New UO Nike deal has strings

The University of Oregon’s tentative $88 million, 11-year athletic sponsorship deal with Nike would be a financial boon for the school’s athletic department. But, like the school’s existing deal, it comes with plenty of strings attached.

A review of the proposed new contract’s language shows that it allows Nike to dictate “from time-to-time” what specific uniforms or equipment UO sports teams must use; contains financial penalties if too many football players tape up or “spat” their ankles over their shoes in a game, even for medical reasons; and bans the Duck Store and other campus retailers from selling any product made by Nike’s big competitors — adidas, Under Armour, Reebok and Puma.

It also gives Nike the first crack at filling any large order of apparel bearing the university’s “O” logo for groups that have nothing to do with sports: student clubs, alumni groups or academic departments.

On the financial side, the new deal represents a huge boost for the UO. The retroactive agreement would increase the school’s base compensation in cash and Nike products to $7 million this school year, up from the $3 million it was in line to receive.

After years of being below market compared with other public university athletic powerhouses, the UO deal’s $8 million average annual value would be among the top 10 in the country.

The UO would receive less in annual cash — between $2 million and $2.5 million — than many other top deals. But it would get more in apparel value at $5 million a year, in retail prices, to start.

“Each deal is unique,” said UO athletic department spokesman Jimmy Stanton, in an email, when asked about the UO’s cash/product split. “The product allotment fits needs for 20 sports.”

Stanton said the additional money from the deal would be used to keep up with department’s growing expenses “including the rising cost of scholarships and student-athlete support,” rather than being spent on new initiatives, facilities, or staff.

The UO also would see an increase in the royalties it receives from the sale of Oregon-themed Nike products, to 15 percent from 12 percent. Its royalty rate for shoes will stay at 5 percent.

Nike royalty payments brought in $1.4 million in the UO’s 2016-17 budget, according to Stanton. They are split 50/50 between the athletic department and the university’s academic side.

The new deal also contains a number of other changes:

UO athletes no longer have to use only Nike brand for several types of equipment, including bats and fielding gloves for baseball and softball, golf clubs and lacrosse sticks.

Nike’s ticket allocation for football bowl games would increase to 20 from 10.

Nike would no longer pay for five $2,000 academic scholarships a year for former UO athletes with no more eligibility to play sports.

The UO would no longer provide two $5,000 scholarships annually for Nike employees.

The UO would lose its rights to review artwork and designs of new Nike products with the university’s logo before their commercial production. The university also will no longer receive random samples of those products for inspection.

If the UO’s football or men’s basketball programs are found to commit a “major violation” of NCAA rules that results in a multiyear postseason ban or scholarship losses, Nike can get an automatic extension of the sponsorship deal at its then-value. The extension would be for the same number of years as the NCAA’s punishment.

The proposed deal contains several other potential financial penalties for the UO, including the ankle taping policy that is also in the current deal.

Under that policy, Nike considers most ankle taping or “spatting” that obscures the logos on its shoes a “material breach” of contract, subject to termination after one written warning. It’s primarily an issue in football where ankle taping is common and Nike gets the most television exposure from university sports.

The UO’s policy does make some allowances for players who may need to tape their ankles for “a bona-fide medical necessity,” provided Nike is notified before a game with a doctor’s note. But that leeway is minimal.

The contract still allows Nike to reduce its base annual sponsorship payment to the UO by up to 5 percent for every game where more than five single shoe logos are obscured, even if all the taping is done for medical reasons.

Similar ankle taping policies have proliferated in college sponsorship deals in recent years, for Nike, adidas and Under Armour. But they’ve been criticized for potentially influencing medical decisions for players and for requiring players’ health issues to be shared with shoe companies.

Share This Story