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Manchester United signs lush Nike deal

  • Nike (NKE -0.9%) has signed a record sponsorship deal with Manchester United (MANU +4.8%), according to a report from The Daily Mirror.
  • The club will bring in £600M ($998M) a year from Nike in a new 10-year agreement which begins when the current contract between the two companies expire next year.
  • The team is currently in 6th place in the English Premiere League, an uncharacteristic position which is expected to prompt lavish off-season spending for new talent.
Comments (10)
  • uncledace
    , contributor
    Comments (87) | Send Message
     
    Its 600 Million pounds for the whole contract, not per year.
    10 Mar, 03:34 PM Reply Like
  • civ-e
    , contributor
    Comments (316) | Send Message
     
    i hope you're right. reading the $1Billion/year almost had me logging in and selling my NKE shares.
    10 Mar, 04:00 PM Reply Like
  • uncledace
    , contributor
    Comments (87) | Send Message
     
    Haha yeah. 100 Million a year is still twice as large as any other shirt deal for another European team.
    10 Mar, 04:20 PM Reply Like
  • civ-e
    , contributor
    Comments (316) | Send Message
     
    i'm in no position to question their marketing but i really wonder what the actual returns are (based on the best studies, at least) on these hundreds of millions they practically give away to athletes every year, not that it could be quantified to an exact degree.
    10 Mar, 04:36 PM Reply Like
  • uncledace
    , contributor
    Comments (87) | Send Message
     
    Yeah I hear you, I don't have a position in Nike, but do in Manchester United. So I am happy about the deal, but it is ridiculous how much they pay to have their name on a jersey.
    10 Mar, 04:59 PM Reply Like
  • Vardaman
    , contributor
    Comments (3) | Send Message
     
    It's a ridiculous amount to pay. People expect to see the Nike logo anyway. No big deal to see it on a shirt.
    10 Mar, 05:37 PM Reply Like
  • dafjev
    , contributor
    Comments (23) | Send Message
     
    Firstly, these types of rumors have been on for over a year and so far nothing has been agreed. In fact if you go back in time you will see that only a few months ago the rumors were for a deal of £80m-£90m per year and this was what analysts initially projected and included in estimates for FY14...that obviously didn't happen so earnings forecasts were downgraded by >50%.

     

    civ-e, Nike, Adidas, etc. enter these deals to acquire the right to sell jerseys and other merchandise. Having their logo on the shirt is a secondary benefit. They only enter a deal if it is profitable from a merchandise sales perspective...it has very little to do with branding. This is why Nike walked away from the Arsenal deal and left it to Puma who was desperate to get their name on a football jersey again. This is also why the negotiations with Nike are taking so long. nike is not interesting in paying a ridiculous price and these press reports are usually just the result of MANU leaking numbers in the press to try and pressure Nike into paying up.

     

    uncledace, i would love to hear your rationale for owning stock in a business that generates practically no earnings and has publicly said that its cash flow will deteriorate going forward, competing in a market where all its competitors are irrational?
    11 Mar, 06:25 AM Reply Like
  • civ-e
    , contributor
    Comments (316) | Send Message
     
    dafjev, thanks for the additional insight into the merchandising rights vs branding.
    13 Mar, 04:09 PM Reply Like
  • uncledace
    , contributor
    Comments (87) | Send Message
     
    Because I enjoy owning a part of a team that I support. It isn't a big position by any means, but its still nice to be an owner of something you support.
    11 Mar, 09:45 AM Reply Like
  • dafjev
    , contributor
    Comments (23) | Send Message
     
    Got it...it's like betting that your team will win...if they lose you are down emotionally AND financially (as is the case so far this season)....enjoy the ride
    11 Mar, 10:10 AM Reply Like
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