Nike: Rumor is $10m/year + other tidbits
I'm getting tired of the Nike threads too, but this was pretty good to get to work today. Most athletic administrators (ADs down to interns) subscribe to a daily news blast called "D1 Ticker"...today Michigan was atop the ticker.
Michiganis headed to Nike in a deal that will commence in 2016 & could be worth over $10m per year once full details of the contract are released, comes amid reports that adidas offered an historically-large & long agreement that the Wolverines passed-up to ink with the Swoosh, cash component would be significantly larger than what Nike is paying it's next largest partner in Florida State's $4.4m & would dwarf that of Big Ten foe Ohio State, UCLA will likely be the highest-paid brand in the adidas portfolio - link, link
I'm interested to know what Adidas offered, but if nothing else...Michigan flexed it's muscles against the other major Universities (when it comes to apparel - if it actually accounts for anything in your opinion).
Note: Not sure if the links work, but the blurb is what I was looking to share.
These apparel deals seem to include a supply component (i.e., supply the teams with uniforms, shoes, etc.) and a revenue component. Is there any indication how this contract will be divided?
FWIW, it always seems like the "supply" component is inflated, in part because it appears to be calculated off of MSRP, which you would never expect an institutional purchaser to pay. The inflated "supply" component seems to artificially bloat the overall number in these deals.
The apparel deals are still a huge component on the revenue side, but it would be interesting to see how the gross dollars are divided between goods supplied and cash revenue.
I hadn't considered this, but if you assume the Jordan/Jumpman brand is probably MSRP'd at a far greater rate than the normal Nike line, this could probably help inflate the supply component even more.
Then again, how many actual uniforms and sneakers can they provide in a given year? Anyone from Bain or BCG care to do the math for us?
It would make up a very small percentage of the gear.
The number of varsity sports that the "supply" component is peanut-buttered over would help inflate that number too. Compared to other schools, Michigan fields a lot of varsity teams with lots of athletes to equip.
July 13, iirc. I'm sure you're right about the equipment figures being inflated, but they do seem to be consistent across schools. I wouldn't expect anything unusual in those numbers. A modest increase and a jump in the revenue. I'm interested to see the split in guaranteed money and percentage of sales. Adidas guaranteed us more, but gave a smaller share than the biggest Nike contracts.
I mean that seems right for current market. UA and ND are at 9million per year. This helps ensure Michigan will get promoted big time by Nike.
at $10 mil/year...we're the flagship of Nike (outside of Oregon). Which is a blessing and a curse.
Can Nike really have it's flagship University not go "full Nike?"
Was made up by the Freep "based upon the market" (i.e., they assumed that UM wouldn't sign for less than it was getting from adidas) and has since been removed from their article on their web site.
The claim that the "most-favored nation" clause in the adidas deal pushed the value of the Michigan deal higher is false. The amount UM received from adidas increased from year one because of a CPI index that was built into the contract.
As a fan, I give zero fucks about "delivery windows".
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next you will bring up the mismatched football jersys. What about all the times the jerseys didn't rip apart, or the time the jerseys all matched. Why does no one seem to mention those times, as if it was expected.
The opposite is happening in European soccer. Adidas signed Manchester United ($1.15 billion/10 years) and Juventus ($152 million/6 years) away from Nike.
If Adidas is kicking out crap uniforms (and uniformz) with bad 'delivery windows' then it's pretty smart of Nike to go after Adidas big clients. They're actually getting Michigan back for less money than Adidas would offer which I would think is a pretty big wake up call / slap in the face to Adidas
Basically "We dislike your company enough that we're passing on millions to not work with you"
That would be way north of anything on the books at present definitely. Bizjournals had a nice database with 2014-15 contract values for schools, sortable by brand. The top ten Nike schools by contract value for the most recent reported year:
1) Florida State - $4,400,000
2) LSU - $4,200,000
3) Ohio State - $4,164,014
4) Texas - $4,055,000
5) Alabama - $3,570,000
6) North Carolina - $3,550,000
7) Kentucky - $3,525,000
8) Washington - $3,360,000
9) Florida - $3,355,000
10) Oklahoma - $3,350,000
After that, Nike contract amounts fall precipitously.
way harder than it should have.
Thanks for posting. I'm surprised that OSU and TX are not higher. Also very surprised FSU is that high.
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This is the right question. Those 2014 reported figures are almost certainly all contracts that are at least a year or two old. We shouldn't be looking backward; we should be looking forward. Nike locked us down for a decade. How is that figure going to look in 2024, 2025, 2026?
Comparisons to other schools' contracts is backward-looking, and therefore not very helpful. Nike has Michigan locked in for a decade at this price.
With all the amateur accountants we have on this blog, and as willing as they are to analyze the UM athletic department's financial health in the complete absence of the facts and figures needed to properly conduct such an analysis, Michigan athletics should be fine as long as our MGoAccountants remain on the job, checking those phantom books!
what Hackett wants
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Hackett wants to stay retired. He came in to right the ship, and wants to spend the rest of his days not working. He will find a very suitable replacement...I mean the man is batting 1.000 right now.
He's done nothing but kill it since he started. I wish we could sign him to a 10 year extension
When the Michigan documents come out July 13 we should have a better idea of what the real numbers are.
That's 12.6 million per year. Which is 8.2 million more than Nike is currently paying Florida State. Wow.
Notre Dame is supposedly $90M+ for 10 years so in terms of the market the Adidas deal makes sense.
Somehow I dont think Nike is at $10M - that seems absurb in relation to their portfolio.
If its $8M a year I'd consider it a massive coup considering the peer group of Nike schools.
I'd like the contract to be Nike's largest CFB contract, with a Saban clause like we had with Adidas.
Second, if we took significantly less than Adidas was offering I'd like to see a better revenue split on sales to make up the difference. Once we start winning again people are going to start buying A LOT more gear than they did during the Adidas contract.
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How is Oregon not the highest paid school? Does Oregon not get a cash payout?
Edit: Oregon gets $600k in cash. Hard to believe they only get $2.2M in equipment considering they get different uniforms for every game.
However, they get significant facility upgrades from Phil Knight.
Good find.
Oh stop it. They save so much on shipping.
The most important comparison will not be with Nike or Adidas' past deals with other schools, it will be with the next big deal either of them makes. That will be telling. But this deal is also going to be compared to Notre Dame's deal with UA, which of course is not public. Swarbrick has let it be known that it is north of $90M over 10 years and that the cash component can be partially taken in company stock, which potentially makes it more valuable given how UA's stock has performed recently. The first year of that deal is potentially worth a lot more than $10M given the rise in UA stock.
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