The University of Miami has announced that it will partner with Adidas, ending a decades-long relationship with Nike. This comes on the heels of Arizona State’s recent announcement that it will be switching from Nike to Adidas next year.
Nike has enjoyed dominance in collegiate athletics, highlighted by the College Football Playoff in which the brand will pay $15 million collectively to the four Nike affiliates in the playoff and subsequently receive maximum exposure worth far more than that. That price tag is relatively cheap considering that one commercial during one of the three games costs $1 million.
In light of this news, competitors Adidas and Under Armour are certain to challenge Nike, but it’s worth noting that the two are forced to double, triple and quadruple the fees to universities compared to what Nike usually pays.
Earlier studies found that while Nike underpays and gets the best deal it usually can, Under Armour and Adidas vastly overpay, largely because it’s the only way they’re able to trump Nike, the undisputed leader in sports apparel and footwear. Case in point: Adidas pays Michigan over $8 million, whereas Nike pays Michigan State — a similar program and similar-sized fan base — only $2.2 million.
With that kind of price competition, Nike may lose a few teams such as Miami, but that model is unsustainable. Nike likely doesn’t have too much to worry about in the collegiate market, especially considering it won the NFL uniform deal, a contract that is much more lucrative than any collegiate partnership. Under Armour and Adidas certainly will be able to steal a few teams by basically offering the schools a blank check, but eventually there will be a limit to how much they can offer. It might behoove the two competitors to focusing on bettering their products to effectively challenge Nike.