SBD/March 19, 2012/Marketing and Sponsorship

North Carolina's Bowl Ban Could Result In Funding Cuts From Nike, Learfield Sports

The bowl ban gives Nike the opportunity to reduce its payment to UNC by 35%
The Univ. of North Carolina's contracts with Nike and Learfield Sports contain clauses "that allow the companies to pay UNC less" for being banned from playing in a bowl game, and those clauses "could cut the department's revenue enough to put its budget in the red for the better part of a decade," according to Melvin Backman of UNC student newspaper the DAILY TAR HEEL. The two companies "are unlikely to cut their funding to UNC," but the possibilities represent an "additional liability for the University created by the football scandal." UNC is banned from playing in a bowl game during the '12 season and will lose 15 scholarships over three years as a result of NCAA violations put on the football program. Nike gives UNC more than $3M in gear annually and pays the school $250,000 "each year for the exposure Tar Heel athletes provide." However, it also retains the right to reduce that $250,000 "in the event of a postseason ban" in football, men's basketball, women's basketball or women's soccer. The bowl ban "gives Nike the opportunity to reduce its payment to UNC by 35 percent." A postseason ban in men's basketball "would allow a 60 percent reduction." Nike did not comment on any potential action it might take. However, the loss of money from Nike "pales in comparison to what could come from Learfield Sports." The school's contract with Learfield has a bowl-ban clause allowing the company to "pay UNC less money over the life of the contract if an NCAA punishment decreases revenues to football or men's basketball by more than 5 percent over three years." The reduction amount from Learfield Sports "is negotiable." A reduction of 3% would be "$200,000 at least," which would eliminate the athletic department's surplus "regardless of whether Nike pursues its reduction option" (DAILY TAR HEEL, 3/16).
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