Skip to main content

Sponsorship challenge for United

One thing that has always given Manchester United an edge over their rivals is the sophistication of their commercial operation which has managed to sell obscure sponsorships to remote parts of the globe.

Despite an 11 per cent drop in revenues, compared with the same period a year ago, to £59.4m, the income from sponsorship was more resilient than broadcasting and match day income. They fell almost 60 per cent and 77 per cent respectively.

However, sponsors deferred over £80m of payments to United. The club has gone to great lengths to ensure that cash from commercial partners continues to flow, for example allowing General Motors’ Chevrolet flexibility in its remaining payments as the team’s main shirt sponsor.

But as well as protecting the value of its current contracts, the club is looking for a new shirt sponsor ahead of the expiry of the $559m seven-year deal with Chevrolet at the end of the current Premier League campaign in summer 2021.

It’s not the first time Richard Arnold, group managing director, has dealt with sponsorship worries. AIG’s logo was emblazoned on the Red Devils’ shirts when the insurer had to be bailed out during the financial crisis.

We’re none the wiser as to whose logo will adorn the famous red shirts once the Chevy deal ends. And United’s results showed that the partners have agreed to extend the deal to the end of 2021 because of the “disruption caused by the pandemic” at no extra cost to Chevrolet.

So is United undermining the value of its own shirt by giving Chevrolet an additional six months ostensibly free of charge? Not exactly. Just think of the cancelled fixtures and the diminished spectacle of games without fans. Plus, GM has its own problems.

Trickier still is that the extended deal ends in the middle of 2021/22 season, potentially creating an issue for Adidas, the club’s kit supplier, given that new shirts traditionally go on sale in the summer.

Striking a timely deal could allow United to resolve its predicament. There’s precedent for compensating partners to end a deal early, and doing so would allow the next sponsor to paste its logo onto United’s shirts ahead of the season start.

The search will test United’s ability to sign a new shirt sponsor on attractive terms at a time when many companies are cutting their sponsorship budgets.  If United find it difficult, that doesn't bode well for other clubs.

Labels:

Comments

Post a Comment

Popular posts from this blog

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...
1 comment
Read more

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...
Post a Comment
Read more

Fulham requires big funding from owner

After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...
Post a Comment
Read more