Manchester United will trigger a financial penalty in their £750 million kit deal with Adidas if they fail to secure a top four finish this season, but the club will avoid an instant £22.5m black hole in their finances, ESPN FC reports, quoting its sources.
Jose Mourinho’s United face fourth-placed Arsenal at Old Trafford on Saturday currently lying six points adrift of Arsene Wenger’s team in the race for Champions League qualification.
Having failed to finish in the top four under Louis van Gaal last season, the terms of the 10-year agreement with Adidas ensure that United will suffer a cut of 30 percent to their annual £75m payment from the sportswear giant if they miss out on the Champions League for consecutive campaigns.
However, it has now emerged that, rather than see their Adidas payment drop to £52.5m immediately after two failed attempts to qualify for the Champions League, the £22.5m deduction figure will instead be spread over the full 10 years of the contract.
As a result, United will pay a catch-up penalty fee of £4.5m for years one and two of the agreement and then suffer a deduction of £2.25m from the annual £75m payment if Mourinho’s team are unable to finish in the top four.
United will then continue to receive £72.75m from Adidas on an annual basis for the remainder of the deal, unless further failures to reach the Champions League trigger additional cuts to the figures banked by the club.
During a conference call to investors on Thursday, following publication of the club’s first quarter accounts, United executive vice-chairman Ed Woodward confirmed the details of the financial penalty looming at the end of the season.
United spent in excess of £145m on new players during the close season, adding Zlatan Ibrahimovic, Henrikh Mkhitaryan, Eric Bailly and £89.3m world-record signing Paul Pogba to the squad.
But despite the team’s slow start under Mourinho,i n which they have only won five of their opening 11 Premier League fixtures, Woodward insisted to investors that there is still reason for optimism.
“On the pitch, it is still early in the season,” Woodward said. “We have 27 more Premier League games to play and have advanced to the quarterfinals of the EFL Cup.”