Earlier this month Manchester United announced the largest kit supplier contract in history, with the club receiving a massive £75m (~$125m) annually from soccer giant Adidas.
Today Mark Ogden of The Telegraph reports on some of the more intricate details of the partnership related to the club’s UEFA Champions League status. United must find their way back to the Champions League by the end of the 2016-17 season or face a 30% reduction in the Adidas payments. Specifically, the clause will be triggered if the club fail to qualify for the CL in two consecutive seasons beginning from the 2015-16 season.
In a situation where the club is unable to secure a spot in the competition Adidas’ annual payments would be reduced from £75m to £52.5m. Other clauses contained in the contract include a £4m payout for any win of the Premier League, FA Cup or Champions League and a 50% reduction in the contract should relegation occur.
The lucrative contract shows the extent to which Adidas is willing to pay for a global brand like United, but also how it does so in a way that controls for volatile league and tournament performances from its club partners. Given the increasing sophistication of branding partners it seems likely that performance based contingencies are going to be increasingly common in licensing agreements.