Nike said Tuesday it will not renew its 13-year contract to sponsor the uniforms of English soccer giant Manchester United when it expires at the end of next season, saying that the Red Devils are simply asking for too much money.
The sporting goods manufacturer paid Manchester United about $519 million in 2002 for the right produce the team's uniforms and sell replicas and other apparel to the public, the New York Times reports.But now, Manchester United is set to sign a 10-year deal with Nike's rival Adidas that would be worth nearly $1.3 billion, the Financial Times reports, making it the most lucrative apparel sponsorship in the game. At $128 million a year, the proposed Manchester United/Adidas deal would more than double the current most lucrative sponsorship, through which Adidas pays the Spanish team Real Madrid $53 million a year.
Though Nike pulled in nearly $28 billion in revenues during fiscal year 2014, it said Manchester United's asking price just didn't make sense for its shareholders."Any partnership with a club or federation has to be mutually beneficial, and the terms that were on offer for a renewed contract did not represent good value for Nike's shareholders," Nike said in a statement published by the New York Times, the Financial Times, and other outlets.
At the rumored price, Adidas' annual sponsorship of Manchester United would be about 4.7% of the $2.7 billion it expects to make in football apparel revenues this year.Still, Adidas SVP of global football Markus Bumann told Bloomberg Television this morning that he did not think Nike's withdrawal from negotiations was evidence that the competition between the two rivals was making apparel sponsorships unreasonably expensive. "I think in general, as in sport, rivalry challenges everyone to be better and about new ways of approaching things," Baumann told Bloomberg's Brendan Greeley. "That's why I believe this is also very good for the industry, for the consumer, and for how soccer appears on the field of play. I'm not concerned that this is reaching a level out of proportion."