Lawyer Highlights Key Legal Issues

Manchester United have agreed a new record-breaking kit deal with Adidas worth £750m over 10 years.

The deal will see United play in the manufacturer’s kit from the 2015-16 season and brings a 13 year arrangement that the Premier League club have with Nike to an end.

Other manufacturers thought to be in the running for the prestigious contract included Warrior.

Adidas group chief executive Herbert Hainer said:  “We are excited to team up with Manchester United, one of the most successful and most loved football clubs globally.

“Our new partnership with Manchester United clearly underlines our leadership in football and will help us to further strengthen our position in key markets around the world.

“At the same time, this collaboration marks a milestone for us when it comes to merchandising potential. We expect total sales to reach £1.5billion during the duration of our partnership.”

Sarah Riding, Corporate & Commercial Partner at Irwin Mitchell, said:

Expert Opinion

“The new multi-million kit supply agreement between Adidas and Manchester United illustrates how buoyant the sport sector remains. The deal will be extremely lucrative with Adidas claiming expected revenue from the deal of £1.5 billion over the ten year period.

“Both brands are strong but there are key issues in these types of arrangements which are fundamental for ensuring that it remains commercially viable. Although the confidential terms of the deal have not been seen, it is likely that a break clause has been inserted for such a long term 10 year contract. Much could happen during this time frame not least that that governing body could stipulate new requirements for branding on kits so it’s imperative that the contract remains flexible.

“Current regulations limit changes to the kit mid-season to protect the fans so it’s important that protection for that is built into the contract including for example when termination can be triggered. There should be a contractual commitment to ensure that the rules of the governing body can over-ride whatever the parties have commercially agreed if necessary.

“Reputational issues are key for both brands. For the club, loyalty of the fan base is paramount. This will of course largely depend on what happens on the field but fan loyalty could also be affected by for example a failure by Adidas to deliver kits to meet supporter demand. There are obvious peaks in demand before the start of a season and it is critical that the contract provides for this. Ensuring that the kit supplier engages in ethical manufacturing processes is also important.

“Adidas are entering into this arrangement to further enhance their link with football and strengthen their reputation in key markets around the world. Adidas are very dependent on the success of the club – for example a successful football campaign in Europe would drive sales. To maximise exposure Adidas will want to ensure that all players and the manager wear the official kit during all appearances and seek to prevent players wearing any other branded sportswear. They will expect the Club to take all necessary steps to ensure this.

“The Adidas brand will feature next to the official shirt sponsor and it is key that this also is a brand that Adidas is comfortable to be associated with and that there is protection within the contract against reputational damage. This also brings the additional challenge in that three entities will want input into agreeing the kit design. One of the problems of this industry is also the illegal sale of unofficial replica kits and contracts of this nature would usually build in requirements for the club to take all necessary action against infringers to preserve the brand value. Brand protection and enhancement are key to the success of this arrangement.”
Sarah Riding - Partner