Losing Their Shirts: Aig Pulls Out of United Sponsorship

One of football's most prestigious sponsorship deals is up for grabs following a decision by the cash-strapped insurance firm AIG to end its four-year, £56.5m deal with Manchester United.

The club has approached the Indian conglomerate Sahara, which already sponsors India's national cricket team, about replacing AIG when the insurer's sponsorship expires in May next year. Other possible contenders are thought to include Saudi Telecom, reflecting the club's immense popularity in Asia and the Middle East.

AIG's withdrawal is hardly surprising given the deep financial crisis afflicting the company. Since September, the US treasury and the Federal Reserve have provided lifelines of more than $150bn to save it from bankruptcy.

As a price for the rescue, the US government has taken a 78% stake in AIG - which means that Manchester United is in effect being sponsored by American taxpayers.

An AIG spokesman said that the firm would honour the remaining months of the contract but had informed the club in October that it would not be renewed: "It's been a wonderful relationship but we have other issues to deal with right now," he said.

AIG's management was replaced by the US government last year and the new executive team is facing intense political pressure to eliminate any unnecessary spending.

New York's attorney general, Andrew Cuomo, threatened litigation to halt "unwarranted and outrageous expenditure" by AIG when it emerged that the company had spent more than $400,000 on a weekend retreat for insurance agents at an exclusive resort in autumn.

The insurer is not renewing a host of other relationships with sports clubs - including stadium advertising deals with baseball teams such as New York's Yankees and Mets, the Houston Astros and the Philadelphia Phillies. AIG is also ending 10 years of sponsorship of the US Davis Cup tennis team.