Pay To Play With Manchester United

The troubled insurance giant, American Insurance Group (AIG), has raised plenty of red flags in recent months. Starting in May 2010, however, the company's name will no longer be emblazoned on the world's most popular red jersey. Reports today confirmed that AIG will end their four-year sponsorship deal with English Premier League heavyweights Manchester United.

In the world's richest endorsement, AIG paid 19 million pounds ($26.6m) each season to have the company's logo worn by human billboards like Christiano Ronaldo and Wayne Rooney. With a fan-base that spans the globe, and is particularly prevalent in countries like China and Indonesia, the Man U sponsorship is a lucrative deal that provides massive exposure. Only two other companies have been displayed on the Red Devils jersey, as both Sharp Electronics (1982-2000) and Vodafone (2000-2006) had multi-million dollar contracts with the club.

Back in September, the perils of an accelerating credit crisis caused AIG to reconsider their jersey sponsorship. While AIG executives announced they would be able to honor their existing commitment to the club, it became clear that any further deal was unlikely. As a major holder of mortgage backed securities and credit derivatives, AIG's liquidity crisis triggered alarming write-downs that ultimately required a $100 billion bailout package from the US federal government. After an embarrassingly expensive executive retreat in October, AIG is now desperately trying to cut unnecessary spending.

Man United are not the first club to lose a sponsorship deal as a result of the global financial crisis. Also in September, West Ham United had to drop its contract with XL Holidays, a low-cost airline and tour operator. That three-year deal was worth about $10.5 million, but had to be terminated after the company was placed in administration. Another Premier League club, West Bromwich Albion, struggled to find a replacement sponsor when Deutsche Telekom's T-Mobile dropped its contract.

Many analysts have observed that the financial strains in global capital markets are beginning to manifest themselves in the sporting world. The NBA cut down its number of preseason games in Europe, Formula One racing (the world's most expensive sport) is facing a slew of cost-cutting measures, and many companies will not be buying the exorbitant Super Bowl advertising slots.

Given the club's global prestige, Man U are almost sure to come out of the economic recession unscathed. Indeed, certain marketing experts believe that the club will have little trouble breaking the 20-million-pound mark for their next jersey deal. United officials have already sent sample kits as a sales pitch to a number of potential corporate sponsors. Some reports have pointed towards Sahara India Pariwar, a business conglomerate, which already has several domestic sports sponsorships. Looking for a partner is Asia reflects the interest of many major English clubs to gain popularity in the region.

On the pitch, United are again tops in league play and are among the favorites to defend their Champions League title in Europe. To the disappointment of lesser clubs across the world, AIG's financial troubles will have little effect on the fleet-footed superstars at Old Trafford.