Umbro has bought a 49 percent stake in its French licensee, Noël Soccer SAS, in a transaction that is helping it to finance an extension of its sponsorship of the Olympique Lyonnais football team to 2013. The sponsorship of Olympique Lyonnais, dating back to 1993, is of great importance to Umbro, as the team is France’s most successful, having won the French league for six years straight. Other big companies were vying for the coveted team.
The total purchase being paid by Umbro is equal to a minimum of about £12 million (€17.6m-$23.8m). The payment involved €8.8 million in cash for a 36 percent share of Noël Soccer, made to its parent company, Noël France, followed by a €3.2 million cash loan which has been converted into an additional 13 percent of the equity. An additional amount of up to €6.0 million will be payable through the next six years if certain performance goals are met.
This gives the Noël Soccer an enterprise value of between £25 million (€36.8m-$49.6m) and £36 million (€52.9m-$71.5m). The French company had sales of €51 million and a profit after tax of €2.6 million for its full year ended last April. Sales grew by 7 percent last year and compare with €40 million four years ago. The company’s gross asset value was given as €13.9 million.
As it turns out, Noël would have been unwilling invest in an extension of its deal with Olympique Lyonnais without knowing whether its licensing contract with Umbro would have continued. Umbro has agreed to extend its licensing deal with Noël through 2020. Noël, a French footwear company that has been Umbro’s licensee since 1993, signed a 10-year deal in 2003 to market BasicNet’s K-Way brand in France, but it has now decided to stop the relationship in view of lower than expected results.
France is also Umbro’s largest market outside of the UK, at least for the moment. The value of football products sold in France is estimated to have been £112 million (€164.7m-$222.3m) in 2006. All of the country’s 10 most watched television programs are football-related. France ranks as the fifth largest football market in the world, trailing the UK, the USA, China and Germany.
China is now expected to overtake France as Umbro’s largest foreign market. In fact, last February Umbro announced that it would increase to 40 percent its equity stake in its licensee for greater China, Team and Sports, which is owned by Win Hanverky Group.
Separately, Umbro reported at its annual general meeting May 16 that branded sales in the UK are in line with expectations and should be above the 2006 level. Umbro said its business in China, USA and Latin America is “significantly ahead of last year.” Overall licensed turnover is expected to be down for the year because of the lack of a major tournament.
