Ohio State Signs 15-year Nike deal
[ED: Covered on the front page:
Funny money. OSU announced a huge Nike contract that was a ton more than Michigan in the same way that NFL contracts have a huge headline number but are actually something less remarkable under the hood. The OSU edge is in apparel awarded, which the Buckeyes padded out for the shiny number. The actual details:
- Both schools have a 15-year deal; Michigan has an opt-out after 11.
- Michigan gets 12 million upfront; OSU gets 20.
- OSU gets 3.44 million for the first 11 years and 4.44 for the last four.
- M gets 4.82 million for the first ten years, 5.32 in 11, and 5.82 for the last four.
- Total dough: Michigan, 88.8 million. Ohio State, 75.6 million.
OSU gets more upfront but inflation isn't sufficient to make up the deficit, especially since Michigan has an opt-out four years earlier. So OSU's "biggest ever contract" actually delivers 13 million fewer dollars than Michigan's. But OSU gets more Nike volleyballs so they've got that going for them.
OSU's deal is not better. Those who'd like to argue Hackett was "fleeced" (including the OP) please contact seth for a great deal on a bridge.]
January 14th, 2016 at 7:55 PM ^
January 14th, 2016 at 5:59 PM ^
Damn Texas and OSU really managed to get that much more than UM huh...
January 14th, 2016 at 6:06 PM ^
I figured Texas would get the contract they got because of how much apprell they sell but I'm shocked at the OSU number. They lag behind schools like Michigan in merchandise sales and don't have the alumni/fan base Michigan does.
Given that Michigan was Nike's highest paid school in the mid 2000's this is a number I'm surprised to see.
January 14th, 2016 at 6:07 PM ^
It's about the same. Just realized (thanks to posters below) that UM's deal is 11 years, not 15.
Thus it is equal.
January 14th, 2016 at 6:28 PM ^
Welp nvm. Looks like they did get more.
I wonder why there's a big discrepancy...
January 15th, 2016 at 12:19 AM ^
January 15th, 2016 at 8:29 AM ^
Becuase 98% of OSU students don't graduate.
January 15th, 2016 at 11:52 AM ^
I wouldn't say that since last June I had to sit through their graduation class of 11 freaking thousand in that god damn stadium when it was hotter than hell.
January 16th, 2016 at 10:44 AM ^
Even though OSU is a larger school now than Michigan, living alumni are both measured at around 550,000. The New York times also did an article a couple of years ago about fan bases and again Michigan and OSU are very close. OSU was meaured at 3.2M and Michigan at 2.9M. Surprisingly, Penn State was 3rd at 2.6M, followed by Notre Dame in 4th and Texas in 5th. They also showed Auburn and Alabama to be nearly equal at about 1.9M each.
Merchandise sales are a lot harder to pin down, but both Michigan and Ohio State generally appear in the top 8 in any study done.
January 14th, 2016 at 9:04 PM ^
One is this deal starts in 2018. These contracts are all structured with escalators. We can't just divide the total amount by the number of years to get a true picture of the relative contract values. Comparing the payouts for the same years will give a better picture. OSU will be getting paid under their old contract for the next two years at a much lower rate. This one will run six years past our option year. It also doesn't appear that OSU has an option clause.
We negotiated a very favorable royalty rate. It remains to be seen how OSU's deal compares.
$41M of the deal is for Nike internships and scholarships for non-athletes. I don't know how to calculate the value of a Nike internship. Companies offer internships everywhere. I never realized they could be considered payments to a school.
Here's a link to the WSJ story http://www.wsj.com/articles/nike-reaches-252-million-deal-to-extend-spo…
January 14th, 2016 at 9:22 PM ^
January 14th, 2016 at 6:00 PM ^
January 14th, 2016 at 6:01 PM ^
January 14th, 2016 at 6:06 PM ^
January 14th, 2016 at 6:07 PM ^
Michigan and Ohio State both have 15 year deals.
January 14th, 2016 at 6:08 PM ^
January 14th, 2016 at 6:14 PM ^
No, we don't.
According to a term sheet dated July 6, Michigan would receive $169 million over the 15-year agreement, with $12 million in upfront money, $76.8 million in additional cash over the course of the deal and $80.2 million in apparel for the school's 31 teams. That is an average of $11.3 million per year.
Michigan has the ability to opt out of the contract after 11 years. The deal, which starts next August, would be worth a total of $122.3 million if U-M declines the option years (2027-31).
January 14th, 2016 at 6:14 PM ^
Please stop reading just the headlines if you want to argue these points. Michigan has an 11 year contract with a four year extension option (exercisable by Michigan).
Options are very valuable, putting market risk on Nike's shoulders and off of Michigan's. Hackett did not get "fleeced" - he did well.
January 14th, 2016 at 6:16 PM ^
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January 14th, 2016 at 6:17 PM ^
Extra, extra, read all about it:
http://www.mlive.com/wolverines/index.ssf/2015/07/nike_michigan_1.html
January 14th, 2016 at 7:29 PM ^
Did you actually read the article you linked?
Edit: nevermind, I am dumb. Misread your reply.
January 14th, 2016 at 6:24 PM ^
January 14th, 2016 at 6:32 PM ^
But the $169 million is with the extension to 15 years. It's in the very article you linked.
Running from Aug. 1, 2016 through July 31, 2027, the deal comes with an option for Michigan to sign a four-year extension through 2031. Without the option years, U-M and Nike have agreed to an 11-year, $122.32 million deal, which includes $12 million upfront.
January 14th, 2016 at 6:52 PM ^
I don't get the point of your reply. I never said the correct numerator was $169M if the denominator is 11 years. I was refuting the OP's continuing assertion that this is a 15 year contract. It isn't, really (unless Michigan exercises its option to extend).
I didn't get into the contract value because the economics of these deals is much more complex than a simple matter of division. You have to look at upfront money (money paid earlier is worth more than money paid later), how much of the value is paid in cash vs. equipment, whether there are additional revenue sharing opportunities, and a bunch of other factors. Then you would do a present value analysis, allowing for any variable factors (like revenue sharing after certain target sales are hit).
I don't have the appetite to dive into a comparison of the three contracts, in part because I don't really care enough to put the energy into it. I might be interested in reading someone else's analysis. But whoever did it would have to understand that we're looking at an 11 year contract with a valuable option. (I understand that you, TIMMMAAY, get that. The OP? Not so much - at least not at the get-go.)
January 14th, 2016 at 6:56 PM ^
I mis-read your reply entirely. I just saw everyone repeating the 11 year thing, trying to hammer home that we get more per year when that isn't the case.
January 14th, 2016 at 6:00 PM ^
Bro, stop making threads ASAP.
January 14th, 2016 at 7:04 PM ^
it is a highly informative post the both attains to UM's Nike contract and to our biggest rival. You 've posted more useless threads than this...
edit* It appears that some of the original content changed between the original post and my response. That may merit the above post
January 14th, 2016 at 6:02 PM ^
I've already pre-ordered mine. I wonder if it'll have the Jumpman logo?
January 14th, 2016 at 6:01 PM ^
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January 14th, 2016 at 6:18 PM ^
January 14th, 2016 at 6:01 PM ^
Fleeced I would not say. Thread worthy this is not.
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January 14th, 2016 at 6:04 PM ^
yeah that was my first question, the length of m's contract (bc i did not recall seeing 15 years). if its 11 years, thats a huge difference
January 14th, 2016 at 6:06 PM ^
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January 14th, 2016 at 6:06 PM ^
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January 16th, 2016 at 10:29 AM ^
Michigans deal is 11 years with a 4 year option. In either case the deal at 11 or 15 years is worth about $11.2M per year.
OSU's deal is 15 years for $252M or about $16.8M per year - a difference of about $5.5M per year in any case.
January 14th, 2016 at 6:09 PM ^
Michigan's deal is 15 years not 11.
According to a term sheet dated July 6, Michigan would receive $169 million over the 15-year agreement, with $12 million in upfront money, $76.8 million in additional cash over the course of the deal and $80.2 million in apparel for the school's 31 teams. That is an average of $11.3 million per year.
Michigan has the ability to opt out of the contract after 11 years. The deal, which starts next August, would be worth a total of $122.3 million if U-M declines the option years (2027-31).
January 14th, 2016 at 6:33 PM ^
Running from Aug. 1, 2016 through July 31, 2027, the deal comes with an option for Michigan to sign a four-year extension through 2031. Without the option years, U-M and Nike have agreed to an 11-year, $122.32 million deal, which includes $12 million upfront.
January 14th, 2016 at 6:02 PM ^
Oh no.
January 14th, 2016 at 6:02 PM ^
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January 15th, 2016 at 9:33 AM ^
15-11=4
January 14th, 2016 at 6:02 PM ^
January 14th, 2016 at 6:08 PM ^
he ran an $3B office furniture company with 11,000 employees ? Meh. \s
January 14th, 2016 at 6:02 PM ^
January 14th, 2016 at 6:07 PM ^
Michigan's is a 11 year deal with a 4 year option on the backend.
January 14th, 2016 at 6:16 PM ^
January 14th, 2016 at 6:47 PM ^
They're not definitely going to go through with anything. I would imagine that if they feel the best move for the atheltic department is to opt out of the deal at the end of the 11 years, thats what they'll do. At no point did I bring up the monetary value, I simpy stated it was an 11 year deal with a 4 year option.
January 14th, 2016 at 8:21 PM ^
But contract values have been rising briskly for some years. If we had signed a contract whose option came up any time in recent years, there is no chance we would renew it. That option is valuable precisely because there is no way to know whether we will want to exercise it or not.
January 14th, 2016 at 6:02 PM ^
169/10=16.9
252/15=16.8
January 14th, 2016 at 6:03 PM ^
thought I was going to have to sign in to post
January 14th, 2016 at 6:04 PM ^