How much are big athletic brands willing to pay to sponsor top-tier college sports teams?
It’s now safe to assume that the dollar amount is north of $280 million.
This week, UCLA and Under Armour inked the largest footwear and apparel sponsorship in college sports history. The 15-year contract, worth $280 million, is further proof that each time we think we’ve hit the college-sports-sponsorship peak, Nike, Under Armour or Adidas will raise the stakes.
In January, Nike reportedly set the previous record when it extended its partnership with Ohio State University for 15 years, in a contract valued at $252 million. That deal surpassed, by nearly $100 million, Nike’s $169 million contract with the University of Michigan in July 2015. Before that, Under Armour Inc. reportedly made a $90 million-plus bid to take Notre Dame from 17-year sponsor Adidas in 2014.
Notice a pattern here?
Watch on FN
When it comes to the amount of dollars being shelled out to sponsor college sports, athletic brands and marketing experts often tout a similar list of objectives (or justifications) — it is a major merchandising opportunity; offers tremendous brand exposure and helps secure the long-term buy-in of athletes (who may eventually become professional league stars).
Still, it can be difficult to quantify the return on this kind of investment.
“I have trouble justifying any of these deals in terms of a return on sales — there just isn’t enough merchandise being sold,” explained Matt Powell, a sports-industry analyst with The NPD Group. “Instead, they must be viewed as a marketing spend.”
Considering that marketers will spend more than $500 billion on advertising this year alone, the amount of exposure — relative to spending — that brands such as Under Armour can reap from these deals could be worthwhile, Powell noted. (Advertising spend data source: The CMO Council.)
“Under Armour’s logo is going to be in every video, on every photo, on every UCLA athlete — every time they are seen,” Powell said. “There is absolutely a value to that kind of exposure.”
Further, Under Armour founder and CEO Kevin Plank has reportedly referred to the UCLA partnership as a deal based on geography, “meaning that [he] recognizes that Under Armour does not have the same brand strength in California as they do in much of the rest of the country,” Powell said.
Sponsoring the state’s university might just be a good place to start.
Adidas, Nike: your move?