A look at LSU’s suddenly underwhelming Nike contract

By CODY WORSHAM
Tiger Rag Editor

The collective jaw of college athletics observers nationwide hit the floor Tuesday, when UCLA and Under Armour announced a 15-year deal valued at $280 million.

It’s a record contract between an NCAA athletic program and an apparel provider, and a shot across the bow of industry leader Nike from the emergent Under Armour, a company flush with cash thanks in no small part to a calculated gamble on Steph Curry.

UCLA’s deal is the latest in a growing market, as colleges ink larger and larger deals with apparel providers.

From Forbes:

Previously, Nike inked a 15-year, $252 million deal with Ohio State in January, eclipsing an 11-year, $169 million agreement with the Buckeyes’ arch-rivals Michigan last July. In between, the University of Texas Board of Regents approved a 15-year, $250 contract with Nike in October.

In context of such deals, LSU’s Nike contract, agreed upon in 2013 and extending through 2022, seems like peanuts. LSU gets just over $4 million annually from Nike each year: $1 million in cash and, in 2015-16, $3.2 million in equipment allowances (a number that increases to $3.5 million by the deal’s end). There’s also a $50,000 bonus for the football team winning a national championship.

http://www.tigerrag.com/wp-content/uploads/LSU-Nike-contract.pdf

At the time, LSU’s deal — at least $39.9 million over nine years — was the most valuable in the country. Since then, obviously, the market has exploded. By September 2015, LSU’s deal had fallen to fourth in the SEC, behind Texas A&M ($6.85 million/year, Adidas), Tennessee ($4.6 million/year, Nike), and Auburn ($4.35 million/year, Under Armour). Today, it will take LSU four years to generate the value UCLA will reap from Under Armour in a single season.

[table]

School, Company, Contract Value

UCLA, Under Armour, $280 million

Ohio State, Nike, $252 million

Texas, Nike, $250 million

Michigan, Nike, $169 million

Notre Dame, Under Armour, $90 million

LSU, Nike, $40 million

[/table]

It also seems LSU has little power to renegotiate its deal anytime soon. According to the contract, LSU cannot enter negotiations with a third-party apparel provider until July 1, 2021.

The University also has equipment contracts with Easton, Mizuno, Molten, New Era, Russell and The Game, essentially for baseball, softball, and volleyball gear.

The Forbes article linked above does specify that some athletic programs see value in partnering with Nike that doesn’t necessarily show up on the contract sheet.

“In our work we still see a lot of ADs going with Nike and potentially leaving money on the table because they value the relationship more than the revenue, or because of the perception that Nike gives them an edge in recruiting,” Jackie Schetter, Director of University Business at Navigate Research, told Forbes.com. “So UA and Adidas are making a more concerted effort to reach athletes at a younger age and build an affinity for their brand at the club level.”