SBD/April 17, 2014/Marketing and Sponsorship

Nike Signs 23-Year Sponsorship Extension With USATF Valued At More Than $400M

Nike's new deal with USATF is valued at more than $20M annually
Nike and USA Track & Field yesterday announced a 23-year sponsorship extension that is valued at more than $400M. The current eight-year deal Nike signed with USATF through '16 is worth an estimated $10M a year. Sources valued the new deal, which runs from '17-40, at more than double that: $20M+ annually. The current and future deals include a mix of cash and value-in-kind goods. Nike and USATF have been working together since the '90s. USATF CEO Max Siegel said that the NGB reached out to Nike about extending its sponsorship after the '12 London Games. He proposed negotiating a long-term deal to Nike because the organization wanted the stability such an agreement would provide. Siegel: “We were seen as an organization that was unstable. Swimming can boast they have sponsors for 41 years. There’s a lot of merit in being in the business with people that want to make a significant investment that they’re dealing with a company that has stability and is not changing overnight.” The 23-year deal, which begins with the '20 Tokyo Games and encompasses six Olympics, took more than a year to negotiate. Siegel said, "There’s a cost benefit analysis of having a long-term relationship with an innovative partner that gives you the ability to grow. Guaranteeing the long-term stability of the organization was one of the top priorities I had when I got here and this does that" (Tripp Mickle, Staff Writer).

QUESTIONS PERSIST: In Chicago, Philip Hersh writes while the new agreement is worth double the current one on an annual basis, fans should not "count on the bulk of the extra money going to relatively needy elite athletes ... who get most of their income in personal deals with companies." USATF indicated that the "increased Nike revenue ... will go for a variety of established and new programs." Hersh writes the two parties "striking a balance -- or at least the appearance of one -- will be critical." An example of that is whether Nike will "go all-in" on a possible bid by Eugene, Ore., to host the '19 IAAF Outdoor World Championships, "even though rival Adidas is the event's primary global sponsor." Nike represented "nearly half" of USATF's $21.8M total revenue in '12, and that could increase to "more than two-thirds" with the new deal. Hersh: "Common sense will tell you such a financial stake gives Nike a more privileged position" (CHICAGO TRIBUNE, 4/17).
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