How Ohio State's 15-year, $252 Million Contract With Nike Measures Up to Michigan, Texas Deals

By Eric Seger on January 15, 2016 at 3:00 pm
How Ohio State's new contract with Nike matches up to the other top deals of the apparel giant.

Nike has done its best to make sure the rich get richer in college sports, but Ohio State took an additional step to guarantee it remained at the zenith of apparel deals across the nation.

Thursday, the school announced a 15-year, $252 million contract with the athletic apparel giant, set to begin in the 2018-19 season and end in 2033. The money outpaces pacts Nike forged with Texas and Michigan in 2015, a directive at the crux of the directive in place by Ohio State administrators.

"We waited for the Texas deal, as that would be the most comparable to who we are," Ohio State Vice President and Director of Athletics Gene Smith told Eleven Warriors Thursday. "Then, we finalized."

Ohio State's deal is the lone of the three mega contracts between Nike and the power programs to be signed and finalized, Matthew Kish, a reporter for the Portland Business Journal covering footwear, apparel, banking and finance news, told Eleven Warriors.

The agreements at Texas and Michigan still need to be signed off by their respective administrations, which isn't uncommon. The move by Smith and the Ohio State Board of Trustees came as a bit of a surprise to Kish, but it ultimately makes sense in the arms race of college apparel money.

"That's good business," Kish said. "These deals have become so big and the information is more available to athletic directors now, that it makes sense to bargain the deals a little bit more. Waiting until these other deals are done gives Ohio State more leverage when it goes to the table."

Texas' deal, announced in October, also stretches across 15 years, but trails Ohio State by a slim margin monetarily at $250 million. The Longhorns were paid $20 million up front and are set to receive $6.5 million in annual cash compensation from Nike. Apparel, equipment and four internships per year will also be provided. In all, Nike is set to shell out an average of more than $16 million per year to the Longhorns under their current deal.

The Wolverines announced their newly minted contract with Nike in July, which at the time was the richest in college sports, 11 years for $122.32 million. Michigan has an option to extend its deal four more years after the initial 11, and if it chooses to do so would boost the deal's total cashflow to $169 million.

Without the option to extend the deal, Michigan's contract includes a $12 million lump sum upfront.

Here's a look at how each of the three schools' top-tier contracts with Nike stack up:

Base Nike Contract Comparison
YEAR OHIO STATE ($20M upfront) TEXAS ($20M Upfront) MICHIGAN ($12M Upfront)
2018-19 $3.44M cash, $5.6M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.3M apparel
2019-20 $3.44M cash, $5.7M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $4.7M apparel
2020-21 $3.44M cash, $5.8M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $4.8M apparel
2021-22 $3.44M cash, $5.9M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $4.9M apparel
2022-23 $3.44M cash, $6.0M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.0M apparel
2023-24 $3.44M cash, $6.1M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.1M apparel
2024-25 $3.44M cash, $6.2M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.2M apparel
2025-26 $3.44M cash, $6.3M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.3M apparel
2026-27 $3.44M cash, $6.4M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.4M apparel
2027-28 $3.44M cash, $6.5M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $4.82M cash, $5.5M apparel
2028-29 $3.44M cash, $6.6M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics $5.32M cash, $5.6M apparel
2029-30 $4.44M cash, $6.7M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics *$5.82M cash, $5.7M apparel
2030-31 $4.44M cash, $6.8M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics *$5.82M cash, $5.8M apparel
2031-32 $4.44M cash, $6.9M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics *$5.82M cash, $5.9M apparel
2032-33 $4.44M cash, $7.0M apparel $6.5M cash, $1.5M/yr avg. initiatives outside athletics *$5.82M cash, $6.0M apparel

*Michigan has a four-year option to extend its deal with Nike at the conclusion of the 2028-29 term

Texas also receives $1 million per year of its deal ($15 million over the term) for former star basketball player Kevin Durant's line of performance products, apparel and footware.

Additional notes in Ohio State's new contract:

  • Ohio State can order an additional $5 million in Nike products (calculated on the basis of suggested retail price) over the remainder of the term;
  • In the first year of the extension period (2018-19), Ohio State can order up to $500,000 in Nike products (calculated on the basis of suggested retail price) for distribution in the Office of Student Life. That total increases by $10,000 each of the following contract years;
  • Nike will also make a one-time payment of $2.5 million to the school's general scholarship fund to be used at Ohio State's discretion;
  • Ohio State receives $41 million for use outside of athletics.
  • Ohio State can order up to $175,000 in Nike Elite Client Services through the completion of the 2015-16 contract year, then a maximum of $250,000 of the same services each year of the extension;
  • Nike will make a $1 million contribution to Ohio State's Student Life endowment fund, to be made on or before Jan. 1 each contract year;
  • Commencing with the extension period, Nike will provide 90 internships (six each year), two to student-athletes and four to other non-athlete undergraduates for the duration of the contract. Nike provides four internships to Texas as part of its deal, while Michigan has the luxury of three with its current agreement.

The specified money outside of athletics worked into the contracts is a noticeable trend that has only surfaced in recent years Kish said, as Nike schools began seeing the value with including such perks.

"Historically, you haven't seen a lot of that in Nike deals," Kish said. "Adidas, from reading a lot of these contracts, pioneered those sorts of 'sweeteners.' T-shirts for the student sections, student events, for example. But I think there's more demand for that because universities see the value in providing stuff to the student body. Not just to athletes."

Kish said the same thing about the distinctions for the beneficiaries of the Nike internships within Ohio State's deal, as old contracts just stated how many would be available. They did not specify which students would receive the internships.

The 15-year deals set in place between Nike and the three schools are becoming the norm with how the spike in popularity of college sports and how Ohio State, Texas and Michigan carry brands that resonate across the globe.

"These are three elite athletic programs," Kish said. "Nike has been willing to let some programs walk in it has been steering more money to the biggest, most elite programs. So Ohio State, Michigan, Texas fit that profile and they have been extending those programs well before the existing deal expires."

Under Armour's recent resurgence is indicative with the signing of Notre Dame, a classic name with historical success on the field that rivals Ohio State, Texas and Michigan. Adidas has apparel contracts with Louisville, Kansas, UCLA and others, but Under Armour's presence pushed Nike to lock up the programs dearest to its longterm success.

"That has added one more kind of party in the bidding process," Kish said. "They've become more competitive, so the numbers are getting bigger and as the deals get bigger they're also getting longer."

Ohio State's deal is the most lucrative in college athletics, followed behind Texas and then Michigan. Florida State (Nike), LSU (Nike), Louisville (Adidas), Kansas (Adidas), UCLA (Adidas) round out the top eight. Kish said the contracts for Florida State and Florida were extended way before the completion of the prior agreements, just like Texas, Michigan and Ohio State. That makes Nike's goal clear.

"Nike is being very aggressive about locking up its most elite programs because they're very valuable relationships for sportswear companies," Kish said.

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