Wednesday, January 21, 2009

AIG pulls sponsorship of Manchester United

The news story is here. Of note: Sponsorship of Manchester United accounts for nearly a third of its revenues. That surprised me; with long-term television deals that have to factor into revenues at least an amount comparable to sponsorship, the majority of Manchester United's revenue stream is guaranteed (as far as contracts can be fulfilled, but assume they are) moving forward into upcoming seasons. Renegotiations over these deals can happen, but this current round of talks over the sponsorship is the only one that comes to mind in which the amount of money to the sports franchise will be (likely) revised downwards.

That blows my mind; am I that out of touch with how business is done, or is this unique to sports? I know businesses expect to sell a certain amount of goods and services, and have confidence intervals and estimates in good and bad times...but that's a large portion of contracted, certain money as a percentage of total revenues, isn't it? Tom, tell me how it is.

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