Ohio State Signs 15-year Nike deal

Submitted by Maizen on

[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.]

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buckeyejonross

January 14th, 2016 at 6:52 PM ^

What's your point? When Alabama re-upped with Nike in 2010, it became the largest Nike deal at the time. Why would it be different in 2018 when they're up for renewal again?

Football drives the bus here. All the top contracts (OSU, Texas, UM, Notre Dame) are football schools. Why would Alabama be any different?

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doggdetroit

January 14th, 2016 at 10:41 PM ^

Alabama is a football blueblood but as an overall athletic program, they are several tiers behind OSU, UM, Texas and ND. They are currently tied for 47th in the Sears Cup standings:

http://grfx.cstv.com/photos/schools/nacda/sports/directorscup/auto_pdf/…

Also, OSU, UM, Texas and ND have bigger fanbases: 

http://thequad.blogs.nytimes.com/2011/09/19/the-geography-of-college-fo…

UM, Texas and ND also have national fanbases. I'm guessing there are very few Alabama fans outside of the South. That's not a slight against Alabama since the South is the most fervent region for college football. But if you consider that Alabama's athletic program lags behind the others and its football fanbase (while still top 10) is smaller than the others, then its not hard to see why their deal may lag behind the others.

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buckeyejonross

January 14th, 2016 at 11:45 PM ^

I'm not disagreeing with any of that. Alabama's overall athletic portfolio is not at the OSU/Texas/UM level. But it doesn't matter. They don't sell women's gymnastics jerseys. Or volleyball shorts.

Nike sells more football/general school name gear than they do all the other sports combined. Just like college football murdered the most famous college basketball conference and no one even blinked, none of those other sports matter in the big picture to Nike's partnership with a school. Football drives the bus. Alabama football gear sells. It deosn't matter if their basketball gear doesn't sell. If basketball gear mattered, UCONN, Kentucky and Duke would be controlling the Nike budget, and Nike would be taking a bigger run at getting IU and Kansas away from adidas like they did with Michigan. But they didn't.

That link on my first post showed it. Alabama signed the richest Nike deal in 2010 when it renewed its contract. I would be totally shocked if they don't have the richest one in 2018 (or sooner if they decide to re-negotiate early).

I think Alabama has more national appeal than you give them credit for. They are the football program right now. Definitely moreso than other blueblood football schools without giant (relatively) Nike deals like Oklahoma.

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doggdetroit

January 15th, 2016 at 12:27 AM ^

They may be THE football program among recruits right now but I still think they lag behind OSU, UM, Texas and ND in terms of national appeal, which is aided by a school's overall athletic program as well as its academic reputation. Alabama is well behind in both areas.

Put it this way, if all five schools' deals suddenly came on the market at the same time, I''m 100% confident Alabama's deal would be the fifth largest. Your fanbase can only buy so much gear and they have a smaller, more provincial fanbase than the other four.

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buckeyejonross

January 15th, 2016 at 1:11 AM ^

I definitely agree with you if they all were on the market at the same time, Alabama would come in fifth.

But a lot of this is about precedent, and Alabama gets the benefit of seeing what came before them, and starting their negotiations accordingly.

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Oost

January 14th, 2016 at 4:47 PM ^

Just to compare apples to apples:

Michigan gets $10.1-$10.9 million in cash/apparel each year of their deal - NOT including their $12 million up front. Combined over 11 years, that's $11.2-$12 million each year.

OSU gets $215 million in cash/apparel over 15 years, with no mention of a signing bonus. So $14.33 million each year. So they're anywhere from $2.3-$3 million more each year than Michigan - for 4 more years of term and for a deal that will end 6 years after M's. And, like Seth said above, this is not including Michigan's insane 15% royalty agreement.

Other points  of comparison - OSU's includes $41 million in scholarships and internships for non-athletic dept. programs. I can't find what that amount was for Michigan.

Bottom line, when you consider the term and inflation, Michigan is doing just fine. When they renegotiate in 2026, it's probably a safe bet they're going to get $20 million+ per year.

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kawter

January 14th, 2016 at 7:18 PM ^

This is correct and what people aren't seeing. The point of a 11 vs 15 year contract isn't the amount of money per yer, rather their ability to negotiate a new agreement at an earlier date. To your point Michigan has this chance to re-up at a higher rate 6 years before OSU can chance their economics.



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Hail-Storm

January 15th, 2016 at 9:58 AM ^

If the 15% does turn out to be $2-3 Million/ year, then the gap above is $11.3-14.3/year, which is about the same, with a 6 year advantage in when this can be renegotiated.

I really don't see how Michigan got taken here. Even if it's $1-2 Million less per year, that difference would only occur for 9 years, at which point the pendulum will shift. 

I think OSU got a great deal, and as much as I'm not a fan, they are a very strong brand. This only works in Michigan's favor anyway. As mentioned by Buckeyejonross, these contracts only help each of the other schools to get larger and larger contracts.If OSU got less, that would be a bad sign for the renegotiation after 11 years. 

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TIMMMAAY

January 15th, 2016 at 9:30 AM ^

There is something wrong with grown men telling other grown men what they can't wear, though.

Kinda like when people tried to give you good advise about what to wear in the press box? You are the face palmiest of facepalms. 

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The Mad Hatter

January 14th, 2016 at 6:58 PM ^

Unless we're getting massive royalties, the OSU deal is far better than ours. Next time around we should make sure the contract includes a clause that guarantees our deal is the biggest. And ppl owe the OP an apology.

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Maizen

January 14th, 2016 at 7:36 PM ^

Thanks. My whole point was I think Nike took advantage of a first time AD. We have a good deal but we should be getting more than OSU, especially considering how much merch Michigan sells compared to OSU. Michigan had a larger Nike deal for all of the late 90's and mid 2000's. Seeing OSU lap us 6 months after we signed our deal is not good. We could have gotten more and didn't.

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A Fan In Fargo

January 14th, 2016 at 8:22 PM ^

I'd say by the time it's time or opportunity to opt out of said clause, Nike will look back on the last decade and realize the truth. That being Michigan will have sold the most merchandise because their alumni and (non) alumni base is by far the largest. There are a lot of Michigan fans in the shadows waiting to start sporting the gear again. Especially when the real winning begins again!! I said it first. I wouldn't bet against UM being awarded the contract that is always the largest.

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alum96

January 14th, 2016 at 7:23 PM ^

Wait... the 1st or 2nd most successful college football program the past 20-30 years - and one that has owned us for a decade -  got a better deal than us?  This is a moral outrage.

Where do I sign up for the pitchforks?

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Evil Empire

January 14th, 2016 at 9:19 PM ^

OSU athletics is huge and OSU fans will buy anything, I mean anything, with the buckstache on it.  As much as Michigan fans like maize and blue gear, I have to believe more OSU merchandise sells.  Nike clearly thinks so.  Good for them.

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GoBlueBorderBattle

January 14th, 2016 at 9:22 PM ^

Win a B1G championship or national championship. simple as that. OSU has done that lately, Michigan hasnt. Twist it anyways you want. Brands want their logo on the winners, and will pay to make it so.

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WholeMilk

January 14th, 2016 at 11:18 PM ^

I don't think this is that big of a deal. It's like arguing about spring game attendance. Also, yes, Hackett is a first time AD, but not a novice in the business world. At the time the deal was signed it was the biggest. It's easy to say now that he should've gotten more, but absolutely no one was saying that at the time.

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Maizen

January 14th, 2016 at 11:54 PM ^

He should have gotten a clause put in that would have made Michigan the highest paid Nike school in the B1G. That would have ensured Nike could take of Texas and we wouldn't be offended. But giving our chief rival, a school who doesn't even place in the top 10 in merchandise sales (which is what a lot of this is based on), so much more is proof we left a lot of money on the negotiating table.

I bet this gets fixed at the next round of negotiations but we have to live with this for the next decade unfortunately.

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karpodiem

January 15th, 2016 at 8:01 AM ^

For those hand waving away the fact that OSU got an extra $100 million and it doesn't matter, you're crazy. If you think they take that pool of money spread it evenly amongst the varsity teams at Ohio Stats, you're also gullible. They're going to put the vast majority of this money into football/basketball, because they are the two teams that largely allowed this size of a deal to be signed in the first place. Fortunately, our donor base eclipses theres. In the next decade, I'd like to see Harbaugh flip the script with respect to the relative value of each deal.



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alltru

January 15th, 2016 at 11:43 PM ^

Hackett got fleeced and lowballed by Nike.

$252m minus $169m = $83m more that Ohio State receives from Nike.

Hackett was last seen petting his Jumpman doll and heard saying "I love you Jumpman, do you love me?

 

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Heywood_Jablome

January 16th, 2016 at 12:10 AM ^

eh, Michigan was never going to get what OSU got.  OSU has probably been selling tons of gear over the past 10 years so they had a bunch of leverage. Michigan is trying to re-establish itself.

Texas getting $250m seems like a lot.  That program has sucked for the last 5 years and is way behind other programs in the state.  I could see them being down for another decade.

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