This year is one of big changes for the University of Colorado Buffaloes football team. Heisman Trophy-winning tailback Rashaan Salaam is gone. The team has a new coach for the first time in a decade. And, starting with the game against Colorado State University four weeks ago, each player began wearing a small Nike logo on his left collarbone.
Guess which change is worth more than the others.
But the university isn't sure it wants anyone to know about it. Last week CU apparently signed a lucrative multiyear deal with the Oregon athletic-apparel company. At least that's what Nike's chief competitor for the endorsement deal says. "We got a letter from their purchasing department saying they signed a five-year deal with Nike," says Doug Trautman, director of collegiate and team sports for Reebok Inc.
But officials for CU continue to deny that a long-term deal has been struck. The university has stalled a reporter's request for a public document in which CU solicited bids for a new endorsement deal. And though athletic director Bill Marolt admits that the university has been negotiating with Reebok and Nike, he says the only decision he has made has been to extend for one year an earlier contract with Nike.
The university's hesitation to release information about any deal with Nike is especially noteworthy considering that CU's relationship with the company already has affected the national perception of Colorado's largest university. Ever since every member of the Buff's football team began wearing prominent Nike swoosh logos on his nationally televised uniform, it has become clear to whom CU owes its corporate allegiance.
Consider which team was the most visible during a recent showpiece CU football game. It wasn't third-ranked Texas A&M, whose Heisman-hopeful running back, Leeland McElroy, gained a paltry 52 yards. It wasn't even the seventh-ranked Buffs, whose top-ranked quarterback, Koy Detmer, was knocked out of the game in the second quarter.
Rather, it was Team Nike. Going into the game, Nike's director of public relations, Keith Peters, was ecstatic. "This Saturday there'll be a whole lot of swooshes on the field," he gloated. That was an understatement.
Every Aggie and every Buff wore Nike shoes, of course. They also wore uniforms with Nike's trademark swoosh emblazoned on the left collarbone so as to be more easily picked up by the television cameras. Even Coach Rick Neuheisel's traditional black-and-gold Colorado Buffaloes cap had been replaced by a new hat boasting the logo.
If Reebok's rejected bid and deals Nike has already struck with other major universities are taken as guidelines, Colorado's new contract with Nike is probably worth seven figures.
"We thought we put in a solid bid," says Trautman. The Massachusetts-based athletic company offered CU a five-year pact, with options to extend it.
He adds that, per CU's wishes, Reebok broke its bid down into three parts: the cash it would give to the university, the amount of money it would spend to market CU's name, and the value of equipment it would give Colorado. Trautman says that the value of the cash and equipment made up most of the total package, with the marketing money having the least value.
In return, of course, Reebok would have received (and Nike will receive) a lot of exposure for the company's name. In addition to the omnipresent swoosh covering players and coaches, Trautman says CU was offering to exchange sign space for the company's name and logo on various Buffalo athletic venues and mention of the product on coaches' television and radio shows.
Lucrative alliances between athletic companies and high-profile universities are nothing new, and Colorado has been no exception. "We've had an ongoing relationship with Nike," explains Marolt. Specifically, Nike has struck deals with individual teams within the university, including women's volleyball and men's basketball.
Not surprisingly, though, the company's most enthusiastic support has been reserved for Colorado's nationally ranked--and, more important, nationally recognized--football team. The athletic company has provided shoes and sideline apparel for the football Buffs for about ten years.
Former coach Bill McCartney enjoyed a reported $50,000 to $75,000 annual stipend from Nike to supplement his $140,000 yearly salary. (McCartney also received incentives for postseason games.) According to Marolt, Neuheisel, who earns $11,000 a month from CU (not counting his postseason incentives), will receive approximately the same amount of money from Nike this year.
Despite Nike's generosity to McCartney and Neuheisel, CU's football coaches receive pocket change compared to the stipends the company gives to other high-profile coaches. Two years ago, for instance, Mike Krzyzewski, the highly successful coach of Duke University's basketball team--and a longtime Adidas endorser--agreed to a deal in which Nike reportedly paid him a million-dollar signing bonus, an annual stipend worth up to $400,000, and Nike stock options.
But in recent years, such deals--in which successful coaches alone trade lucratively on a university's good name--have begun to raise hackles. So the major athletic companies that compete for college sports exposure have begun to shift their strategy to "total university relationships."
The new deals work like block grants. Nike, say, delivers money to the university, whose athletic directors then distribute it as they see fit. Explains Nike's Peters, "Over the past few years we have begun to work with athletic departments in toto, rather than the old arrangements we made with individual programs."
A typical case is the University of Michigan's new relationship with Nike. That contract, signed last year, is a seven-year deal worth an estimated $6 million. Michigan's 22 athletic teams will receive, free of charge, Nike apparel and equipment. The shoe company also threw in additional money for women's athletics programs and a journalism fellowship. (Basketball coach Steve Fisher's estimated $200,000 annual stipend from Nike, however, will be grandfathered in.) In return, Nike enjoys exclusive rights to market Wolverine wear, as well as tremendous exposure. Michigan's football stadium seats over 100,000, and the Wolverines are one of football's most televised teams.
Peters says Nike has reached similar agreements with seventeen universities so far, including Oklahoma and Penn State. Trautman says his company has attracted UCLA, Notre Dame and Wisconsin, among others, into the Reebok fold.
Nike's marketing push hasn't thrilled everyone. Most of the programs targeted by the company are lucrative in their own right, and alumni from various universities have complained that their school's good name is being purchased by a corporation interested in nothing but profits.
Penn State, for one, did nothing to discourage that impression. Traditionally, the Nittany Lions have used their uniforms as an expression of team spirit and their allegiance to no one. The football team, for instance, refuses to have its players' names emblazoned across the back of their uniforms. Last year the players decided against sullying their uniforms with the National Collegiate Athletic Association's 125th-anniversary patch, and they refused to wear a Rose Bowl patch.
But Penn State's football team has begun sporting the Nike swoosh.
Lucrative corporate sponsorships also put additional pressure on college teams to win. The reason is simple economics: Nike, or any other potential endorser, is not interested in being associated with a loser.
Nike tends to cut deals with "schools that have a long history of competitive excellence," explains Peters. "Obviously, it's got to make sense to us from an exposure standpoint." But what happens when a university that has become used to receiving $1 million worth of free equipment each year starts losing and the company withdraws its support?
In some cases, the new "university-wide" deals could end up costing schools money. For example: If a coach is accustomed to receiving a stipend from Nike that effectively doubles his salary, where will that money come from when Nike stops writing the checks to him? The university might have to make up the difference. (Some experts also predict lower salaries for college athletic coaches.)
Although Nike has been supplying college athletic teams with footwear for years, the company's sudden burst of exposure can be traced to a recent confluence of marketing science and good logo luck.
Market research done by the industry showed that even if a company was supplying every single shoe on a given football field, it wasn't going to have much impact unless the television camera happened to zero in on the athletes' feet. Uniforms, however, are a different matter.
"One of the things we realized recently was the on-the-field opportunity" for corporate exposure, says Peters. As a result, this is the first year that Nike has begun to produce athletic uniforms on a large scale. (The fact that people are noticing Nike's swoosh more this year than previous years "shows how much more exposure you get from sideline and on-field apparel," adds Trautman.)
Of course, a plain uniform doesn't increase sales. The next challenge the athletic companies faced was how to get national television audiences to notice the manufacturer. Nike met the challenge partially when its marketers determined that putting its corporate identification on an athlete's shoulder was more noticeable than sticking it on elsewhere. Until recently, most athletic manufacturers had been affixing their logos to uniform sleeves. (Some companies still cling to the sleeve, though: Russell and Champion both stitch their company names there.)
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Although its marketing savvy helped, Nike also received a boost from an obscure NCAA rule change that went into effect this year.
For years the NCAA insisted that if uniforms were to boast a logo, the symbol must occupy no more than a two-and-a-half-inch square. Yet, as on-the-field corporate exposure became more important, that rule began to chafe companies with no recognizable logo and those with longer names. Champion, for instance, could not fit its name into a square shape.
So, under pressure from a quiet lobbying campaign, the NCAA this year decided to allow the companies' identification to take whatever shape the sponsor wished--rectangle, square, triangle--as long as it could fit into the same space.
Nike's Peters says his company did not lobby the NCAA to change the rule so that his company's rectangular-shaped logo would stand out more. But, he adds, "I can't deny that the swoosh looks pretty darn good.