When the University of Michigan signed a million dollar contract with NIKE in 1994, it was one of the first major apparel endorsements in NCAA history. The Wolverines’ licensing agreement changed everything. Over the next decade, school would begin to compete for contracts, and University of Michigan would remain one of the top college brands on the market.
For years, Michigan were the fourth highest-selling name in college; but, in 2007, NIKE decided to back away from the Wolverines. As a result, Michigan signed an agreement with Adidas worth $7.5 million Annually. according to the Portland Business Journal, by 2014, Michigan’s new contract had become the most lucrative deal in the country.
The Adidas deal was great for the university. It included $3.8 million in cash each year, $4.4 million in equipment / apparel (also annual) and a $6.5 million signing bonus. The contract also included a clause to match any offer that Adidas made to another University. It was one of the best deals in sports history… until now.
Last week, it was announced that Michigan had “reunited” with NIKE. According to MGOBLUE.com:
“The partnership will commence August 1, 2016 and will see NIKE supply all 31 of U-M’s athletics programs with uniforms, footwear, apparel and equipment. U-M and NIKE also will collaborate throughout the agreement on innovation initiatives in sports technology, design and best practices.”
The deal lasts from 2016 through to 2027 and has an estimated value of $169 million (or roughly $11.3 million per year). This deal goes beyond any that has ever been made in NCAA history.
Jim Hackett, interim director of athletics at the University of Michigan, said that the “partnership is about more than Michigan athletics… NIKE is a recognized leader in its field when it comes to product innovation and we look forward to future collaboration.”
While NIKE does have a reputation for innovative product design and research, the financial aspect was probably a slightly larger selling point.
This deal represent an increase in sports revenue to a university that’s already flush with cash. In 2011-12, the school’s football program generated around $62 millions more than it cost. In 2010, their basketball program reported profits of around $3.5 million per year.
Currently, tuition for out of state students at Michigan starts around $57,000 per year. Hopefully, this new deal can help the school lower costs.
[Photo via SneakerNews.com and thePremiereStore.com]