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SBD Global/November 16, 2012/Marketing and Sponsorship

Manchester United Seeking To 'Dramatically' Increase Value Of Kit Deal With Nike

Manchester United is looking to increase the value of its kit deal with Nike.
ManU left "no illusions" that Nike will "have to increase the value of its kit deal dramatically if it is to remain in partnership," according to James Ducker of the LONDON TIMES. Nike, whose $480M, 13-year kit deal with ManU expires in '15, has "an exclusive six-month window from February in which to negotiate a new contract with the club." ManU is "confident of securing a new kit deal that will be unprecedented in its scale" for a football club. ManU Vice Chair Ed Woodward has "made no secret" in recent months of his belief that the present Nike deal is "substantially undervalued." Woodward "would not be drawn on the sort of figure" the club is seeking, but previous estimates that put it at about $1.58B would "not appear to be an unrealistic target." Woodward said, "We feel we know, with some clarity, the value of our rights, and we are bullish about the abundance of opportunities available to accelerate the growth of this business" (LONDON TIMES, 11/15).
SEEKING FAIR DEAL: In London, Ian Herbert wrote, "When the present deal was negotiated in '02, United were a publicly floated company and preferred to take as much risk as possible away from any sponsorship tie-up." It meant a profit-share arrangement was "put in place which ensured United received only a proportion of the cash generated from worldwide shirt sales in exchange for a guaranteed sum" (INDEPENDENT, 11/15). The MANCHESTER EVENING NEWS reported in July ManU revealed a "staggering" £357M ($566M) deal with General Motors for the Chevrolet logo to be worn on its shirts for seven seasons beginning in '14. That figure prompted ManU to buy-out the present deal with logistics company DHL for the club's training kit. ManU believed that there is "a lot of money to make." Woodward said, "The planning on DHL started post-GM deal. We are always monitoring the value of our rights. We can improve the amount, duration and rights-package about that deal." He added the U.S. was the "next natural place" for the club to open a regional center given that just as many supporters watch United live there as do in the U.K. (MANCHESTER EVENING NEWS, 11/15).
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