Why would Adidas be making such a "strong deal" when there's seemingly minimal competition?
Mostly rhetorical question.
Because, with all due respect to
@Hurracanes , it will not be the "strong deal" that it is advertised to be. Though it will be a very good deal if it is in the Tennessee/Pedo State range.
There will be a component of the contract that I do not dispute at all, which is a direct cash payment to the University of Miami. This amount is just a fraction of the deal.
So let's talk about the other things that Miami will get.
1. "Massive NIL support". As I've said before, this is an area where I have given adidas strong credit for moving bigger and stronger and faster than Nike has at this point. Now, just based on the REPORTS for Tennessee, the claimed number is $10M per year for 20 Tennessee sports. Acknowledging that football will get the lion's share, it should also be noted that based on reports of two elements (including the "adidas ambassador program"), the likely structure will be that a LOT of Tenneseee athletes get a moderate amount of money, and that certain individual players will get a lot of money per person. In other words, it is not that hard to envision that about $5M of that $10M would go to the football program. Again, this is nothing to sneeze at, and if Nike is NOT matching that element, then it's like comparing apples to...well, actually, nothing. But let's move on to the analysis. Again, $5M per year is not insignificant. But in a timeframe when teams can spend $50M per year, you are talking about 10% of the annual NIL budget. NOT insignificant, but also unclear whether this gives a competitive advantage or is just used to sign one or two big players. A lot is yet unknown, so I will NOT denigrate this new aspect of apparel deals at all, I will just say that I am curious as to how it will work out. ULTIMATELY, if adidas and Nike start doing this for all their P4 schools (or most), then it just raises the level for everyone. HOWEVER, if it is only done for some, then you have a real competitive advantage. This is new stuff, so we need to keep our eyes open.
2. How does "massive NIL support" impact the schools - as I've alluded to before, if these are cash payments to the PLAYERS, then the "advertised value" of the contract does not mean that UM gets more money itself (it doesn't), but it certainly eases the burden on donors and collectives on "how to make payroll" during the NIL era. CANNOT be ignored.
3. How does "massive NIL support" impact adidas/Nike - this is where I would argue that the nature of the deals should NOT be "focus on the advertised value". Sure, if adidas pays $10M of NIL to Tennessee athletes each year, that is a cash payout. But the VALUE is quite heavily on Tennessee's side as well. If adidas paid Tennessee $10M cash, the money is gone. But if adidas pays Tennessee athletes $10M cash to be their brand ambassadors, the value comes back to adidas quite heavily. This will be true on other elements described below.
4. Marketing and co-branding ("activation"): This is usually about one-third of a contract. The new Tennessee contract can roughly be split into two parts. One part is like the "old" apparel contracts. About $100M of the $200M advertised value is going to be "NIL money" as described in #1 to #3 above, so that means the other $100M is traditional. About 1/3 cash payment to the school, about 1/3 in equipment and uniforms, and about 1/3 in marketing and co-branding. This is the non-cash "value" that attaches to things like advertisments and posters and billboards and whatnot that show Tennessee players wearing adidas clothing. So imagine how you get an e-mail (or mail, or billboards) encouraging you to buy season tickets. If there is an image that features the jersey or helmet (and adidas logo), then a value attaches to that. Trust me on this, if you knew HOW MANY companies were involved in traditional NASCAR images, you would be shocked. They had an entire department that tracked all the royalty payments due-due and due-from every time there was an image of a car or a driver (in his suit) used in any sort of likeness or image. BUT...suffice it to say...and this is very important...the NON-CASH value that a university has to include in its income is very...intangible...and also has a massive benefit to the apparel company.
5. Equipment and uniforms: This is a more tangible component of the contract, but is ALSO non-cash. Thus, if we get helmets and shoulder pads and footballs...great. A "sweetener" of such components can include the "alternate" jerseys...but let's not forget that Nike and adidas make a lot of that money back on...SELLING replicas of those jerseys at retail. I would EXPECT that a big bump that adidas is offering will be "funding for the new weight room", and while that is helpful, let's not ignore the fact that a nice bit of that value will be in BRANDING that weight room. By putting the adidas logo on the walls and on the equipment, adidas derives ongoing value above and beyond what they might pay to help us complete the Hecht/IPF improvements.
None of these things are insignificant, but they also need to be contextualized. We do not know all the details of the Tennessee contract yet, and the Pedo State contract has sparked significant controversy in Pennsylvania, including the "AD discretionary" portion (about $5M in value) and the highly summarized way in which the contract was presented to the Board of Trustees. In other words, one of the larger (overall) contracts that Pedo State was bound by...the BOT barely knows what is actually in the contract. Another controversy with Pedo State is that apparently Nike offered a $30M cash payment on Day 1, and this clause was not communicated to the PSU BOT.
So, sure, when you SEE the "total value" of what adidas is offering or what Nike is offering, there will be an eye-popping total number, and then there will be both "traditional" elements that we all are familiar with and understand, and there will be "new" elements (NIL) that are completely novel and will take several years to understand how this will impact the school and the sports teams.
As I've said before, this has been LARGELY a "fix is in" situation. For people who know how RFPs and contractual negotiations happen, you have to give a completely open opportunity to at least two bidders to get a fully apples-to-apples comparison. If Miami wants its next contract to include new elements like NIL support and funding for the new weight room, it simply includes those elements in the RFP. It is up to each bidder whether they want to include every element, or else do something as simple as offering one big lump sum that can be spent however Miami wants (though that would not happen, since 2/3 of the traditional deals have been non-cash, I was just giving an example).
I did find it interesting that the "advertised" value of Tennessee's deal is "20M per year" over 10 years, and the "advertised" value of Pedo State's deal is "300M over 10 years". Given that both schools are virtually the only large state schools in each state, and PA is the 5th largest state and TN is the 15th largest state, I would be very curious to know what exactly makes up "the other $100M". It looks like the "AD kickback portion" of $5M is part of it (this was described as a "non-standard" element of the deal, no matter how the PSU AD tries to spin it), but then what about the other $95M?
Bottom line, if Miami got a $200M deal comparable to Tennessee's, you could expect about $35M in direct cash payments to UM, which is about $3.5M per year. Which is a bit more than Miami gets paid now. The real "new money" would be the NIL money, and if UM football gets an extra $5M per year for NIL, that is helpful and wonderful and great. I just need to figure out if (eventually) EVERY P4 school will have something similar, or if this truly gives Miami a competitive advantage.
Clearly, I prefer Nike, but that is on a historical and personal basis. I feel like the last contractual cycle was poisoned by Beta Blake to yield one particular outcome. And while I do not feel that THIS CYCLE is as badly-tilted in adidas' favor, I also know that Nike wasn't given the red carpet treatment to get back into the building.
There aren't a lot of secrets in these deals anymore. If "Pedo State" gets something, people at Pedo State brag and eventually Ohio Taint demands the same treatment from Nike. And Nike isn't blind-sided by what adidas has been offering to Tennessee and Pedo State, at least to the point where Nike is ignorant about what to offer to Miami. But there are also times when different schools prioritize different parts of the bids. For instance, if you were representing a university located in Tallahassee, then you just might PRIORITIZE an element like the $30M up-front cash payment that Nike offered to Pedo State.
As I've been saying for months, I think adidas will prevail here. That's unfortunate to me, as I know how important the nationwide message of validation was in 1987 when Nike anointed Miami as "worthwhile". I understand if some 20-something Miami fan doesn't value that relationship the same way.
There are definitely some elements of the offers adidas is making right now to schools like Tennessee and Pedo State...that are impressive.
But I'm definitely not buying any more adidas merch until they make better merch. Just got 2 brand-new Nike UM polos off of eBay, and I'm very happy with the quality.
