Having lost its single most important revenue stream in its Yeezy line of designer footwear, Adidas signed up to a record-breaking deal for the right to equip a Premier League side in the hopes of better exploiting a key existing source of demand—official replica jersey sales.
A new agreement extends their deal for a further ten years until June 2035 and will see Adidas paying the Red Devils at least 900 million pounds sterling, or nearly $1.2 billion, according to the New York Stock Exchange-listed club.
“We look forward to continuing our partnership with one of the most iconic clubs in football,” new Adidas CEO Bjørn Gulden said in a statement sent to Fortune on Monday.
According to the BBC, this represents a 20% markup over the previous ten-year deal, which saw Adidas supplant Nike as the side’s official kit supplier.
Amid the FIFA Women’s World Cup tournament, in which the United States is hoping for a threepeat, the new deal also increases the focus on United’s women’s team.
The sportswear giant, based in the provincial German town of Herzogenaurach, declined to comment on the financials of the deal.
Adidas looking for a quick win
Adidas needs fresh revenue fast after it pulled the plug on its line of athletic shoes developed in partnership with Kanye “Ye” West following numerous anti-Semitic rants by the artist. It’s believed that Yeezy accounted for roughly a tenth of its turnover.
After claiming to have considered torching $1.3 billion worth of remaining inventory, Adidas eventually opted in favor of the more profitable option of selling the goods. It said it would donate a portion of the proceeds to charity, declining to disclose specifics, however.
The liquidation immediately gave a much-needed bump in its quarterly results, prompting Adidas to revise its annual sales forecast last week to reflect a less dramatic decline in turnover. Another wave of inventory is set to be released on August 2nd.
It’s a calculated risk for Adidas, however, since the future of the club finally looks rosier.
United is returning to the lucrative Champions League for the upcoming season and reports suggest Sheikh Jassim of Qatar and Jim Ratcliffe, the billionaire behind U.K. chemicals group Ineos, are jockeying for future control of the club.
Shares in United have nearly doubled ever since the Glazer family—vilified by the Red Devil faithful for mismanagement of the once proud club—announced in November they would finally put their ownership of the club up for sale.
Meanwhile, bitter rival Puma, founded across town by Adi Dassler’s estranged brother Rudolf, has seen the value of its kit partnership with derby competitor Manchester City soar.
Last season the club, owned by Abu Dhabi’s Sheikh Mansour and managed by Pep Guardiola, crowned its rise to the top of international club football with a historic triple, winning the Premier League title, the FA Cup and the Champions League.