Adidas, currently the hot company in the sportswear industry, announced last week its largest-ever investment in American college sports. It signed an apparel deal with the University of Louisville valued at $160 million over 10 years.
But it’s certainly not the only big deal this year: Under Armour’s deal with UCLA, which totals $18.5 million for the 2017-18 school year, tops the list. It’s the first time in recent history that Under Armour has hit the top slot.
And though competition in the space continues to drive the deals higher, not all collegiate partnerships look the same these days.
Adidas is adding a collaborative element to some of its relationships with universities, like the University of Nebraska and Arizona State, that will give the brand a chance to test its gear and gather data. The universities, in turn, get access to things like internships and public speaking engagements.
Similarly, Ohio State University crafted its deal with Nike to benefit the entire campus rather than just its athletic department, which is already flush thanks to fans packing the football stadium.
“What Adidas did with Arizona State and Nike with Ohio State, I think that will be more of a trend going forward,” said Jonathan Jensen, a researcher with the University of North Carolina’s Center for Research in Intercollegiate Athletics.
“There seem to be fewer schools who are just saying, ‘Let’s go out and see who’s going to give us the most money.’ These two deals are really kind of trendsetting, true partnerships as opposed to just taking the cash.”
The Business Journal has maintained a database of NCAA deals with sportswear companies since 2013. According to the Business Journal’s analysis, Under Armour, Adidas and Nike last year pumped more than $300 million into college athletics, a number that the companies are on track to top this year.
CRIA’s Jensen, along with undergraduate research assistant Tyler Wisniewski, analyzed the deals to determine how much each university should be getting from its apparel contract, and thus which deals end up being good for the university and which are steals for the companies.
The analysis found that each school’s enrollment (ergo, its alumni base), the number of times its basketball team had an NCAA-tournament appearance and the size of its football stadium or football attendance were the greatest determinants of the apparel deal values.
In many cases, the universities that are “underpaid” are simply those whose contracts are up for renewal soon, like Iowa State and University of Florida, whose deals are up in 2018 and 2020, respectively, after which point they’ll likely come back to market value.
Topping the “overpaid” list is UCLA, whose deal with Under Armour, the CRIA analysis finds, is more than $9 million over its predicted value.
“If you talked to (Under Armour CEO) Kevin Plank now and he was being honest with you, he would probably say that he regrets that decision,” Jensen said. “Not only because they paid so much, but it was just such a big investment. The amount that all of the companies are spending on these college deals has just really gotten out of hand, and the way things have gone recently, I think they probably regret that decision.”
No matter how you shake it, though, the deals tend to be a net benefit for the apparel companies, according to Jensen.
The apparel companies, for starters, don't need to make large cash payments to most of the universities, which are generally compensated with apparel priced at retail value that costs the companies much less. The companies also get a significant amount of media coverage as the athletes wear their gear in televised games.
Further, the deals often offer the companies a chance to connect with future professional athlete endorsers.
“These college deals are bargains (for the companies),” he said. “They’ve long been undervalued, but there’s starting to be a market correction going on where they’re finally paying what they should. With the increased professionalization in the world of collegiate athletics, universities are finally realizing what they have and are pricing things up appropriately.”
Click through the slideshow above to see the top 20 deals this season, and check out our database to see how much your school’s apparel deal is worth.
The rankings and database include the contracts of public universities at the top level of college sports. Private universities, such as Notre Dame, are not required to disclose contracts.
The Portland Business Journal is a KGW News partner.