Sports Funding: The Final Frontier?

It was a story that made headlines on both the sports and business pages. The University of Notre Dame, an Adidas-clad sports program since 1997, will become an Under Armor school when the Adidas deal expires July 1.

It’s a sports story because, of course, it’s Notre Dame and anything that happens with the sports programs under the Golden Dome is news. It’s a business story because it shows how far Under Armor has come in penetrating the America athletic scene, with a deal that puts one of the oldest, iconic athletic programs in the same breath as a relatively young equipment manufacturer.

Under Armour will be the exclusive outfitter for all 26 of Notre Dame’s varsity teams under the 10-year contract. Although the numbers weren’t released, Sports Illustrated and ESPN speculate the deal is worth about $90 million, and the University has the option to take some of its payments in Under Armour Stock. Not a bad idea, since right after the announcement, Under Armour stock rose 3.4 percent to $84.78 a share.

Among publicly-announced deals, the University of Michigan had what was believed to be the largest contract, $8.2 million annually in equipment and cash under an eight year deal with Adidas.

Under Armour already had been making inroads in the high school game, as title sponsor of the Under Armour All-America High School Football Game, girls’ high school volleyball awards and the like. A number of the top high school football programs have been wearing Under Armour for years.

Why is it important for Under Armour to land one of the biggest names in football? The growth of college football on television means your logo on team uniforms is seen dozens of times during a game on 70-inch high definition televisions around the country. Division 1 athletic departments generate about $7.5 billion in annual revenue, and merchandise sales of more than $4.6 million a year, according to the Kelley School of Business at Indiana University (an Adidas school).

And Notre Dame generates about $78 million of the school’s athletic department revenue of $108 million, and the Irish are third in merchandise sales, behind Texas and Alabama. So for Under Armour to grab the contract with Notre Dame at the least raises the exposure of the company, still dwarfed by Nike’s 79 Division I schools and Adidas’ 30 and at the most, give it the ‘halo’ effect of being associated with Notre Dame.

Deals like this trickle down to youth sports, where kids wanted to “be like Mike” a couple of decades ago with Air Jordans or sport And 1 shoes like Alan Iverson.

Oh, and under the heading of “Is this a coincidence,” just days after the Under Armour announcement, Notre Dame unveiled a $400 million project to add three academic and student life buildings around the exterior of hallowed Notre Dame Stadium, offering premium seating for fans and outdoor terraces overlooking the football field.

The project includes several club-style seating options, available on three upper levels on both sides. A hospitality area also is planned for the new building on the south end of the stadium. The stadium itself will be renovated, with the press box making way for premium seating. The project could add up to 4,000 premium tickets for Notre Dame Stadium.

Could Notre Dame have raised the money for the Campus Crossroads project without the Under Armour deal? Probably. Will the Under Armour deal help? Absolutely. Just take a look at what the University of Oregon has done with Nike backing. For recruits, staffers and moneyed alumni, these contracts mean upgraded facilities, updated buildings and the ‘cool’ factor that comes with wearing just the right logo.

Equipment deals are big deals for colleges and high schools. Youth sports are the next frontier.

Notre Dame Under Armour

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