clock menu more-arrow no yes mobile

Filed under:

Reports: Texas agrees to 15-year shoe/apparel contract with Nike

What is expected to be a record-setting deal will keep the Horns wearing the swoosh for a long time.

via @utexasequipment

Texas Longhorns fans intent on having the latest burnt orange apparel won't have to throw out their Nike gear, as the industry leader retained its biggest client in college sports by re-signing the Horns to a reported 15-year deal expected to be the richest in history.

First reported by the Austin American-Statesman, the financial specifics are not yet known, but the source said it would be worth more than the $169 million the Michigan Wolverines received this summer from Nike.

According to Horns247, the negotiations are complete and the contract only needs approval from the University's Board of Regents next week.

Keeping Texas was a priority for Nike because the Longhorns have led the nation in merchandise sales for the last nine years.

There had been speculation that the Longhorns could leave Nike after former athletic director Steve Patterson bucked the status quo by dumping industry giant Collegiate Licensing Co. as the school's master licensee for retail needs, instead joining USC as the only major college brand represented by another upstart company in Dallas-based 289c Apparel.

There was a key factor in that speculation -- Nike hadn't been willing to pay out large sums of money for apparel deals. In fact, of the top 10 apparel deals nationally as of late May, five were adidas, three were Under Armour, and only two were Nike, a telling statistic.

What was the market for Nike schools re-upping with Phil Knight and company?

Georgia finished No. 5 in CLC royalties in 2013-14, but signed a new Nike deal in 2014 worth at least $40.8 million over 10 years. Tennessee ($5.5 million from adidas), Auburn ($4.3 million from Under Armour), and LSU ($4.2 million from Nike) led the way in the SEC, even though LSU ranks behind Georgia in royalties, a rough approximation of brand strength.

So even the top schools weren't exactly cashing in with Nike as of several months ago when the market-setting deal was from Under Armour, too, as Notre Dame inked with the Maryland-based company last year for a reported $90 million over 10 years, a deal that also reportedly includes the ability for the Fighting Irish to take some of the contract in stocks.

With the rise of Under Armour stock overall -- up 80% from early 2013 to early 2014 -- and the 3% boost provided by the Notre Dame deal alone, the addition of Texas could have created an even more pronounced bounce.

But the former record-setting contract that Nike signed with Michigan seemingly changed everything back in July, as it provided proof positive that the swoosh was willing to pay out big money to compete with Under Armour and adidas, even though the company didn't have the match the offers from its two major competitiors:

According to contract details released by the Michigan athletic department, the university's deal with Nike is worth $169 million over 15 years, making it by far the richest of all apparel deals in collegiate athletics. The contract, which will supply all 31 U‐M athletic programs with uniforms, footwear, apparel and equipment, will pay $76.8 million in cash and $80.2 million in apparel.

Then, the firing of athletic director Steve Patterson marked a sharp turning point in negotiations between Texas and potential apparel partners Nike and Under Armour, according to a recent report from Horns Digest.

The stark differences between interim athletic direcitor Mike Perrin and Patterson have quickly become apparent and the tactics both reportedly employed in dealing with the expired apparel contract with Nike and a potentially lucrative bid from Under Armour shed light on how their respective personalities influenced the process.

Patterson, who viewed Texas as a professional sports organization and valued the bottom line over relationships, wanted to start a bidding war between Nike and Under Armour in hopes of landing the biggest contract possible.

Perrin, on the other hand, clearly values relationships and loyalty over the bottom line, so once he took over for Patterson, he wanted to "completely change course" from Patterson's plan, reportedly holding a meeting with Nike on September 24 that included Texas alum Kevin Durant, who signed a massive deal with Nike last summer instead of switching to hometown Under Armour.

Instead of a bidding war, then, Perrin honored Nike's expressed wish to avoid having to match a deal from Under Armour, which one source said was willing to go as high as $22 million a year, including the same type of company stock options Under Armour included in its deal with Notre Dame. As recently as late September, just before the exclusive negotiating window between Texas and Nike expired, Under Armour was considered a "major player" to land Texas.

With the Horns having reportedly cancelled a meeting formerly scheduled with Under Armour on October 4, the school announced the new Nike apparel contract without hearing pitches from Under Armour or adidas, as previously expected.

And Perrin further distinguished himself from his predecessor in doing so in keeping the Horns outfitted by the swoosh.