Nike could strip United of kit deal if decline deepens

Nike will consider terminating its lucrative 13-year £303m kit deal with Manchester United unless the club's on-pitch fortunes improve, a senior executive has warned.

Nike will consider terminating its lucrative 13-year £303m kit deal with Manchester United unless the club's on-pitch fortunes improve, a senior executive has warned.

To make matters worse for Sir Alex Ferguson, it has emerged that the manager is facing an annual transfer cap of £26m per year under Malcolm Glazer's regime, which will decrease the chances of United buying their way back to success. If the Nike deal falls apart, finances could become tighter still.

Nike's decision has nothing to do with Glazer's £790m takeover at Old Trafford, according to Ian Todd, Nike's vice-president of sports marketing.

Instead, his company is concerned about United's lack of major honours in recent seasons, and may choose to trigger a get-out clause in July next year which would cancel the agreement beyond the 2007-08 season.

Although the deal, signed in August 2002, will have been worth a minimum of £133m to United by 2007-08, the uncertainty beyond that will not help Glazer or United.

"We don't know what is going to happen next year. All options are open," Todd said. "Chelsea won the League this year, Arsenal won the FA Cup and Liverpool won the Champions' League. So you could argue that Manchester United is only the fourth-best club in England at the moment.

"If, for example, Manchester United failed to qualify for the Champions' League next season, that might be a problem. We will look very carefully at this situation, as we do with all our sponsorship agreements," Todd explained.

Ferguson's transfer kitty under the Glazer regime is yet to be made public but it is understood that it will be capped at net spending of £26m per year. If that does indeed transpire, it will equate to a reduction on recent seasons. Ferguson has spent £126m since summer 2001, or an average of £31.5m per year. The club's return has been one League title, one FA Cup and one League Cup in the four seasons since.

While Nike insists that team performance, not the club's ownership, will dictate the future, fans' groups are intent on pressuring Nike - and all the club's other sponsors - to sever ties with Glazer. Boycotts of sponsors' goods will be encouraged.

In another move designed to hit Glazer in the pocket, the Shareholders United fans' group is expected to advise its members to sell their shareholdings to him this week in the hope that he will come under extra financial pressure through buying them.