Companies & Industries

College Athletes Come at Bargain Prices for Apparel Giants


The Kansas Jayhawks running back carries the ball into the end zone against the West Virginia Mountaineers on Nov. 16, 2013 in Lawrence, Kansas

Photograph by Jamie Squire/Getty Images

The Kansas Jayhawks running back carries the ball into the end zone against the West Virginia Mountaineers on Nov. 16, 2013 in Lawrence, Kansas

Add Nike, Adidas, and Under Armour to the list of those taking advantage of a rigged labor market.

A database of contracts between college athletic departments and apparel makers Nike (NKE), Adidas, and Under Armour recently made available by the Portland Business Journal is a great resource for anyone interested in the inner workings of big-time college sports. Nike owns exclusive rights at 12 of the top 20 programs (ranked by size of the equipment allowance), followed by Adidas with seven, and Under Armour (UA) with one: Auburn University, which should provide a good return when 25 million-plus people tune into the BCS National Championship Game on Monday night.
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PBJ estimates the three companies combined spend more than $250 million a year. The University of Kansas has the most lucrative agreement, at $4.6 million in equipment and apparel and $1.5 million in cash annually from Adidas.

The contracts are full of fun facts. Nike’s agreement with the University of Alabama, for instance, stipulates that the company gets 10 tickets “between the 30-yard lines” to football games. The men’s basketball team’s youth camp gets 800 T-shirts. The women’s receives 350. Football players are forbidden from “polishing-out,” “spatting,” or taping over the Nike logos on their shoes unless a trainer decides it’s necessary for an injury, “which shall not include the spatting or taping of the footwear on the other ankle/foot if such other ankle/foot is not also injured.”

The contracts paint a picture of a system where the paying customers call the shots and the costs are relatively cheap. When LeBron James became eligible for the NBA in 2003, Nike handed him a seven-year, $90 million contract. The company pays a reported $220 million annually to outfit the NFL. It gets the rights to dress essentially ever player in every sport at the University of North Carolina at a cost of $3.2 million in apparel and $250,000 in cash. The exposure, of course, is greater with James or the NFL. Yet it’s hard to imagine Nike would not have to pay more for Tar Heel players on an open market for college athletes.

Boudway_190
Boudway is a reporter for Bloomberg Businessweek in New York.

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Companies Mentioned

  • NKE
    (NIKE Inc)
    • $96.46 USD
    • 0.17
    • 0.18%
  • UA
    (Under Armour Inc)
    • $68.21 USD
    • 0.24
    • 0.35%
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