Adidas edged out incumbent Nike and rival Under Armour last week in a deal with the Devils. The German sporting goods giant said it agreed to pay Arizona State University a minimum of $33.8 million in cash and product to become the Sun Devils' official footwear, apparel and accessory brand through the 2022-23 season.

Spokesmen for ASU and Adidas declined to break down the number last week, other than to say it reflects the wholesale value of gear Adidas will provide to ASU and guaranteed cash payments. Such agreements typically include cash bonuses for championship appearances and a 10 percent royalty fee on sales of university branded merchandise as well as explicitly prohibiting universities from renewing licensing or marketing agreements with rival brands, such as Nike, Under Armour or Russell.

The contract appears to land between a  six-year $24.3 million deal Adidas negotiated with the University of Kansas in 2012 and a $54.4 million, eight-year deal it negotiated with the University of Michigan in 2008.

From
left to right: Greg McElroy, associate VP, chief business development
for Arizona State University; Ray Anderson, vice president of ASU
Athletics; and Mark King, adidas Group North America
president.

“It is expensive, but it is very much worth it because of the way you are able to represent your brand,” said Mark King, who was appointed president of Adidas Group North America June 1 following disappointing first quarter results.

Through the press conference, ASU Vice President of University Athletics Ray Anderson emphasized that Adidas demonstrated a much greater commitment to advancing the Sun Devils brand than incumbent Nike.

“The current agreement expiration provided us an opportunity with ASU and Sun Devil Athletics to really go outside and seek a genuine, committed partner willing to really aggressively invest in Sun Devil Athletics at an elite level,” Anderson said. “A partner who would make Sun Devil Athletics a priority amongst their schools – willing to put skin in the game to really advance all of our sports programs, including very specifically an emphasis on our Olympic sports. They graciously and creatively met our requests.”

That message could help Adidas in negotiations with other top NCAA programs, including the University of Miami, which could announce this week  whether it plans to extend its historic 26-year partnership with Nike, which expires Aug. 31, 2015. The Palm Beach Post reported last week that Adidas and Under Armour have submitted richer bids for that contract.  Nike's 1989 agreement with the University of Miami marked the first time an athletic brand secured rights to represent major university's entire sports program rather than just one of its teams.

The Sun Devils deal marks an apparent win for Adidas, where management has been under fire for losing market share to Nike since May. That's when Adidas reported North American sales of Adidas and Reebok had declined 13 and 8 percent respectively in the first quarter. Last month, Adidas reported its North American revenues through the first three quarters of the year were running 7 percent behind year earlier levels in currency neutral terms, due primarily to declines in the United States.

Anderson ticked off several provisions of the agreement that he said make it “a uniquely comprehensive deal,” including:

  • a very robust product allotment that covers all ASU sports and automatically increases to cover future varsity sports, including “hockey, and whatever may come next;”
  • uniforms for the band and spirit squad;
  • provision of special orders of uniforms for unique occasions like Breast Cancer Awareness or Military Appreciation week over and above the base uniforms amounts;
  • dollars specifically committed to ASU sports promotions and program development, including facilities’ improvements, as prioritized by Sun Devil Athletics;
  • branding and design expertise and assistance that “really benefits Sun Devil Athletics in a way that we have not been benefited before;” and
  • sponsorship of up to 12 internships annually to benefit Sun Devil Athletics, whether that be in law, business journalism, marketing, or other undergraduate programs.

“We have more investment now with these new partners than we ever had before,” Anderson said.
Portland Business Journal Reporter Matthew Kish, who built and posted a database about 80 NCAA licensing contracts online earlier this year, was struck by the last item.

“One part of the announcement that caught my attention was that it includes as many as 12 sponsored internships in areas such as business, law, marketing,” Kish said. “That caveat seems to have its roots in Nike deals. Big schools like UNC, Oregon and Oregon State get Nike internships. But it’s always been one or two. Twelve significantly raises the bar.”

Adidas, meanwhile, adds it second PAC 12 team and fills a gap on the map between Texas A&M of the SEC and UCLA of the PAC 12. Adidas other NCAA partners and their conferences include Indiana, Michigan, Nebraska and Wisconsin of the Big 10; Mississippi State of the SEC; Louisville and NC State of the ACC; Kansas of the Big 12; and Cincinnati of the American Athletic Conference.

Just as importantly,  Anderson is eager to work with Adidas to promote ASU's Olympic sports, including ice hockey.

“One of our competitors doesn’t offer products in many of the categories, so for us, Ray’s passion for building the size of the athletic program was important,” said King.


Editor's Note: Keep your eyes open for the University of Miami announcement. A win there would give Adidas its third ACC team and fill in a big gap in the Southeast.