By Douglas Busvine and Yadarisa Shabong
BERLIN (Reuters) - Manchester United will sport German software firm TeamViewer's logo on their shirts from next season, drawing a line under a deal carmaker Chevrolet which has sponsored them for the past seven years.
The deal seeks to raise the global profile of TeamViewer, a remote connectivity software company that floated in Frankfurt in 2019 and has since expanded internationally.
"TeamViewer will enable Manchester United to bring its fans even closer to the team they love through ground-breaking AR solutions and remote access to the Theatre of Dreams," Manchester United said in a statement on Friday.
While the 20-times English soccer champions, currently second in the Premiership, did not disclose financial details, two sources told Reuters that the annual value of the five-year deal was around 55 million euros ($65 million).
A third source, however, said the deal with TeamViewer was worth less than 40 million pounds ($55 million) a year.
The biggest Premier League shirt deal struck during the coronavirus pandemic is nevertheless worth less to the Red Devils than its last one with Chevy, which was wider as it included providing cars to players.
The club last year extended its record $559 million deal with General Motors (NYSE:GM) that was due to expire in June 2021 by six months after COVID-19 lockdowns ate into its finances.
TeamViewer, based in the southwestern town of Goeppingen, is the only German major shirt sponsor in the English Premier League, where managers Juergen Klopp at Liverpool and Thomas Tuchel at Chelsea are the Germany's best-known soccer expats.
GLOBAL REACH
TeamViewer says its "anyone, anything, anytime, anywhere" software can be run in a range of settings - remotely controlling snow cannons at ski resorts or running experiments on the International Space Station.
The augmented reality dimension of the United deal picks up on TeamViewer's recent takeover of a U.S. company called Upskill, whose smart glasses help 'show' front-line maintenance workers how to do tricky tasks.
TeamViewer is free to individuals, but once it sees that people are making commercial use of its software it starts to charge them.
This 'freemium' strategy relies on raising global awareness of the brand, which is where Manchester United's 1.1 billion-strong international fan base comes in.
TeamViewer said that, due to an increase in marketing spend from the Manchester United deal and other global initiatives, its profit margin would narrow to 49%-51% this year from a previous forecast of 55%-57%.
Based on earlier guidance, the extra marketing spend by TeamViewer would work out at around 35 million euros this calendar year.
Investors took a dim view of the short-term impact of TeamViewer's move, sending its shares 11% lower, although some analysts said it could pay off in the long term.
"We believe the marketing exposure TeamViewer will garner from the deal could significantly aid the company's traction," analysts at Morgan Stanley (NYSE:MS) wrote in a note.
"As a result, we would view the share price reaction today as a buying opportunity."
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