BBC News | BUSINESS | Man Utd in �300m Nike deal (original) (raw)
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Friday, 3 November, 2000, 18:14 GMT
Man Utd in �300m Nike deal
Get off your kit - and put on Nike's
The world's richest football club, Manchester United, has signed a record-breaking �302.9m sponsorship and merchandising deal with US sports gear giant Nike.
The deal dwarfs previous Nike football sponsorship deals, such as its �7m a year sponsorship of Brazil's national team, and is thought to be the biggest of its kind ever signed.
It will effectively hand control of Manchester Utd's global replica-kit and merchandising business to the sportswear giant.
However, the amount paid to the club by Nike will be reduced if the team does not finish in the top half of the Premiership or take part in European competition.
Grass-roots initiative
Under the deal, Manchester Utd will grant exclusive rights to sponsor its gear, manufacture and sell its merchandise and operate Manchester United's existing retail operations.
The agreement starts on 1 August 2002 and will run for 13 years, althought Nike will have the option to end the arrangements in 2008.
Nike will form a wholly-owned subsidiary to control Manchester Utd's global licensing and retail operations.
Nike and Manchester Utd will appoint half of the directors each, with Nike appointing the chairman, who will have the casting vote.
Manchester Utd's merchandising operations generated revenues of �20.1m in the year to 31 July, producing a profit of �2.1m.
As part of the deal, the two companies said they would launch a �1m a year grass roots football programme, to be funded by Nike as part of its existing football commitments.
Manchester Utd claims to have six million supporters in the UK and up to 40 million worldwide.
It currently markets its merchandise in 40 countries.
Nike already has strong links to Manchester Utd, with players Dwight Yorke, Paul Scholes and Andy Cole wearing its boots.
Manager Alex Ferguson is believed to have been offered an "ambassadorial" role with the company when he retires.
The club still has two years to run on its current kit deal with Umbro.
Profits dip
Last month, the club announced a dip in profits - blamed on rising player wages.
The signing of players such as French international goalkeeper Fabien Barthez for �7.8m meant operating expenses rose by �11.4m to �65.8m.
The amount of gate receipts during the year also fell, from �41.9m to �36.6m, as the lack of FA Cup matches reduced the number of games played at Old Trafford.
Despite an increase in merchandising turnover - to �23.6m from �21.6m - the overall pre-tax profits figure was �16.8m, from �22.4m the previous year.
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