CHELSEA announced the most dramatic change in corporate image since the arrival of Roman Abramovich as the club’s owner in July 2003 by ending a decade-long association with Umbro, their kit supplier.
The club said that they had decided "by mutual agreement" to terminate the contract five years early and would pay the retailer £24.5 million in compensation. The agreement will now end in June 2006 at the conclusion of Chelsea’s centenary season.
Peter Kenyon, the Chelsea chief executive, will open talks with a new kit supplier and replica kit distributor. Adidas is the favourite to land the deal because Nike is tied into a long-term relationship with Manchester United, while Reebok (Adidas)supplies Liverpool.
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Chelsea are also looking for a new shirt sponsor to replace Emirates, the airline company whose £6 million-a-year agreement winds up at the end of this season, when it will move its sponsorship to Arsenal’s new ground at Ashburton Grove.
Umbro’s shares fell nearly 4 per cent on the London Stock Exchange after the surprise announcement. The company has supplied Chelsea with playing and training kit and handled the sale and distribution of replica products since 1995. In 2001, the West London club signed a ten-year extension worth up to £3 million a year. It was negotiated by Ken Bates, the club’s former chairman and majority shareholder.
"They [Umbro] have made a major contribution to the Chelsea of today," Kenyon said. "However, we believe this decision will help us to achieve our strategic long-term goals."
Chelsea’s decision is a blow to Umbro, which was dropped by Manchester United in favour of Nike, after the completion of the treble, and recently lost the business of Celtic.
The company still sponsors the England team in a deal due to expire in 2010 and also has similar contracts with the Sweden, Ireland and Norway national teams. The agreement with the Football Association of Ireland was renewed this week for £7 million over the next six years.
Umbro, which floated last year, said that Chelsea’s change in kit sponsor would hit sales this year and reduce profits by between £1 million and £2 million in the financial year to December. Last year, Chelsea-related sales of £8.2 million represented 6.1 per cent of the company’s UK turnover. "The Chelsea situation is unique because of Abramovich coming in. They did not like the terms of the contract," Geoff Haslehurst, Umbro’s chief financial officer, said.
While Umbro will not supply kit to any Premier League club for the first time in its history from the summer of 2006 (it only sponsors Everton’s shirts), it expects to generate greater value from its endorsement deals with individual players such as Michael Owen, John Terry, Deco, Alan Shearer and David James.
"Adidas and Nike have moved up a league in some of the money they are prepared to offer clubs," Haslehurst said. "The prices are in excess of a straightforward profit calculation. It’s a question of how much brand exposure they achieve. With Owen, we get far more brand exposure."
Nike’s 13-year deal with United is worth a guaranteed £23 million a year to the club. There is a further revenuesharing arrangement but analysts believe the incremental income is stacked more in the manufacturer’s favour. To see the article click
Further reading
adidas unveils new Chelsea FC kit
Adidas, the world’s number one football brand, and double Premiership champions Chelsea Football Club, has unveiled its’ new kit for the 2006/2007 season.
adidas has signed a deal to be the new official sponsor and sportswear supplier for Chelsea FC for the next eight years. This sponsorship agreement takes effect from July 2006 and the association sees adidas and Chelsea join forces for the first time.
The new adidas home kit will make its debut when Chelsea play their first pre-season match against the Major League Soccer All-Stars team in Chicago, USA on August 5.
This new partnership is a natural affiliation between the world’s number one football brand and one of Europe’s leading clubs. The new Chelsea team shirt is the most stylish and technically innovative to date, with the traditional home kit in the synonymous Chelsea blue. The official away and UEFA Champions League kits will be revealed in due course.
As always for adidas, technology is at the forefront of the kit design. The shirt incorporates the world-renowned ClimaCool and FlowMapping technologies which allow heat and sweat to escape while bringing cooling air into contact with the skin.
The shirt also features ForMotion technology – a highlight of adidas top performance apparel. The shirt was designed 3-dimensionally and engineered to fit a footballer’s body in motion and the seams are sewn flat to reduce irritation.
In addition to the technology, the renowned adidas style and detail is evident on each kit. The Chelsea crest is a woven badge with embroidered keyline, accompanied by the adidas three stripes down the sleeve. The shirt also features a new crew neck which is inscribed with ‘Chelsea Football Club’, and an embossed Chelsea Lion symbol on the back.
Frank Lampard, Chelsea and England midfielder, said: "The technology and style of the shirt is typical of the modern game and will help our performance. The design and attention to detail on the shirt is second to none and it is great to see Chelsea be associated with the number one football brand"
Peter Kenyon, Chief Executive of Chelsea Football Club said: "This partnership is great news for Chelsea and we look forward to working with adidas, whose vision we share. We believe a global partnership with adidas will be a huge step in helping the club achieve its long term goals. Together we can become a formidable team".
Gil Steyaert, Managing Director, adidas Area North said: "adidas has a long tradition of working with top football clubs around the globe, and Chelsea certainly fit into that category. Chelsea, under the guidance of Jose Mourinho, are the current Premiership champions and adidas are proud to be associated with them. We look forward to many years of success".
