News Column

United share price boosted by £750m kit deal windfall

July 15, 2014

FRANK DALLERES



MANCHESTER United's share price surged yesterday following confirmation of the Premier League club's record-breaking 750m shirt deal with German sportswear giant Adidas.


The 10-year agreement, which takes effect from the 2015-16 season, is the most lucrative of its kind in any sport and worth more than double any other shirt deal in football.


United's share price climbed 4.84 per cent to $18.64 on the New York Stock Exchange after the announcement of United's third vast commercial tie-up.


The Old Trafford side already pocket around 50m a year from a new sponsorship with General Motors, which will see Chevrolet adorn the front of shirts from the coming season, while insurer Aon pays 20m per season for sponsorship of the club's training kit and training ground.


Real Madrid's kit deal is next biggest, at 31m a year, while Arsenal's new contract with Puma, which also replaced Nike, earns them 30m per season.


It means United are better equipped to cope with a drop in earnings this year due to their failure to qualify for European competition - a figure chief executive Ed Woodward put at 35m in May - and compete within the boundaries of European financial fair play rules, which approximately restrict spending to earnings.


The bumper deal comes as Holland World Cup coach Louis van Gaal prepares to start work as United manager. Adidas struck the agreement, which includes exclusive rights to distribute dual branded products globally, after seeing off rival interest from Nike, which is in the final season of a 13-year association with United, and Warrior Sports, a relative newcomer to the football market.


Nike, which currently pays 23.5m to manufacture the kit, announced last week that it was withdrawing from negotiations over a renewal because it "did not represent good value for shareholders".


TOP KIT DEALS Man Utd* Adidas 75m R Madrid Adidas 31m Arsenal Puma 30m Chelsea Adidas 30m Barcelona Nike 27m Sums per year. *Starts 2015


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: City A.M. (UK)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters