On Monday Manchester United and Adidas announced a record breaking kit manufacturing deal, £750 million over 10 years. That’s £75 million a year to have Adidas famous three stripes adorning the red shirts of Manchester United. It brings to an end United’s previous deal with Nike, which when it started in 2002 was itself a record £303 million. The deal eclipses the previous record kit manufacturing deal, more than doubling the £31 million Real Madrid receive every year until 2020, also from Adidas.
The £128 Million Manchester United Shirt
This new deal is complemented by the shirt sponsorship deal from Chevrolet that starts this season paying £53 million a year to have their logo on the front of United’s shirt. This is currently more than double the next biggest deals, £25 million to Barcelona from Qatar Foundation & the £23.6 million a year Bayern Munich receive from Deutsche Telekom. Add in the £15 million a year AON pays Manchester United to put its logo on its training Kit and United’s Kit is worth £143 million a year.
To put that £143 million in to perspective that is more money than all but 6 Premier League clubs total turnover for the financial year 2012-13. The number 6 team Tottenham Hotspur, who finished 5th that year, made £147 million. So only £4 million more total turnover than Manchester United make on their kit alone. Wigan who made the least money, despite winning the F.A. Cup, had a total turnover of £56 million, which is just over a third of United’s kit deals.
So what does this mean for United? In the short term it is a welcome boost as United will be without the revenue that comes from competing in the UEFA Champions League for at least one season, after failing to qualify for the first time in 19 years after a disastrous 2013/14 campaign under David Moyes. This should allow new manager Louis Van Gaal to compete in the transfer market as he aims to get United back to winning ways and back into the UEFA Champions League. In the long term it should secure United’s long term financial future. With £389 million of debt from the Glaizers takeover still on United’s books the £750 million Adidas will pay United over 10 years should allow the Glaziers to manage that debt and see the club return to the black.
What does this deal mean for everyone else? In the age of financial fair play it is an ominous sign, the ability to pull off deals like this mean Manchester United can compete for the best players in the transfer market pay them top wages and not fear that they will fall foul of UEFA’s regulations. This deal as much as it sets Manchester United apart in the merchandise department does not give United total financial dominance over the rest of Europe. While Barcelona and Real Madrid continue to negotiate their own TV deals, as opposed to the collective bargaining deal United are part of in the Premier League, and while a UEFA champions League size hole sits on their balance sheet United will still have as much of a fight for dominance off the pitch as they do on it
Not since the early days of Sir Alex Ferguson’s reign have the three stripes of Adidas been seen on Manchester United shirt and they oversaw the first few trophies of what turned out to be a unprecedented era of success. Will this new deal see in a similar vein of success under new manager Louis Van Gaal? The people in charge at Adidas have bet £¾ Billion that it will.
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