Nike Will Pay Michigan All Of The Money
When Michigan chose to partner with Nike for their next apparel deal, it was rumored they did so while turning down more generous monetary offers from Adidas and Under Armour. The details of the Nike contract have been released, and it's safe to say Jim Hackett struck a pretty solid deal regardless. Via MLive's Brendan Quinn:
According to contract details released by the Michigan athletic department, the university's deal with Nike is worth $169 million over 11 years, making it by far the richest of all apparel deals in collegiate athletics. The contract, which will supply all 31 U‐M athletic programs with uniforms, footwear, apparel and equipment, will pay $76.8 million in cash and $80.2 million in apparel.
Michigan will receive $12 million upfront, followed by $10.1 million-$10.9 million annually in cash and apparel/equipment.
Notre Dame's 10-year contract with Under Armour, which surpassed Michigan's then-record contract with Adidas, is reportedly for $90 million. From Quinn's article, the next-highest contract for a public school is Texas' deal with Nike, which is worth a little over $5.5M/year.
Yes, saying Michigan signed a deal for $Texas may actually be understating things. Take a bow, Jim Hackett.
UPDATE: The $169 million figure is a little misleading, as that apparently includes four option years tacked on to the end of the deal.
W/o option years, U-M & Nike have agreed to 11-year, $122.32 million deal (includes $12 million upfront). The option is 4 years for $46.68
— Brendan F. Quinn (@BFQuinn) July 15, 2015
As part of the still-record-shattering deal, Michigan will make a pretty penny on royalties:
In addition to shattering the record for the largest deal in NCAA history, Michigan will also receive 15-percent royalty rates on apparel purchases. This passes Notre Dame's 13-percent and is believed to be the highest in the country.
Michigan has a 10% royalty rate with Adidas.
David Brandon didn't sign Michigan to Adidas, did he?
how much that deal aided our bargaining position this time around.
Brandon is busy slinging legos and shopkins to five year olds.. . .
My daughter has 6,343,793 shopkins, so it's working.
Am I the only one confused by the math?
76.8+80.2 = 169? 12*11 = 169? What are the other streams of revenue that get us to the 15+ mil a year needed to reach 169 over 11 years. And is 2016-2027 11 or 12 years. If it includes both the 2016 Football season and the 2027 football season, then that would be 12. Which is still 14+ a year, not 12 or 10.X or whatever.
Just to be clear. Its ALL good, just curious.
You forgot to add in the upfront $12 mil signing bonus... $12 + $76.8 + $80.2 = $169
Also, according to the article, the $169 is figured over 15 years not 11... so the $169 assumes Michigan signs the 4 year extension option at the end of year 11.
I think it's an 11 year deal with a 4 year option Michigan can exercise if they like. I've seen the 4 year option in a couple places and it seems that's the only way the 169 number makes sense when it's about 10 million per year.
$80.2 million in apparel.
Three pairs of Air Jordans and a couple shirts?
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it's the $76.8mil plus $80.2mil plus the $12mil (one time up front cash payment) that equals the $169mil
President Schlissel also deserves some love. Comes in to a tough situation, everyone is worried he is going to diminish the importance of atheltics... "fires" Brandon... hits the home run with Hackett and allows him to bring our boy home.
well-done, fellas -- nice to have a ton of well-heeled alums with a sports jones
Like this guy, right here. Wait..I missed the "well-heeled" there. Carry on...
The deal includes $80.2 million in apparel over 11 years. That's a lot more than any other Nike school gets in cash and apparel combined. Tennessee signed a deal just last year that gives them $4 million a year. Does that mean we are paying substantially more for our gear? Or are other schools having to buy more gear than their contracts cover?
Our apparel will be manufactured in cheaper child sweatshops to cut costs.
/ducks
It could mean we get swag for all our programs, whereas other schools might only make sure their high-profile teams are covered. There's also staff to consider. Point is, there's an awful lot of flexibility here.
That said, I think your concern is very justified. I joked about it upthread, but I'd definitely want to audit the apparel side of the contract. $80.2 mil ain't a lot if Nike writes off $1000 for each pair of spikes just to inflate the numbers.
I'm not TOO concerned though. We're not buying anything; as I understand it that's just the valuation of what Nike's giving us as part of what to them is basically a marketing campaign. Also, Hackett so far has shown he's no fool.
$80 million over 15 years looks reasonable. It's not out of line with our current deal with Adidas if you factor in some inflation. It still makes me wonder about the deals a lot of other schools have for cash and apparel. I'm guessing that cash often goes right back to Nike.
It's $12 million + $76.8 million + $25 million + 15% of sales over $166 million over 15 years. I'm not sure if the benchmark is annually over the 15 years. But for simplicity lets assume not. So the minimum is $113.8 million over 15 years plus $80.2 million in apparel at wholesale. If apparel sells well then this contract is worth more potentially much more.
I understand that there is a strong emotional reaction here to credit the hype over Harbaugh for the richness of this contract. Certainly that is a part of this valuation of MIchigan by Nike, but I suspect that it is a rather small part. This is an 11 - 15 year contract. To believe that Harbaugh is a major part of Nike's evaluation you must believe that they believe that Harbaugh will be here for at least the vast majority of the next 15 years. While nothing would please me more, it's hard to accept that Nike would tie up such a commitment because of any one individual.
Yes Harbaugh has dramtically changed the assessment of Michigan's immediate prospects, but Nike is NOT beating on any single individual, or any particular staff, Nike is betting on the long term performance of Michigan. If Harbaugh weren't here I strongly believe that Hackett would've negociated a comparable agreement. If you asked Harbaugh or Hackett I bet they'd agree.
I know that this phrase pisses off a significant percentage of the folks here, but this really is Michigan fergodssakes. Institutional greatness, build over more than a century, that is what Nike is buying. I feel privileged to have been a part of it long ago. I hope all of you do too.
I'm not sure who you re arguing with about Harbaugh's value. I was only talking about how the amount of apparel included in the contract seemed very high. I thought that was clear enough. Why you would think I'd claim the entire value of the contract is only $80 million is mystifying.
I was lazy and addressed two things at once, only one of which was addressed to you the other more generally to the board at large. I know better and should have made separate comments. In responding to you I merely wanted to note that the deal was even better than you indicated.
The remainder of the comment was directed at the board at large.
Again - My apologies.
Dateline: November, 2016
Gentlemen, we expect dedication from the scout team - you're an important part of the team's success. And just because many of you are walk-ons doesn't change the fact that you're vital to our success.
So please put on four pairs of shorts and five jerseys, and let's get to work!
Hackett's the one who knocks.
(Lyrics NSFW)
Just. Wow. Our Jims are better than all the other Jims, combined.
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Ace snuck it in there at the end: a 15% royalty rate. My guess is that's also one of the higher rates in college football. So every piece of Nike merch sold generates 50% more for UM than it would have with adidas.
Nike must be expecting to sell a metric shitton.
it's the WD clause
Its capped at 18 million over the 11 years or 25 million over the 15 so there is limited upside. I hope they hit the limit every year but even then its only 1 million extra a year.
Good catch.
Actually I need to correct myself, the $1.7M is a floor not a cap. Big mistake on my part, there is actually a ton of upside out there if sales go up. NC here we come, Harbaugh needs a few million new pairs of shoes!
Quote from the term sheet: "Aggregate royalties shall not be LESS than $18,370,000 over the Initial Term..."
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This is a perfect example of why paying a lot of money for a great coach can in fact be a smart business move, for all the people whining about coaches salaries.
It's difficult to imagine that the deal would have been anywhere near as lucrative but for the excitement generated by Harbaugh and the continued excellence of Beilein. It is great that Michigan was not pennywise on the hiring of the new staff, including assistants.
If it's broke, fire the asshole that broke it and hire Jim Hackett.
While I'm not disputing its a good deal, I'll bring up two points:
1. While this is a substantial increase in value from the prior contract and looks to be better than any other school, this still doesn't report what we could have got from Adidas or UA. Maybe higher, or a lot higher yet.
2. There is an imputed amount related to apparel. Given that apparel is over 50% of the value, this is a big item. How do we know how this was valued. For example, if the value of each apparel article rose a lot, then the amount of apparel may not be going up much, if at all.
Re: point #2, it's the wholesale price.
We know the other offers were higher. I'm not sure I want to know what they were though....I do, but I don't. But I think mostly I do.
I heard from some people in the department that UnderArmour and Adidas both offered about 1.5x what Nike did.
If that's true... I probably would rather have UnderArmour and take the money. Plus, Michigan can MAKE under armour a bigger brand. Not Nike big, but still.
If Hackett needs to start a money counting group within the Athletic Department, I'm his man.
I'll be honest, I was not a big fan of the Hackett hire. He felt like everything that was wrong with Michigan sports hiring post RR: had never run an athletic department but played for Bo and therefore was a MICHIGAN MAN (tm). Even after he hired Harbaugh offering less money than the NFL, I still wanted him to be an interim until we hired Ward Mannuel or someone else with experience.
But he's turned me around. Schlissel should call him this afternoon and ask if he wants the full time job.
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I know Brian and most others now denigrate even the word "brand," because it evokes Brandon (and I agree with everyone that Brandon was a disaster, along with the Lochdog etc). But this deal is about precisely that, the Michigan brand, and the power it has around the country. And there are things the administration can do beyond playing great football to make that brand even stronger. I guess i'm saying that Brandon went about it all the wrong way, but that the impulse to think about M as a brand, and manage it that way, is not wrong.
Is it just me or is everyone ignoring Texas' $15M/yr deal with underamour? It seems to me even with its new deal Michigan will only have the 2nd richtest apparel deal in college sports.
http://www.burntorangenation.com/2015/5/28/8677001/texas-longhorns-appa…
I don't believe Texas has accepted the offer. (yet)
It shouldn't be surprising that there are a few other schools that can command this kind of contract... but it is good that we are leading the way.
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