On Monday Manchester United released a statement on its Investor Relations site stating that the club had reached an agreement with sporting goods manufacturer Adidas “for a global technical sponsorship and dual branded licensing deal for a minimum guarantee of GBP 750 million, subject to certain adjustments, beginning with the 2015/2016 campaign.”
The deal comes after months of negotiations and talks with multiple suppliers, including Nike, and represents a massive step change in the landscape of kit sponsorships in the soccer industry. The previous most expensive kit deal in world football rested with Real Madrid, another Adidas sponsored club, at approximately $49 million per year. The £750 million over 10 years mentioned in the news release translates to roughly $128.1 million per season, 2.6 times the value of the Real Madrid deal on an annual basis. Below is a look at the top 10 club kit sponsorships after Manchester United’s new deal with Adidas is accounted for.
From this lens Adidas is the clear dominating brand in this arena. In total, the top 10 kit deals in the world represent about $434 million in sponsorship revenue for the clubs listed, of which Adidas represents $287 million in total (of the top 10), or 66.1%. It’s biggest rival, Nike, after losing the Manchester United deal, only accounts for 14.3% of the top 10 kit sponsorship revenue for clubs, down (-15.4 pts) from its previous position. Below is a look at the brand distribution of sponsorship dollars for the top 10 kit deals before and after the Manchester United deal with Adidas, to throw into perspective just how influential it is to the industry.
Manchester United and Adidas combine to account for 29.5% of the new total of $434 million for the top 10 clubs with their new $128.1 million/year deal. The club is coming off of a very disappointing season, having finished out of the top 4 in the Premier League for the first time since the 1991-92 campaign when it finished 6th in the table. The Red Devils have already been active in the off season in the transfer market, looking to bolster their side for the upcoming 2014-15 season, knowing that they cannot afford another year as they have just had. The club has brought in Ander Hererra from Athletico Bilbao ($49.5 million) and Luke Shaw from Southampton ($51.3 million), and are looking to add to that list. These two players already represent a rather expensive off season for United, and while they have offloaded some players as well the club will need to offset its expenditures such that it maintains a healthy financial position in good standing with the financial fair play regulations (FFP). For more on how FFP has impacted clubs,
The new Adidas sponsorship deal will certainly help the club do just that. Revitalized interest in soccer all over the globe is sure to cause a spike in club merchandise, including and perhaps most of all in jersey sales. As one of the world’s most popular clubs, Manchester United and its new partner Adidas will look to capitalize on this trend, as will all clubs and sporting goods manufacturers. One thing is for certain, and that is that Adidas and other kit suppliers better see to it that this trend comes to fruition, because now that they have thrown this kind of money around for Manchester United, other clubs like Real Madrid, Bayern Munich, and Chelsea are going to want to talk about new deals in the same neighborhood at United’s. They will need the big increase in merchandise sales to offset the increase in sponsorship expenditures that are almost certain to come in the near future now that a new bar has been set.