General Motors plans to shell out as much as $600 million to sponsor a European soccer team despite owing $27 billion to American taxpayers.
GM’s Chevrolet logo will appear front and center on the jerseys of soccer powerhouse Manchester United, as part of one of the largest sponsorship deals in U.S. history. GM will pay $60 million per year for the logo—nearly double the $31 million European insurance company Aon paid—despite plummeting sales and massive liabilities.
The U.S. Treasury owns 26.5 percent of the stock of the Detroit-based automaker, which has been reeling from a dwindling European car market. Stock price is down.
Manchester United is the world's most valuable sports franchise, according to Forbes:
The Red Devils still lay claim to … : The world’s most valuable sports team. Forbes estimates Manchester United is now worth $2.23 billion, 19% more than No. 2 Real Madrid, which is worth $1.88 billion.
The deal was announced at a time when Congress is constraining military advertising: The Army withdrew its sponsorship of a NASCAR vehicle as part of the $80 million budget cut, and Dale Earnhardt Jr. also faces the prospect of losing his $26.5 million deal with the National Guard.
Military officials have argued that the sponsorships help attract talent to their ranks. Several lawmakers are attempting to preserve the deals.
GM and its lending arm, Ally Bank, owe U.S. taxpayers $42 billion. The prospects of a full return on investment are looking grim. Ally is on the verge of bankruptcy and its attempt to spin off the mortgage division that sunk it in 2008 is under investigation. GM’s stock has fallen by more than 30 percent since its November 2011 initial public offering. It would have to triple in order for taxpayers to recover the entire $50 billion bailout.
President Obama has touted the auto bailout as one of his biggest successes, while falsely claiming that the companies have paid back American taxpayers.
The car company got more bad news on Wednesday as sales fell 6.4 percent in July, 8.5 percent short of expectations.