Manchester United confident of shirt deal

By Simon Stone,Pa
Thursday 30 October 2008 18:38

Manchester United chief executive David Gill is confident the Red Devils will match their current £19m-a-year sponsorship deal with AIG when they look for a replacement in 2010.

United appear to have bucked the trend of a worldwide economic downturn by securing a fourth lucrative partnership agreement in the past 10 months, this time with Swiss watchmaker Hublot.

They join Saudi Telecom, the Seoul Metropolitan Government and Budweiser on an impressive list of major organisations willing to associate themselves with the European champions.

Yet the spectre of AIG looms large. Three years ago, United astounded financial experts when they signed up with the American banking giant following Vodafone's shock decision to walk away from a deal worth £9m annually.

At the time, AIG were seen as one of the most prestigious financial institutions in the world.

That was before the credit crunch, in which AIG would have gone to the wall had it not been baled out by the US government, which now effectively sponsor United.

The prominence of the AIG logo at Old Trafford last night suggests there will be no immediate termination of a four-year deal which is now in its third season.

But it is virtually impossible to conceive of a renewal, leaving the club to find an alternative in the worst economic conditions.

However, Gill feels the Hublot deal - worth less than a tenth of their shirt sponsorship - shows United remain an attractive proposition globally.

"Putting your name on the Manchester United real estate, which is our shirt, is very valuable," said Gill.

"The overall value of our deal with AIG is around £19million-a-year. That is a significant deal.

"But we think the value is very much there and we will be able to secure a new partner from 2010 onwards."

Gill confirmed there are funds outstanding from the AIG deal and the financial services aspect of the contract runs beyond the expiry of the shirt deal.

It creates a complicated picture for United's commercial staff - a whole team of which are now based in London and work closely with director Bryan Glazer - to work from.

But memories of what happened when Vodafone turned tail suggests there is no need for despondency.

"Obviously the economic conditions were different then but you only have to sell the shirt once," Gill said.

"There are still some very successful, profitable, growing companies around the world.

"Football is global, Manchester United is global. We have to demonstrate, to one company effectively, what the value of being on our shirt is.

"We are very confident we can do that because we truly believe the shirt of Manchester United is worth a lot of money."

The many critics of the Glazer family, with whom Gill now enjoys a close relationship despite initially being fiercely resistant to their takeover in 2005, have claimed the precarious nature of refinancing arrangements put in place to cover debts of around £666m, mean that any downturn in performance, from either a team or financial perspective, would put the club at risk.

Sources close to the Glazers reject the notion totally, while Gill points to the players brought in, including the club record £30.75m addition of Dimitar Berbatov, as proof United are in robust health.

"We have always had a medium to long-term business plan," he said.

"That is coupled with owners who understand what happens on the pitch is crucial to their overall aims."

While factors such as sponsorship and support are clearly in United's control - Old Trafford currently has 65,000 of its 76,000 seats pre-sold for the season - other revenue streams are not.

Yet the Red Devils remain committed to the collective bargaining principle of the Premier League and feel a collapse in income from the £1.7billion gained domestically and £625m from overseas rights is not inevitable.

"We don't see a situation where it falls off a cliff," said Gill.

"The recession will not last forever and the Premier League are speaking with the broadcasters about a new contract from 2010.

"They understand the markets and study them more closely than we do. But we are part of the collective and we support the collective.

"We believe the Premier League will still be an attractive product and a key asset to either retain in the case of Sky and Setanta, or obtain in the case of some American broadcaster possibly."

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