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.