No limit to Reds commercial gain – now for squad renewal

July 16, 2014 Tags: , , Reads 26 comments
featured image

It is, in every sense, an extraordinary deal. Some 13 years after Manchester United first hooked up with Nike, executive vice chairman Ed Woodward has brokered a shirt manufacturing contract with adidas that is worth at least £750 million to the club by 2025. Possibly substantially more. It is a deal that underlines United’s enduring global appeal despite the damage inflicted both by David Moyes and the Glazer family’s ownership. Now, supporters trust, Woodward will flex United’s commercial muscle once again – to deliver big name signatures that lead the club’s revival under Louis van Gall.

The adidas numbers are, indeed, staggering – a deal that represents a three-fold increase on the contract United holds with Oregan-based Nike, and one that will add around 40 per cent to the club’s bottom line from June 2015. Or, in other words, a material impact on United’s finances at a time when a lack of Champions League football has left a £40 million black hole.

The American company claimed last week that spending some £75 million each season does not represent “good value” for Nike’s shareholders. adidas’ rejoinder was stark – CEO Herbert Hainer boasting that the German company expects “total sales to reach £1.5 billion” over the decade-long contact. One that supports Woodward’s decision to play a game of brinkmanship with a clutch of global kit manufacturers as Nike’s contract ran down.

Indeed, in the global battle for sportswear supremacy United is a pawn set to profit handsomely. In fact so large is the new contract that revenue from adidas in 2015/16 will exceed the £64 million United received from the Premier League broadcast pool last season, making the kit deal the single most important source of ongoing income.

And when put in the context of both United’s historical kit deals, and the global market, Woodward and his commercial team has broken new ground. The total value of Nike’s then record-breaking £302.9 million contract, signed in 2002, has been more than doubled. Meanwhile, United’s new deal outstrips those of rivals Real Madrid, Barcelona and Liverpool by more than £40 million per season.

Or to put the numbers into context, the £75 million that United will receive from adidas is only just shy of the turnover Sunderland and Aston Villa posted in 2012/13. United’s three principal sponsors alone – Adidas, Chevrolet and Aon – will generate income in excess of 14 rival Premier League clubs. Such is the impact that it is no stretch to argue that Woodward’s commercial strategy has reinvented how many clubs now view monetisation.

Just hours after United announced adidas as a record sponsor, the club paraded Japanese noodle firm Nissin as a regional partner, adding to the multi-year sponsorship deal with Korean Pharmaceutical company Cho-A Pharm, reported in June.

In April it was a partnership with curry firm Ottogi and one with Asian confectionery company EuroFood. And in 2013 “Personal Care and Laundry Partner” Unilever was brought on board, along with tyre manufacturers Apollo and Federal Corporation. The club has held longer relationships with Kagome, Bulova, Bwin, Casillero del Diablo, Singha, Aeroflot, Aperol Spritz, Epson, Yanmar, Kansai, and a string of regional telecoms companies.

Each is a smaller, but cumulatively lucrative, junior partner to the £53 million-a-season contract signed with principal shirt sponsor Chevrolet last year that has helped to drive United’s commercial income way beyond £150 million per year.

The new income will help to fill some of the void left by the lack of Champions League this season, which leaves the club short of matches, prize money and likely short-changed by special covenants on some of its commercial arrangements.

Yet, supporters have long-held the view that money – to bastardised Sir Matt Busby – is far better spent on the pitch than sitting in the bank; and certainly nowhere near the Glazer family’s pockets. It is a view held in tandem with a suspicion that Woodward is far better at signing sponsors than he is navigating the European transfer market.

This charge has only partly been rectified by the acquisitions of Juan Mata, Ander Herrera and Luke Shaw over the past six months. After all, long remain the memories of summer 2013 that brought mirth to rivals, embarrassment to United, and Marouane Fellaini to a level beyond his limited ability.

This summer, with van Gaal arriving at Carrington on Wednesday after a successful World Cup with Netherlands, is billed as one of renewal. Herrera and Shaw will add silk and steel to United’s midfield and defensive resources, but popular opinion still has it that United is some way short of rivals both home and abroad.

It is an observation that leaves van Gaal seeking, perhaps, another four more high quality reinforcements, while more than half-a-dozen players will be removed from the club if suitable buyers can be found. Certainly none of United’s expenditure this summer – if Woodward can pull off the deals – is likely to be at the bottom end of the market, reversing years of relative parsimony under the Glazer regime. In spectacular fashion at that.

The Dutchman is believed to be after an experienced central defender – with Rio Ferdinand and Nemanja Vidić having left Old Trafford in May – a box-to-box midfielder, and a sprightly winger. Anderson and Bébé will certainly go, while few of Nani, Shinji Kagawa, Darren Fletcher, Javier Hernández, Ashley Young, Tom Cleverley, Wilfried Zaha, Chris Smalling or Fellaini are secure at Old Trafford.

Nor would many be truly missed. With no European football van Gaal need not work with the full 37-man first team squad he inherits, albeit one that includes half-a-dozen youngsters such as Will and Michael Keane, Jesse Lingard, James Wilson and Nick Powell.

Yet, the new man has just a month until United’s first Premier League match against Swansea City on 16 August; just six weeks until the transfer window closes on 2 September. Enough time, one suspects, for Woodward to close yet another sponsor in a far-off land. Or, perhaps, to add the final touches to a squad that simply must finish in the Premier League’s top four if van Gaal is to retain his job – and the Old Trafford bean counters are to remain content.

Anything less is unthinkable. Then again, few thought United would extract more than £750 million from a kit supplier. Woodward, it seems, is now central to both goals.

26 comments

John Madden - July 16, 2014 Reply

I hope they don’t go with that horrible adidas logo it reminds me of Liverpool. Its got to be the original adidas trefoil logo for me!

David Shankland - July 16, 2014 Reply

all too quiet again for me…hope it is before the storm

Nav Rahal - July 16, 2014 Reply

We are going to see what the intentions of the glazers are in the coming years. They are either going to use that revenue to bring in some world class talent, build the greatest team the world has ever seen, and pay down that debt, or they are gonna take most of that money out to fund their other business interests whilst spending minimal amounts of money to keep United competitive.
Somehow I’ve got a feeling it’s going to be the latter :S

MS Assefa - July 18, 2014 Reply

I think blaming only the Glazers for all uniteds failings is just getting quite ridiculous . What about the leeches who drain blood from the leeches themselves ie the Charltons, etc of the world. They surely get a handsome amount per annum to “ambassador and be board members” so where were they when Moyes was suggested? Where were they when the club pays a ridiculous amounts of money for the likes of Fellaini and yes Shaw and what about that idiotic Rooney contract extension? Arent they the “footballing people” of the club?

As one blogger on another site said “If Arturo Vidals name was Arthur McVidle we would have already bought him for 70 milion by now”. This are the kind of outdated xenophobes who are in charge of the footballing side of things at United. Unless this side gets an overhaul and all this old men are removed there is no going forward. We need professionals with European expirience as technical directors etc.

So please let us stop this idiocy. The Glazers are and will always be leeches that is a FACT. But let us not forget SAF was their prime ally in the clubs takeover. They are business people who know nothing about football BUT they HAVE invested in the past year. The problem is the so called British squadron running the footballing side of the club.

giggyjon - July 16, 2014 Reply

This is a truly staggering commercial transaction and you can but commend Woodwood for delivering what are potentially game changing numbers.

The model is now clear and United will whore ourselves all over the world, become the official partner of this and that irrelevant corporates, but in doing so develop brand awareness in as many global markets as feasible.

This in turn will create more United fans, they’ll want a United adidas shirt and everyone is happy. The success of this model long term is however to a large extent predicated by success on the pitch.

I agree that we potentially need another four players, and would love all the obvious suspects like everyone else. It is however concerning that we have rarely closed these kind of European super deals in the last 10 years,never mind in the post-Gill era.

Woodwood needs to learn how to close transfers, and appreciate that playing Nike, Warrior and Adidas off against each other to engineer a huge commercial win, is a different game to closing a deal with a European based agent and clubs who rarely wish to sell the players that we want to get. This is where network is king and I am sure Ed W is probably more like a queen. He has to sort this or get in some help.

Aside from this, and assuming we do get another two players minimum into the club (and these must be top players), then I could not be more excited about the new season. I am expecting a huge reaction from all the players and a big step up in performance from last year. This combined with some quality new signings, the introduction of a couple of youngsters from Wilson, Powell, Zaha, Keane, Keane, Lingard or Lawrence, and 3rd place in the league will represent a very good first season.

Can we have a podcast next week please on the first week in the job for King Louis.

Subterranean Steve - July 17, 2014 Reply

As far as United “will whore ourselves all over the world…..”, you’re dead right.

To finish top of the heap in the Premier League these days you need lots of income. So, whether it’s forging commercial partnerships with all and sundry or fluking a mega-rich sugar daddy with the deepest of deep pockets, it’s all about selling your body. The soul of course, disappeared years ago.

Must be why they call it, ‘being on the game’.

giggyjon - July 17, 2014 Reply

Just realised I have written an article about the TV character from the 1980’s The Equalizer. I think the poor chap has now passed away, but had he still been alive and in charge of United then I am sure we would have signed Vidal by now!

Denton Davey - July 17, 2014 Reply

“It is a deal that underlines United’s enduring global appeal despite the damage inflicted both by David Moyes and the Glazer family’s ownership.”

You just can’t resist taking a swipe at the Glazers. Since 2005 – when the Glazers took over a team that had finished 2nd/3rd for the previous couple of years – UTD had an unparalleled period of success: three CL finals and a string of EPL trophies. Of course, you might want to credit this to SAF but he performed that magic under the ownership “model” that the Glazers implemented.

Really, the swipe at Moyes is fully justified but I fail to see how the owners were more than pawns in SAF’s game in that regard.

Hopefully, having sidelined Fergy from the selection of the new manager, we can go back to business-as-usual on the pitch.

Subterranean Steve - July 17, 2014 Reply

And you can’t resist taking a swipe at anyone who criticises the Glazers.

Christopher CULP - July 17, 2014 Reply

The Glazers were blessed to have SAF, without him the anti glazer protests would have just gotten louder and louder. They needed a world class manager, but I am afraid that with this money it won’t go to paying off ALL the debt AS IT SHOULD AND CAN. Operating costs of less than 100 million pounds last year. If they don’t pay tit off they are bastards.

Denton Davey - July 17, 2014 Reply

Hardly.

But, in this case, the comment was ludicrously over-the-top.

After 2005, MUFC enjoyed a sustained period of great success; then, last season – for whatever reason – AgentMoyes was given (yes, “given”) the keys to the kingdom. He was fabulously incompetent and the success seemed to vanish in-the-blink-of-an-eye.

My point was that however one apportions the “blame” for the appointment of AgentMoyes, it is only fair to acknowledge the huge successes since 2005. Instead, the offending sentence took a quite-gratuitous swipe at the wrong target.

I’m not going to claim that I’m happy with an ownership that has sucked money out of the club to pay for their leveraged-buyout BUT, equally, that same ownership has been assiduous in raising the club’s commercial revenue by leaps-and-bounds. And it has been Edward Woodward – often called “WoodenHead” (or such like) – who has been in charge of that side of the business.

Yep, it’s a business for the owners – for the fans, it’s not. That’s too bad, eh ? It’s also the reality of vampire capitalism – and the clock won’t get turned back. For that reason, I just don’t understand the spurious resentment directed against the Glazers’ ownership because it seems to have little relevance to the “product” on the field. Clearly, money is no problem – if anything, the real “problem” was SAF’s ability to squeeze great results while not really spending significant amounts of money on player acquisitions; and when he did spend money after the Vidic/Evra bonanza, it was usually not well spent. Can you really blame the owners for that ?

Andy - July 17, 2014 Reply

The Glazers happend to take over at a time when the squad and in particular Ronaldo were starting to peak so anyone could have been in charge. I dont remember the Glazers coming in, spending a load of cash to enable us to be successful.

the real deal - July 17, 2014 Reply

It amazes me that every season at this time, we are still struggling to buy quality players. Here it is about 5 weeks before the season starts and all of our so-called targets are going elsewhere. As I see it now, we will not make the top 4 and another manager will be gone before the season ends. Chelsea are so strong now with their new signings, got to be the best team in the world and if they sign Pogba, this team is in a class of its own. Arsenal, Man. City, Liverpool and now Newcastle are way ahead of us in quality. Unless we get our targets within the next three weeks, be prepared for another miserable season. I’m sure Antonio Conte will be checking are results very closely. He could be the next manager sooner than you think!

Felderkirk - July 17, 2014 Reply

Must feel weird for United fans. Having spent years hypocritically criticising the likes of City and Chelsea because of their “sugar Daddy” ethos (because corporate sugar Daddies don’t count apparently – massive global commercialism doesn’t effect football’s ‘level playing field’), now United are worse than either of them.

Granted, this is mere trolling, and I’d gladly like to be in your position. But United fans can’t keep up the “traditional club” act anymore, surely.

Ed - July 17, 2014 Reply

Felderkirk – I can’t help wondering where the sugar daddy is at United? Given that the Glazers have sucked more than £600m out of the club since 2008 yours has to be the worst piece of lame trolling I’ve ever read. Your second comment has been deleted. The personal insults levied expose you to be just another low rent keyboard warrior. Piss off, don’t come back.

Red Dave - July 18, 2014 Reply

The moderating on this blog is just brilliant, I couldn’t recommend United rant enough to a United fan (or all fans). Long may it continue!

The Goat - July 18, 2014 Reply

lol

Pingback: RoM Reads

Cliff1961 - July 17, 2014 Reply

Adidas would not have agreed to this deal if they had not been assured by the club that the very best players would be wearing their shirts, so heavy investment will be made.
Smalling, Jones, Cleverley and other assorted über dross do not sell shirts.

Thomas - July 17, 2014 Reply

Thats what Ed is good at, bringing in commercial partner, every week a new sponsor is announced so for that fair play, Totally different in dealing witth clubs and agents in transfer dealings, I think Ed should stick to the commerical side of things for which he excells and another man should come in to deal with transfers, Ed is simply not a football man.

the real deal - July 17, 2014 Reply

And now I see today, Chelsea are preparing a 60 million pounds bid for Progba.
There must be something wrong with the way Woodward and others do their business when it comes to buying players.
Why do we keep struggling every season to buy our targets. I am sure van Gaal is going to be pissed off if we fail to bring in the players he wants. That just puts him under more pressure to keep his job beyond Christmas. Can’t just blame Moyes or van Gaal for team failure if Woodward keeps failing to buy quality players.

the real deal - July 18, 2014 Reply

I don’t know if any of you have been reading the sports news but van Gaal in a press conference today said he is not looking to buy anymore players. He said he will look at the players he has for the next two to three months and then decide who needs to go and who he needs to bring in. Fans on other websites are furious and real angry by his comments. What makes it worse, Carrick has fractured his ankle and will be out for three to four months through injury.

The Goat - July 18, 2014 Reply

LVG will do just fine.

Although we do need a couple of fresh faces I am more looking forward to seeing who LVG chooses from our current squad to go into his 23 man core of players. We have some cracking youth players ready to come though and some of the players that haven’t had great opportunities under SAF and AgentMoyes may fit into the LVG revolution. We have already seen the mans ability to take young players and low key faces to a world cup semi final and we have better players than the dutch national team.

hello sunshine 🙂

David - July 18, 2014 Reply

If addidas are stupid enough to pay this obscene amont of money you cant blame the Glazers. However let no one forget how the carpetbaggers from Florida have screwed this club for the past 9 years or so, automatic cup scheme, huge ticket increases early on, severe lack of QUALITY investment in players coming in exc van persie ) their deperation in hiking this club around the world to get it listed on the stock market, how they took a massive % from the float offering to line their own pockets ( contrary to promising to pay debts down, the Ronaldo money which disappered and was never reinvested, complete lack of communication with the fans, oops I forget, they did his on the first day they took over! They would sell OT tomorrow if it earned them enough money buy, I have thought for some time we have our Football Club were the brand is being debased by all the massive sponsorship, United f…knickers/condoms anything where they can sell the club’s name and get cash in. Successful, without a doubt -sickening/repugnant/obscene -never lose sight of the fact that match day revenues continue to decline as a % of income. The commercial side is bigger and more important than our team. As the old saying goes – reap and yee will sow

LOVE UNITED HATE THE GLAZERS

Senna - July 18, 2014 Reply

“The commercial side is bigger and more important than our team.” Funny you say that. That’s what LVG basically said on the presser if you read between the lines. Can’t wait for all the promises about investing turning into nothing as usual. “Biggest club in the world, but not on the pitch” Sure is right about that.

the real deal - July 19, 2014 Reply

And today van Gaal said in a “live” interview with the press that he has informed the owners that he will need two years to rebuild the team. He said he will not be buying anymore players this season, but intends to rebuild from his academy players and premier division players and once he has looked at all his in house players, he will then decide which players need to go and what players he needs to buy. So as I see it and from what he is saying, we will not make the top 4 this season. He is talking the same talk as Moyes, saying it is going to take time to get back on top and he is asking for the fans to be patient. This is bullshit! If van Gaal does not bring in any more new players, we will struggle worse than last season with this current no quality players that we have now.

Add your comment