At the tail end of last week "news broke of the biggest-ever kit sponsorship deal in football history, with Spanish football website Marca reporting that Adidas and Real Madrid were poised to sign a decade-long agreement," worth €140M ($157M) per year, according to Ben Bold of MARKETING MAGAZINE.
If accurate, the Real Madrid figure "is significantly more" than adidas’ existing €38M ($42.6M) deal with the club.
Adidas' latest Real Madrid deal would significantly outstrip its £75M ($109M)-a-year agreement with ManU, "which in itself broke football sponsorship records when it was signed in 2014."
The figure was so high that, at the time, it led other adidas-sponsored clubs "to contact the brand and question the value of their own deals," IMR editor Simon Rines said. Rines: "Adidas are creating their own inflationary spiral here. It doesn’t appear to make sense from a business perspective." For sports marketing agency Synergy Chief Strategy Officer and former ManU strategist Carsten Thode, adidas’ experience with ManU "is precisely why the brand has done the Real Madrid deal."
He said, "For me, the biggest signal the reported size of the deal sends is the fact that the United deal is creating value for them. They have spent enough time with United to generate the confidence to say that this is worth doing." Thode said that the ManU deal benefits adidas "in several areas." Thode: "First and foremost, is all the sales of kit, which they will get a significant amount for, and Manchester United sells a lot of kit, over a million [shirts]. You don’t have to do the maths to see that that makes a lot of money." Rines pointed out that deals do occasionally get renewed early and renegotiated, "if the rights holder thinks that they are at a major disadvantage." Nike "acted similarly on the other side of the Atlantic," where it renegotiated and extended an existing agreement with the NFL. Nike "was acting to protect its associations with American football." Thode suggested that, in part, this is what accounts for adidas’ "willingness to pay out such a high amount for Real Madrid." He said, "Clearly, Real Madrid is a very special club in terms of its global popularity and the amount of kit it sells. But It’s important that adidas has a counterbalance to Nike, which has Barcelona" (MARKETING MAGAZINE, 2/3).
