What do you do when your large American insurance shirt sponsor goes bust and pulls the deal? Get another one of course! That’s exactly what United have done in the last week by announcing that US risk management group Aon will be the team’s new sponsors from the start of the 2010-11 season. The deal is rumoured to be a world-record £80 million over four years, replacing the £14 million per season contract with AIG, which is due to run out at the end of next season. The announcement will ease the pressure on the board who were forced to seek a new sponsor in the middle of one of the worst financial climates in living memory. Bizarrely, United’s shirts will continue to display the AIG logo next season despite the firm having been bailed-out by the US government to the tune of more than $100 billion.
Announcing the deal, Manchester United chief executive David Gill spoke of his delight at entering “such an important relationship with a company of the stature of Aon.” In reality United were open to the highest bidder, save for any companies (such as gambling or porn) that wouldn’t have sat well with the club’s American owners. The huge deal easily outstrips the £25 million five-year deal recently signed by Manchester City with Etihad Airways, or the €15 million per season deal that Real Madrid have in place with online gambling site Bwin. With that Gill was able to claim that the “announcement clearly strengthens our position as the world’s leading football club.”
While Aon may not be a brand name in Manchester, the deal less about the UK market, and more about United’s presence in emerging markets and the Far East, where Aon hope to capitalise on United’s claimed 330 million fans. Aon’s CEO Greg Chase spoke of the “unique opportunity” to partner with “one of the most recognised sports brands in the world.”
The deal comes just days after United announced that they had earned over £90 million in TV prize money in a season when they won the Premier League and Carling Cup, and reached the final of the Champions League.
However, the Reds are still in hundreds of millions of pounds of debt. This season’s profits will barely pay off frightening annual interest payments on debt that is over £667 million as of the most recent accounts. The debt is made up of a £425 million cash loan that is secured on Old Trafford, Carrington, season ticket sales and players. According to The Guardian’s David Conn a further £90 million of unsecured loans and £152 million in Payment in Kind debt are also owed by the club.
The new shirt deal will add to United’s revenue at time when it is most needed. With the Glazer family so far unable to refinance the massive debt, they have consistently rolled annual interest into the overall debt – including the £30 million purchase of Dimitar Berbatov last summer. It’s a policy that will see United paying ever more in interest and paying down very little of the actual debt.
Almost inevitably United are looking to trim their expenditure this summer with £7 million Frazier Campbell set for a permanent move to Hull, and Darron Gibson and Danny Simpson placed on the transfer list. The financial climate has also put a hold on the transfer of Carlos Tevez, with the club unwilling to match his “owners'” £25.5 million valuation. While a compromise agreement was rumoured to have been reached last week, the smart money says the Argentinian will move across town to Manchester City and the vast wealth on offer.