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SBD Global/September 21, 2012/Franchises

ManU May Squeeze Nike In The Wake Of Its Record $559M General Motors Deal

Following ManU's record $559M sponsorship deal with General Motors, the football club is now "ready to play hard ball" with jersey-maker Nike, according to Tariq Panja of BLOOMBERG. ManU currently has a 13-year, £303M ($491M) contract with Nike, giving the company "control over the club's complete merchandise sales operations." ManU Exec Vice Chair Ed Woodward said, "We continue to believe that there will be an opportunity to reset our existing deal with Nike to market rates. There have been many changes to the world of football since this deal was negotiated in 2001." Woodward's optimism "may have been fueled" by the seven-year GM deal. ManU recently announced that its full-year revenue was down 3%, the first decline since the Glazer family purchased the club in '05. When ManU enters its exclusive negotiating period over a renewal with Nike in February, Woodward may "point to new entrants" in the football apparel market from the U.S. Online sporting good retailer Kitbag CEO Andy Anson said that Europe's leading teams are "no longer restricted to a choice between Nike or adidas." Anson: "The main impact of the new entrants, such as Warrior and Under Armour, has been to create a greater market for the clubs." Nike's deal with ManU is made up of "a minimum guarantee," with any additional revenue generated from retail sales split 50-50. How much more the company would be prepared to pay "depends on the business case." Nike Brand President Charlie Denson said, "it's their job to create demand for their product and that's what they're doing" (BLOOMBERG, 9/20).
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