It seems that Manchester United always manages to grab headlines when it comes to finances. Today is no different as the football club just agreed to a 10-year, $1.28 billion contract with adidas, which just so happens to be the grandest licensing deal in the history of sports.
“Manchester United plc has reached agreement with adidas for a global technical sponsorship and dual branded licensing deal for a minimum guarantee of GBP 750 million, subject to certain adjustments, beginning with the 2015-2016 campaign.
“For the 2014-15 season, Nike will continue in its role of technical sponsor and trademark licensee,” a statement on the team’s official website read.
Nike previously owned the rights to producing Manchester United gear, including the kit and other apparel, for the past 12 years. However, adidas going above and beyond forced Nike to rethink their sponsorship. Basically, it came down to Nike not seeing a way in which its shareholders would be able to see a legitimate return in profit if the company agreed to a $1.28 billion deal (assuming that is what Manchester United demanded to continue business).
Last year, Manchester United was valued at $3.165 billion, the second most valuable sports team in the world behind only Real Madrid. An updated version of the rankings has them valued at $2.810 billion. They also have annual revenue of $551 million per year. Obviously, the new licensing deal, which will take in affect at the beginning of the 2015-2016 season, will change Manchester United’s business landscape.