Manchester United’s commercial prowess continues to grow
Manchester United look set to smash sponsorship records as negotiations with Nike over a new kit deal begin next February; and a fee for a new year ten-year contract could be worth a staggering £1billion- dwarfing the £303million, 13-year deal that expires in 2015.
United chief of staff Ed Woodward, has a sixth-month window of talks with Nike and indicated that the club are looking for a ‘major increase’ from the American sportswear giant.
It is the latest example of the club’s commercial prowess and how they can squeeze every penny possible out of prospective sponsors, using their global appeal as a successful bargaining chip.
The club will also have new shirt sponsors from the 2014-15 season, with States car manufacturer Chevrolet agreeing to fork out £52million a year to have their logo emblazoned across the chests of Rooney and Van Persie et al; and take the place of Aon.
Sharp were the longest-running shirt sponsors of the club in a partnership spanning 17 years from 1983 to 2000; when Vodaphone took over the deal worth a comparatively measly £8million a year in today’s crazy financial climate.
That figure has gradually risen from the £14.5 million that AIG paid between 2006 and 2010, before Aon’s £19.6million fee.
It seems that no other club in the Premier League can compete with United’s commercial success, as Chelsea have one of the next most lucrative deals with Samsung- worth a more modest £18million a year.
When investigating as to why United are so far ahead of the rest, one would have to go back to 2008, when the club reorganised its commercial department so they could target deals from all over the world.
It is based in London, with Woodward and commercial director, Richard Arnold also identifying individual media and telecom deals to further expand the Manchester United brand.
This has been demonstrated when the club saw the possibility of enormous growth in South-East Asia, as a deal was struck with Beeline; a Vietnamese telecommunications company that would distribute United content across Vietnam, Cambodia and Laos. The club’s fan base in Vietnam alone is estimated at 16million, while the number is a staggering 192million across the Asian continent.
But perhaps the most striking deal of them all concerns the training kit sponsorship with logistics company, DHL; a four-year deal being worth £40million, exceeding the previous shirt deal with Vodaphone.
Chief Executive, David Gill said the deal broke new ground in English football and he is not wrong. How many other teams could convince prospective sponsors to dish out that sort of money for rights over training kit?
The agreement is reportedly more expensive than all but five of the main shirt sponsors in the Premier League and illustrates how United are in a class of their own when it comes to making money.
But with United making all this all extra cash, many supporters are left fuming by the escalating ticket prices and how the money is being used to pay off the huge amount of debt from the Glazer takeover.
The Manchester United Supporters Trust recently made a statement regarding the issue of sponsorship since the Glazer takeover, claiming they would like to advise sponsors that their money is not going to be invested into the club and will instead be used to pay off the Glazer debt.
It also stated how any prospective sponsorship fees would be plundered into a failing business empire, with very little if any money being re-invested into the team.
This led to the announced boycott of all Manchester United products back in August, which many hoped would act as a wake-up call to the Glazers that without fans’ buying power, the Manchester United brand will cease to exist.
However, taking the proposed Nike deal into account, it appears that this supposed boycott is having few far-reaching effects; with many brands including GM Chevrolet still seeing the club as a huge brand.
One suspects that many of United’s fans from the far flung locations of Far East Asia or the Middle East will care little about the Glazer ownership and see the club in a much more superficial light.
The sponsors will see these regions of vast wealth and technology as the main money-making areas; and where their partnership with the Manchester United brand will be fully utilised.
They will also consider the fact that United have been a great success since the Glazer takeover, with four Premier League titles and a Champions League trophy flowing into the cabinet since their arrival.
Calls to boycott products by sponsors of the club are well-intentioned and admirable, but Manchester United and its partners are simply growing increasingly out of touch with the club’s core supporters.
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