Adidas and Chelsea football club had announced on the 11th of May they would be ending their 10 year partnership at the end of the 2016/17 football season.
The deal will be terminated in the summer of 2017, 6 years earlier than the contract’s duration. Both parties announced this was by mutual consent. However, neither Adidas nor Chelsea have given any reason for the separation.
This announcement comes mere days after the release of Chelsea’s new home kit for the 2016/17 season, which incidentally, wasn’t very well received by the fans. They ‘pjyama’ kit sparked outrage, with most of the Chelsea fans shocked by the cost of the replica, which could come up to more than a £100.
Chelsea have agreed to pay a rumoured £40 million compensation to terminate the deal early. The original deal, which was signed in 2013, to extend the Adidas-Chelsea alliance for a further 10 years, was set at £30 million a year. So far, that comes up to a grand total of £120 million that Adidas have given Chelsea, and if the compensation fee which Adidas will now receive were to be taken into account, the German sports giants would have paid only 80 million. That is 20 million a year, which is a good deal for Adidas, given that Chelsea have won the Premier League and the League Cup in that time.
According to Bloomberg, Adidas’s current chief executive Herbert Hainer has said this move was a step in reducing the number of teams that Adidas have on their roster. On Thursday, he said “We are continuing the concentration process that is part of our sports sponsorship strategy. Going forward, we intend to focus on fewer teams on the European club level.”
And the results of Adidas’s strategy are clear to see. They now sponsor Manchester United, Real Madrid, and this season added Juventus to their list of club teams. These are clubs with a large fanbase or are dominant in their respective leagues. Notable national teams include Argentina, world champions Germany and European champions Spain. They are also the official kit sponsors of the Major League Soccer in the USA, capitalizing on a rapidly growing American market.
In recent seasons, it has seemed as if Chelsea have fallen down in Adidas’ priority list. Their t-shirt designs have been labelled as lazy and it often looks like the home kits of Bayern and Madrid have been turned blue and handed over the Chelsea. Adidas reportedly pay Manchster United £75 million a year and Real Madrid an eye-watering £104 million a year. Reports from City AM say that Chelsea believe they can get around £50 million on a yearly basis.
The benefit is clear in both parties going their different ways. Adidas can now focus on their market strategy and Chelsea can find a sponsor who pays more and give them more importance.
Possible future sponsors
It is highly unlikely that Chelsea would end a contract of this magnitude so early, without already having something set up in its place. This season will surely just be a minor blip in Chelsea’s history and the impending arrival of Antonio Conte shows great promise for the club’s future. Therefore, the now ex-Premier League champions will have no shortage of potential suitors.
Umbro: It is possible that Chelsea could revert to Umbro, who were their sponsors until 2006 before Adidas stepped in. Umbro will surely be on the lookout for a big team in England to sponsor, having lost out on the England national team kits a few years ago to Nike. Some notable teams in Umbro’s roster are Everton, PSV Eindhoven and West Ham United. Umbro were Chelsea’s kit manufacturers when Jose Mourinho first arrived and ushered in a new era of success at Stamford Bridge, and it is possible they might be there for a new Conte era as well.
Nike: Nike seem like the most likely replacement. The American company are the largest sports manufacturing company in the world. They have recently lost Arsenal and Manchester United to Puma and Adidas respectively, and will be willing to pay the large sums that Chelsea will demand to establish themselves in the English market. Nike have some of the world’s premier football teams in their roster, including the likes of Barcelona, PSG, France and Atletico Madrid. Nike have been reported to offer more than a £100 million to extend their contract with Barcelona.
Puma: German sports giants Puma and Adidas have a long history of rivalry, starting from the time of their foundation. Puma are fast growing in the football market after playing second fiddle to Adidas and they might be open to a deal with Chelsea and expand their market share in England. Puma are the current sponsors of the Italian national team, Chelsea’s rivals Arsenal and Borussia Dortmund in Germany.
Under Armour: The American company are making new strides forward in their expansion into other sports. In recent times, they have signed deals with Tottenham Hotspur, Southampton and Schalke 04. They have also signed on the official kit sponsors for the North American Soccer League. A deal with Chelsea could be the next step in increasing and would help increase their market share considerably.