Manchester United secured a record-breaking $1.3 billion sponsorship deal with Adidas on Monday, signaling the club’s enduring global appeal despite its worst Premier League campaign and strengthening its financial muscle for player transfers.
The 10-year kit deal, worth at least $128 million a year from July 2015 for an overall $1.3 billion, was negotiated after Nike decided that trebling the cost of its existing 13-year contract for having its name on United shirts was not good value for the company.
United finished seventh in the league last season at the start of the post-Alex Ferguson era. But the eagerness of Adidas to make United kits and sell replicas is an indicator of the expected durability of the Red Devils’ brand — and a worldwide following which the club claims to be around 660 million supporters.
The German sportswear firm said it expects to generate $2.5 billion in sales during the decade-long deal with United. Adidas currently pays around $50 million a year to Chelsea and Real Madrid, and United could generate far more over the decade from football’s biggest kit sponsorship, describing the headline figure of 750 million pounds as a “minimum guarantee.”
In 2005 the Glazer family paid 790 million pounds — just 40 million pounds more than the Adidas windfall — for the entire club. Ten percent of the Old Trafford-based team is now listed on the New York Stock Exchange and shares rose two percent to $18.14 in morning trading on Monday.
Adidas, which also makes the kit of newly-crowned World Cup winner Germany, saw shares rise by 2.85 percent in Frankfurt on Monday.
“Our new partnership with Manchester United clearly underlines our leadership in football and will help us to further strengthen our position in key markets around the world,” Adidas chief executive Herbert Hainer said.