Nike May Face a Bidding War for the NCAA's Richest Program

Jerrod Heard of the Texas Longhorns drops back to pass against the California Golden Bears on Sept. 19, at Darrell K Royal-Texas Memorial Stadium in Austin, Texas.

Jerrod Heard of the Texas Longhorns drops back to pass against the California Golden Bears on Sept. 19, at Darrell K Royal-Texas Memorial Stadium in Austin, Texas.

Photographer: Cooper Neill/Getty Images
  • University of Texas apparel contract about to be up for grabs
  • Under Armour, Adidas would love to oust Nike from Austin

The richest program in college sports looks like it’s about to get a lot richer.

Nike Inc. won’t renew its apparel contract with the University of Texas before the company’s exclusive negotiating window expires on Oct. 1, according to people with direct knowledge of the talks. That opens the bidding to Nike rivals including Under Armour Inc. and Adidas AG, the companies most likely to pay to put their logos on every uniform the Longhorns wear -- and on the millions of dollars in gear Texas fans buy.

Recent deals suggest that could be worth more than $15 million annually. Earlier this year, Nike agreed to pay the University of Michigan $169 million over 11 years, ousting Adidas from Ann Arbor. Last year, Under Armour won the rights to the University of Notre Dame, which said at the time the contract was the largest in the history of college sports. The exact terms of that deal aren’t public, but it included an equity stake in Under Armour for the university.

Remember Reebok?

Texas’s original contract with Nike was substantially smaller. In 2000, Texas ended its relationship with Reebok for a seven-year, $17 million contract with Nike, according to the Austin American-Statesman. Texas and Nike have since extended that contract three times. Nike still has the contractual right to match any offer Texas receives, according to a person with knowledge of the agreement.

Adidas and Under Armour have been stretching the market for marquee college programs and for professional players. Adidas recently wooed Houston Rockets guard James Harden from Nike for a whopping $200 million over 13 years. And Under Armour drove up the bidding for National Basketball Association MVP Kevin Durant, who ultimately stayed with Nike for $300 million over 10 years.

Texas athletic department spokesman Nick Voinis declined to comment, as did Nike spokesman KeJuan Wilkins. Spokeswomen from Adidas and Under Armour didn’t immediately respond to voice messages and e-mails.

Richest Program

Texas is already the richest athletic program in the country. It earned $161.3 million during the 2013-14 school year, according to its most recent financial report, and unlike most college athletics programs, it covers its own expenses. Most of that money comes from the football team, which turned a $74.1 million profit in the 2013-14 school year, according to the U.S. Education Department. That makes it the most profitable team in college football by almost $10 million. Michigan is No. 2, with $64.6 million in profit.

Negotiations come at a tumultuous time for Longhorns sports. Athletic Director Steve Patterson resigned earlier this month, after repeated clashes with school officials and boosters. The football team has lost three of its first four games this season; it plays No. 4 Texas Christian University on Saturday.

Texas has already shown its willingness to break ties with a market leader. In March, the school said it would part with its licensing representative, Collegiate Licensing Company, a unit of WME/IMG, once its agreement expires in June 2016, in favor of Learfield Licensing Partners. The change was designed to save the UT system about $1 million annually. The Longhorns made $7.9 million in net licensing revenue in 2013-14, according to the school.

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