Nike to end Man Utd sponsorship citing rising cost

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By Keith Weir

LONDON, July 8 (Reuters) - U.S. sportswear company Nike Inc (Sao Paolo: NIKE34.SA - news) will not renew its long-running kit supply deal with former English soccer champions Manchester United (NYSE: MANU - news) after pulling out of a bidding war with a rival.

United are reported to be close to finalising a 10-year agreement with German sportswear company Adidas AG (Other OTC: ADDDF - news) that could be worth 60 million pounds ($102 million) a season, a record for a club deal.

Both Adidas and United declined comment.

Nike, who had sponsored United since 2002, said on Tuesday that the 2014-15 season would be its last as a partner of the 20-times English champions. The statement confirmed what a source with knowledge of the negotiations told Reuters on Monday.

"Any partnership with a club or federation has to be mutually beneficial and the terms that were on offer for a renewed contract did not represent good value for Nike's shareholders," the company said in a statement.

Nike had the right to match any bid made by a rival but decided that the price had gone too high.

Nike, the world's largest sportswear group, and Adidas are battling for supremacy in a soccer market that the German company has long dominated.

A deal with United, one of the world's most popular teams, would be seen as an attempt to protect the German company's leading position after Nike made strong inroads over the last two decades.

United earned around 38 million pounds ($64.7 million) from the current deal in the 2012-13 season, including its share of profit from the sale of team merchandise around the world.

United recently launched the team's new kit for the 2014-15 season, which bears the name of new sponsor Chevrolet for the first time and will be the last shirt with the Nike swoosh on it.

United, owned by the American Glazer family, are investing heavily on new players after finishing only seventh in the English Premier League last season, missing out on a place in the lucrative Champions League.

Nike also has deals with Premier League champions Manchester City and top French club Paris Saint-Germain, as well as World Cup semi-finalists Brazil and the Netherlands.

The company has just been replaced as kit supplier to Premier League club Arsenal by Germany's Puma, the third-ranked company in the market.

Puma is reported to be paying around 30 million pounds a year for its Arsenal deal. ($1 = 0.5877 British Pounds) (Editing by William Hardy and David Holmes)