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Friday, September 24, 2021

Sportswear Companies Among The Biggest Losers Of Canceled College Football Season

The Washington Huskies debut their new Adidas uniforms
during the first game of the season against the Eastern
Washington Eagles last season. Photo/Alika Jenner/Getty
Images

By Clare Duffy, CNN Business

(CNN) — Two of the country’s top college football conferences will postpone their fall seasons. That could mean billions of dollars in losses — for universities, college towns and companies built around the American college football spectacle.

Sportswear companies in particular stand to lose out on one of their biggest investments and most lucrative marketing opportunities.

Nike, Adidas and Under Armour sign sponsorship deals sometimes worth hundreds of millions of dollars with universities with strong athletics programs. For the universities, the deals are an important revenue stream; for the companies, they’re a key source of brand exposure to both high performance athletes and the broader consumer base.

“If you look at what the overall spend (on college apparel deals) is, I bet it’s the companies’ biggest expenditure from an advertising standpoint,” said Eric Smallwood, president of Apex Marketing Group.

The Big Ten and Pac-12 on Tuesday voted to postpone college football and all other fall sports seasons in light of the potential risks to student athletes during the pandemic. The other members of college football’s “Power Five” conferences — the Big 12, SEC and ACC — have stated plans to play football in the fall. Many smaller conferences, which apparel companies also work with (though the deals are less valuable), have also announced plans to postpone fall football.

Some of the most lucrative collegiate apparel deals are with schools in the Big Ten and Pac-12, according to a September 2019 accounting of the biggest deals by Forbes. They include Under Armour’s 2016 15-year, $280 million deal with UCLA (which Under Armour is now trying to exit); Nike’s 2016 15-year, $173.8 million deal with the University of Michigan; and Adidas’ 2018 10-year, $119 million deal with the University of Washington.

During the 2020-21 school year, Michigan is set to receive $5 million in product and more than $4.8 million in cash from Nike, according to its contract, which was obtained by the Portland Business Journal. The deal also includes added bonuses if Michigan, a Big Ten school, plays in championship games, which now won’t be happening this fall.

“Nike is synonymous with college football,” Smallwood said. “So, it’s very crucial for them.”

Even the schools that plan to move forward with fall football face serious challenges in carrying out the season safely.

On Saturday, the head football coach at the University of Oklahoma, a Big 12 school, said nine players had tested positive for coronavirus. Last week, a wide receiver at Florida State University (an ACC conference member) accused the school’s athletics department of lying about players’ health safety conditions related to Covid-19 during the first week of football camp, though the school’s athletic director and other athletes pushed back on the claims.

The apparel companies will lose out on merchandise sales and brand exposure during televised games — the companies’ logos appear on players’ jerseys and shoes and are also often plastered around stadiums.

Smallwood estimates that, on average, a Big Five conference school’s regular football season would provide $4.74 million in marketing value to its apparel company through TV brand exposure. A single conference championship game could provide the company with more than $2 million in marketing value.

For both the schools and the apparel companies, missing a season would involve other losses, too.

As part of some collegiate apparel deals, some companies will work with a universities’ student athletes to test gear and gather data on its performance. In return, some universities receive guaranteed internships for students or on-campus talks from corporate leaders. Sponsoring college athletics helps the apparel companies build relationships with student athletes, so that if they go pro, they’re more likely to endorse and wear that company’s gear.

The partnerships can also help build brand loyalty among fans of a college football team.

Most collegiate apparel deals include clauses that allow the companies to penalize the university or pull out of the agreement if players cover up the company logos on their apparel or shoes or if a team is sanctioned by the NCAA and can’t play.

In the Michigan contract, the school acknowledges that “a principal inducement for Nike’s entrance into this agreement is the exposure that the Nike brand receives through the prominent visibility of the Nike Marks that appear on the side … of the football shoes worn by members of the football team.”

But it’s unclear whether the agreements account for a global pandemic that cancels play, or if apparel companies would pull out of the agreements even if they did. Smallwood said if the pandemic continues to push off the football season, or if it begins to encroach on college basketball, the companies may try to renegotiate their deals.

“Under Armour remains committed to defining multiple ways to support athletes, coaches and staff as society navigates the months ahead of us,” Under Armour said in a statement to CNN Business. “We are focused on performance solutions for all athletes, regardless of sport, as they work towards accomplishing their training, competition and recovery goals.”

Adidas declined to comment for this story. Nike did not return requests for comment.

The-CNN-Wire
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