[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 20 January, 2005, 16:53 GMT
Umbro loses Chelsea football deal
Frank Lampard
Umbro has deals with more than 150 teams
Shares in Umbro have fallen 4% after the sportswear firm lost its contract to make Chelsea Football Club kits.

Chelsea said the Umbro deal, which gives the firm the lucrative right to make replica shirts, would end five years early by mutual agreement.

The contract will expire in June 2006 instead of 2011 - with the club making a 24.5m ($45.7m) payment to Umbro.

The UK sportswear company said it now expects pre-tax profits to fall by 1-2m this year.

Umbro had paid the current Premiership leaders for the right to make its kit and reaped hefty profits from manufacturing replica shirts for fans.

'Long-term goals'

Neither Chelsea nor Umbro said why the contract was ending.

"We believe this represents a good deal for shareholders," Umbro chief executive Peter McGuigan said in a statement.

Premiership kit deals
Chelsea: Umbro
Arsenal: Nike
Manchester United: Nike
Everton: Umbro
Liverpool: Reebok
Middlesbrough: Errea
Charlton: Joma
Tottenham: Kappa
Manchester City: Reebok
Aston Villa: Hummel

"It provides us with a material cash injection in the summer of 2006, which will fuel a higher level of global investment in the brand over the medium term."

Chelsea chief executive Peter Kenyon said the club believed the decision would "help us achieve our strategic long term goals in the future".

The end of the contract will fuel speculation that Chelsea is lining up a deal with either Nike or Adidas, the world's top sportswear companies.

Mr Kenyon has been trying to turn the club into a powerful international brand since his arrival from Manchester United, where he brokered a record-breaking 303m marketing arrangement with Nike.

Shares in Umbro, which will remain kit sponsor during Chelsea's 2005-6 centenary season, closed down 4.5 pence at 105p.

International deals

In 2004, sales of Chelsea products were worth 8.2m, accounting for 6.1% of Umbro's UK turnover.

When fans know the shirts are changing, they tend to sell less well
Umbro

The company will bring out unique Chelsea products for the centenary celebrations but expects sales to fall this year.

"When fans know the shirts are changing, they tend to sell less well," a spokesman for Umbro said.

"In this case, the deal with the current Chelsea shirt sponsor, Emirates, is also coming to an end."

Cheshire-based Umbro makes kit for 150 teams worldwide, including the England national squad.

Profits in the half-year to July 2004 were 16.55m, a 51% increase on the same period in 2003.





SEE ALSO:
Euro 2004 boost for Umbro profits
08 Sep 04 |  Business
Umbro slashes its flotation price
28 May 04 |  Business
Umbro gives go-ahead to flotation
29 Apr 04 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific