Thurow, R. Wall Street Journal. "Shoe companies, tongues out, buy
up college teams wholesale"
Shoe Companies, Tongues Out, Buy Up College Teams Wholesale
From the frontlines of world war shoes comes this
battlefield update from the Reebok International Ltd. camp.
"Michigan State, head-to-toe Reebok, defeats Michigan," says a
company lieutenant. "Northwestern, in our shoes, defeats Penn
State. Two Reebok programs knock off two highly touted Nike
programs. A big weekend."
The foot soldiers have stormed the ivory towers of academia.
Actually, they've walked right in, with college administrators,
squeezed by stingy state legislatures, holding the gates wide
open and welcoming the gravy train of corporate sponsorships.
During the current football season, a few schools have sold
their home games to sponsors who then took the contest on the
road to more lucrative locations. A few schools, like Southern
Methodist University in Dallas, have peddled the title of
individual games , as in the Cadillac SMU-Texas game. Most
notable, entire college athletic departments, from volleyball
football, have gone corporate, signing for millions with either
Nike Inc. or Reebok to provide shoes and apparel.
What began years ago as standard discount deals by shoe companies-buy
one pair, get one free-to get their sneakered feet in the door of hugh
college sports market, and later escalated into lucrative deals with
individual coaches, now engulfs complete universities. Nike, of
Beaverton, Ore., signs up the University of Southern California; Reebok of
Staughton,Mass., gets the University of California at Los Angeles, Nike
grabs the University of Alabama; Reebok takes the University of Texas.
Nike, being the biggest competitor and first off the mark, so far has nine
schools on its roster, also including Colorado, Florida State, Illinois,
Miami, Michigan, North Carolina and Penn State. Reebok boasts two
complete university deals, and recently locked up a contract to supply the
shoes to than 80 teams in the 10-school Southern Conference. These two
companies, as well as other outfitters like Germany's Adidas AG, Champion
Products Inc., a division of Chicago based Sara Lee Corp., and Russell
Corp., Alexander City, Ala., generally share the outfitting of other
universities.
These days, the college try is getting as logo-laden as a
Indy car. Universities, of course, have never been shy about
accepting corporate funds. But while an endowment of the physics
department may be laudable, outside money flowing into college
athletics brings suspicion as well as support. Through the
years, a number of high profile teams have been tainted by
scandals involving illegal payments and inducements to players.
Corporate sponsorship risk sweetening the pot of temptation and
feeding the argument that college football and basketball
players, the performers in the two big revenue sports, should get
paid for enriching their schools.
The recent moves to sign up whole departments might have
gone relatively unnoticed if Nike hadn't put its trademark Swoosh
prominently on the front of its football jerseys. Before this
season, manufacturers mainly stitched their logos into less
prominent places - on a sleeve or down by the waist, for example.
But anonymity is not the Nike way.
"For us," says Nike spokesman Keith Peters, "the bottom line
is that there is a great deal of exposure, whether it is on the
shoulder of a Penn State football player or the feet of a women's
soccer team."
So it has come to pass that the only identifying mark on the
blue and white uniform of Penn State's football players this
season, others than their numbers, is the Nike swoosh above their
heart. Under coach Joe Paterno, no frills traditionalist, the
uniforms are devoid of players' names and even logo of the
Nittany Lion mascot. A novice, seeing Penn State for the first
time, could be excused for wondering if they are the "Nike
Lions." For $2.6 million over three years, the Penn State
athletic department sold not only its soles but a bit of its
soul, too.
"I've heard Joe say that he's enough of a realist to know
that if people are making an investment into an organization,
they're entitled to a return." says Budd Thalman, Penn State's
associate athletic director.
For most universities it is well worth it, from a dollars -
and - cents standpoint, at least. At the same time state
governments are cutting back on university funding, the federal
government is demanding that schools spend more money on women's
sports programs to balance the tradition heavy spending on men's
athletics, particular football and basketball.
According to a 1993 survey by the NCAA, the athletic
departments at the more than 100 division I-A schools that play
big time football ran an average surplus of $660,000. If
institutional support is subtracted, that changes to an average
deficit of $174,000. And the old truism that football is a cash
cow funding all of a school's sports is no longer so true. In
1993, one-third of division I-A football programs were losing
money, at an average of $1 million per school. At the NCAA's 800
member schools, spread over several competitive divisions, the
red ink is flowing even more heavily.
The marketing attitude at most athletic departments is
"pretty much go out and get what you can," says Kathryn Reith of
the NCAA. Several athletic conferences, emulating the Nike and
Reebok deals, are considering pooling the collective rights of
member schools and signing up "official" conference sponsors for
rental cars, express delivery service and airlines.
The NCAA tries to keep at least a loose leash on the
commercialization of its schools - a manufacturer's logo can
cover no more than 2 1/4 square inches in area on a uniform, for
example - and attempts to control its own marketing urges. For
instance, while the organization collects vast sums from sponsors
of the Final Four men's and women's basketball tournaments, it
bans logos from the playing floor area to keep them out sight of
the television cameras. "We don't want players out on the field
where their uniforms are covered with corporate logos," Ms. Reich
says.
But after Nike positioned the swoosh on the front of the
football jersey, can its competitors, or purveyors of other
products, be stopped from doing the same thing - turning college
athletes into running, jumping, tackling sandwich boards? "If
schools allow this to continue, then everybody is going to want
to play. And everyone will want to use the same billboard," says
Donna Lopiano, executive director of the Women's Sports
Foundation. "It's perfectly fine to have a sign on the
scoreboard. We name rooms and buildings for corporate donors.
But we name students."
As a former director of women's athletics at the University
of Texas, Ms. Lopiano applauds corporate funding for college
sports. But, she worries, it could eventually endanger the
universities' not-for-profit tax benefits. In accepting money
for the prominent display of logos on uniforms, are colleges
behaving any different than professional athletes? "The more
[schools] act like paid entertainment...well, they better be real
careful," she says.
But it is difficult to walk away from new revenue, even for
the most prosperous of athletic departments. Florida State
University in Tallahassee, for instance, is a school that
annually harvests money from postseason football bowl games, has
a generous booster club and operates a $25 million athletics
budget, which can be counted on to produce a surplus of some $2
million to transfer into general university use. Still, when
Nike contracts with the football and basketball coaches came up
for renewal last year, new FSU president Talbot D'Alemberte
figured the school itself could do better. He heard that
Michigan had signed a six-year, $7 million contract with Nike
covering the entire athletic department.
"It seemed like a better deal for the university," Mr.
D'Alemberte says. "It gives you a chance to even out the support
you give to all your athletic programs. We know that in the
marketplace, our women's softball team doesn't have much
bargaining strength, even though it's one of the best teams in
the country.
Getting more out of Nike became the top priority for new
athletic director Dave Hart. "You don't negotiate a significant
contract without leverage," he says, smiling - knowing that a
football team that annually battles for the top national ranking
and a basketball team that plays in the high-profile Atlantic
Coast Conference give him plenty of that.
After several weeks of negotiations in September, Nike was willing to
put up $6 million over five years. As part of the arrangement, Nike
agreed to supply FSU's intercollegiate teams with shoes, uniforms and
practice gear, valued at $400,000 a year, and contribute about $1 million
in cash over the five years to be used at university discretion for women
and minority programs and degree-completion programs for former
student-athletes. Nike's relationships with some individual coaches were
also included in the contract.
In addition to exposure, Nike gets the right to market the
"authentic" gear of FSU teams (through a myriad of companies are
able to sell other things bearing FSU logos). The university
collects the standard 7% royalty on all Nike-FSU stuff the
company sells.
For a school that has had its share of dark publicity while
competing for the national football title in recent years - the
NCAA has been looking into alleged violations centered around
shopping spree in 1993 (the year FSU claimed the top spot) where
several players received merchandise paid for by sports agents -
FSU administrators weren't deterred from the Nike deal. They
believe the school's insistence on Nike contributions to general
university programs, as well as the oversight of the president's
office, balances any charge of extreme commercialism.
"You can't sit in the role of a CEO and be driven by a fear
of perception," says Mr. Hart. "The reality is that it has
become a marketplace issue. That's the world we live in." He
chooses his words carefully: "Everytime I say this publicly, I
can see people cringe: Athletics is a business. But it is!"
Nike attaches some altruistic motives to its business. "The
revenue generated [from the Nike contracts] can be spent on other
things than equipment, like scholarships." says Mr. Peters. "It
allows more men and women to compete on the collegiate level."
Down the road in Tallahassee, Florida A&M University, a
considerably smaller school than FSU, wouldn't mind a piece of
that largesse. The school's annual athletic department budget is
about $3 million and a number of sports aren't able to full
scholarships.
"Our teams don't have national exposure, so, naturally, when
the Nikes and others come to us, we get the scrapping," says
Florida A&M athletic director Ken Riley. The best deal Mr. Riley
has heard from Nike and the other outfitters is the one he's been
hearing for years: Buy one pair, get one free.
"I'm not crying, though," he says. "I'm happy for the
schools that get the deals. But, hey, help us, too."
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