Manchester United news: Failure to qualify for Champions League will see club face Adidas sponsorship penalty

United could lose more than £20m in sponsorship income should they fail to finish top four

United is in its second season of a 10-year, £750m deal with Adidas

(Getty)

Manchester United are at risk of triggering a financial penalty in their £750m kit deal with Adidas should they fail to qualify for this season’s Champions League.

United will suffer a 30 per cent cut to their annual £75m payment from the German sportswear giant if they finish outside of the top four. This means the club will lose more than £20m in sponsorship income.

However, it’s believed the total £22.5m deduction would be spread over the full 10 years of the current contract.

United would therefore pay a catch-up penalty fee of £4.5m for the first two years of the agreement and then suffer a deduction of £2.25m from the annual £75m payment for the remainder of the contract.

Adidas is in the second season of its 10-year, £750m deal with United.

Executive vice-chairman Ed Woodward confirmed the details of the looming financial penalty to club investors on Thursday.

Despite spending close to £150m to bring in the likes of Paul Pogba, Zlatan Ibrahimovic, Henrikh Mkhitaryan, United currently sit sixth in the league – six points off fourth place and eight points behind table toppers Liverpool.

The side face Arsenal at Old Trafford on Saturday with the opportunity to reduce the gap between themselves and the Gunners to three points.

Woodward remains optimistic that the club can turnaround their disappointing start to the season having only won five of their opening 11 Premier League fixtures.

"On the pitch, it is still early in the season," he said. "We have 27 more Premier League games to play and have advanced to the quarterfinals of the EFL Cup."

United's failure to qualify for this season's Champions League has already had an impact on their 2016-17 finances.

First-quarter revenue - to 30 September - was down £3.4m (2.8 per cent) to £120.2m, with matchday income down 32.3% to £16.8m.

The reduction in income is largely down to United playing three fewer home games than in the same period in 2015.

Debt has risen 18 per cent to £337.7m, due to the fall in the pound against the dollar since the Brexit vote.

Speaking about the club’s financial figures, Woodward said: "Our financial results for this quarter reflect the impact of our non-participation in the Uefa Champions League."