Apparel companies have signed contracts recently with college athletic departments that are eyebrow-raisers. The latest salvo in this ongoing battle was fired by Under Armour and UCLA:
That deal is a 15-year deal that will begin in 2017, at which point UCLA will transition from adidas to Under Armour. That means the Bruins will make on average $18.7 million a year from the deal, making it, well, The Biggest in NCAA History, as the article says.
UCLA’s deal trumps recent deals by Ohio State, Texas, Michigan, and Notre Dame. The LA Times article linked above has this graphic in it that shows where UCLA lands relative to those deals:
How Apparel Deals are Structured
The deals that college athletic departments sign with apparel companies have a total value associated with them, and how that value is calculated varies widely. Nearly all contracts consist of two components: (1) a cash payout from the apparel company to the university athletic department; and (2) uniforms, footwear, and various types of workout gear that have a cash value associated with them.
For example, State U. might have a $3 million per year deal with Nike that includes $2 million a year in gear, and $1 million a year in cash. State U. has a budget of $2 million worth of “stuff” they can get from Nike for all their sports. If the value of the gear they get from Nike is less than or equal to $2 million, no problem. In many cases, however, they can request gear from Nike that amounts to, for example, $2.1 million, and in this case they actually have to pay Nike $100,000 when all is said and done; only the first $2 million worth of gear is free.
How the cash is doled out varies, and not all deals include a cash component. Nearly all do, but some universities only get the apparel, and no money. (This is rare among P5 schools.)
Sometimes, the cash is paid out in equal amounts over the life of the contract. Sometimes, there’s an upfront signing bonus, plus regular payments. The new UCLA deal with Under Armour, for example, includes a payment of $15 million in cash, up front.
Sometimes, part of the money goes directly to coaches — usually just the football coach and/or men’s basketball coach. In the most egregious example I’ve read about, Steve Spurrier took South Carolina for quite a ride, courtesy of Under Armour, while he was USC-E’s football coach. Most of the cash paid by UA went straight to Spurrier. In all, Spurrier received $5.5 million of the $6.2 million that Under Armour paid South Carolina. He even received his final $250,000 payment from Under Armour after he resigned as head coach last fall.
The Landscape of Collegiate Apparel Deals
The headlines are attention getters, but what’s the full picture? I recently conducted an extensive study of Power 5 (P5) conference schools and their apparel deals, and here’s what I found.
Unfortunately, it’s really bad news for Hokie fans. We’ll get to that in a minute.
I did my best, through the power of Google, to find details on every apparel deal around the nation. To my knowledge, the data I’m about to pass on is accurate. I did the research in February 2016, then did my best to update the data with deals announced between then and now, such as the UCLA deal above, and a few others. South Carolina, for example, signed a killer new deal recently with Under Armour (10 years, $71.5 million).
Out of 65 schools consisting of the Power 5 schools and Notre Dame, I was able to find information on 50 of the 65 schools. The other 15 schools are either private (thus not subject to open-records requests), or they reside in states where they are exempt from open-records laws. Penn State and Pittsburgh, for example, don’t have to comply with information requests, per Pennsylvania law.
There are three companies in the business of outfitting collegiate athletic departments, and one outlier. Of the 50 schools I was able to find data on, here’s the distribution per apparel company:
- Nike: 29 schools
- Under Armour: 11 schools
- adidas: 9 schools
- Russell Athletic: 1 school (Georgia Tech)
Nike has dominated the collegiate apparel landscape for years, but recently, Under Armour has been making a push, signing lucrative deals in an attempt to get a foothold in the business. It’s no coincidence that UCLA’s uber-lucrative deal is with Under Armour; UA has been throwing cash around like crazy to make a splash.
In my research, six of the ten most lucrative collegiate apparel deals were signed by UA, despite Nike having UA outnumbered almost three to one. When Under Armour goes, they go all-in.
Virginia Tech’s Nike Deal, and Where it Ranks in the Power 5 Conferences
Virginia Tech’s current deal with Nike is technically an extension of a previous deal that started on July 1, 2007. The extension kicked in on July 1, 2014, and it runs through June 30, 2022. Here is the cash/product breakdown:
|Contract Year||Cash Compensation*||Supplied Product Limit||Total Value|
|2014-15||$275,000||$1.6 million||$1.875 million|
|2015-16||$275,000||$1.6 million||$1.875 million|
|2016-17||$275,000||$1.6 million||$1.875 million|
|2017-18||$275,000||$1.6 million||$1.875 million|
|2018-19||$275,000||$1.8 million||$2.075 million|
|2019-20||$275,000||$1.8 million||$2.075 million|
|2020-21||$275,000||$1.8 million||$2.075 million|
|2021-22||$275,000||$1.8 million||$2.075 million|
|Average (8 Years)||$275,000/yr||$1.7 million/yr||$1.975 million/yr|
|* During Frank Beamer's tenure as coach, $150,000 of the Cash Compensation was paid directly to him. Upon his retirement, that amount is now paid to the university.|
Where does Virginia Tech’s Nike deal rank nationally with all apparel contracts?
Well … the news is not good for Hokie fans. To be direct, Virginia Tech’s deal is 5th-worst out of the 50 apparel deals I researched, when ranked on a scale of monetary value per year, from smallest to largest.
|School||Conf.||Company||Annual value||Exp. Date|
|Iowa State||Big12||Nike||$442,857||Expires in 2018|
|Rutgers||B10||Nike||$1,040,000||Expires in 2017|
|Iowa||B10||Nike||$1,850,000||Expires in 2018|
|Oklahoma State||Big12||Nike||$1,850,000||Expires in 2017|
|Virginia Tech||ACC||Nike||$1,975,000||Expires in 2022|
|Georgia Tech||ACC||Russell||$2,000,000||Expires in 2018|
|Purdue||B10||Nike||$2,025,000||Expires in 2021|
|Kansas State||Big12||Nike||$2,050,000||* Expired in 2012|
|Colorado||PAC12||Nike||$2,115,000||Expires in 2016|
|Oregon State||PAC12||Nike||$2,125,000||Expires in 2019|
|Texas Tech||Big12||Under Armour||$2,150,000||* Expired in 2014|
|Minnesota||B10||Nike||$2,200,000||Expires in 2020|
|Missouri||SEC||Nike||$2,250,000||Expires in 2019|
|Washington State||PAC12||Nike||$2,300,000||Expires in 2025|
|Utah||PAC12||Under Armour||$2,416,000||Expires in 2017|
|Mississippi State||SEC||adidas||$2,500,000||Expires in 2021|
|Clemson||ACC||Nike||$2,875,000||Expires in 2023|
|Nebraska||B10||adidas||$3,000,000||Expires in 2018|
|Florida||SEC||Nike||$3,300,000||Expires in 2024|
|Maryland||B10||Under Armour||$3,300,000||Expires in 2024|
|Washington||PAC12||Nike||$3,325,000||Expires in 2019|
|Michigan State||B10||Nike||$3,400,000||Expires in 2024|
|Oregon||PAC12||Nike||$3,450,000||Expires in 2018|
|UVA||ACC||Nike||$3,500,000||Expires in 2025|
|Alabama||SEC||Nike||$3,670,000||Expires in 2018|
|UNC||ACC||Nike||$3,700,000||Expires in 2018|
|Arizona||PAC12||Nike||$3,800,000||Expires in 2025|
|Kentucky||SEC||Nike||$3,825,000||Expires in 2025|
|Ole Miss||SEC||Nike||$3,900,000||Expires in 2027|
|Georgia||SEC||Nike||$4,080,000||Expires in 2024|
|Arizona State||PAC12||adidas||$4,225,000||Expires in 2023|
|LSU||SEC||Nike||$4,300,000||Expires in 2022|
|Kansas||Big12||adidas||$4,333,333||Expires in 2019|
|Tennessee||SEC||Nike||$4,400,000||Expires in 2023|
|Illinois||B10||Nike||$4,450,000||Expires in 2026|
|FSU||ACC||Nike||$5,000,000||Expires in 2023|
|Oklahoma||Big12||Nike||$5,200,000||Expires in 2024|
|NC State||ACC||adidas||$6,450,000||Expires in 2022|
|Indiana||B10||adidas||$6,700,000||Expires in 2024|
|Texas A&M||SEC||adidas||$7,100,000||Expires in 2022|
|South Carolina||SEC||Under Armour||$7,150,000||Expires in 2026|
|Louisville||ACC||adidas||$7,800,000||Expires in 2019|
|California||PAC12||Under Armour||$8,560,000||Expires in 2027|
|Auburn||SEC||Under Armour||$8,680,000||Expires in 2025|
|Notre Dame||ACC||Under Armour||$9,000,000||Expires in 2024|
|Wisconsin||B10||Under Armour||$9,600,000||Expires in 2025|
|Michigan||B10||Nike||$15,800,000||Expires in 2027|
|Texas||Big12||Nike||$16,666,667||Expires in 2030|
|Ohio State||B10||Nike||$16,800,000||Expires in 2031|
|UCLA||PAC12||Under Armour||$18,666,667||Expires in 2032|
|Boston College||ACC||Under Armour||n/a|
1.) The Kansas State and Texas Tech deals shown have already expired; information for their new deals was not available.
2.) Schools for which no data is listed are exempt from open records requests, and have thus never provided data for public consumption.
3.) Some deals shown have not yet started, but will kick in soon (UCLA, for example, doesn't start with Under Armour until summer 2017).
4.) For an Excel spreadsheet with more information, including links to sources, click here.
In addition to Virginia Tech’s deal being less lucrative than most, it runs longer than the other low-value deals that surround it. While VT’s deal runs through 2022, the other five schools in the bottom six — Iowa State, Rutgers, Iowa, Oklahoma State, and Georgia Tech — will all get a chance to sign new deals, by 2018 … in an environment where apparel deal values are skyrocketing.
By 2018, Virginia Tech’s apparel deal could be the worst in the nation among Power 5 schools. In this age of competitive bidding between Under Armour, Nike, and adidas, expect Rutgers, Iowa, and Oklahoma State to all sign deals better than Virginia Tech’s, and even Iowa State has a good shot at doing so.
Which begs the question: how did this happen?
How Virginia Tech Wound Up Here
Virginia Tech’s last contract with Nike ran through June 30, 2015. That contract can be viewed in PDF form by clicking here, but note one thing: the cover page says July 1, 2007 – June 30, 2018, but section 2 (TERM) on Page 4 specifies the start and end dates as 7/1/2007 – 6/30/2015.
In late 2013, a couple of key things happened:
1.) On November 12, 2013, the late Jim Weaver announced his retirement as athletic director, effective January 1, 2014.
2.) Negotiations for an extension of Virginia Tech’s contract with Nike were initiated, even though the contract wasn’t due to expire until mid-2015.
To be clear, I don’t know when item #2 started. It may have been before Jim Weaver’s retirement announcement; it may have been after.
In the months before Whit Babcock was hired in early 2014, the terms of a new deal with Nike were hammered out. Babcock had no part in that, and it’s not clear who did, at least not to me. There have been posts on the message board naming specific VT athletic department employees, but in several interviews in which Babcock has talked about the Nike deal — including one with TechSideline.com — the question “Who negotiated this deal?” was never asked directly, and thus never answered.
When Whit Babcock started at Tech in February 2014 — he worked part time at VT in the early part of the month, then transitioned to full-time on roughly February 17th, 2014 — the new Nike deal was put on his desk for him to sign.
“The Nike deal was put together right before I got here and was almost literally on my desk the day I got here,” Babcock told David Teel of the Newport News Daily Press in August of 2015.
The situation didn’t give Babcock much time or inclination to review the deal. In an interview with me in February of 2016, Babcock noted, “When I looked at the deal here, it was my understanding it had been approved across campus. Coach Beamer, a lot of people were involved in it.”
That’s not a good environment for a brand new athletic director, with some major pressing issues on his to-do list, to take a stand.
Babcock wasn’t a newbie to apparel deals. As an executive associate director of athletics at Missouri, he worked on Missouri’s Nike deal in the 2010-11 time frame, before apparel deals started to mushroom, and before Missouri was invited to the SEC.
While Babcock was the athletic director at Cincinnati, their deal with adidas was coming to a close, and he was working on a new deal. Cincinnati eventually broke from Adidas in 2015 and signed with Under Armour, to the tune of $47 million over ten years — $4.7 million per year.
“We were talking to Nike and Under Armour and all that, so I felt like I knew enough to be dangerous,” Babcock said in our interview of his time at Cincinnati. So through his work at Missouri and Cincinnati, Babcock was no stranger to the world of apparel deals.
Of Virginia Tech’s deal he says, “Certainly nobody forced me to sign it, but it was presented as ‘here’s where we are and Nike’s been good to us.’ And I reviewed it, and I just did not feel at that time that it was a smart move necessarily to put it out on the street, and I thought I should get my feet on the ground at Virginia Tech.”
So Babcock signed off on the deal, and in the two years since then, as you know from the headlines and the deals outlined above, apparel contracts have exploded. The timing of Virginia Tech’s deal was poor, and the Hokies are falling further behind with each new announcement.
That boom in apparel deals has been driven in part by adidas and Under Armour attempting to grab market share from Nike. “An Adidas contract typically pays more than Nike,” Babcock notes. “They have to buy market share and other things, so the Adidas deals and the Under Armor deals are usually more lucrative on the cash side. But the brand power of Nike is worth a lot too.
“I also want to be real clear on this,” Babcock adds, “That brand power of Nike means a lot. I like the Virginia Tech brand beside the Nike swoosh. That’s a good thing. So yes, I don’t fault anybody else for how they did it, and it was a better deal than we had before. But that’s the context I recall viewing it in at the time.”
That’s diplomatically phrased by Whit Babcock, and for the time being, he’s correct about the power of the Nike brand. It’s especially strong in basketball, where the vast majority of college coaches don’t want to go AAU recruiting without the power of the Nike brand behind them. That may change over time, but for now, Nike rules the roost in basketball. (As a sidebar, the contract was negotiated when Virginia Tech’s basketball value was bottoming out under former head coach James Johnson.)
It’s worth noting that when Babcock was hired, Frank Beamer was still the head coach, and Frank Beamer liked Nike as well.
As Babcock noted in our February interview, Nike also participated in a brand refresh of Virginia Tech athletics, the results of which can be viewed here. Only five schools around the country each year receive Nike’s free brand-refresh treatment. Babcock was also one of just a small handful (“five or six”) of athletic directors who recently toured Nike’s Asia operations.
— Whit Babcock (@WhitBabcock) January 16, 2016
In Babcock’s eyes, Nike has been a good partner, and Virginia Tech is happy with the relationship.
As the time goes by and (speaking bluntly) Virginia Tech’s deal continues to look worse and worse, is there a chance for the Hokies to renegotiate?
“Not to my knowledge,” Babcock said. “I believe there’s something that kicks in in later years of the contract where it doesn’t get all the way to the last year before you can start talking about it. So in general, around 2-3 years out is about the time you would start talking about it and start laying the groundwork for the next deal. Usually Nike will approach schools about it well before it finishes to start talking about the next one. But no, not to my knowledge, there’s not an automatic clause in there, but it’s been awhile since I’ve read the entire contract.”
Additional reading/source material:
- Whit Babcock Interview, David Teel, Newport News Daily Press, August 11, 2015
- Whit Babcock: Two Years In, Will Stewart, TechSideline.com, February 15, 2016
- Whit Babcock Interview, by Andy Bitter, Roanoke Times, May 20, 2016
- Collegiate Apparel Deals (Excel Spreadsheet), Will Stewart, TechSideline.com
Note that every effort was made for the Excel spreadsheet to be as accurate as possible. Corrections and clarifications can be made in the comments section below.