Nike outlet: U prepares for new athletic apparel deal after Nike contract expires

  • Article by: MIKE KASZUBA , Star Tribune
  • Updated: June 10, 2013 - 1:02 AM

The University of Minnesota, a “Nike school,” is gearing up for a better deal on its next athletic apparel deal.

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University of Minnesota athletic teams — from track and field to women’s hockey to football to baseball — display the iconic Nike swoosh on uniforms, hats, shoes, gloves — even golf balls. Under a seven-year contract with the school, the company provides all of the merchandise.

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At the University of Minnesota’s spring football game, Nike was everywhere. Running back Donnell Kirkwood warmed up on the sidelines, with N-I-K-E in silver letters on the back of his black shoes. An array of coaches and assistants roamed the field — including coach Jerry Kill in a Nike hat and pullover — and each wore the trademark Nike swoosh on their chest. In the gift store inside TCF Bank Stadium, a Nike football featuring the university’s logo sold for $35.

In exchange for a hard-to-miss profile on campus, Nike has been important to the Gophers’ bottom line — the school gets $1 million a year in Nike merchandise, with the company offering everything from shoes, uniforms and gameday warm-ups to weight-training gloves, stopwatches, sunglasses and golf balls.

As the school’s seven-year contract with Nike nears expiration in July 2014, university officials are looking to increase the benefit to the school. Under the current contract, the school also gets $200,000 a year in royalty payments: $10,000 should the Gophers men’s hockey team make the Frozen Four tournament and a 2-for-1 deal on Nike football shoes once the Gophers football team gets 325 pairs.

But other schools have since signed more lucrative apparel contracts with Nike or its competitors. It’s a sign of how such arrangements are now commonplace on the collegiate landscape, and also an indication that the University of Minnesota remains a second-tier customer for apparel companies because of its more-modest tradition of winning.

Alabama — the college football national champion for three of the past four seasons — is in the midst of an eight-year contract with Nike that is valued at $30 million.

Michigan is in the middle of a long-term contract with Adidas — the school switched from Nike — that pays the university $6 million annually in cash and in-kind contributions. Nebraska’s contract with Adidas involves $2.5 million annually in cash and in-kind contributions, and the company pays the school $100,000 if its football team plays in a major bowl game.

Nike pays Minnesota $25,000 if the Gophers get invited to a major bowl game.

There are critics of the apparel deals and what that says about the commercialization of college athletics.

“What does doing business with Nike have to do with higher education?” asked Michael McNabb, a Twin Cities attorney who regularly analyzes the Gophers’ athletic budget. The business that has become collegiate athletics — including the Nike deal — “is just so far removed from what [the] reasons for having a university are,” he said.

But coaches and athletes for the most part appreciate the arrangement.

“I enjoy being a ‘Nike school,’ ” said Katie Richardson, who played third base for the Gophers softball team. “I’ve kind of worn Nike for most of my life.”

As she fielded ground balls at a recent practice, Richardson wore a Gophers maroon-and-gold uniform that featured the Nike swoosh on the chest, back pocket, socks and shoes.

As the University of Minnesota weighs a contract extension, doing business with Nike — which has contracts with seven other Big Ten schools — comes at a price.

In its contract with the school, Nike makes little secret of its motive: “The principal inducement for NIKE’S entrance into this agreement is the exposure that the NIKE brand receives through the prominent visibility of the NIKE Swoosh.”

Nike spokeswoman Cindy Hamilton said the company would not discuss details of its Gophers contract nor its contracts with other schools. “We don’t tend to comment on our contracts,” she said.

The 33-page contract stipulates that the university can be penalized financially if players tape over the Nike logo on their uniforms or shoes; players who cannot wear a Nike shoe for medical reasons must have the reason certified by the team’s doctor. The university must make its coaches available for up to three personal appearances a year on behalf of Nike and even gives Nike the legal ability to use a coach’s nickname in marketing the company.

At most home games, a public address announcer or an electronic message board at a stadium must tell fans that Nike is the “exclusive products supplier” for the school. For a separate $100,000 annual payment to the school, Nike gets eight hockey season tickets and 12 tickets per round of any postseason tournament — part of a large assortment of tickets the company gets to most of the school’s major home-and-away sporting events.

While Nike will pay the university $25,000 if its men’s basketball team makes a Final Four tournament appearance, the school can lose money from Nike should the university be banned from television appearances or if Nike’s swoosh is “materially diminished” in size and placement on a school uniform and shoes.

Coach: Not ‘over the top’

School officials defend the arrangement, even as some of them have faulted Nike’s products.

“I don’t think it’s over the top,” John Anderson, the longtime Gophers baseball coach, said of Nike’s on-campus presence.

Anderson said he and other college coaches successfully convinced Nike not to force their teams to use its aluminum baseball bats — he believed they were not as well made as others — and also exempted his middle infielders, first baseman and catcher from having to use Nike’s baseball gloves.

“They didn’t make a very good first baseman’s glove — they admitted it,” he said.

Anderson said Nike has not been pushy regarding its contract.

“I haven’t felt that somebody’s walking around, checking to make sure I got my Nike shoes on every five minutes,” Anderson said as he sat in his office, wearing a school pullover with a Nike logo.

Of the number of Nike swooshes on his own coach’s uniform, Anderson laughed and said: “I think I counted 20-some one day.”

Negotiating a deal

Even though Nike’s agreement does not expire for another year, school officials who are being pushed to increase athletic department revenues have already begun preparing for the next contract.

Although other companies are expected to compete for the new deal, Nike already might have a leg up. Mike Ellis, the school’s new senior associate athletic director, will play a key role and only last year helped negotiate a contract with Nike while at Virginia Commonwealth.

“I’ve been involved with Nike for a long time,” said Ellis, who was hired by new athletic director Norwood Teague, who also came from VCU.

The university’s contract is similar to Nike deals with the seven other Big Ten schools, particularly those with similar marketing brand values.

Purdue has an eight-year contract with Nike, with annual in-kind product payments that began at $900,000 and have escalated to $1.1 million. If a player at Purdue cannot wear Nike shoes for medical or comfort reasons, Nike will at least temporarily allow the player to wear a competitor’s shoes provided the name of the competitor is blocked out.

Patrick Rishe, a professor specializing in sports economics at Webster University in St. Louis, said that — like them or not — athletic apparel contracts are here to stay.

“The cost of running an athletics department is increasing,” Rishe said. “You need revenue from wherever you can get it.”

Rishe said that because the University of Minnesota “will pale in comparison” as a marketing brand compared with other major college programs — such as Alabama, Florida and Southern California — it is no surprise that the Gophers get less money from Nike.

At Ohio State, another Big Ten school with a high-profile marketing brand, Nike does not pay the school a set annual payment. Instead, the company pays 12.5 percent of the net sales of Nike’s exclusive licensed products to the university.

Selling merchandise

At Goldy’s Locker Room, a souvenir store located inside TCF Bank Stadium, store manager Shawn Gregory said that having an exclusive contract with the school helps Nike rise above the many other companies that sell Gophers-related clothing.

“I think there’s a percentage of people that want to wear what the team is wearing,” Gregory said. “I know the Nike hat that Coach Kill wore, [we] sold a lot of those.”

Inside the store, an orange Nike swoosh hung above a sign that read: “Take an additional 20% off sale Gopher football jerseys.” Nearby, a Gophers maroon hooded sweatshirt with a Nike logo sold for $65.

Gophers softball coach Jessica Allister said her team, despite the Nike contract, uses Wilson and DeMarini gloves and bats.

She said she has played and coached at Minnesota, Stanford, Georgia and Oregon — and has worn Nike apparel at every school.

“I’ve been wearing Nike for a very, very long time,” Allister said.



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