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UNITED AGREE Ł300M NIKE DEAL
Manchester United and Nike have agreed a record breaking kit deal worth Ł302.9 million sterling over 13 years. The deal is the most lucrative in sporting history and overshadows Nike's Ł67 million sponsorship of the Brazilian national team.
News of the negotiations between United and the sportswear giant were controversially leaked last month and at one stage it looked like Umbro, the club's current sponsor, would take legal action.
The details of the agreement specify that United will bring in at least Ł23 million each year, while 50% of any profits from merchandise sold will also go to the club. However, Nike have the option to pull out of the deal in 2008.
Following the announcement this statement was given to the stock exchange:
"Manchester United plc has granted to athletic, footwear and apparel leader Nike exclusive worldwide rights as (1) the official sponsor of Manchester United footwear, apparel and equipment (2) the official kit (uniform) supplier to Manchester United (3) the manufacturer, marketer and seller of licensed apparel, footwear, equipment and other merchandise bearing the Manchester United trademarks including replica kit and (4) the operator of Manchester United's global retail operations".
United and Nike will set up a subsidiary to control the global operation, each appointing half the directors. Nike will appoint the chairman, who will have the casting vote, and the sportswear giants will also have the option to terminate the deal after six years if they should wish.
United's statement said the club intend to use the revenue for "general corporate purposes" - meaning some of the money will be available for buying players, though Sir Alex Ferguson is unlikely to benefit as his contract expires in the summer of 2002 and he has said he will move on.
Nike and United will also launch grass-roots football programme aimed at young players, with the Ł1 million-a-year running costs funded by Nike.
However, the deal has been met with concern from Shareholders United due to the allegations that Nike uses child labour.
"This is not just about the allegations of child labour and we're concerned that commercial pressure will be put on United" Spokesman Oliver Houston said. "United went out to the Far East to play in a Pepsi tournament and who's to say that similar things won't happen with Nike."
"We're also still awaiting the outcome of the Brazilian Parliamentary Commission on Nike's interference. From a PR point of view it seems foolhardy to rush into this after the warning we gave them."
