The 13-year old Nike Manchester United deal to manufacture the English football club’s kit, which expires in 2015, will not be renewed. The American sportswear giant felt the terms on offer for a renewed contract “did not represent good value for Nike’s shareholders.”
German Adidas and Michigan-Based Warrior Sports are still in talks with the club. The new 10-year deal, rumored to be worth about £600 million ($1.027 billion), is nearly double Real Madrid’s £31 million ($53.06 million) annual contract with Adidas.
The current contract that Nike is ending with Manchester United (United) is worth £24 million per year.
Both Adidas, which made United’s kit in the 1980s, as well as Warrior, which manufactures Liverpool’s current kit, confirmed with the BBC that talks are in progress.
What does Nike’s rejection signal?
Is Nike’s rejection a reflection of the English football club’s woes, or does it signal a market ceiling for kit deals? Possibly it is neither. Adidas and Warrior are still in talks regarding a mega deal. Most experts believe Adidas will win, and that it will be the largest kit contract ever made.
United had been hoping a bidding war would develop between Nike, Adidas, Puma and Warrior. Earlier this year, Arsenal announced a contract worth £30 million ($51.35 million) per year with Puma after twenty years with Nike.
United failed to quality for this season’s Champion’s League for the first time since 1995-96, and this year the 20-times English champion came seventh in its worst ever Premier League season. Under Alex Ferguson the previous year, United won the title. Ferguson’s successor, David Moyes, who lasted less than a year, will be replace by current Holland national team manager Louis van Gaal after the FIFA World Cup tournament.
In May, 2014, consultancy Brand Finance announced that Manchester United’s brand value slid from $837 million in 2013 to $739 million in 2014, making it the third most valuable soccer (football) brand globally, after Bayern Munich and Real Madrid.
Despite a bad season, Manchester United PLC posted improved third quarter profits (ending March 2014). Q3 2014 profits were $11 million, compared to $3.6 million in Q3 2013.
Nike decided not to match rival bids
Nike had been given an exclusivity period to extend the contract. When this expired, United started talking to rival bidders. While still having the right to match any competing offer, Nike opted not to exercise that option.
Nike wrote in a statement:
“We are proud to have partnered with them for the last 12 years and will continue to sponsor the club until the end of the season.”
The fight for supremacy in global football sponsorship is aggressively being fought by Nike and Adidas. While still a newcomer to the soccer world, Nike signed a deal with United in 2002, which helped it become a major sponsor rival to the more established football brand of Adidas.
Adidas has enjoyed a good FIFA World Cup tournament as an official sponsor and supplier of the Brazuca match ball.
Nike unveils new Manchester United kit
On July 7th, 2014, Nike unveiled Manchester United’s 2014-2015 red-black-and-white home kit.
The kit features a red shirt, white collar and cuffs with a red-and-black trim, white shorts, and block socks with a red band.
The new home kit has been available to pre-order since July 7th.
Can Louis van Gaal change United’s fortunes?
Louis van Gaal, born in 1951, who takes over as manager of United when the FIFA World Cup tournament is over, has an impressive track record. He is currently manager of Holland’s national team.
Louis van Gaal has been manager of the following football clubs:
- Jul 2012 – end of 2014 World Cup: Holland national team. Percentage win 61.54%.
- Jul 2009 – Apr 2011: Bayern Munich. Percentage win 61.46%.
- Jul 2005 – Jun 2009: AZ Alkmaar. Percentage win 57.95%.
- Jul 2002 – Jan 2003: Barcelona. Percentage win 53.33%.
- Jul 2000 – Feb 2002: Holland national team. Percentage win 53.33%.
- Jul 1997 – May 2000: Barcelona. Percentage win 56.02%.
- Sep 1991 – Jun 1997: Ajax. Percentage win 68.35%.
Under van Gaal’s management:
- Bayern Munich won the Bundesliga in 2009-10 and was Champions League runner-up in 2009-10.
- AZ Alkmaar won the Eredivisie in 2008-09.
- Barcelona won La Liga in 1997-98, 1998-99, la Copa del Rey in 1997-98, and the UEFA Super Cup in 1997.
- Ajax won the Eredivisie three times, the KNVB Cup, the Johan Cruijff Shield, the Champions League once and runner-up once, the UEFA Cup, the UEFA Super Cup, and the Intercontinental Cup.