Swoosh: Manchester United's current kits are made by
Nike
Nike face having to shell out huge sums
of cash
if they want to maintain their association with Manchester
United.
The American sportswear giants are due to sit down with
Red Devils officials in February at the start of an
exclusive six-month negotiating period with United over their
£303million kit supply deal.
And whilst United officials were giving little away today
during a conference call to provide information on their first
quarter results, it seems obvious Nike will have to come up with an
enormous sum to satisfy the club’s owners, the Glazer
family.
In July, United announced a staggering £357million deal
with General Motors for the Chevrolet logo to be worn on their
shirts for seven seasons from 2014.
That figure prompted United to buy-out the present deal
with DHL for United’s training kit, which will now come to an end
at the climax of this season.
'We feel we know, with some clarity, the value of our
rights, and we are bullish about the abundance of opportunities
available to
accelerate the growth of this business,' said Woodward.
'The planning on DHL started post-GM deal. We are always
monitoring the value of our rights. We can improve the amount,
duration and rights-package about that deal.
'Our six-month negotiating window with them (Nike) starts
in February. We look forward to sitting down with them
then.'
Privately, United officials do not see the way the Nike
deal is structured fits with the more commercially aggressive
Glazer regime.
When the present deal was negotiated in 2002, United were
a publicly floated company and preferred to take as much risk as
possible away from any sponsorship tie-up.
Therefore, a profit-share arrangement was put in place
which ensured United received only a proportion of the cash
generated from worldwide shirt sales in exchange for a guaranteed
sum.
The Glazer family have not gone down the same route. They
have even stopped the policy of contracting out pre-season tour
arrangements, believing they can negotiate better deals
themselves.
Costly: If Nike want to extend the deal they will have
to cough up
As a battle is presently taking place between
Sydney, Brisbane and Melbourne for two proposed matches in
Australia during 2013, the value of such an attitude is
obvious.
It has also been noted Nike now pay the French Football
Federation almost £40million-a-year, without a profit-share
arrangement, for a seven-year period which began at the start of
last season.
Sponsorship certainly appears to be a lucrative revenue
stream for United given they posted a 32% increase to £27.8million
for the three months to September 30, 2013.
Including the General Motors contract, United did 10
sponsorship deals during that time, confirming an increase in
workforce from 670 to 735 was almost exclusively connected to the
marketing sector.
They now have mobile phone
partnerships in 44 countries, with Woodward claiming the three-year
deal with Japanese soft drinks manufacturer Kagome came as a direct
result of opening an office in Hong Kong.
He added that the USA was the 'next natural place' for the
club to open a regional centre given as many supporters watch
United live there as do so in the United Kingdom.
Lucrative: From 2014 United will be sponsored by
General Motors
It was also confirmed United received £2.5million
as a result of being an Olympic Games football venue, plus
£1.3million in compensation for players appearing at
Euro
2012.
In addition, United used proceeds of IPO to reduce total
debt by 17% to £359.7million.
This is unlikely to appease the vast numbers of
anti-Glazer United supporters though.
An ‘exceptional item’ of £3.1million related to
professional advisor fees in connection with the IPO, part of what
is estimated to be an overall spend of £550million in interest and
fees since the Glazer takeover in 2005.