Manchester United signs £ 900 million kit deal with Adidas: Can shirt deals help football clubs financially? Explained

On August 1, English football club Manchester United signed one of the most lucrative deals of any sporting brand in the world. United signed a 10-year deal with Adidas as their global kit sponsor, which has been priced at £ 900 million.

It is not the first time a sports brand has spent that much money to become the kit sponsor of a certain club. The clubs also benefit from a commission, which ranges from 7 per cent to 15 per cent of the retail price of shirts sold by the brand.

But how much does a club benefit from this kind of deal? Do such deals help the club in any way financially?

During the winter transfer window of the 2022–2023 season, London-based football club Chelsea spent a total of € 323 million . Not only that, but during the 2023–2024 summer transfer window, a lot of players have been sold for over € 100 million, and this shows how much a team can pay to sign a single player.

When a club signs a player at such a high price, it expects some value in return. Apart from the players' role in how they can improve the squad, they are also expected to help boost shirt sales by being a global brand themselves.

But does it help the teams recover the money they spend on a player in the transfer market? The answer is a big NO. 

Apart from the money the club receives from the sponsorship deal, they don't actually make a lot from shirt sales. As mentioned earlier, football clubs get a commission from shirts that are sold. The kit manufacturers retain more than 80 per cent to 90 per cent of the total shirt value, and for a shirt priced at € 100, the club gets an average of € 7 to € 15.

Sometimes, clubs don't get that amount either, as there might be clauses mentioned in the contract that a threshold has to be crossed in the total number of shirts sold, and because of this too, clubs might also not get the commission rate.

There are, of course, expectations in the commission rates too, with Liverpool getting 20 per cent from each shirt sold as per their five-year € 150-million deal with Nike, which they signed back in 2020. 

Calculating that, if Nike sells around 1 million Liverpool shirts a season for € 80, Liverpool will get € 16 from each shirt, and that will turn out to be € 16 million per year. On top of that, Liverpool will receive € 30 million each season from the € 150 million deal, and that adds up to € 46 million per season from just shirt sales and deals.

So, even though the amount might not be significant for the clubs, shirt deals still hold tonnes of financial possibilities for the kit-maker. The reason behind this is that it is just a licencing agreement between the kit manufacturers and the club they signed with. Manufacturers like Adidas, Nike, and Puma need those licencing rights to manufacture and sell the kits.

In return, the clubs do get their fair share, and as a global brand of its own, the manufacturers can easily market the clubs and increase the shirt sales as well as the profits.

Now, coming back to Manchester United, as Adidas signed the most lucrative deals of all time with them, United will receive a total of £ 90 million per season for the next 10 years. Adidas sold over 1.95 million shirts in 2021 according to statista.com, and this shows how this deal will benefit the kit maker. 

United might not be able to make any significant financial gains, but making over an estimated £ 100 million per season is not that bad for the struggling club's financial books.

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