Adidas replaces Nike as Manchester Utd kit sponsor in £750m deal

Adidas has announced it will replace Nike as the kit sponsor for Manchester United in a £750m ten-year deal it hopes will generate an additional £1.5bn sales throughout the partnership.

United could open up emerging markets for Adidas, particularly those in Asia where it has a limited presence.

The move confirms long-running rumours that peaked last week (8 July) when Nike ended its 13-year tie to the club due to the price of the signing an extended deal. It kicks off from the 2015/16 season and is worth £75m a year, pushing it past Adidas’ £31m Real Madrid deal to be the biggest kit tie-up.

Adidas will also have the exclusive right to distribute co-branded merchandising products worldwide.

The multi-million pound union is a fillip to the company’s renewed push to exploit the global scale of the Premier League, where Chelsea FC is the only other top English club it sponsors. The club is understood to have sounded out Arsenal last year when its deal with Nike was axed before Puma bagged the rights.

Additionally, the brand will hope to mine United’s strong supporter base in Asia to bring football sales closer in line with its fast-growing Adidas Originals & Sport Style range, which grew 7 per cent in 2014.

Herbert Hainer, chief executive of Adidas, said: “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 £1.5bn during the duration of our partnership.”

The timing of the announcement should lift positive perception and awareness for Adidas, when both are at a high in the UK after its sponsored Germany team was crowned World Cup champions last night (13 July). The kit maker says the tournament has been an “outstanding success” for driving engagement and sales and it will take the learnings from its sponsorship campaign into activity around the upcoming domestic seasons.

Kenny Ager, head of strategy for Asia Pacific for sports marketing agency Sports Revolution, says: “It’s a great coup for Adidas. Not because Nike are a rival but because Manchester United have over 600 million fans around the world. The number of official shirt sales from all over the world on just that figure alone would contribute a large proportion to Adidas’ initial outlay for the rights.

“The question is how many of those will be official and unofficial shirt sales. In Asia, where United is most popular, there is a huge unofficial market. For [fellow United sponsor] Chevrolet, that’s not a bad thing because brand exposure is brand exposure but for Adidas the value of their deal is in the ability to sell official shirts rather than brand awareness.”

The deal bolsters United’s commercial credentials, which took a knock earlier this year following the club’s failure to qualify for the Champions League for the first time in 18 years. Sponsorship experts at the time predicted the club would need to shake-up their strategy with new revenue streams and brand partners to offset the missing broadcast revenues from UEFA.

The club’s seven-year deal with Chevrolet, said to be worth £50m a year, starts this summer and will also allow it to offset any negative impact in the short-term.