What's the story?
In a sponsorship deal which would be the biggest in the history of football Real Madrid are set to don Under Armour shirts from next season according to reports from Marca. The reports suggest that the American brand is ready to offer a £127 million per year deal to be Real Madrid's official shirt sponsor, replacing Adidas.
Real Madrid came second last year in Forbes' annual tally of the world's most valuable sports team worth $3.65 billion just behind the Dallas Cowboys. The Spanish side are also one of the richest clubs in the world in terms of commercial revenue and the club hierarchy is trying with all its might to increase the value of the football club further.
In case you didn't know...
Barcelona became the first club to enter the £100 million per year sponsor club as the Catalans signed a new deal with Nike which will see them earn £100 million per season from 2018.
Manchester United are currently at £75 million per year deal with Adidas but the German manufacturers can withhold £20 million of the annual payment if they fail to qualify for the Champions League next season. Meanwhile, Chelsea's next season kits are set to be produced by Nike which will see the Blues earn £70 million per year.
The heart of the matter
Real Madrid currently earn £34 million per year from Adidas and have a contract with them till 2020. But according to reports, Madrid want to back out of the current deal and tie up with Under Armour to become the richest kit sponsored club in the world, surpassing the likes of Barcelona and Manchester United.
Adidas have been Real Madrid's kit producers since 1998 but might see the partnership end with Under Armour looking to extend its reach in Europe by tying up with one of the most iconic brands in the global sports business.
What's next?
Under Armour has been Tottenham Hotspur's sponsors since 2011 but rumours suggest that the Londoners are set to sign a new deal with Nike next season. A deal with Real Madrid would see UA's stocks go up with the American manufacturers revealing a current revenue of $4.8 billion for the full year, an increase of 22% from last year.
Sportskeeda's take
Real Madrid's rivalry with Barcelona is not only on the pitch but off it as well. And with their rivals, earning nearly three times from their kit sponsors, it’s not a surprise at all that the Madrid hierarchy are seeking similar or better figures.
However, things might get dicey in the future. Under Armour’s stock was the worst-performing sports stock in 2016. This year hasn’t too kind to them as well with the company missing fourth quarter earning estimates.
