Thanks for the correction about UCLA; I know that they were an Adidas school for a long time, but I just checked one of their on-line stores and saw that you’re right about them switching to the Jump Man brand. Nevertheless, my point was that many big time schools, including the current football NC, are Adidas schools, so it’s not like PSU signed with some fly by night company.
If you’ve been watching the World Cup, you notice that a lot of the teams are outfitted by Adidas, including the two teams that will play for the championship on Sunday. Because of their prominence in global soccer, Adidas might be a more prominent sports apparel company than Nike is globally.
Ah, yes! Now we have someone barking up the right tree - or at least sniffing around in the right forest. Hurray!
Let's look at a few facts:
Apparel deals - decades ago, when they first became common, were composed of two parts:
1 - Provide a bunch of gear pro-bono
2 - Maybe include a bit of cash money
Why? From the vendor's perspective, outfitting a prominent sports team with gear - gear that had the VENDORS "NIL" plastered onto it - was worth something. It gave more prominence to the vendor - essentially "advertising". Each time that client's teams took the field, thousands of folks saw the vendor's logo on display. That value to the vendor was quid pro quo-ed by giving the team free gear, and maybe a bit of $ sweetener. That is why, for example Texas got a better deal than North Texas. More folks watched Texas play - broader advertising value - than the number of folks who watched North Texas compete.
Now, what else now influences these deals?
3 - Sales of "licensed" gear (which was always a part, but now generally a MUCH more significant factor)
and, most recently:
4 - "NIL" deals
These deals between Nike/Adidas/Underarmour etc, and the teams also include licensing/royalty payments. When the deals are done, they typically include exclusive rights, to one degree of another, for the vendor to be the seller of "official" merchandise. The quid pro quo there? The vendor benefits, as all fans looking for official merchandise have to buy from them (NIke, Adidas, etc), and the team gets a cut of the sales (X% of the sales price of each official item).
In today's world that royalties amount can be a very sizable figure (look around you at a sports event and see how many fanatics are wearing "team gear" that costs them $100s, and cost the manufacturer $2 in Asian labor).
What determines how "good" the deal is for the team? Two things - how much stuff does the vendor sell (the sales volume generated on licensed merchandise) and the "X" - the percentage of those sales dollars that gets kicked back to the team. The "X" is easy enough to uncover - it is typically a flat number agreed to by both parties when consummating the deal. The sales volume? That is a different animal, but certainly from the team's standpoint you want a vendor who is "prolific" - who sells a ton of stuff in the markets in which your "fans" are buying. In the case of nearly every major college athletic program, that market is: the domestic college football market, and to a lesser degree, the domestic college basketball market. Anything else is rounding error.
"NIL" deals:
This is the new monkey in the wrench. The basic logistics are: Vendor uses some of their marketing and advertising budget to promote their gear (including gear with "officially licensed" merchandise of their stable of clients) - the quid pro quo is that the vendor uses the college teams players in that process - providing to the player some "NIL" money, and providing to the team a nice marketing pitch - "Come to our school, and you will have company(ies) willing to pay you to advertise their product and "build your brand"". Theoretically, any company could pay any athlete. Practically, companies are going to make deals with those athletes who are a part of their "stable" - part of the group of programs that they have merchandise deals with.
And now, you can see why you are sniffing in the right forest. I hope.
Which vendors can yield the highest royalty payments to the team?
Obviously, those with a dominating presence in the domestic college football market (and a bit of weight to the domestic college basketball market).
Which vendors can yield the highest "NIL" marketing benefits to the school (and the individual players)? Those with the highest advertising presence and "Q Value", if you will, and the largest advertising/marketing budgets - in the relevant markets.
Is the picture becoming clearer? Keep in mind, the "values" of the royalty part, and the "NIL" part are typically not contracted at "X" dollars - because the components of those values are not static.
Now, lets look at the two companies in question - Nike and Adidas:
1 - Within rounding error, Nike's annual sales are
twice that of Adidas. But that is just the start.
2 - As you mentioned, of their sales, a far larger portion of
Adidas is driven by soccer (fine for them, but there is essentially ZERO "soccer market" domestically for college programs. Ask any sports fan to name 5 top players in college soccer - or even 5 top teams in college soccer. Good luck). So that relevant part of Adidas' market - which started out at 1/2 of Nike's - is even "more smaller" in any market that PSU (or any other similar program) cares about
3 - Further -
Adidas' market is skewed towards Europe, South America, and East Asia - far more so than Nike. Not a surprise - Adidas is a Euro company focused on soccer. Nike is a US company focused on Football and Basketball
So, to what degree can/will a deal be able to be mutually beneficial to PSU?
Put that all together, and a smaller and less prominent company (Adidas), whose "prominence" is skewed towards a market type that is irrelevant to college programs (Soccer), and whose demographic market type is skewed to regions that are irrelevant to college programs (Euro, South America, East Asia), and you have a whole confluence of factors that make vendor A (Nike) far better positioned to be of value to a USA college athletics program.
These factors, which are generally not contractually defined (not laid out in specific hard dollar contract terms - they really can't be) have HUGE implications in the era of NIL.
PSU just decided to go with a vendor B that will be operating (and therefore PSU operating) with one hand tied behind their back (maybe both hands).
That is, unless you believe the "stories" that came out from PSU athletics in conjunction with the deal being announced - that PSU was going to receive tens of millions of "NIL" money per year (as part of this "$300 Million deal") to buy CHAMPIONSHIP rosters for its sports programs. If you believe that, good luck.
Anyway, fan(atics) are free to believe whatever they want. They are free to "love" a deal simply because they want three stripes on their gear instead of a swoosh (or vice versa), they are free to "hate" (or love) one vendor because of where they are located. They are free and of no obligation to consider ANYTHING. It is not their duty to care.
But there WILL be implications for their favorite sports program. No doubt about that.
Generally, fan(atics) will never know what those implications are- not when the target program involved is PSU. Why not? Because PSU has a uniquely non-transparent way of conducting its business, and a unique level of non-righteousness in their history of "what they say" vs "the full truth".
Enough said. People can recognize common sense (and also know that there will be limits to their understanding - either because they don't really care all that much, or because getting full and accurate information is not possible for them).
Or they can choose to just wave the pom-poms, have a drink, and enjoy the game - win or lose. That may be the best option for most people.
