SBD/June 11, 2013/Marketing and Sponsorship

Univ. Of Minnesota Eyes More Lucrative Apparel Deal After Nike Contract Expires

Minnesota currently would receive $25,000 from Nike if invited to a major bowl game
As the Univ. of Minnesota's seven-year contract with Nike nears expiration in July '14, UM officials are "looking to increase the benefit to the school," according to Mike Kaszuba of the Minneapolis STAR TRIBUNE. The school under the current contract "gets $200,000 a year in royalty payments: $10,000 should the Gophers men’s hockey team make the Frozen Four tournament and a 2-for-1 deal on Nike football shoes once the Gophers football team gets 325 pairs." But other schools have since "signed more lucrative apparel contracts with Nike or its competitors." The Univ. of Nebraska’s contract with adidas involves $2.5M annually in "cash and in-kind contributions, and the company pays the school $100,000 if its football team plays in a major bowl game." By contrast, Nike pays UM $25,000 "if the Gophers get invited to a major bowl game." It is a "sign of how such arrangements are now commonplace on the collegiate landscape, and also an indication that the University of Minnesota remains a second-tier customer for apparel companies because of its more-modest tradition of winning." But doing business with Nike "comes at a price," as UM's contract with Nike stipulates that it "can be penalized financially if players tape over the Nike logo on their uniforms or shoes." Additionally, players who cannot wear a Nike shoe for medical reasons "must have the reason certified by the team’s doctor." The deal also requires UM to "make its coaches available for up to three personal appearances a year on behalf of Nike and even gives Nike the legal ability to use a coach’s nickname in marketing the company." UM’s contract is "similar to Nike deals with the seven other Big Ten schools, particularly those with similar marketing brand values." Purdue Univ. has an "eight-year contract with Nike, with annual in-kind product payments that began at $900,000 and have escalated" to $1.1M (Minneapolis STAR TRIBUNE, 6/10).
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