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AIG, the American insurance firm, has confirmed it will not renew its sponsorship deal with Manchester United, however the club remain confident of securing an improved deal elsewhere when their current contract ends in May 2010.

The company, which has suffered massive losses during the global economic downturn, says it remained in discussions over its current deal with the world and European champions, which is due to expire in May 2010.

Despite the news United say they have already opened discussions with a number of global companies, who they feel, could offer United an improvement on their current deal. Sahara, the Indian financial services corporation, has already confirmed United have made contact to gauge its interest in sponsoring the club, while Saudi Telecom have also been sounded out about replacing the AIG deal.

The Old Trafford club also have strong links in both Malaysia and South Korea, so even at a time of financial prudence around the world, United are still optimistic of bettering their current contract, worth £19million including various financial packages

"In line with industry practice, Manchester United is exploring the possibility of a shirt sponsor for the new 2010/11 season," a United spokesman said. "The club is in dialogue with a select number of top companies worldwide and has so far received sufficient interest to be confident it can improve on its current £19m annual partnership with AIG."

AIG came close to collapsing in the final few months of last year as it fell victim to the worst housing market since the Great Depression. The situation became so bad that the US government was forced to extend it a $150billion (£109.3 billion) loan, which it is unlikely to get back, which almost certainly saved AIG from oblivion.

AIG reached its perilous state after having to pay out tens of billions of dollars on insurance policies written on mortgages that homeowners cannot possibly repay. It will also make tens of billions of additional losses on complex investments tied to properties that are plummeting in value

(source: timesonline.co.uk)

AIG recently posted a third-quarter of $24.5 billion, prompting the US government to rework the terms of it’s aid to the insurance giant in order to a) extend more money to AIG (another $40 billion, after $123 billion had already gone into buying up AIG equity and b) significantly reduce repayment terms to help stabilise the company and allow it to recover fully (as opposed to collapsing under the current crisis or under the weight of the government handouts).

For Manchester United, the message is clear - if there was any hope that AIG would recover in time to renew their deal as sponsors of the Manchester United shirt, they are now shot. David Gill was recently quoted as saying that United would have no trouble in finding a replacement if the need arose - it’s time for the Manchester United chairman to put that to the test and ensure that a shirt sponsor paying as much (and if possible more) than AIG’s 14m / year deal is brought in before the agreement with AIG ends, or worse, before AIG says they can’t pay their next year’s installment.
The US government has stepped in with a new package of aid for troubled insurance giant American International Group. It comes after the firm - which sponsors Manchester United Football Club - announced third quarter losses of £14.7bn.

AIG made a £1.8bn profit the year before. The rescue package includes a £20.5bn cash injection in return for partial ownership of the firm. Announced jointly by the Federal Reserve and the Treasury Department, it takes the sum pumped into the company to around £90bn. As part of the new deal, the Fed is reducing a £51bn loan it had made available to AIG to £36bn. It is also replacing a separate £22.7bn loan to the insurance company with a £31bn aid package. The government said the measures were needed to "keep the company strong and facilitate its ability to complete its restructuring process successfully." The Treasury Department, which is overseeing the rescue operation, has promised to invest £150bn in America's banks to get them lending again.

Until now all of the help provided for AIG was coming from the Federal Reserve.
It said earlier this year it would lend AIG a total of £74bn, then gave it access to a further £12.5bn to help it pay wages and other key expenses. AIG has said repeatedly its kit sponsorship deal with Manchester United will not be affected by its financial woes. The contract, which is worth £56.5m over four years, is the most lucrative in the Premier League.

source: Forbes, Sky