United hit kit jackpot with record £750m adidas deal
Manchester United underlined their global status as a brand yesterday by signing the world's biggest sports kit deal for an astonishing £750m with adidas
That figure, just £40m shy of what the Glazer family paid for the club in 2005, could potentially be worth even more, with the £750m over 10 years yesterday described as a "minimum guarantee", though United refused to elaborate on exactly what that meant.
The fact United are not in the Champions League for the first time in 14 years and the team are being rebuilt under new manager Louis van Gaal has not put off adidas from trumping Nike, United's kit supplier for 13 years.
Nike pulled out of negotiations over a new deal last week because they felt United were demanding too much money – adidas are paying more than double what Nike had been paying.
Adidas chief executive Herbert Hainer explained why the new deal, which starts in the 2015-16 season, made economic sense when he predicted: "We expect total sales to reach £1.5bn during the duration of our partnership."
The previous record kit deal was held by the France football team at £36m a year. The highest non-football deal is the £11m a year Nike pay the NFL.
The adidas agreement was described in a statement as "a global technical sponsorship and dual-branded licensing deal", with adidas providing training and playing kit to all the club's teams.
Adidas have not given any details about the design of the new strip but said they may look to United's kits of the 1980s and early 1990s for inspiration.
With a world-record seven-year £53m shirt sponsorship deal already in place, United will be earning £125m a season just from their shirts. That figure can be doubled through Premier League TV income, and increased again through European football, ticket receipts, corporate entertainment and the myriad country-specific marketing agreements that the Glazer family continue to sign.
The Glazers' initial instinct, that there was money to be made from United, has proven to be a smart judgment, though they can expect outgoings to increase sharply, too, as players' agents apprise themselves of United's income, think of a figure, then treble it.
Will they meet such demands? We will see, but there is no financial reason for United not to go head to head with Real Madrid, Barcelona, Paris Saint-Germain and, of course, Manchester City.
However, the pity is it is highly unlikely much of this cash will be reinvested into the game; indeed, a lot of it may not even be reinvested in United.
Despite the gruelling campaign in Brazil, Van Gaal is taking just two days off before formally taking charge at United this week and beginning the tour of the United States on Friday.
"I don't need a holiday," the 62-year-old former Bayern Munich, Barcelona and Ajax coach said. "It's great to have such an exciting challenge. To work daily with young people is something that I don't need time off to rest for.
"I'm looking forward to it. It's time that I get to know more people at the club." (© Independent News Service)