Manchester United and Adidas in £750m deal over 10 years
- 14 July 2014
- From the section Business
Sportswear giant Adidas has signed a £750m deal to make Manchester United's kit for 10 years from next season.
It comes after US rival Nike decided to end its association at the end of the 2014-15 season.
Nike has been paying United £23.5m a year, and the new deal is worth a world record-breaking £75m ($128m) a season to the Old Trafford club.
Champions League winner Real Madrid's £31m-a-year deal with Adidas was previously the biggest club deal.
Adidas will provide training and playing kit to all the club's teams and will have the exclusive right to distribute dual-branded merchandising products worldwide.
The huge sum involved is only £40m less than the Glazer family paid for the club in 2005.
Adidas chief executive Herbert Hainer said the deal would help the firm "to further strengthen our position in key markets around the world".
He added: "We expect total sales to reach £1.5bn during the duration of our partnership."
Adidas has not given any details about the design of the new strip but said they may look to the Manchester United kits of the 1980s and early 1990s for inspiration.
It will be the first time Adidas has made the Premier League's team's strip in 23 years, since the 1991-92 season.
The announcement comes a day after the German firm, a Fifa World Cup sponsor, provided the kit for 2014 finalists Germany and Argentina.
In trading on the German stock exchange on Monday, the firm's shares closed up by 2.73%.
Adidas also supplies Bayern Munich, Chelsea, AC Milan and Flamengo. From the 2015-16 season, they will also provide kit for Juventus.
Sean Hamil, director of the Sport Business Centre at London's Birkbeck College, said that the Glazers had put in place "an exceptional marketing and sponsorship team", although they had taken flak for the way they had put debt onto the club's books and for increasing season ticket prices.
He said: "They have been able to secure this landmark deal in the sector, against the background of no Champions League football next season. This is clearly a major vote of confidence in the Manchester United brand.
"Also, it shows that leading English clubs are sufficiently robust in terms of global appeal that sponsors are making value decisions based on the long term and not just around one season."
Dr Leah Donlan, a marketing expert at Manchester Business School, said the deal will give Adidas "a significant competitive advantage" over Nike.
She added that Adidas could "strengthen its global brand position" by adding Manchester United to its portfolio of teams.
Nike had been given a period of exclusivity to negotiate an extension with United and also retained the right to match any other offer.
But the company decided against exercising either option, claiming the terms "did not represent good value for Nike's shareholders".
Manchester United suffered their worst Premier League finish to date last season after manager Sir Alex Ferguson left following 26 years in the job.
|Manchester United in numbers|
|The Glazer family bought the club for £790m in 2005||Club's commercial operations grew by 30% to £34.9m in 2012-13 - Deloitte|
|The club still owes about £400m in loans used to finance the takeover||£10m-a-year interest payments due on the club's debt|
|Turnover for the 2013-14 financial year is expected to top £418m||Juan Mata is the club record signing - bought for £37.1m|
|Net profit of £146m for 2012-13||Wayne Rooney's new four-year deal worth a reported £300,000 a week|
|Chevrolet will pay £53m a year to have its name on United's shirts||Total wage bill estimate for the financial year 2012-13 was £182m- Deloitte|
|Aon paid £120m to sponsor the club's training ground and kit||No Champions League football will cost £50m- 10% of annual revenue - Deloitte|
His successor, David Moyes, lasted just 10 months as the club failed to qualify for the Champions League for the first time in 19 years.
United will now be managed by Louis van Gaal, whose commitments with the Netherlands are over following the climax of the World Cup.
The club has already unveiled the last MUFC kit bearing the Nike logo.
It features Chevrolet as shirt sponsor for the first time.
The US motor giant is said to be paying £53m a year to have its name splashed on the red shirt fronts.
Since the Glazer family took over at Manchester United, they have segmented many of their sponsorship deals, seeking specific regional partnership deals in many of their sponsorship sectors.
Other high-profile arrangements included an agreement to rename their Carrington training ground.