Man United could lose £22 million from Adidas if they fail to qualify for Champions League

Manchester United’s inability to qualify for the Champions League could mean disastrous financial consequences with kit partners Adidas. The Man United Adidas deal has penalty clauses which could see the Old Trafford outfit lose up to £22.5million. Man United are currently fifth in the Premier League table, three points off fourth-placed Chelsea.

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Man United UCL qualification: Two routes for Manchester United to qualify for the Champions League next season

After a poor start to the campaign, the Red Devils are back in the running for a spot in the Champions League. Ole Gunnar Solskjaer’s side have amassed 43 points so far, three less than Chelsea, who occupy the last Champions League qualification spot in the Premier League. They have also progressed to Europa League Round of 16, meaning they have two possible routes to make it to the Champions League next season.

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Man United Adidas deal: Failure to qualify for Champions League could affect Man United revenue

However, if Ole Gunnar Solskjaer’s team fail to qualify for the Champions League, the Man United Adidas deal has penalty clauses that could see them lose close to £22.5million. Adidas, who are Man United’s kit manufacturers, agreed a 30 per cent cut in their annual £75 million sponsorship if Manchester United fail to qualify for the Champions League for two consecutive seasons. The loss is massive despite Man United revenue being reportedly around £627million last year.

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Man United Adidas deal: Deal structure means United won't have to pay loss at once

While the loss is staggering it is unlikely to affect the Man United revenue at once. The structure of the Man United Adidas deal is such that Manchester United won’t have to incur the entire £22.5million at once. The loss would be spread out across the five remaining seasons of the 10-year kit deal agreed in 2015, resulting in £4.5million a year less in Man United revenue. Manchester United can also report it at a reduced value of £2.3million taking the entire life of the 10-year deal into account. That would mean that United backdate the deficit, and would pay close to £11.5million in their 2019/20 accounts while receiving £2.3m less annually in each of the remaining five years of the Man United Adidas deal.

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