To Sign or Not to Sign? Considerations for University Athletics Contracts

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Collegiate sports continue to grow as an enormous commercial enterprise nationwide, and this increasing popularity has presented lucrative opportunities for participating schools. The allegiance fans have for ‘their school’ has become a reliable source of revenue for many colleges and universities, many of which have seen viewership and interest in their athletic programs explode over the last few decades.

NCAA football attendance has more than doubled from slightly over 35 million fans in 1996 to well over 45 million fan in 2006, and more than 49 million fans in 2016. As the fan base has grown, so has the accompanying revenue stream. The growing number of viewers has blossomed into a highly profitable opportunity for companies such as adidas, Under Armor, and Nike to get their products in front of eager fans.

When college teams win, they get air time and more national viewer attention, which translates into more exposure for the brands that student athletes are wearing, and nonverbally endorsing. The opportunity for athletic companies to expand their product endorsements has generated many high-value contracts between sports apparel companies and colleges. Postsecondary schools that have had success increasing on-screen time and growing popularity in comparison to other schools represent the optimal target for apparel companies.

Colleges with the most success – from winning seasons and TV presence – receive lucrative apparel packages. Two illustrative examples of public universities with these deals are the University of Michigan, a member of the Big 10 Conference, which annually receives 3.8 million in cash and UCLA, of the Pac-12 Conference and the Mountain Pacific Sports Federation, which receives 3.5 million in annual cash and $35,000-$2 million annually in product, both from adidas.

Some slightly more modest public university deals include the Mid-American Conference’s Central Michigan, which doesn’t get cash but receives $10,000-$130,000 annually in product (adidas), and the University of Hawaii, a member of the Mountain West conference, which receives $125,000-$160,000 annually in cash and $225,000-$260,000 in product (Under Amour).

The contracts are beneficial to collegiate sports programs in ways that transcend cash and discounts. Many colleges choose to enter into a contract with these apparel providers to build branding and make sure that their athletic programs are cohesive in appearance and equal in equipment quality.

Massachusetts state schools are no different, although at this time not many public postsecondary schools in the Commonwealth have chosen to enter into contracts. Salem State University and UMass Amherst are among the few that have, while schools such as Fitchburg State, Worcester State and Westfield State have chosen not to sign with a single provider. The schools that have not entered into contracts have not explained why they have chosen to buy in bulk from multiple brand apparel companies instead, but the reasons are numerous. In some cases schools decide the yearly minimum purchase wouldn’t be worth it (as those uncontracted bulk orders can also be financially compelling), while in other cases the decision might result from disagreements over contract terms or general disinterest.

Pioneer Institute, through a public records request, obtained a contract between Salem State University and adidas for the period of July 1, 2015-June 30, 2020. The contract requires that all apparel and footwear for the school’s varsity teams and players be ordered exclusively through Champions Choice (an authorized adidas team dealer). The varsity teams that the contract covers are Baseball, Men’s and Women’s tennis, Softball, Men’s and Women’s Cross Country, Women’s Volleyball, Field Hockey, Men’s and Women’s Ice Hockey, and Men’s Golf.

In the deal, Salem State received a one-time $7,000 stipend to purchase apparel products at retail price. Past this stipend, the university must reach an annual purchasing minimum of $30,000 in product at 35 percent off retail price. If they surpass that amount, they will receive a flat 10 percent return on all purchases that the school has made inclusive of the initial $30,000. The contract also outlines goals for the two parties: (1) If Salem State attains an honor such as Conference Coach of the year, they’ll receive an additional $500 in product at retail price; (2) If they reach the NCAA Tournament they will receive an additional $1000 in products at retail price and individual qualifiers receive $100 in product at retail, although there is a maximum of 10 individuals per sport.

The contract wording is similar to other agreements between adidas and other collegiate athletic departments. Yet as with any contract, there are conditions that are required of both parties. Contracts benefit a school by giving them a discount on quality apparel that the school needs to purchase anyway. But they involve the student athletes, not just the school administrators that sign the contract.

In this case, the conditions not only outline the monetary agreement between the school and company, but establish what student athletes can and cannot do with their apparel during a game or public event, and what the company would be liable for in the case of an injury to a student.

In the contract, adidas waives any liability for injury or damage suffered by the school for wearing or using adidas products (except those resulting from gross negligence or willful misconduct by adidas).

There is also a requirement against covering the logo on apparel in any way. The same requirement mentions that ‘spatting’ in particular – covering a logo on cleats/shoes with tape in an effort to stabilize the ankle of a player and protect it from injury – will not be tolerated without prior written approval by adidas. The sports department at University of California, Berkeley is a prominent example of one of many schools that have had interactions with limits on spatting. In their case, athletics director Sandy Barbour had to email the equipment manager and head athletic trainer to review the contract with Nike to ensure that all parties were aware of Cal’s obligations.

Spatting is commonplace in the NFL, but has become a contentious issue between college football programs and the apparel companies with which they contract. The obligation of a school to report or request the spatting of a player – even in the case of an injury – conflicts with the student’s right to promote his or her own safety, welfare, and medical protection.

Although many claim spatting is helpful in preventing or protecting existing injuries, some assert that restricting the natural range of motion can have a detrimental effect on the ankle’s health. Unfortunately, studies are somewhat limited and spatting is popular, so it is unclear if it will endure as a fundamental choice of players and medical staff or fade out of preference. Either way, logo altering will remain as a fundamental breach of contract between Salem State and adidas.

With many variables to consider, it is true that a large-scale athletic apparel contract may not be the right fit for every state school. For Salem State, the contract terms have presented themselves as an attractive alternative that may prove to be beneficial. But if the cost of entering into a contract exceeds the cost of purchasing necessary apparel, it can be just as beneficial to buy outside of a contract, as many public universities in Massachusetts still choose to do.