English football club Manchester United Plc (MANU) on Monday struck a 750 million British pounds 10-year kit sponsorship deal with German sportswear maker Adidas AG (ADDDF, ADDYY), which outbid rival Nike, Inc. (NKE) with the record offer.
The agreement will see adidas become the global Technical Sponsor and Official Licensing Partner of Manchester United for ten years, beginning with the 2015/2016 campaign.
"We are excited to team up with Manchester United, one of the most successful and most loved football clubs globally. Our new partnership with Manchester United clearly underlines our leadership in football and will help us to further strengthen our position in key markets around the world. At the same time, this collaboration marks a milestone for us when it comes to merchandising potential. We expect total sales to reach 1.5 billion GBP during the duration of our partnership," Adidas Group CEO Herbert Hainer said in a statement.
The deal will end Nike's 13-year association with the English soccer giants, which signed a long-term deal with the firm in 2002. Nike's current deal is valued at 302 million pounds for 13 years, implying about 23 million pounds per year, significantly lower than adidas' 75 million pounds or $128 million per year.
Adidas became the favorite to bag the deal after Nike reportedly declined to match the offer and confirmed that they are out of the running to extend their contract. Nike was reportedly put off by the expected costs of 60 million pounds per year.
However, Nike will continue in its role of technical sponsor and trademark licensee for the 2014/2015 season.
The 10-year deal will see adidas supply product to Manchester United and outfit all of the club's teams as well as have the exclusive right to distribute dual-branded merchandising products worldwide. These include manufacturing and retail rights to the team's uniforms and fan merchandise.
The deal is billed as the highest deal in all of sports and more than doubles that of the second highest deal in soccer. Adidas is paying Real Madrid 31 million pounds per year and Chelsea FC 30 million pounds per year for a similar deal.
adidas already has running deals with some of the world's top clubs such as Real Madrid, FC Bayern Munich, Chelsea FC, AC Milan, and Flamengo. It is also adding Juventus starting with the 2015/2016 season.
adidas was the outfitter of the two finalists in the 2014 FIFA World Cup, World Champion Germany and runner-up Argentina, and is also the partner of FIFA's adidas Golden Ball winner Leo Messi, adidas Golden Boot winner James Rodriguez, and adidas Golden Glove winner Manuel Neuer.
Manchester United, one of the world's best and richest football teams, is wrapping up its worst season on the pitch in more than two decades after finishing seventh in the English Premier League. It has been the English soccer champions for a record 20 times, and has won a total of 62 trophies.
Manchester United has in mid-May appointed Dutch national coach Louis van Gaal as manager and Head coach after David Moyes was sacked in April within a year of assuming charge from Sir Alex Ferguson. He will take up his post after the FIFA World Cup, where he will manage the Dutch national team. He has signed a three-year contract beginning from the 2014/15 season.
MANU closed Friday's regular trading session at $17.78, unchanged on a volume of 9,300 shares.
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