The announcement that Nike is to end its kit deal with Manchester United, which started in 2002, begs the question of where this leaves the club. There are arguably only four kit suppliers in the world who could consider taking rights: Nike, Adidas, Puma and Warrior. Puma (Arsenal) and Warrior (Liverpool), have shown ambition recently to challenge the big two, but for a brand the size of Manchester United, surely being aligned with one of the two giants in the industry is imperative.
The fact that news of the end of the deal has been released suggests that perhaps a new deal with Adidas might already be in place. So why has the Nike deal ended? First, it has been rumoured that Manchester United were asking for a very high fee (around $100m per year), which Nike has indicated did not represent good value. The club on the other hand has indicated that it was not receiving the value that it felt worthwhile from the deal and was making too many concessions to Nike. Manchester United is known in the industry as a tough negotiator and it is therefore likely that the two sides simply couldn't agree a compromise on rights and fees that satisfied both. Certainly Nike wouldn't walk away from the world's leading sports merchandise rights lightly.
However, if an Adidas deal is not in place, it arguably leaves the club exposed. Would it consider that there is sufficient competition from the likes of Puma and Warrior to force Adidas to make the sort of offer it has in mind? With the need for a brand that offers both global distribution and status, it will be very interesting to see if Manchester United can pull off a huge deal. Certainly there will be no shortage of interest, but with the club having had a terrible season by its standards, and there being no guarantee that things will turn around immediately despite the signing of Louis van Gaal, along with Nike being out of the running, the remaining kit manufacturers might just play a little harder to get.
The outcome will certainly be a test of where the club currently stands in terms of power in the market. Eyebrows were raised at the size of its Chevrolet sponsorship, so if it can pull off another huge commercial deal, while not even competing in the Champions League, it will underline the attraction of the brand and help to finance its re-building programme. If it cannot command a huge fee, it will perhaps show soccer in general that brands have a limit to how far they are prepared to go to get the prime properties. It will be a very interesting few months.
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