Nike Sponsorship

[SilverFox2]

Given City's worldwide shirt sales, the Nike deal looks about right. I'm sure the power brokers at City are savvy enough to have a renegotiation clause somewhere down the line should success continue to flow.
If anything, Utd's deal is massively over-valued. If in 5 years time they're languishing in the middle of the Premier League table with no trophies to boot, you can bet your bottom dollar Adidas will cut their cuts and implement a break clause in the contract.

Agree.
The fragility of any player contract has surely given all football teams an insight into the way things change almost overnight so it would be remiss of all sides to not build in some sort of 'adjustment' as things develop.

The deals have been reported for marketing purposes only and are hardly likely to include full details.

 

[blueparrot]

Given City's worldwide shirt sales, the Nike deal looks about right. I'm sure the power brokers at City are savvy enough to have a renegotiation clause somewhere down the line should success continue to flow.
If anything, Utd's deal is massively over-valued. If in 5 years time they're languishing in the middle of the Premier League table with no trophies to boot, you can bet your bottom dollar Adidas will cut their cuts and implement a break clause in the contract.

You can't sack the owner, the Chairman, the CEO, and the Commercial Director.

This deal would have gone all the way to the top at City, and been approved.

Call it market forces and figures/sales at the time, but this deal now looks poor value in retrospect.

Too late now, unless there are clauses written into the contract regarding the teams success and extra merchandise sales due to that, etc.

Is it possible we could re- negotiate with Nike for a deal that includes sponsoring parts of the academy and mini stadium . Especially as we should be their main premier league priority now ?

 

[Neville Kneville]

What this has done, has made it pretty much impossible for Platini's gangsters to decide what is fair value. Adidas are doing this to make the money back in shirt sales ? No. They just want the brand name on their books. That brand name didn't even make the Champions League & were a laughing stock. Here is their reward.

We are the Champions. Our media exposure is huge & increasing. If companies decide they want to pay us stupid money purely to be seen to be connected with our brand, we are realistically worth it.

If some of those companies are based in the middle east or have connections with our owner, tough, Utd have shown that fair market value is impossible to judge.

 

[SilverFox2]

If the Adidas deal is as reported then the numbers look crazy. Adidas are looking at over 25 million shirt sales over 10 years just to break even. I now United are big in Asia but the majority of kits over there are fake. Credit to the Gazier's they have United maxed out on just about every front - they arn't looking to sell this is a cash cow that they are going to sweat to death.

I think the Glazer's would sell if they were offered the right money.
Surely its cash cow status will be taken into consideration with any acceptable bid to them ?

I think it is more likely that they are waiting to see if they can get more money for MUFC via the ever changing streaming video route to mobiles (instant replay of goals etc.).

Problem is; if they are maxed out on every deal how can anyone else buy it and make a greater return - which they would need to do to pay the Glazier's a premium - otherwise the Glazier's just sit tight and take the money.

Agreed, but they are still reluctant to 'miss out' on any potential video return.

Once this approaches viability they as businessmen can sell out this potential and let others wait for the return it will no doubt contain or am I being naive in understanding the way business works ?

 

[nmc]

But did UEFA look at or ask any questions regarding United's Chevrolet deal?

Global marketing chief Joel Ewanick was axed less than 48 hours after it was announced the Chevrolet badge would be ­emblazoned on the United shirt from next season.

But GM executives were furious when they learned their company would be paying £6m a year more than United’s current shirt sponsors Aon.

It has also been claimed Ewanick failed to give his bosses the full details of the sponsorship before signing the deal.

Unfortunately with Gill and now Woodward being part of he UEFA machine, United's influence and UEFA will only grow and be cemented.

Chevrolet sold just 23 cars in the UK in June - down from 1,299 in June 2013. Ford sold 31,000 cars and Vauxhall 25,000 cars in the same month. Year to date Chevrolet have just 0.21 of the UK car market - I doubt it's an awful lot better in the rest of Europe. The United deal is obviously seen as a way of launching their brand into the mainstream (but they are paying a kings ransom for some brand awareness). Their products a re notoriously poor and are largely unsuited to the European market. GM already has a relatively successful brand in the UK in Vauxhall and in Europe Opal - so really not sure why they are splurging money on this scale - to create an inferior competitor brand.

 

[richards30]

I wonder if nike want to sponsor a nice new campus bridge??? :-)

 

[nmc]

I think the Glazer's would sell if they were offered the right money.
Surely its cash cow status will be taken into consideration with any acceptable bid to them ?

I think it is more likely that they are waiting to see if they can get more money for MUFC via the ever changing streaming video route to mobiles (instant replay of goals etc.).

Problem is; if they are maxed out on every deal how can anyone else buy it and make a greater return - which they would need to do to pay the Glazier's a premium - otherwise the Glazier's just sit tight and take the money.

Agreed, but they are still reluctant to 'miss out' on any potential video return.

Once this approaches viability they as businessmen can sell out this potential and let others wait for the return it will no doubt contain or am I being naive in understanding the way business works ?

I'm not saying the Glazier's won't sell but it's unlikely. They have a very highly leveraged business; which still makes them millions per year. I.e. the business pays the interest on its leveraged borrowings, it makes a healthy profit and they get to take millions out of the business annually. For the Glaziers in the short term, that's as good as it gets. Therefore the only way that they would sell is if someone offered them a huge multiple of its value - but another investor will only offer a sizeable multiple - if they can be sure to grow the business and increase revenues etc. Unlike most other takeovers and acquisitions - Football clubs are stand alone institutions with little or no opportunity for savings from a merger of activities operations. Personally, I very much doubt anyone could increase the earnings of Man United over the next 10 years - in fact I think a number of their sponsors have overpaid - including Adidas and Chevrolet. You have to ask why Nike who were closer to the kit deal than anyone didn't think the numbers worked even with significantly lower figures.

 

[FanchesterCity]

At some point, there's a limit to getting a return on investment with sponsorship (kit manufacturing in this case). Even if it's not tangible sales, and it's brand awareness / association etc etc, there are limits.

It seems Nike believed they'd reached those limits, or had squeezed enough recognition out of their United association, and thus moved on / dropped out.

It's slightly add that Adidas should see fit to offer significant more. Why would they do that, unless they needed to to win United? very odd. If Nike truly did pull out that would leave United seeking a new kit manufacturer. There was a chance nobody would pay what Nike had... but that's not transpired.

Either United have bluffed Adidas into such a high deal, or they had other sponsors prepared to bid similar figures.

FFP does nothing to resolve this big brand dominance. As many before me have suggested, it actually cements it. 'Fair Play' is the biggest misnomer.
We can't really complain about what United are able to do... it's precisely what we've been doing - using our spending power to beat others.

Our efforts are hampered, theirs aren't, but still, even our hampered efforts are an advantage over most clubs.

But whilst we should accept that what we are doing is what United are doing, they must do the same. They are buying their improved chances of success in the same manner we are, and FFP in its current guise isn't curbing money buying advantage on the pitch, it's only tilting it towards the old guard.

 

[Shaelumstash]

When we are regular CL quarter finalists, and have another 5 trophies under our belt probably.
I still think we're considered slightly 'flash in the pan' at the moment. Far more credible now that 4 years ago but still not established as such. The public are STARTING to believe we aren't going away. I think the sponsors and kit manufacturers won't be far behind them.

I think you can balance that argument with the fact that we have more players that sponsors want to see on the back of the shirt and that virtually all of them are decent human beings and 'good role-models'. This is true throughout the team, be that a world star like Aguero or someone like Joe Hart who is very marketable in his own right as the England keeper (as evidenced by the ridiculous amount of ads he is in). I don't think I am being biased in saying that the rags can't offer that at this moment in time. We should have negotiated a better deal.

I think there's a distinct difference between a kit manufacturer and a sponsor though. A kit manufacturer's profit from such a deal is hugely influenced by shirt sales, which in turn correlates very closely with fan base (not 100% correlation, but not far off). A sponsor is far more concerned with exposure and association with a successful, clean living club.

Obviously there's a bit of crossover, but the two are different.

You should see Liverpool and United on matchdays, full of tourists buying up shirts, and matchdays are only a fraction of the worldwide sales.

Joe Hart's global recognition is nowhere near that of Rooney. Aguero might be on a par with Van Persie, difficult to say. Man United STILL benefit from the Beckham shine! Right now, United are at a low ebb, and we are on a high, but they'll still beat us in player awareness around the world. It's take a good while to knock them off their perch I'm afraid, but brick by brick, we can dismantle them!

I understand your point, but the adidas deal with the Shite just doesn't stack up purely on shirt sales. It's one of the reasons Nike pulled the plug.

The Shite sell 1.4m shirts a season. Let's say they're £50 a pop, that's only £70m turnover. That's before you've taken manufacturing, shipping, retailers margin and taxes out.

adidas are paying them £75m a year, there's absolutely no way that is profitable from a purely shirt sales point of view. They are paying a premium for the brand exposure The Shite gives them in the far east, and so they can say they've got a bigger dick than Nike.

 

[FanchesterCity]

Problem is; if they are maxed out on every deal how can anyone else buy it and make a greater return - which they would need to do to pay the Glazier's a premium - otherwise the Glazier's just sit tight and take the money.

Agreed, but they are still reluctant to 'miss out' on any potential video return.

Once this approaches viability they as businessmen can sell out this potential and let others wait for the return it will no doubt contain or am I being naive in understanding the way business works ?

I'm not saying the Glazier's won't sell but it's unlikely. They have a very highly leveraged business; which still makes them millions per year. I.e. the business pays the interest on its leveraged borrowings, it makes a healthy profit and they get to take millions out of the business annually. For the Glaziers in the short term, that's as good as it gets. Therefore the only way that they would sell is if someone offered them a huge multiple of its value - but another investor will only offer a sizeable multiple - if they can be sure to grow the business and increase revenues etc. Unlike most other takeovers and acquisitions - Football clubs are stand alone institutions with little or no opportunity for savings from a merger of activities operations. Personally, I very much doubt anyone could increase the earnings of Man United over the next 10 years - in fact I think a number of their sponsors have overpaid - including Adidas and Chevrolet. You have to ask why Nike who were closer to the kit deal than anyone didn't think the numbers worked even with significantly lower figures.

As far as I can see there's basically a few decent (if unlikely) reasons to sell:

1) A company believes they can make more money out of the club than you can, and thus offers you what you're already making plus a little more... (but less than the extra they can make). So let's say you make 100 million from a club, and the potential buyers reckon they can make 120 million out of it, they can purchase it from you for 110, giving you a bigger profit than you'd normally get, plus still making money for the new buyers.
This only works if they CAN make more money out of the club though, and United are probably being very well squeezed / run already.

2) A buyer has more faith in the long term future of the club than the current owners.
If the current owners start thinking the future is looking a bit more risky than they are comfortable with, a buyer might offer to buy the club at an attractive price that's not far short of that the current owners HOPED to make from them, but removing all the risk. Of course, the buyer's faith needs to be justified.

3) The current owners needs the money!
The classic situation. For whatever reason - sometimes, things go pear shaped elsewhere, and it means the owner needs to sell. It's not impossible that such a situation could happen with the Glazers.
Sometimes it might not be a distress sale either... it might simply be that they need 1 billion for a BETTER investment elsewhere. If that happens, they either borrow another billion and have both investments running, or they shift the United investment. Shifting their investment isn't so far fetched.