PARISAdidas AG and Chelsea Football Club have mutually agreed to terminate their existing sponsorship deal prematurely, prompting the German sporting goods firm to increase its guidance for the 2016 fiscal year.

The partnership will now end on June 30, 2017, instead of June 30, 2023, as originally agreed, Adidas said on Wednesday.

“As compensation for the early termination of the contract, the Adidas Group will receive a payment in 2017 that will already positively impact the group’s profit in the second quarter of 2016. The impact on the group’s net income is expected to be in the mid-double-digit million euro range,” it added.

As a result, it now expects net income from continuing operations to increase by around 25 percent in 2016 to around 900 million euros, or $1 billion at current exchange, compared with earlier expectations of a 15 percent to 18 percent increase. The group’s operating margin is projected to increase to a level of around 7 percent, versus a forecast 6.6 percent to 7 percent previously.

Adidas had been sponsor and sportswear supplier for Chelsea since 2006. The deal, renewed in 2013, was reported to be worth 30 million pounds, or $43 million at current exchange, per year.

The agreement to end the deal early will allow Chelsea to enter a new equipment agreement with a competitor of Adidas, while the firm will partner with fewer teams as part of its strategic plan titled “Creating the New.”

“Adidas AG wishes to expressly thank Chelsea Football Club for their always professional and successful collaboration, which has included, among other successes, the time of their UEFA Champions League title in 2012 as well as two Premier League titles,” it said.

load comments
blog comments powered by Disqus