This article is designed to help educate readers just how much control of the collegiate sports landscape that Nike has over their top competitors, being Adidas and Under Armour. Southern Methodist University served as the petri dish for opinions and analysis of one Nike sponsored school and what comes with it.
It was a good year for Adidas. Seven FBS apparel contracts transferred in the 2017-18 academic year and Adidas snagged them all. The company pushed Russell Athletic out of the game at the FBS level, knocked Under Armour to stand as the lone number two threat behind Nike, and even stole away the University of Washington from Nike. Even though Adidas was able to accomplish all of this in just one academic year, they still are far behind Nike.
If you were to go through each conference you would find that Adidas is an “aggressive bargain shopper”. Adidas matches Nike’s 26 Group of Five contracts and owns 20 of the 36 available contracts in the MAC, Sun Belt, and Conference-USA. At the Power Five level, the tables are turned. With the big players and coaches in collegiate athletics being mainly located in the Power Five conferences, realistically Adidas is more closely comparable to Under Armour than Nike. Although they have a presence in each corner of the country, they do not have much more aside from that. Pilfering the University of Washington away from Nike gives Adidas one Pac-12 North division school to match Arizona State University, their lone Pac-12 South division school.
Adidas reported first-quarter earnings of 2018 sales 17 percent higher than analysts’ predictions. North American sales grew 29 percent in the final quarter of 2017. For additional perspective, Under Armour’s stock price which sat at a high of $51.86/share in September of 2015, plummeted to $11.61/share in November of last year and sits at $21.97/share as of Wednesday, December 5th, 2018. Meanwhile, Nike shares are selling on the market today for $75.79/share.
Nike also has supplied 12 schools that have reached the College Football Playoff to date. Under Armour’s highest finish before the University of Notre Dame, this year at number three overall in the CFP, was with the University of Wisconsin at number six in the 2017 final CFP poll. Adidas has failed to come closer than Mississippi State’s number seven ranking in the final 2014 poll. The total FBS breakdown includes Nike owning sponsorship rights to 68 schools (52.6%). Adidas with 39 schools (30.2%) and Under Armour with 22 schools (17.2%).
Southern Methodist University competes in the American Athletic Conference, one of the Group of Five conferences. Nike has 50 percent of the schools in the American, Adidas has three, and Under Armour has three. SMU is lucky enough to now be sponsored by Nike after their deal with Adidas ended several years ago. Ever since it has been all about the swoosh and not about the three stripes.
When I asked about the opinions on SMU being a Nike sponsored school I was returned with some interesting responses.
“Honestly Under Armour is a death sentence, Nike completely dominates the collegiate sports landscape. Adidas is making some progress, but they still have a long way to go,” SMU student Matthew Rose said.
SMU has 17 division one athletic teams, all donning the Nike swoosh.
“Nike seems to have more resources than the other brands, so it is of more tangible value,” SMU student Jeff Bolte said.
Nike currently has three out of the top four most valuable collegiate sports apparel deals (Ohio State University, the University of Texas and the University of Michigan).
“I would say that for the athletes that will be competing in the apparel and for recruiting purposes, Nike sponsored schools definitely utilize that to their advantage. Adidas has been stepping their game up recently and becoming more popular, but I think Nike is still the marquee brand that you can never go wrong with for athletics. Some people still are not and potentially may never end up being sold on brands like Adidas and Under Armour,” SMU student Grant Hizer said.
In the Wall Street Journal’s rankings of the most valuable college football teams, the top five ranked schools all are Nike sponsored programs. Eight out of the top ten ranked schools are Nike sponsored programs. It goes without saying that Nike undoubtedly has a stronghold over the competition in this field.
“I do not think that SMU has a big enough sports program yet for a certain sponsorship to make an impact,” SMU student Mac Andrews said.
A valid point, as SMU athletics are certainly not dominating the sports world like other Nike sponsored schools are such as Texas and Ohio State.
“I feel like honestly, we should change back to Adidas once our contract with Nike is up. We should change up from the mainstream and go a different route. Everyone seems to be signing on with Nike every chance they get. Standing out is a good thing, and I think it would actually be beneficial across the board for SMU to partner with a brand that is not the main dominating player in the sports apparel sponsorship world,” SMU student Sam Saxton said.
It goes without saying that just being sponsored by a brand as reputable as Nike, Adidas or Under Armour is a blessing. However, with how much money collegiate athletics generate year after year, sponsorship contract deals become increasingly more important. Last spring, the NCAA reported a revenue of $1.1 billion for the 2017 fiscal year. Ironic, as the NCAA is technically a non-profit organization. A crazy stat to accompany that is that only two sports are actually profitable. Men’s basketball and football are the only two collegiate sports that do not lose money. This means that just about all of the revenue generated comes from solely those two sports, which just goes to show how big the business of collegiate athletics is, and how much disparity there is in them as well. Marketing rights and ticket sales for both men’s basketball and football generate hundreds of millions of dollars. Ponder that for a second, and the magnitude of just how powerful the NCAA is will really sink in. Accompany that with the fact that out of all the sports that are under NCAA jurisdiction just two are profitable.
Nike has done a great job positioning themselves as the dominant player not only in collegiate athletics but athletics as a whole. With partnerships with professional athletes such as Lebron James, Serena Williams, Cristiano Ronaldo, and Odell Beckham Jr. just to name a few, it is easy to see how the brand known for their simple yet effective just do it slogan dominates as they do. Nike is the largest and arguably most well-known athletic brand in the entire world. The reach of the company is unmatched, as they service 160 countries around the world on 22,000 different retail accounts. After being founded in 1964 as “Blue Ribbon Sports,” it officially became “Nike Inc.” in 1971. During the early 1980s, after Nike Inc. went public, they developed strategies to appeal to all types of consumers, and in the following years, they became the leader in the industry. At the end of 2017, Nike reported that they are supplied by about 127 footwear factories located in 15 different countries. In 2017, Nike reported a $34.35 billion in total revenues and blew every other athletic company out of the water. With the rise of competing for athletic wear companies, such as Adidas and Reebok, Nike will have to continue its growth to maintain its position in the market. However, no other athletic wear company has been able to surpass them in the public market for many years. Nike’s consumer’s loyalty is unmatched, as people continue to support the brand, even after the sponsorship of many controversial athletes, most recently Collin Kaepernick, who has not been on an NFL roster since his infamous kneel during the national anthem. It is these risky sponsorships that have continued to keep Nike in the public eye, contributing heavily to their high sales worldwide. While Adidas and Under Armour have made up some ground in the past few years, Nike still owns the collegiate sports landscape all across the country.