Monday, May 11, 2015

Michigan Monday: Wolverine Shoe Wars

Adidas is Michigan's athletic shoe and jersey provider for at least the rest of the year.  I remember back in 2008 when Michigan made the switch.   It was when they welcomed in Rich Rodriguez to the program and they declined the option to continue with Nike.   In one of Carr's last press conferences after his big win over Tebow in the Citrus Bowl, he was wearing a Michigan Adidas golf shirt as a clear sign a new provider was on their way in.   Whether you love or hate the Adidas, you have to love the contract that always pays Michigan the highest contract in college sports.  For example if OSU signs a contract for $2M more with Nike, Michigan's contract goes up $2M to match or exceeded that contract.   Can there be a better contract written for the University?  I doubt it. 

The issue is, the players don't seem to be fully behind the Adidas gear.   When David Brandon fired RR and told the players, they all started to chant Nike, Nike, Nike during the meeting.   Of course at that point Michigan wasn't able to break the contract.  Michigan now has the opportunity to get out of the Adidas contract and pick a new provider. 

So now what?

Michigan visited Under Armour about 10 days ago to discuss or to listen to a presentation on UA becoming the Michigan outfitter.   Your first thought might be:  Can Under Armour really afford the Michigan contract?  Yes, they can and just showed it by signing Notre Dame recently.   The deal is worth $90 million, more than the $82 million that Adidas AG agreed to pay the University of Michigan over 10 years, ESPN said, citing unidentified people familiar with the terms.

Under Armour is a serious contender to win the contract as they are clearly willing to pay big dollars to get large NCAA brands.   Any downside?  Yes, they are not a player in basketball and shoe contracts are a big deal in recruiting top tier kids.   You think it's hard recruiting basketball talent to an Adidas school? Try recruiting to a UA school.   On a side note, UA does have the new NBA MVP Seth Curry under contract.   UA is also known more for clothing then shoes.   They do a pretty good job with cleats, but the have a ton of ground to make up in running and basketball shoes. 

Sounds like Michigan also visited Nike recently (updated reports are that Michigan is meeting with Nike today) and it seemed they pulled out the red Maize carpet when the Wolverines came visiting.



from Mgoblog

Nike of course wants the contract back, but the common thinking is they won't over pay for the Wolverines as they feel they are the strong leader for what the athletes want.   Most believe that Nike knows they have the leverage and might not over pay like UA might.  Nike's largest college contract is with FSU at just over $4M a year.


Adidas is struggling and has fallen behind Nike and UA in the market.   They recently decided not to renew their NBA contract:  "We have decided to not renew our partnership as official outfitter of the NBA after our current contract expires following the 16-17 season," the statement said. "While we have enjoyed a successful long-term relationship with the league, we continually review our partner agreements to ensure they are meeting our investment and delivering on our brand and business needs.

"We are re-imagining and reshaping our business and have evolved our strategy to look at new, cutting-edge ways to drive our brand and support our business over the long term. We will invest more in telling stories that matter to our consumer, building category-disrupting innovative products, reinvigorating youth basketball with our new Next Generation programs and doubling our roster of professional athletes to authenticate our brand on-court."  If I had to guess, I would think that Adidas would still like to keep Michigan  but won't be able to over pay like they did 10 years ago.  Michigan does have clause in their contract that they can re-up with Adidas under the current terms of its existing contract by has to inform them by 7/31.  My guess is there are a few Adidas executives that hopes Michigan goes elsewhere.


Ok Bob, Do you have a prediction?

I think it's a two horse race between UA and Nike.   Michigan will want to sign a contract larger then ND and probably above the 100 Million Dollar range for 10 years.   They will try to leverage UA's hunger against Nike's hard stance.   I think Nike is the preferred provider and UA will have to knock their socks off with a huge contact.   $10 Million a year doesn't seem that much for the Michigan brand, I think UA will come strong and we will see if Nike's offer is in the ball park  Big House.   I think Nike has felt minor pain the past 10 years and will make a decent offer but their history of college contracts suggests they won't overpay.   Will Nike really pay double over what they pay FSU? Michigan won't take a hit on the contract, so I'm guessing this is UA's contract to lose. 



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