About the partnership
On October 13, Nike (NKE) and Chelsea Football Club announced a long-term partnership under which Nike will become the official kit supplier for Chelsea starting next year. The deal, which is the largest commercial deal in Chelsea’s history, is said to be worth ~$75 million a season. The deal spans over a 15-year period, which puts the total sponsorship value close to $1.1 billion, reported the Financial Times. However, the terms of the deal have not been disclosed by either Nike or Chelsea.
Nike to supply uniform for teams, apparel for fans
Nike will provide the uniform for Chelsea’s First team as well as its Academy and Ladies teams. It will also supply clothing for Chelsea’s supporters. Trevor Edwards, president of the Nike brand, said, “Chelsea is a world-class club with a rich tradition and passionate fans across the globe. The partnership with Chelsea reinforces our leadership position in football. We are excited to help grow the club’s global reach, serving players and supporters with Nike innovation and design.”
Nike replaces Adidas, edges out Under Armour
Nike replaced Adidas (ADDYY) as the official sponsor of Chelsea. Owned by Russian Billionaire Roman Abramovich, Chelsea announced in May that it mutually terminated the sponsorship contract in June 2017 instead of 2023. Adidas is reported to have paid $44 million a year to Chelsea.
In 2014, Adidas replaced Nike as Manchester United’s sponsor in a $1.1 billion partnership. The same year, Puma (PMMAF) also replaced Nike as Arsenal’s kit maker.
Nike is believed to have won over Under Armour (UA), which was also in the race for sponsorship. Under Armour, though just about 10% of Nike in terms of revenue, is offering the company some tough competition. Read the next part of this series to learn more about Nike’s sponsorship deals and how Under Armour is becoming a threat for Nike.
ETF investors seeking to add exposure to NKE can consider the SPDR Dow Jones Industrial Average ETF (DIA), which invests 2% of its portfolio in NKE.