Michigan's athletic apparel/equipment deal

Submitted by Auerbach on

As many of you know, Michgian's current athletic apparel/equipment deal with Adidas expires on 7/31/16, which means this upcoming football season is the last one covered under the current contract. Many alumns and fans have expressed a desire for Michigan to switch apparel/equipment providers (or at least explore the idea of switching) to either Nike or Under Armour. 

I decided to take a look at how Michigan's Adidas deal compares to other schools. I'll let you all draw your own conclusions from the data as to what the liklihood is that Michigan switches providers. But here are a few obvious points:

  • Michigan's deal with Adidas is easily the largest among the Adidas schools and second only to Notre Dame/UA among all athletic apparel deals
  • Nike's biggest contract (which is with FSU) is worth HALF of what the Michigan/Adidas and Notre Dame/UA contracts are worth. In other words, Nike doesn't shell out $$$ for apparel deals like Adidas and UA do. 
  • While UA's deal with Notre Dame is similar in value to the Michigan/Adidas deal, UA's next biggest deal (which is with U. Maryland) is only worth $4.3mm/year. So while UA shelled out big bucks for Notre Dame, they're not in the habit of doing that, and may not be willing to undertake another enormous deal like the Notre Dame deal. 

Adidas: 

 

Nike:

 

Under Armour:

*List does not include Notre Dame's new deal with UA, which is worth $90mm over 10 years ($9mm/year)

 

Big Ten:

Source: http://www.bizjournals.com/portland/blog/threads_and_laces/2013/12/database-nike-adidas-under-armour-ncaa.html

M-Dog

December 31st, 2014 at 11:26 AM ^

Taking a cue from our new leader, when you are making millions and millions, not everything needs to be about that last marginal dollar.  Some things are more important.

I would not automatically stay with Addidas just because of more marginal dollars.  Unis that don't rip in Championship games count for something too.

Auerbach

December 31st, 2014 at 11:29 AM ^

This. And if Adidas is willing to shell out 2x as much as most other deals at big schools, one has to ask WHY that is. And I think at least part of the answer is that the value/quality of the apparel/equipment they're providing the school isn't as high as Nike is. 

MGoBender

December 31st, 2014 at 11:50 AM ^

Your reason is one possibility.  There are others, including that NIke may have more schools.  Or the quality can be the same (really, outside those stupid football uniforms two years ago, the difference in quality between Nike, Under Armour, Adidas, Reebok, is minimal).  And adidas just has to shell out more because they don't have the "prestige" that Nike has.

I don't get the fanboy arguments about adidas vs. Nike.  I use/buy apparel and equipment from both and I have never thought one to be clearly superior than the other.

So, when any apparel company will give you $4M more per year, you go with them.  Period.  That's not insignificant change at all.

snarling wolverine

December 31st, 2014 at 1:14 PM ^

It's pretty much impossible to make up the difference in apparel sales.  Remember: when someone buys a Michigan jersey, the vast majority of the proceeds go to Adidas.  It's their merchandise.  Michigan gets a small cut of royalties (around 5%).  That's it.   So if $4M more Michigan stuff gets sold, we get $200,000 in extra royalties.

I'm not sure we've ever gotten $4 million in royalties in a given year, even when the Fab Five was here.  Royalties are not what makes these deals lucrative for schools.

The argument for taking less money for Nike would be based on intangible things like the notion that they are more popular with recruits, and that in turn might help the team win more games.  It wouldn't be based on a direct economic comparison.  

 

snarling wolverine

December 31st, 2014 at 11:54 AM ^

I don't think it has to do with quality or lack thereof.  It's more an issue of wanting to break into the market.  

In soccer it's been the reverse.  Adidas is the established power there and Nike, over the past two decades, has been slowly expanding its profile but is still #2 in the sport.  They have recently been very aggressive at courting national federations for apparel deals.  For instance, they signed a gigantic contract with France a couple of years ago, even as the French team was disarray at the time. 

MGlobules

December 31st, 2014 at 12:11 PM ^

nothing about the ripping argument does. Nike and Adidas are huge corporations; they use hundreds of different kinds of constantly evolving cloth. The continually test new apparel. Nike and Under Armour clothes rip, too, as many of us can attest. For that kind of money UM can readily stipulate anything it wants about the sturdiness of the apparel. 

And when it comes to design. . . I have yet to hear, over many years, anything convincing about the superiority of Nike over Adidas. It may all come down to the swoosh, in which case it's. . . to put it charitably, a sentimental argument. Both companies hire thousands of designers; as with the auto companies, many of them move back and forth. One example among many:

http://www.fastcodesign.com/3039858/fast-feed/nike-reveals-recovered-em…

Personally, I look at the design of the individual item. Sometimes I admire Nike designs, sometimes Adidas. Sometimes others. If I'm pledging allegiance to one giant corporation over another then I'm little more than a trained seal.

Posters can fill up a lot of silly space on internet boards with these discussions, but most if not all of it is sound and fury, and signifies sweet f all.

Monkey House

December 31st, 2014 at 1:03 PM ^

I see people complain on here all the time about how bad Adidas is and how great Nike is. I've seen plenty of ripped Nike jerseys over the years and the argument that Adidas throw back or alternate jersey's are bad some of Nike's are down right pathetic. this argument is pretty silly in the grand scheme of things.

814 East U

December 31st, 2014 at 11:25 AM ^

I do not believe it is far fetched to think UA makes an offer just under ND (because I think ND has a clause that states they must be the highest paid school under UA) to Michigan. Having Notre Dame and M for UA would be a great foundation going forward if that is the direction UA want to go in the apparel market.

Baughlieve

December 31st, 2014 at 11:35 AM ^

I think UA would be bad for basketball recruiting. Nike would obviously be the best option when it comes to that.

http://www.sportsbusinessdaily.com/Daily/Issues/2014/03/14/Marketing-and-Sponsorship/Auburn-UA.aspx

"I’m pretty sure he means Auburn’s association with Under Armour sinks it by making it nigh impossible to recruit top high school talent." The "line of thinking" is that because Nike and adidas "sponsor a slew of the most prominent basketball camps, tournaments and AAU teams, they have a hand in steering the best young players toward programs ... with which their companies are affiliated." UA is "a second-tier basketball brand." It is "not that UA doesn’t sponsor the same sorts of things the bigger companies do, but it doesn’t have the foothold in the marketplace that Nike or Adidas has."

justingoblue

December 31st, 2014 at 2:02 PM ^

I definitely prefer Heatgear/Coldgear to Pro Combat and whatever Adidas is called, but I've never even considered buying UA running shoes over Nike or Mizuno and I'm pretty sure they don't make hockey equipment (what's ND going to do about that, by the way?).

Auerbach

December 31st, 2014 at 11:31 AM ^

Those were just rumors that started on Twitter. That doesn't mean Nike isn't going to bid to be Michigan's apparel/equipment provider though. It just means whatever was floating around here last week was unsubstantiated. 

Alton

December 31st, 2014 at 3:05 PM ^

"Gunning for" is a strange way to put it, but yes--Nike, Adidas and Under Armour will almost certainly submit bids for Michigan's next apparel contract.  Why would anybody expect otherwise?  I'm sure they will all submit bids on Washington State's next apparel contract as well.

Personally, arguing about which one Michigan should accept (without knowing the details of the bid) is like arguing about whether they should be selling Coke products or Pepsi products at the concession stands.  But obviously the 117 replies and counting on this thread and the myriad others on this subject show me that I am in a minority on that.

It Happened

December 31st, 2014 at 11:27 AM ^

I think Jim Harbaugh being our coach will bring in more than enough extra revenue to make up for the difference if we left Adidas and went back to Nike. That stadium is going to be packed every week!

GoWings2008

December 31st, 2014 at 11:27 AM ^

to the Adidas deal over the last couple years, but going back to Nike I think is the best deal moving forward.  UA I think may not be the right choice, I feel like their version of Maize would be a lot like the highlighter yellow we do not prefer...just an impression though.

'07LesMilesMafia

December 31st, 2014 at 11:28 AM ^

that's because nike knows its product sells itself. there's a reason adidas had to shell out all that money: they suck. the basketball recruiting advantage of nike is worth 4 mil in my opinion...

pdgoblue25

December 31st, 2014 at 11:33 AM ^

Every year big golfers leave Titleist for bigger deals (Rickie Fowler, Mcilroy etc.) because Titleist doesn't need to pay golfers to advertise.  They're still going to sell millions of Pro V1s to moron 20 handicappers at every private club in the country.

MRJ2di

December 31st, 2014 at 1:13 PM ^

Even if Nike offers something just barely north of the FSU deal, UM should grab it.  Basketball commitments from Nike affiliated AAU programs will swiftly make up the difference.  '14, '15, and (it appears more and more likely) '16 recruiting have been remarkably disappointing especially in light of the recent on-court success.  Nike has power in the basketball recruiting realm that cannot be overstated.

UofM626

December 31st, 2014 at 11:29 AM ^

Many times before. Nike basically showed us the door back when we signed with Adidas. Nike told us they don't see us as the national brand anymore, and basically started pulling away, beginning with taking the Nike camp off out campus and placing it on OSU campus. I like Nike to but I say fuck them

Black Socks

December 31st, 2014 at 11:30 AM ^

I would be okay with Adidas if they would sell classic, simple designs.  The squiggly lines and 80's looks don't do it for me.

SuperWolverine40

December 31st, 2014 at 11:31 AM ^

Great post! I was gaining up mgopoints to be able to post something similar to this, but this is great! I am really not a fan of Adidas apparel. I would be extremely happy if we switched to either Nike or UA, but I would prefer the switch to Nike. Some of my favorite clothes to date are my old Nike Michigan gear from the Carr days. Another interesting tidbit, is that a lot of my friends who are athletes at Michigan have expressed their displeasure for Adidas. They all agree that a majority of the student-athletes would like to switch out of Adidas.

LKLIII

December 31st, 2014 at 12:02 PM ^

This. And the highlighter yellow has to go. If Adidas can produce a classic looking uniform with the traditional maize color, plus maybe ONE Uniformz type of outfit for one special UTL type game each year, I am OK with Adidas.

I could also be wrong, back in 2000-2003 there seemed to be a student run protest against Nike and use of foreign sweatshops, which may have marginally impacted the dynamic as well.




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UofM626

December 31st, 2014 at 11:40 AM ^

Owns Nike and that's just what's on the books. Phil gives Oregon everything first before and other Nike school gets it. I bet that's just cash and not the apparel that is thrown there way. I know a Oregon kids parents that plays football here from Cali and they say it's unreal all the shit they get. I mean boxes and boxes of stuff new and prototype.

Auerbach

December 31st, 2014 at 11:55 AM ^

Yeah I wasn't sure what to make of that either. We know the Nike-Oregon deal is of a completely different character than all the other deals, so perhaps it has something to do with that deal being structured in a way that doesn't really show up in charts like this. 

The_Mad Hatter

December 31st, 2014 at 11:33 AM ^

I'm no Addidas fan, but if they're paying double what Nike offers, we're not switching.  Every dollar that comes in from clothing sales is one less dollar that needs to be made from higher ticket prices and $5 water.

It would be nice to have maize again though.  I don't know why the university puts up with the highlighter yellow.  And no, Nike does not have maize trademarked.