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SBD Global/July 9, 2014/Marketing and Sponsorship

Manchester United To Swap Nike For Adidas In 10-Year, $1.3B Sponsorship Deal

ManU will end its 13-year partnership with Nike after this season.
Adidas is "primed to sign a 10-year deal" to supply ManU’s kit worth in the region of £750M ($1.3B) after rival Nike "declined to match the German company’s offer," according to Roger Blitz of the FINANCIAL TIMES. Months of talks between Nike and ManU to extend its 13-year kit deal ended with a statement from Nike saying the terms on offer “did not represent good value for Nike’s shareholders” and that its relationship "would end after next season." Nike "was given a period of exclusivity to extend the deal, but when this expired United approached rival companies." Nike still "had the right to match any competing offer but has now decided not to exercise that option." ManU "declined to comment" and adidas "did not return calls." People with knowledge of the situation said that they "expect" the new contract to be worth around £75M ($128M) a year. The size of the deal "underlines the fight for supremacy between Nike and Adidas in football, graphically played out at the World Cup in Brazil" (FT, 7/8). In N.Y., Sara Germano reported the potential deal "is the latest move" by adidas to "regain some ground from Nike." In adidas' home region of Western Europe, net sales were flat at €1.1B for the quarter ended March 31, while Nike posted a 25% jump to $1.3B in the region for the quarter ended May 31. Warrior Sports, a subsidiary of New Balance Athletic Shoe, "also has expressed interest in sponsoring the team, which has an avid and global fan base despite its tough year" (WALL STREET JOURNAL, 7/8). FORBES' Mike Ozanian reported it is likely that the rejection of the deal by Nike "signals a market top for kit deals, rather than being a reflection of the soccer team’s struggles on the pitch." Bloomberg reported that Nike "doesn’t see value in the price United is seeking" (FORBES, 7/8).
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