United sign kit deal worth pounds 80m
Saturday 10 February 1996
Manchester United have signed what is believed to be the biggest ever kit sponsorship deal in football. Their six-year deal with Umbro is believed to be worth a remarkable pounds 80m.
The deal was announced yesterday after months of negotiations behind the scenes as the world's leading sportswear manufacturers vied for the prize contract.
Umbro were forced to come up with the pounds 80m under heavy competition from their rivals, Nike and Reebok. Nike had offered pounds 50m over four years.
However Umbro, who are based in Manchester, topped that figure in a new six-year deal and made sure the bidding stopped before their present arrangement ends in July 1998.
Martin Edwards, the United chairman, refused to comment on the size of the deal but explained: "We could have gone two ways. We looked closely at doing it ourselves and we did have an interest from a very large company.
"Others rang to negotiate, but we did not get too far down the road with them because of our talks with Umbro. We've been happy with the four years we have had with them and they were prepared to come to us early in the agreement to renew it."
Peter Kenyon, Umbro's chief operating officer, said: "Manchester United are the biggest club in Britain and one of the biggest in the world. I can't name figures, but reasonable conjecture would be that the agreement reflects their status."
The sale of sportswear has helped to transform football's finances in recent years. In the 1994-95 tax year, United's income from merchandising was pounds 23.5m, which outstripped the club's gate receipts by nearly pounds 4m. In that year the club had a turnover of pounds 60m and made a profit of pounds 16.3m before transfer fees and taxation.
Merchandising has taken off to such an extent that United opened a megastore at Old Trafford last year. However, there has been criticism of the frequency with which United change their playing strips. Any change of kits inevitably provides a major boost to kit sales.
Edwards said: "They [Umbro] pay us money for us to wear their strip and recover those monies through the sale of replica kits.
"The deal does not mean another kit will go on sale. We are into a cycle now and there will be a new home strip coming out in August, but all our fans know that.
"We always have three strips in existence and each has a three-year life cycle. The deal means we carry on with that cycle. Had we changed supplier, we would have to have three new kits on sale at the start of next season."
United are not the only people who will be making a substantial profit out of their latest deal. Umbro are expected to make a profit in the six years of around pounds 100m.
The United shops alone have a huge annual turnover, the price of their Umbro gear reflecting the kind of money that can be made. Strips, home and away, cost pounds 25 upwards for a shirt, pounds 12 for shorts and pounds 8 for socks.
The popular line in coats and tracksuits that can be seen around Old Trafford are also a major money-spinner. The distinctive Umbro coats can cost up to pounds 75, while tracksuits vary between pounds 50 and pounds 60.
Umbro's success in winning the contract will be a setback for Nike. They won a major contract with Arsenal in their first football venture and have made substantial profits from football ever since.
The first month's turnover on Arsenal kits was an amazing pounds 6m, which puts the pounds 80m on offer at United into some sort of perspective. United's six-year deal is easily the longest in the game and should remain the most lucrative for years to come.
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