KEY POINTS:
New Zealand rugby is now enjoying what might just be the biggest sponsorship in world rugby.
In a year where financial markets have gone into meltdown, New Zealand rugby's good year got even better with the news that adidas has extended its sponsorship agreement.
The German sports apparel
manufacturer will retain its link with the All Blacks through to 2019.
The existing deal was due to expire in 2011, but both adidas and the New Zealand Rugby Union agreed at the Beijing Olympics to begin negotiations about an extension and reached agreement faster than expected.
The value of the deal has not been revealed but NZRU chief executive Steve Tew said he would be surprised if it was not the biggest sponsorship package in world rugby. "There has been an uplift in the value," he said and then revealed that the deal was structured to deliver more cash between 2012 and 2016 with another jump again in the final three years.
The real value in signing the deal is that the NZRU now have certainty of income for the next 11 years. Having fixed the value of their foreign exchange in recent months, they even know the precise value in New Zealand dollar terms of the adidas contract through to the World Cup.
The deal is paid in US dollars and, in previous years, the NZRU has not been able to value it due to fluctuations in the currency markets.
The extension also comes against an uncertain economic backdrop where recession is gripping some of the biggest countries in the world.
There had been fears in New Zealand that, with so much gloom around, adidas would be reluctant to enhance the value of the deal.
There were even whispers that the group would decide not to renew the contract at all.
But adidas chairman Herbert Hainer revealed that 2007 had seen sales of replica All Black jerseys leap to record levels in the months around the World Cup.
"We were seeing figures in line with the likes of AC Milan, Bayern Munich and Marseilles," he said.
Those booming sales were enough to convince adidas to buy-in for another 11 years and it is clear that the Germans are determined to do their bit in growing the global presence of rugby. They were influential behind the scenes of the recent Hong Kong test and Munster game and they are obviously keen to see more of these offshore fixtures in new markets.
Replica sales of rugby jerseys are strong in Europe but adidas are looking to grow their presence in Asia. In their presentation to reveal the extension of the deal, they threw forward a scenario of the All Blacks one day playing at the Olympic Stadium in Beijing.
The NZRU is on track to post a small profit this year, a much improved situation from the one predicted six months ago.
