Adidas Steals Manchester United Sponsorship From Nike In Record-Breaking $1.3 Billion Deal

The English football giant announced Monday that Adidas will pay nearly $1.3 billion to provide its uniforms and apparel for the 10 years after the club's current contract with Nike expires at the end of the 2014-15 season.

At $128 million a year, the new deal will more than double the second-most lucrative apparel deal, through which Adidas pays the Spanish team Real Madrid $53 million a year.

The deal was initially reported by The Financial Times last week. Shortly after the announcement, Nike said it would no longer pursue the contract because Manchester United was asking for too much money.

Indeed, Adidas' annual sponsorship of Manchester United will add up to about 4.7% of the $2.7 billion it expects to make in football apparel revenues this year.

For its money, Adidas will not only get free advertising on one of soccer's most ubiquitous uniforms, but also the exclusive right to distribute replica jerseys and other products around the world.

Adidas CEO Herbert Hainer told the BBC and other outlets the company expects to make more than $2.5 billion in sales over the course of its Manchester United partnership. Perhaps that's why Adidas SVP of global football Markus Baumann told Bloomberg Television last week that he didn't think Nike's withdrawal from negotiations was evidence that its rivalry with Adidas was making apparel sponsorships unreasonably pricey.

"I think in general, as in sport, rivalry challenges everyone to be better and about new ways of approaching things," Baumann told Bloomberg's Brendan Greeley. "That's why I believe this is also very good for the industry, for the consumer, and for how soccer appears on the field of play. I'm not concerned that this is reaching a level out of proportion."