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GM In Record Man Utd Sponsorship Deal

Financial Times, August 04, 2012

By Andrew Edgecliffe-Johnson

Manchester United’s new sponsorship deal with General Motors’ Chevrolet brand will be worth almost $80m a year, more than double the £19.6m insurer Aon is now paying to have its brand on the team’s shirts.

The exclusive rights deal, worth $559m over seven years from the 2014-15 season, sets a new record for a football club sponsorship contract.

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“The increase between Aon and Chevrolet I’d say is unprecedented,” said Jim Andrews of IEG, the sponsorship consultancy, noting that the deal smashed the previous record set by the Qatar Foundation’s sponsorship of Barcelona, worth $39.1m a year.

As recently as 2006, Vodafone was paying only about £8m a year to sponsor the club’s kit. It was followed by AIG, which paid £14.1m a year between June 2007 and June 2010.

Many European football clubs have seen shirt sponsorship revenues rise threefold in the past seven or eight years, said Mr Andrews, who predicted that US sports leagues such as the National Basketball Association will start to allow sponsorship of players’ jerseys in the coming decade.

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GM announced the Chevrolet sponsorship on Monday, hours after saying that Joel Ewanick, its chief marketing officer, had “failed to meet the expectations that a company has of an employee” and was leaving.

The club revealed the figures on Friday in a Securities and Exchange Commission filing before the initial public offering it expects to price next week.

After slack demand prompted it to abort a planned IPO in Hong Kong and Singapore, Manchester United now hopes to list its shares on the New York Stock Exchange on August 10, people familiar with its plans said.

The company said on Monday it expected to price its shares in a range of $16 to $20, which would raise $300m and value the club at just under $3bn at the midpoint. The IPO roadshow is expected to complete on Thursday, after events in Kuala Lumpur, Singapore, London and New York.

Manchester United said annual revenue from the Chevrolet shirt sponsorship agreement would be $70m in the first season, rising 2.1 per cent a year until it ends in the 2020-21 season. In addition, it will receive about $18.6m in fees from GM in each of the 2012-13 season and 2013-14 season under the terms of our new shirt sponsorship agreement.