[title_box title=”Should Tennessee have negotiated for more from Nike?”]
Almost a year has passed since the University of Tennessee starting donning their Nike threads for all sports, and without a doubt, fans are pleased with the decision. With the boost in revenue from Nike and Tennessee’s increased percentage received from all Nike apparel, the athletic department is enjoying the boost in cash flow.
Tennessee Athletic Director Dave Hart admitted he was willing to take less money in order to get the Vols wearing the swoosh. In fact, the Vols are receiving about half the amount of cash they were from Adidas (roughly $1 million a year) during their previous deal.
Looking back on many of the apparel deals signed with universities since Tennessee inked their Nike deal, the question must be asked; how much money did Dave Hart leave on the table?
Exactly two weeks after Tennessee’s eight-year contract began with the country’s biggest athletic retailer, the University of Michigan also agreed to an 11-year deal with Nike worth up to $173.9 million. Although the overall value is estimated, the signing and apparel bonuses are not.
In Michigan’s contract, Nike agreed to pay $12 million up front as a signing bonus paralleled to the $2 million given to Tennessee. Comparatively, Texas’ new deal they signed with Nike demands that the retailer pay them a $20 million cash bonus. Additionally, Michigan will receive $56.8 million in equipment and apparel while the Vols will only receive $23.7 million.
In 2014, Notre Dame inked a 10-year deal reportedly worth $90 million with Under Armour, the most valuable apparel deal at the time. Two years later, UCLA trounced just that number by signing a 15-year, $280 million deal with the same company.
It’s understandable that Under Armour is willing to shell out more money in their recent deals. Both UA and Adidas are trying to gain a larger share of the market that has been largely dominated by Nike, who did over $13 billion of revenue in North America alone. However Nike had 50% of the top 20 largest contracts in the NCAA during the previous fiscal year.
With the increase in revenue among athletic departments from expanding TV deals, there has been a significant amount of inflated value placed into apparel and shoe contracts in college athletics. And although Tennessee will be among the top programs this year among revenue, their number is magnified by their signing bonus. Next year, the Vols will be in the 18-23 range.
But for a program that ranked ninth last year in total revenue made according to USA Today and thirteenth in intrinsic value by Wall Street Journal, it’s worth wondering how much more the Vols could have negotiated for.
Featured image by Jordan Dajani
Edited by Jordan Dajani