Yesterday, General Motors fired its chief marketing officer, Joel Ewanick, saying he failed to live up to the company's "expectations." Those expectations seem to be related to GM's recent deal to sponsor Manchester United, the world's richest sports team.
Today, GM announced a deal to put Chevrolet's name on Man U jerseys, starting in 2014. The value was "undisclosed" but Reuters says the seven-year agreement is worth nearly $600 million, or $60 million to $70 million a year.
That's more than double what Aon, the insurance company, is currently paying per year to put its name on the jerseys. A person with knowledge of the deal tells Reuters that GM will also pay a $100 million activation fee for the jersey-naming deal, which wasn't part of GM's original agreement with Man U six weeks ago.
All GM got in that deal was the right to call itself Man U's global automotive partner, plus some perks like putting its name on the sidelines. But jerseys are the real deal, because they're seen in every shot of every game.
Other news reports peg the deal at about half of the value in the Reuters story. But no matter whether GM is paying $300 million or $600 million, that's a lot of money to put the Chevy name on the jerseys of players who don't trod American turf. Of course, GM is aiming at a global market, in its effort to turn Chevy into a name known around the world, and Man U claims to have 659 million followers worldwide.
There's another interesting piece to this whole story. Man U had planned a public stock offering in New York in order to pay off some of the club's massive debt. It hoped the offering would raise about $100 million — the same amount that GM is paying in the activation fee, at least according to Reuters.
But last week, the I.P.O. was scrapped, a setback for the Glazer family, which owns the team. It was the second postponement, coming on top of efforts in Singapore and Hong Kong last year to sell Man U shares.
UPDATE: This afternoon, Man U announced it is going ahead with its stock offering. According to Bloomberg, the company plans to raise up to $333 million — much more than its original plan — and is selling 16.7 million shares at between $16 and $20 apiece.
The company is selling Class A shares, that would have one vote each. The Glazer family gets Class B shares worth 10 votes apiece, meaning they'll keep voting control of the company.
So to recap, today, GM shelled out hundreds of millions of dollars for jersey rights, a day after Ewanick was fired, and Man U is going ahead with its I.P.O. How are all these things connected?
Photo Credit: GM