Real Madrid 'agree 12-year Adidas extension worth €1.6bn'
Real Madrid, the Spanish soccer giants, have agreed a renewed 12-year kit deal with incumbent partner Adidas, the German sportswear giant, worth €1.6 billion ($1.8 billion), it has been reported.
The deal will officially be signed at the end of the season and come into effect for the start of the 2019-20 campaign, a year before the existing deal between the two parties was due to expire, according to Spanish sports newspaper Marca.
Adidas has been the LaLiga club’s kit supplier since 1998, and the present agreement is understood to be worth a maximum of €52 million per year, including a fixed fee of €42 million and a variable of up to €10 million.
As part of the extended deal, Real will also receive 20 per cent of sales related to club merchandise and be supplied with €9 million in equipment and kit for the club’s various teams.
Adidas will also have its own retail space inside Real's Santiago Bernabeu stadium when the renovations to the venue are complete, with the store expected to be the brand’s biggest in the world.
Real announced earlier this month that work to remodel the iconic venue is finally set to begin at the end of this season, and is expected to take between three and four years.
The club is set to earn as much as €120 million per season from the new kit deal, making it the second largest such agreement in world soccer behind Spanish rivals Barcelona’s €155 million-per-year deal with Nike, the major US sportswear brand, which came into effect at the start of this season.
The agreement will be the biggest deal in soccer for Adidas, trumping the brand’s contract with English soccer’s Manchester United, which came into effect in 2015-16, and is worth around £75 million ($98 million) per annum over 10 years.
German Bundesliga giants champions Bayern Munich signed a 10-year renewal with Adidas worth €900 million that started with the 2015-16 season. The previous deal had five years to run but the German brand chose to extend with the club for a further decade to 2030.
This renewal is expected to further strengthen Real's position as soccer’s richest club after overhauling Manchester United earlier this year to top the Deloitte Football Money League, the annual table of the world’s leading soccer clubs by revenue. Real generated turnover of €750.9 million ($852 million) in the 2017-18 season.
With the club’s sponsorship deal with Emirates, the Dubai-based airline, which is reported to be worth €70 million per year through to 2021-22, taken into account, the new deal with Adidas could make the Spanish soccer powerhouse the first club in the history of the sport to generate annual revenue of €1 billion.