Monday, August 9, 2010

Manchester United Sign Aon to Replace AIG as Shirt Sponsor

Manchester United
Manchester United signed a shirt sponsorship deal to replace AIG with with insurer Aon believed to be worth £20 million a year (about $33 million). Bonus payments could add a further £5 million a year, according to the FT.

The deal ends Man Utd’s dependence on U.S. taxpayer dollars. AIG spent about £14 million of its bailout money on the final year of its sponsorship, The Sun noted. Neither Man Utd nor Aon gave details of the deal. However the FT said:

Man Utd received a strong bid from a betting company, which enabled them to pitch three to four suitors against each other, said to include Standard Chartered.

That explains the Sahara Group rumors of a few days ago. (Looking back, wasn’t that bizarre?)

The deal means two things for Man Utd: First, it will increase its sponsorship revenues at a time when many clubs are expected to see theirs decline due to the recession. Second, it puts some relief on their spiralling player budget costs.

To give you an idea of how bad the latter is, striker Carlos Tevez is currently demanding £25.5 million to stay at Old Trafford; and Deloitte’s Annual Review of Football Finance reports that the team spends £121 million per season on players.

As for the former, the AP reported:

… that is about 40 percent more than AIG was paying and 17 percent more than Bayern Munich’s shirt sponsorship with mobile phone provider T-Home.

The good news for United didn’t end there. The Manchester Evening News reported that the club has shaken off some of its debt expenses on higher revenues, and made a profit.

The Premier League champions made £71.8m for the season 2007-8 to put them at the top of the money tree globally.

Their revenue of £257.1m also saw them outperform the rest of their Premier League rivals - with figures suggesting they are bucking the global economic crisis.

Side note: How far behind, business-wise, are Americans when it comes to sport sponsorships? Check this out for the answer. Practice shirts, indeed!