Sponsor Puma struggles to price Leicester City success

When Leicester City signed its first apparel deal with Puma four years ago, the team was firmly ensconced in English soccer’s second division. 

Sponsor Puma struggles to price Leicester City success

A Premier League championship seemed less likely than Bono becoming Pope, and so team executives never thought to include a bonus clause in its contract with Puma.

The two parties are now in talks about a new contract that would reflect Leicester’s sudden and unexpected status as England’s best soccer team, according to sources.

The terms of the existing arrangement are private, but it is worth a fraction of what the league’s traditional powers earn from their sponsors, and there are several years left on the deal, said the people.

Meanwhile, Adidas will part ways with Chelsea, getting a payoff of at least £50m as a battle to sponsor Europe’s top sports teams intensifies.

The 10-year deal will end in June 2017, six years earlier than planned.

The breakup “comes as a surprise and leads to questions over what really happened behind the scenes,” Zuzanna Pusz, an analyst at Berenberg Bank, said.

“We find the event worrying, raising concerns over the intensifying battle in the European football sponsorship rights,” he said.

This season, in lieu of a bonus payment, Puma will pay for additional marketing for Leicester, including an open-top bus tour next week and the team’s preseason tour to the US.

The sportswear manufacturer based in Herzogenaurach in Germany, was as surprised as the rest of the world by Leicester’s rise.

It made about 25,000 shirts to sell to fans, an inventory that has been sold out for months.

Next season, it will produce as many as 90,000 shirts. Manchester United, the record 20-time English champions, has the UK’s biggest technical equipment agreement, a 10-year £750m (€950.3m) deal with Adidas.

Puma pays Arsenal about £30m a season, similar to Adidas’s arrangement with Chelsea.

Those figures dwarf the amount available to teams like Leicester, which typically get free-kit for the club and discounts on stock to retail to fans.

Until this year Puma’s relationship with Leicester was managed at arm’s length by a company based in Manchester that is responsible for arrangements with lower-tier teams in the Puma stable.

They include Fleetwood Town, where Leicester recruited its top scorer Jamie Vardy from.

Leicester’s unprecedented success has put the Foxes in the global spotlight, and Puma is struggling to put a value on a new deal.

Leicester’s TV audiences are up more than 23% across metered markets globally with 29% growth in the UK, according to Repucom, a sports-intelligence company.

As a result, Repucom said, the team’s media value has grown 30% globally and 70% in the US, where the team’s zero-to-hero story has captured viewers’ imaginations. Puma shares rose 2.4% yesterday, while Adidas fell slightly.

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