Manchester United seek to increase £303m kit deal

Club expects big increase in any future Nike deal as latest figures reveal debt down by £62m

Manchester United demonstrated their commercial might yesterday as they made it clear that Nike faces having to substantially increase its 13-year £303m kit supply deal to maintain its association with the club.

Nike is due to begin an exclusive six-month negotiating period with United in February over the current kit supply deal. Having concluded an unprecedented £357m deal with General Motors for the Chevrolet logo to be worn on their shirts for seven seasons from 2014 and bought out the present deal with DHL for United's training kit in the belief they can find better value, the club were bullish about improving on the Nike contract yesterday.

United announced they had reduced their gross debt in the financial first quarter by nearly a fifth, after the Glazer family used the proceeds of the club's flotation to pay off £62.6m of bonds.

The debt still remains a mighty £359.7m, a figure which it would take another five years to clear even if no money was spent on transfers, the analyst and United specialist Andy Green observed yesterday. The club, whose shares have slipped by seven per cent since their £1.5bn initial public offering (IPO) float on the New York Stock Exchange in August, posted profits after tax of £20.5m to September, against £5m during the same period last year.

But United's commercial clout continues to grow, as Nike is discovering. "We feel we know, with some clarity, the value of our rights, and we are bullish about the abundance of opportunities available to accelerate the growth of this business," United vice-chairman Ed Woodward said of the Nike deal. "The planning on DHL started post-GM deal. Our six-month negotiating window with [Nike] starts in February. We look forward to sitting down with them then."

United officials do not see the way the Nike deal is structured fits with the more commercially aggressive Glazer regime. When the present deal was negotiated in 2002, United were a publicly floated company and preferred to take as much risk as possible away from any sponsorship tie-up. It meant a profit-share arrangement was put in place which ensured United received only a proportion of the cash generated from worldwide shirt sales in exchange for a guaranteed sum. The Glazer family have not gone down the same route.

Nike now pays the French Football Federation almost £40m a year, without a profit-share arrangement, for a seven-year period that began at the start of 2011-12. Sponsorship revenues from 10 deals enabled United to post a 32 per cent increase to £27.8m for the three months to 30 September.

An "exceptional item" of £3.1m related to professional advisor fees in connection with the IPO is part of what is estimated to be an overall spend of £550m in interest and fees since the Glazer takeover in 2005. United received £2.5m as a result of being an Olympic football venue, plus £1.3m in compensation for players appearing at Euro 2012.

Facts in figures

1.5 Billion pounds, the value of United's shares in August.

359.7 Manchester United's debt, in millions of pounds.

7 Number of years the Glazer family has owned United.

13 Length in years of United's deal with Nike, which ends in 2015.

Have you tried new the Independent Digital Edition apps?
Caption competition
Caption competition
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before