Big things have been happening across the pond as October marked the signing of the largest jersey manufacturing deal in history. Manchester United has reportedly signed with Nike for £300 million over the next five years, giving Nike the right to manufacture Manchester United game kits (kits are apparel worn by football players during games) until 2019. This historic deal shatters the previous record held by Spanish football club Real Madrid and sponsor adidas, worth £248 million over eight years.
Not only does Manchester United receive a significant cash infusion, which is likely to be used for signing more star players to their roster, but also included in the contract is the right to sell the jerseys. Sales could generate another £15 million a year, pushing the potential worth of this contract close to £375 million.
The latest partnership with Nike isn’t the only record-breaking deal England’s most commercially successful football club struck this year. This past May, Manchester United worked a deal with Chevrolet for the American car company to become the principal sponsor of the team starting in the 2014/2015 season, replacing insurance company AON. The deal is supposed to run until 2021 and will be worth $559 million.
This deal doesn’t mean the end of AON’s involvement with the club. AON has partnered with Manchester United as the official sponsor of the team’s training facility and practice kits in a $240 million, 8-year deal. They will also assist the club with player analysis and risk management practices. While they were unable to secure the principal sponsorship again, AON’s reinvestment in the Manchester United brand speaks volumes about the marketing power of the world’s largest football club.
The partnership with Manchester United sponsorship solidifies GM’s position in the English Premier League. Chevy has also worked a deal as the official automotive sponsor of Liverpool. The deal with Manchester United did not come without controversy for the American auto brand. GM’s Global Chief Marketing Officer, Joel Ewanick, resigned the day before the Manchester United deal was announced. It has been said that the deal with Manchester United was the breaking point for GM, which asked Ewanick to resign on his own terms.
While there is much doubt in the GM camp regarding the value this sponsorship will bring, they cannot question the global reach their new partnership will extend to them. With over 650 million fans in nearly every country on the planet, Manchester United’s brand is recognized by millions of people all over the world. Receiving that kind of exposure will certainly bring Chevrolet a new level of awareness globally, especially among the 325 million Manchester United fans in Asia alone. Pair those numbers with the current trends in the auto industry outlined by the current KPMG report, and the Manchester United / Chevy partnership seems like a match made in heaven.
It should come as no surprise that Asia is slated to become the world’s next big market for autos. As rapidly developing countries such as China and India begin to witness an increase in the purchasing power for their ever growing middle class, the demand for quality, name-brand automobiles should provide the auto industry with plenty incentive to shift the focus of their global supply chain to Asia. GM has already positioned itself to take advantage of this growth by establishing an Asia-Pacific headquarters in Shanghai, as well as developing several manufacturing plants throughout China, Russia, and India. Three countries that, when grouped together, are expected to surpass the US in automotive sales in the next 5 years.
These moves mark a significant shift in the corporate philosophy of GM, showing that in order to maintain their expansive share in the automotive market, a serious effort needs to be made to get the attention of the people living in developing areas. Although the team at GM recognizes that there is foreseeable future in the Asia-Pacific region, bringing awareness to these people will come at a cost for the American auto giant.
In order to fund their global football initiative, GM has been forced to cut spending on domestic advertising and sponsorships. Last year it was forced to eliminate advertising on Facebook and even cut their ad in the Super Bowl. While their new sponsorship with Man U and the One World Futbol Project paints Chevy in a positive light to footballers everywhere, GM could appear to be neglecting the needs of its own city.
As we mentioned in a previous post, Detroit is desperately seeking a corporate sponsor for its new hockey stadium. However, with a price tag of $650 million, a new stadium for only the US’ 3rd most popular sport pales in comparison with the Manchester United deal. Although soccer fans around the globe will begin to recognize Chevy, this iconic symbol of American ingenuity may risk losing the support of the city that fondly refers to itself as Hockeytown, and built the company up to where it is today.