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Wednesday, January 21, 2009
AIG ending sponsorship of Manchester United

LONDON -- Insurance giant American International Group will not renew its shirt sponsorship of world club soccer champions Manchester United and has already started cutting back costs in relation to the existing deal.

The American company also said in an email sent to Reuters that it was "in active discussions" with the club regarding the current four-year $100 million deal, which runs until next May.

The English club, former home to David Beckham and current team of FIFA World Player of the Year Cristiano Ronaldo, has a huge global fan base, making it one of the top prizes in sports sponsorship.

"In October, AIG told Manchester United that it is not renewing its sponsorship," the company said in response to questions from Reuters.

"Further, AIG has been in active discussions with the club regarding the current contract, which expires in May 2010."

Once the world's biggest insurer by market value, AIG averted bankruptcy in September last year with an $85 billion federal bailout, which later swelled to about $152 billion.

The company has started selling assets and cutting costs to repay part of the government rescue package. It joins a string of other companies that have had to rein in spending on sports as the global economic downturn deepens.

AIG said it had been reviewing all sponsorships following the Fed bailout and was already in the process of eliminating marketing, advertising and hospitality costs related to the existing Manchester United deal.

The news comes a day after Indian company Sahara, which has interests spanning financial services and real estate, said it had been approached by the Premier League champions about becoming a sponsor.

Manchester United spokesman Philip Townsend declined to say whether AIG would stop its sponsorship of the European champions at the end of this season.

"The process for the 2010 season has already started," Townsend said. "Sahara is one of a number of companies who have expressed an interest."

He added that ideally a sponsor would be named soon for its name to be ready for the start of the 2010-11 season.

"We would be starting the process now to find a new sponsor to have the new shirts ready in time for our outlets and fans around the world."

Sahara, which sponsors the Indian cricket team, on Tuesday said it had received an "elaborate" sponsorship proposal from the club.

British media reports have named Saudi Telecom and British insurer Prudential as other potential suitors.

United's appeal is enhanced by its growing legion of fans in the largely untapped Asian market. The club has a series of exhibition games in China, Malaysia, South Korea and Indonesia planned for later this year.

With the global financial crisis biting deeper by the day, companies around the world are cutting costs and slashing sponsorship budgets.

British soccer club West Ham played for weeks without shirt sponsorship after its sponsor XL went bust last year.

Formula One has also been hit. Earlier this week BMW-Sauber lost Swiss bank Credit Suisse as a sponsor, while F1 teams have agreed to reduce their budgets by 30 percent for 2009 after Honda was forced to pull out of the sport last month because of the economic crisis.

Manchester United relies on sponsorship for around a third of its revenues. The club pays around 43 million pounds ($59 million) a year to service 660 million pounds in debt created when U.S. owner Malcolm Glazer bought the club in 2005.




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