SBD/March 6, 2014/Marketing and Sponsorship

Penn State's Nike Relationship Examined As Contract Terms Remain Secret

Experts estimate Penn State's deal to be worth about $2M per year
Penn State for more than 20 years has "had a close relationship with Nike," but exactly how much the deal is worth is "a Penn State secret," according to Smart & Gross of the Lancaster INTELLIGENCER JOURNAL. The newspaper in a six-part series is taking a look at the relatioinship between Nike and Penn State. Experts estimate the deal "to be worth about" $2M per year, which represents "a tiny portion of the university’s overall athletic budget." But "in the wake of the Jerry Sandusky child sex abuse scandal and the NCAA sanctions that followed, Penn State’s athletic department lost money last year -- making the Nike money all the more important." State legislators "have proposed bringing Penn State under the right-to-know law," but until then, only "one chunk of the Nike money is visible -- the money paid" to football coach James Franklin. Of Franklin's salary, $500,000 "will come from Nike every year." Former Penn State football coach Bill O'Brien "got $350,000 annually from the proceeds of the university’s Nike contract." Temple Univ. sports economist Joel Maxcy said of Penn State's outfitter deal, "I'd say Penn State is in the top half of the Big Ten for sure. They probably trail Michigan and Ohio State, but get more than Purdue or Indiana." He noted that the $2M annually is "a small figure in the context of Penn State's $100-million-plus overall athletic budget." However, other experts "say the money is key." Syracuse Univ. sports management professor Richard Burton said, "Even if it's only 5 or 10 percent of the overall operating budget, that's much more than a rounding error." Experts said that were Penn State and Nike to "negotiate a contract extension today," the school might "get a smaller deal than it would have gotten had the Sandusky scandal not occurred" (Lancaster INTELLIGENCER JOURNAL, 3/6).
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