Behind the logo: The business of athletic apparel partnerships
MANAGING SPORTS EDITOR
It has been a rough few weeks for the University of Delaware Athletics. Lost in the turmoil of the last few weeks is the school’s recent move to an exclusive five-year deal with Adidas—marking the first time in history that all 21 of Delaware’s athletic programs will be outfitted by the same athletic apparel company.
The partnership, signed off by Athletic Director Eric Ziady, will begin in July.
This isn’t Ziady’s first venture into the lucrative world of college athletic sponsorships.
In 2010, he negotiated the largest sponsorship deal in the history of Boston College, a six-year, multi-million dollar deal with Under Armour.
Behind the negotiations, apparel partnerships are one of the most profitable facets of college sports.
There are three major players in the college athletic apparel business—Adidas, Under Armour and Nike. Between the three of them, these companies pour an estimated $250 million into college athletic departments each year.
The largest current collegiate athletic contract belongs to the University of Michigan, which pulls in $8.2 million from their sponsorship deal with Adidas. Of that, $4.4 million is in apparel and the remaining $3.8 million comes in the form of cash.
Adidas and Under Armour typically pay higher prices to obtain the exclusive rights to collegiate programs, while Nike shells out significantly less. The company’s largest deal is with the University of Texas for roughly $5.56 million.
Still, that’s a lot of money. So what exactly do these companies get out of the deal, and is it worth dropping millions of dollars to get it?
There’s the exposure that comes with having 34.2 million people watching 132 guys wearing your gear for over three hours, as was the case when two Nike-sponsored teams—Ohio State University and the University of Oregon—faced off in the Bowl Championship Series game.
The game drew the highest ratings in ESPN and cable history, while Nike used the championship as an opportunity to unveil newly designed uniforms for both teams.
In addition to exclusive rights to supply both schools’ athletic apparel needs, Nike received a number of other perks.
For example, outlined in the corporation’s deal with Oregon is the right to use all photos and film footage of any of the school’s athletic programs in Nike commercials or other advertisements. In the Ohio State contract, all football, basketball and soccer coaches must be made available for up to four appearances for Nike events. The deal also includes other benefits such as additional signage at the Buckeyes’ athletic fields.
For their part, national champions Ohio State received over $2,546,014 in equipment and apparel, $1,448,000 in cash and $150,000 in discretionary apparel expenses for the 2014-2015 season. The Buckeyes also received a $10,000 bonus for competing in the BCS Championship game.
Think that’s indicative of the university’s newly signed deal with Nike’s biggest competitor? Not so fast. While most major schools do receive deals similar to those of Ohio State and Oregon, many teams from smaller conferences––such as the CAA––do not enjoy such benefits. In fact, many must still purchase their uniforms and apparel at wholesale prices even after signing a sponsorship deal.
What determines the magnitude of a school’s contract? Having a top football program is the number one factor. As the most visible college sport, football revenues far exceed other sports in most major conferences. However, basketball is a close second. Top basketball programs that traditionally make deep runs in the NCAA Tournament, such as Kansas, can also pull in huge sponsorship deals. The Jayhawks will earn $6.1 million in cash and apparel from their Adidas deal. A final determinant of contract value is school size.
So while Delaware’s new deal is groundbreaking, as it provides consistency across the school’s athletics programs, the Adidas deal may not be as lucrative as originally thought.