jose - soccer

The soccer team will find it hard to get an equally lucrative sponsorship deal from 2010.It looks like the American government is not interested in bankrolling top soccer brand Manchester United anymore. After taking control of struggling insurance company American International Group last year--as the financial crisis threatened to engulf some of the world's biggest companies--Uncle Sam does not want to renew the insurer's $78.0 million sponsorship deal with the British team.

This will be a problem for Manchester United, which relies on sponsorship for around one-third of its revenues. If it can't get a new sponsor to pay out a similar or higher amount in 2010, when the contract with AIG (nyse: AIG - news - people ) runs out, club owner Malcolm Glazer will find it even harder to repay the debts he saddled the team with when he bought it in 2005.

"They have to find a deal of equal standing, that is the critical issue," said Sean Hamil, an academic at the University of London's Birkbeck Sports Business Center. He told Forbes that this was unlikely to happen, given the troubles facing the corporate world, and that this would have an effect on Manchester United's ability to keep paying for star players.

As for who could replace AIG, speculation is rife it could be insurer Prudential (nyse: PUK - news - people ) or Indian conglomerate Sahara India. Either way, there are already signs that Glazer is tightening his belt, according to Duncan Drasdo, of the Manchester United Supporters' Trust. He told Forbes that Glazer was rumored to be putting his American football team, the Tampa Bay Buccaneers, team up for sale. He also said that Manchester United was taking ticket money from members' bank accounts earlier than planned.

AIG is not the only example of how the economic crisis is seeping into the sports world. German automaker Bayerische Motoren Werke (other-otc: BAMXF - news - people ) lost Swiss bank Credit Suisse (nyse: CS - news - people ) as its Formula One sponsor on Tuesday, while Japan's Honda quit the auto sport in December.

Even in soccer, two high-profile Premier League sponsors are banks: Barclays (nyse: BCS - news - people ) and Northern Rock. A spokesman for Barclays told Forbes the bank had not yet begun talks on renewing its Premier League sponsorship contract, and that it would not comment on the financial details. A Northern Rock representative was unavailable for comment.

Manchester United was ranked the most valuable soccer team in the world by Forbes last year, with a team value of $1.8 billion.

(source: forbes.com)

The US government is to buy a $40bn equity stake in troubled insurer American International Group – increasing its investment in the company to a total of $150bn as it reported $24.47bn of quarterly losses.
AIG, best known in the UK as Manchester United's shirt sponsor, is to receive the capital injection as part of a restructured package of funds from the Federal Reserve and the Treasury intended as a longer-term investment than the original monies offered.

The Fed originally offered AIG an $85bn credit lifeline in mid-September, and handed over a further $37.8bn last month when it became apparent that the original facility was not enough. Under the new structure, the Treasury will buy $40bn of preferred shares in AIG – which in return will pay an annual 10pc dividend – as part of the Troubled Assets Relief Programme.


The more permanent investment will allow the Fed to reduce its $85bn credit line to $60bn, and a further $50bn will be provided to purchase distressed assets from AIG which are to be then placed in a pair of financing vehicles. In addition, some of the loan terms have been eased to make it easier for AIG to meet its commitments.

The new structure was hatched by AIG chairman Edward Liddy, who was brought in after the government's first bail-out in September, and Neel Kashkari, the Treasury's interim assistant secretary for financial stability. It is similar to one first suggested by former AIG chairman Hank Greenberg, who remains a major shareholder in AIG, although it is not known whether he was instrumental in these negotiations.

Mr Kashkari said yesterday that the decision was necessary to prevent yet more turmoil in the markets. "Today's action was a one-off event," he said. "It is not the start of a new programme." The revised investment package should stabilise the company in order to allow Mr Liddy to continue with his plan of selling off major parts of AIG, including its personal insurance arm, its life and retirement businesses and its aircraft leasing arm.

Mr Liddy said he was in talks with lots of different buyers for each of the various up-for-sale businesses, and that he planned to announce several transactions in the current quarter. News of the investment came as AIG announced a net loss of $24.47bn in the three months to September, against a profit of $3bn in the same period last year.

The results include $7.05bn of unrealised losses and $18.31bn in investment writedowns.

(source: www.telegraph.co.uk)