Nike deal nets United £303m

Manchester United enhanced their status as the world's biggest football club last night by confirming the game's largest ever sponsorship package, a 13-year deal with the sportswear manufacturer, Nike, worth £303m.

Manchester United enhanced their status as the world's biggest football club last night by confirming the game's largest ever sponsorship package, a 13-year deal with the sportswear manufacturer, Nike, worth £303m.

The "strategic alliance", which starts when United's current kit deal with Umbro expires in August 2002, will make Nike the team's official sponsors and kit supplier and will also give it the global rights to all United merchandise and retail operations. According to a statement released to the stock exchange, Nike will also become "the operator of Manchester United's global retail operations". In practice this will involve Nike spreading the United brand around the world.

The deal could be even more lucrative to United, who will get half of Nike's net profits generated from the licensing and retail operations, providing they stay in the top half of the Premiership and play in Europe.

To put the deal into perspective, it works out at £23.3m a year for United. A statement from the club's plc said: "Manchester United intends to use the proceeds for general corporate purposes". This is likely to include spending on new players, wages and development of United's already extensive international set-up.

The deal announced yesterday dwarfs the £30m four-year shirt sponsorship deal that United have with Vodafone - itself a record when it was signed - and the only comparable arrangement is the sponsorship deal Nike have with the Brazilian national side. A spokesman for United appeased fears that United - like Brazil - would have to play an extensive programme of exhibition matches for Nike. "United are likely to play some overseas games for commercial reasons," he said, "but there is no contractual commitment to do so".

United and Nike will set up a subsidiary company to control the global operation, each appointing half the directors. Nike will appoint the chairman, who will have the casting vote, and the sportswear company will also have the option to terminate the deal after six years if it should wish to do so.

Nike and United will also launch a grass-roots programme aimed at young players, with the £1m-a-year running costs funded by Nike.

The sponsorship announcement came on the day that United's manager, Sir Alex Ferguson, said that he hoped his assistant, Steve McClaren, may succeed him at Old Trafford. "Steve has been brilliant since he came here," Ferguson said. "He has shown a willingness to learn. It is not my decision to make, but I would have thought all the credentials were there for Steve to take the job."