United May Squeeze Nike After Record GM Deal

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Manchester United convinced General Motors Co. (GM) to pay a record $559 million to have its Chevrolet brand on the team’s red jersey. Now, the 19-time English soccer champion is ready to play hard ball with Nike Inc. (NKE), its maker.

United, which this week announced its first results since August’s initial public offering, got 33.8 million pounds ($54.7 million) in retail sales for the year ended June 30. That’s mainly from its 13-year, 303 million-pound contract with Nike, which gives the Oregon-based company control over the club’s complete merchandise sales operations, including the jersey.

“We continue to believe that there will be an opportunity to reset our existing deal with Nike to market rates,” United’s executive vice chairman Ed Woodward said on a conference call with analysts after the team announced a fourth-quarter loss of 14.9 million pounds. “There have been many changes to the world of football since this deal was negotiated in 2001.”

Woodward’s optimism may have been fueled by the seven-year GM deal, which the club says is the largest such agreement in sports. The carmaker will pay more than double current jersey sponsor Aon Corp.’s 20 million pounds a season when it takes over in 2014. Even before then it’s paying almost $18 million for each of the next two seasons as part of the agreement.

When United enters its exclusive negotiating period over a renewal with Nike in February, Woodward may point to new entrants in the soccer apparel market from the U.S.

Continue reading Tariq Panja’s Manchester United May Squeeze Nike After Record GM Jersey Deal

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