Sports

Why This Year's NCAA Tournament Is Nike's to Lose


Carlos Emory of the Oregon Ducks looks to pass the ball in the first half as he is defended by Luke Hancock of the Louisville Cardinals during the semifinal round of the 2013 NCAA Men's Basketball Tournament in Indianapolis on March 29, 2013

Photograph by Andy Lyons/Getty Images

Carlos Emory of the Oregon Ducks looks to pass the ball in the first half as he is defended by Luke Hancock of the Louisville Cardinals during the semifinal round of the 2013 NCAA Men's Basketball Tournament in Indianapolis on March 29, 2013

In the big business of college basketball, one question is paramount: Will Nike (NKE) blow it again?

Last year’s NCAA tournament saw Adidas (ADS:GY) maneuver through the bracket to have its gear on the backs of Louisville’s championship team, while Nike’s hometown Oregon Ducks got washed out in the Final Four. This time around, however, the odds are heavily stacked in Nike’s favor. Of the tournaments 68 teams, 45 will be wearing its sneaker and uniforms, including all four of the No. 1 seeds. And in the off-season, the apparel company sweetened its deal for Wichita State, a team that lost in the Final Four last year and hasn’t dropped a game since.

The best shot for an Adidas upset once again rests on Louisville, with Kansas offering another promising path to victory. But the real Cinderellas are Russell Athletic, which is outfitting four teams, and Under Armour (UA), which snuck into the bracket by signing a multiyear deal in December with SF Austin—all long-shots given virtually a zero chance of winning by Las Vegas bookkeepers.

When the field is broken down by betting odds, Nike has a 73 percent chance of outfitting the eventual champion, followed by a 27 percent chance for Adidas. Here are the Vegas odds on the top five teams:

• Florida: 20 percent (Nike)
• Michigan State: 18 percent (Nike)
• Arizona: 13 percent (Nike)
• Louisville: 13 percent (Adidas)
• Kansas: 10 percent (Adidas)

Both companies appear poised for a March Madness merchandise bonanza, regardless of the tournament outcome. Nike’s authentic college jerseys sell for $120, while the shorts cost $80. Adidas is shipping special uniforms for the tournament, part of a new line aptly named the Made in March Uniform System. The garments are quick-drying, and a bunch of them have short sleeves, giving superfans a reason to upgrade their ratty old tank-top jerseys.

Exposure in the college basketball tournament comes cheap, at least relative to what these companies pay superstars to wear their sneakers. Both Adidas and Nike are tight-lipped about the expense of their deals with colleges, but a deal with a marquee Division I program generally requires a couple of million dollars a year in gear and a few million dollars a year in cash.

Adidas, for example, forks out about $6 million a year in cash and merchandise for its deal with University of Michigan hoops, according to AdWeek. In the most opulent college sponsorship in college history, Under Armour recently agreed to pay Notre Dame roughly $90 million over 10 years. That’s about $9 million a year for quality, gold-plated squads in 26 different sports.

Back in the world of nonscholar athletes, Nike is reportedly close to forking out somewhere around $100 million a year to kit out Manchester United (MANU). And you can be sure that figure is all cash, not donated cleats and trainers.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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