By Mark Baber
July 14 – Manchester United and Adidas have agreed the biggest ever deal in sports licensing history as the German sportswear giant will sponsor the United kit as technical sponsor and dual branded licensing partner. The deal is for a minimum of £75 million ($128 million) a year for the next ten years, beginning with the 2015-2016 season.
The agreement follows Nike’s decision to withdraw from the bidding last week, the US company saying the price they would have had to pay to extend their 13-year association with Manchester United did not represent good value for money.
That Adidas are willing to make such a massive financial commitment, despite Manchester United’s dismal on-field performance in the 2013-14 season, is testament to their faith in new manager Louis Van Gaal, and in the enduring value of the Manchester United brand.
Adidas currently pays just $50 million a season to Chelsea and Real Madrid and an estimated $100 million for each World Cup. The deal dwarfs the previous record UK record for a kit deal which was set by Arsenal and Puma’s recent 5-year £150m deal.
Adidas sponsors both the Germany and Argentina national teams and are engaged in a fierce battle with Nike over the title of leading soccer brand and the greatest slice of the $5 billion a year soccer kit market.
The two brands control 80% of the market, with Nike making inroads in the growing US market as well as Adidas’ home territory of Germany.
Rumours as to the size of the deal had an adverse effect on Adidas shares over recent days but, following the official announcement, both Adidas and Manchester United shares have risen in value by 2% +.
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