Manchester United & Nike Reportedly Agree to Record Setting $1B Deal

Reports from England indicate that Manchester United (“United”) and Nike (NKE) have agreed to a ten-year, US $1B (£600M, €720M) kit deal.  If true, the agreement would mark a world-record sum for an outfitting sponsorship in the world of soccer, bringing in an estimated US $100M (£60M, €72M) annually to United.  The reported sum would double Arsenal’s latest agreement of US $50M (£30M, €36M), and nearly double the previously largest held kit contract between Real Madrid and Adidas, believed to cost the German brand a reported US $52M (£31M, €37M), on an annual basis, respectively.

The reported deal arrives after months of speculation concerning Manchester United’s future outfitters, as well as a number of recent sponsorship changes on the club level, namely Arsenal, Juventus, and Porto.  It was widely reported that the likes of Adidas, Puma, and Warrior were all in the hunt for the rights to clothe the current titleholders, a surely considered factor that drove the Nike bid upwards.

Photo courtesy of Nike

Photo courtesy of Nike

United’s price tag reflects the trend of rising costs in the world of soccer since the turn of the millennium, as transfer fees and outfitting deals continue to climb.

This is good and bad news for clubs across the world, the decisive factor being traditional domestic and intercontinental performance, which usually trend with the team’s associated status or branding.  For the biggest clubs in the world, the announcement serves as a bargaining chip to increase their outfitting bids, and ultimately bring in additional revenue to allow for the funding of player transfers, salaries, and academy funding.  It’s the lifeblood of the world’s elite level of soccer and will bring more quality to both the game, and the TV sets around the world tuning in to watch.  It’s a machine: as cash is poured into the game and development, quality rises.  Consequently, passion for the game across the globe grows; more kids fall in love with it, practice hard to make it big, and every so often, a game-changer is born.  This is all happening while cash is continuously pumped into soccer, and helps feed the world’s demand for sports and entertainment content.

On the other hand, the aforementioned cash flow headed in United’s direction, complemented by the US $559M (£334M, €403M) jersey sponsorship with Chevrolet,  highlights the growing gap of financial inequality that some might argue is plaguing the game, further explored here.  Simply put, it is hard to imagine the likes of any clubs besides those listed in the Deloitte Football Money League’s Top 20 making a significant impact on the game at the global level.

An official announcement between the two organizations has yet to occur, but is expected to arrive shortly.

Is United worth $1B over the next ten years with their current form?  Let us know in the comments section below or via Facebook or Twitter.

Reporting on the business side of the world's game.