SBJ/August 31 - September 6, 1998/No Topic Name
Adidas ties up UCLA deal, said to be worth $18 million
Published August 31, 1998
Adidas has replaced Reebok as the official all-school marketing partner of UCLA in a six-year deal valued at more than $18 million in cash, products and other in-kind contributions, according to a source familiar with the situation.
UCLA picked Adidas over Nike Inc. and Reebok, which is finishing out the last year of its six-year deal with the school. Adidas won the bidding even though it offered less cash than Nike, and Reebok's bid was well below that of the other two sneaker giants, sources said.
Robert Erb, director of sports marketing for Adidas America, declined to comment on the price of the deal. But he said that Adidas' strategy of keeping marketing partnerships with just five colleges was a factor in winning the coveted UCLA relationship. UCLA has more NCAA team championships, 77, than any other college in the United States.
Erb noted that because Adidas has partnerships with just five schools the other four being the University of Notre Dame, University of Tennessee, University of Nebraska, and Northwestern University it can offer a more comprehensive relationship to its marketing partners than its competitors.
Under the terms of the UCLA deal, Adidas will supply full-time company representatives to ensure that the Adidas products meet the needs of student athletes. The deal also includes a customized marketing plan, internships for UCLA students, and commitments for Adidas executives to give lectures and provide mentoring for students.
"We are committed to go and send our [Adidas corporate] managers to go and give lectures to the business students," Erb said. "We are going to hire interns from the business side and the athletic side."
The UCLA agreement bolsters Adidas' brand presence in the Los Angeles market, where the shoe company has already signed Laker Kobe Bryant to a multiyear contract. Los Angeles "is the second-biggest market in the United States and of course it is important for us," Erb said.
At the same time, Reebok, which mutually agreed with Laker Shaquille O'Neal to terminate its marketing partnership earlier this year, is decreasing its presence in Los Angeles.
David Fogelson, public relations director for Reebok, said it was a "pure coincidence" that O'Neal's contract expired and the company lost the UCLA marketing partnership at the same time.
"We are not looking at it from a Southern California perspective, but a brand perspective and where we sit in the marketplace," he said.
Fogelson said Reebok lost the UCLA partnership because the school wanted a significant increase in deal value over the previous six-year contract, which expires June 30, 1999.
"Suffice it to say we didn't feel that the value was there given the financial commitments asked for," Fogelson said.
Fogelson added that just because Reebok's contract with UCLA is ending, it does not mean that the company is pulling back from all of its college marketing relationships.
"We do have some high-profile schools," including Michigan State and the University of Texas, as marketing partners, he said.
But in college marketing partnerships these days "there is a lot of cash involved and a tremendous amount of equipment involved ...which may run well into the seven figures," Fogelson noted.
At the same time, he said, "the sales that are generated from the licensing agreements [with the schools] are nowhere near what is laid out in the contract."