Notre Dame and Tennessee Both Leave Adidas – Coincidence?

Last Updated on February 1, 2014

Notre Dame left Adidas for Under Armour when its contract ended last month. Ok, fine. It’s not completely unheard of for a college to change apparel companies, although it doesn’t happen that often.

Now Tennessee has announced its leaving Adidas for Nike.

Coincidence?

I don’t know, but it does raise my antenna.

What I do know is that last April I wrote a piece for ESPN about schools that were terminating or suspending their contracts with Adidas over a workers’ rights issue in Indonesia. The issue largely flew under the radar as only university and local papers covered each school independently. All together, however, I found at least 17 schools had terminated or suspended their contract with Adidas.

Neither Notre Dame or Tennessee made public any sort of disappointment or disagreement with Adidas surrounding the workers’ rights issue. Michigan and Wisconsin led the charge against Adidas, with the latter going so far as to file a lawsuit against the apparel giant.

In April, Adidas did settle with the workers in Indonesia. Although it went largely unnoticed by the national media, I believe the pressure applied by major universities like Michigan and Wisconsin played a pivotal role.

I also believe it’s not a coincidence that Notre Dame and Tennessee are both leaving Adidas. Something is going on there – either Adidas has decided not to make college athletics an emphasis  or Notre Dame and Tennessee didn’t like something about the way Adidas was doing business.

Notre Dame is the #3 selling institution in the country for Collegiate Licensing Company, and Tennessee is #15. If Adidas wanted to remain in the collegiate athletics space, why wouldn’t it match or exceed any offer made by Under Armour or Nike?

Sure, Adidas would have to increase Michigan’s contract, as it has this clause requiring it to be Adidas’ highest-paying collegiate apparel contract:

“If during the Term, adidas grants to or contracts with any college or university … that provides for more favorable average annual value … than the current University (of Michigan) average annual value specified in this Agreement … then adidas agrees to make a written offer to grant to the University that same more favorable average annual value on the same terms and conditions that were offered to the other college or university within thirty (30) days of the execution of such other agreement.”

I find it hard to believe that’s the issue here. Michigan currently receives $3.8 million annually in cash payments and $4.4 million in equipment and apparel. Notre Dame’s new deal is reportedly $90 million over 10 years, or $9 million annually in cash and equipment/apparel. If Adidas wanted to stay in the college space, do you really think they wouldn’t bump up Michigan’s $8.2 million annual value in order to keep a major property like Notre Dame?

Tennessee’s new deal with Nike appears to be worth far less than Michigan’s deal (at a reported $34.6 million over 8 years), so Adidas could have matched or exceeded without issue.

It is possible the only story here is that Under Armour will allow Notre Dame the option to take some of its cash in the contract as Under Armour stock instead. It would be great timing for Notre Dame, as Under Armour’s stock hit an all-time high this week, rising 23 percent after releasing its better-than-expected fourth quarter earnings report.

And maybe Tennessee was just ready for a change. I don’t have any answers, but I do still have a lot of questions….

What do you think? Coincidence or not?

 

AdidasNikeNotre DameSECTennesseeUnder Armour