UM’s $174 million Nike apparel deal starts with a bang

0

the University of MichiganThe huge clothing, footwear and equipment deal with the sporting goods giant Nike Inc. officially started today.

A launch party was held outside Ann Arbor’s Mr Den, the official retailer of UM products, on Sunday evening before the new products go on sale at midnight. Michigan football coach and social gadfly Jim Harbaugh participated.

Images of some of the new uniforms and other details can be found online at GoBlueHailMichigan.com.

All non-M Den outlets will have Michigan Nike gear available starting Tuesday with the football jersey and Jordan Trainer One available in select stores starting Aug. 8, UM said in a statement. The new Nike-designed football uniforms will be unveiled on Tuesday.

Under the terms of the contract, Nike will pay UM up to $127.12 million over 11 years. A four-year option would take the deal to $173.8 million and extend the contract through 2031.

UM receives $53.52 million in cash; $56.8 million worth of clothing, equipment and footwear; and $12 million just for signing the deal in March. In addition, UM can exercise an option for another piece of equipment worth $4.8 million.

The deal was announced in July 2015, but only formalized earlier this year. It was originally advertised as a $169 million deal, but was later revised upwards.

When announced, UM’s Nike deal was the largest financial relationship of its kind in college athletics, but it was later surpassed in value by deals for the University of Texas, Ohio State Universityand UCLA. UCLA currently has the largest varsity apparel deal at $280 million over 15 years starting next summer.

Michigan’s previous deal was with a German clothing manufacturer Adidas. It started in 2007 and cost an average of $8.2 million per year ($4.4 million in equipment and $3.8 million in cash). UM received an initial lump sum payment of $6.5 million when this deal began, and it was initially worth around $60 million before the variable annual escalations took effect.

Adidas and under protection also bid for the new UM contract. No details were disclosed on the amount of the offer from these companies.

Nike had a seven-year, $30 million sponsorship deal with UM that ended in 2008.

The university’s athletic department has 31 programs and more than 900 student-athletes.

The new Nike contract allows UM to continue third-party sports equipment deals with other manufacturers except for Adidas, Under Armour, Puma and Reebok. Some of the licensed third party supplies include baseball and softball bats and gloves, wrestling shirts, golf balls and clubs, and volleyballs.

The Nike agreement includes the use of Nike’s Jordan Brand “Jumpman” apparel and footwear for men’s and women’s basketball.

Nike’s Graphic Identity Group works with the athletic department on uniform design.

The deal also includes three student summer internships at Nike headquarters near Beaverton, Oregon. Internships are valued at $15,000 each.

The new agreement also calls for Nike to collaborate with UM on at least two community events per year that support health and wellness and to work with the university on sports research, such as health training, recovery and injury prevention.

Additionally, Nike and UM will collaborate on environmental sustainability efforts, such as sharing strategies and innovations to reduce waste and conserve resources, the agreement says.

Based in Atlanta Collegiate Licensing Co., which manages UM’s apparel and merchandise licensing, will receive a 15% royalty on net sales of the university’s Nike merchandise. CLC’s minimum aggregate royalty over the entire 15-year agreement is set at $25 million.

The CLC has generated between $3.2 million and $6.8 million annually for the university over the past decade, UM said.

The licensing company is owned by North Carolina-based Winston-Salem IMG Collegewho has been engaged since 2008 to manage and sell all marketing and sponsorship deals for UM athletics through 2020. Based in Louisville Host Communications Inc. got the UM rights deal in 2001, but was acquired by IMG in 2007.

In 2008, IMG paid $86 million for all Michigan athletics media rights in a 12-year deal that covers radio, publishing, website management, corporate sponsorships , hospitality, coaching endorsements, and coaching TV and radio shows, according to Sports Business Daily. In exchange for the $86 million, IMG keeps some or all of the revenue from deals it creates for Michigan athletics.

Share.

Comments are closed.