Manchester City have extended their partnership with Puma until 2035 at the value of £100m per season
Manchester City have become used to setting financial firsts. The first Premier League club to have reached £700m in revenue has now become the first in England to have a kit deal that delivers £100m per season.
On Tuesday it was announced that City had extended their current deal with Puma until 2035, with the new deal worth a staggering £1bn over the next 10 years, rising from £65m per year to £100m per year.
The deal had been due to end in 2029, but in a move similar to what others such as Manchester United and Arsenal have done with Adidas, Manchester City have engaged Puma on a longer-term contract, providing greater security over future revenues, surpassing United’s £900m deal with Adidas in the process.
The new deal will help push City closer to becoming the first English club to reach £1bn per year in annual revenue, something that could well arrive within the next five years, and further strengthens their financial position.
It is also a show of confidence in the impact that the partnership is having globally that Puma wanted to engage at such a big sum for so long, with City the biggest club brand in the Puma portfolio of kit sponsorships.
Success of a team is an important metric to be measured by kit manufacturers when it comes to determining the value of a partnership, with winning teams generating a greater buzz among fans that opens up the potential for more merchandising lines. When the club has global appeal, as City has, the impact of success is felt even more keenly.
While last season, by the high standards set by City, fell below what was expected, the expectation is that next term the club will be back challenging for honours domestically and in Europe, and Puma are betting on the City star continuing to ascend and for the benefits of partnering with a winning side to be there for the next decade at least.
It also shows that there has been little reputational damage done to City against the backdrop of the Premier League charges, a case that is still to reach an outcome, and the ability of the club to negotiate such a major deal during what has been a time of tumult and concern is a major win.
There will likely be some caveats and clauses in the deal, as exists in any major commercial partnership between a brand and a football club, where events that have the potential to impact the value of the deal, such as failing to qualify for the Champions League and the lack of exposure, or falling foul of league or regulatory body governance mean that the value falls.
But confidence over the Premier League charges issues has long exuded from City, and the very public display of commitment to the cause by Puma shows that they share that confidence.
In terms of the value, kit deals have many strands to them and the numbers reported are often skewed. City were able to leverage the success that Manchester United had in bringing in £900m despite a lack of success and brand damage to ensure that a new Puma deal was deemed to be fair market value for a club that has dominated the English game for the past decade.
Some deals are struck at lower guaranteed fees but offer greater incentives and control for clubs when it comes to merchandising, such as Liverpool’s new deal with Adidas, set to be between £65m and £70m guaranteed but with the club able to earn more on top of that.
The long-term signing of Erling Haaland has likely played some part, with brands wanting to see the major stars who play for the teams they sponsor have a long-term commitment. It provides greater certainty over the marketability of the kits when they can leverage the stardom of players like Haaland.
But long-term deals can have drawbacks. Will the kit market be considerably more valuable in five or six years? If so, then clubs who have engaged in five-year deals get to test the water and go to market sooner, potentially realising greater returns than the ones that are on offer in the here and now.
But, as clauses will exist for poor performance, success on the pitch has its financial upsides for the clubs often, with partners incentivising success, with a Champions League win, for example, a valuable marketing tool for brands.
Since City’s contract with Puma started in 2019, Pep Guardiola’s side have won four Premier League titles and became the second English team to claim the treble. There will be plenty of metrics Puma have analysed to see just how valuable that success has been, and that has emboldened them to partner again at such a price.
For their rivals, the latest deal is another demonstration of how strong City are, and how their financial might shows no signs of weakening. It does, however, provide a number of clubs with a case to argue when it comes to raising their own deals and arguing fair market value since a new Premier League benchmark has now been set.