Nike has exercised a contract option to extend its three-part agreement with Ohio State until 2018, positioning OSU to bring in about an additional $18.5 million.
OSU and Nike signed three separate seven-year contracts that went into effect Aug. 1, 2007. All three will be extended until July 31, 2018, OSU spokesman Gary Lewis said.
The agreement sets OSU to gross almost $46 million over 11 years, with more than $18.4 million coming from the additional four years.
The three parts of the agreement are broken up into a standard license agreement, an equipment supply agreement and an appearance and consultation agreement.
Standard License Agreement
Over the original seven-year period, Nike is contracted to pay OSU a minimum of $1.4 million for the exclusive right to manufacture and distribute all OSU competition apparel and now an additional $1.2 million with the extension period.
Nike is contracted to pay OSU 12.5 percent of net sales on products that it has the exclusive rights for. This includes all “authentic competition apparel,” such as jerseys. Royalty for all other OSU products Nike sells is set at 11 percent. OSU is guaranteed an annual minimum payment of $200,000 for the first seven years and $300,000 for the extended four years.
Equipment Supply Agreement
The extended equipment supply agreement between OSU and Nike, the most lucrative portion of the deal for OSU, sets the university up to gain more than $17 million in addition to the original more than $25.7 million over the first seven years.
Of the additional equipment supply, about $10.5 million is in equipment Nike supplies to OSU’s 36 varsity teams and more than 900 student-athletes.
The agreement makes Nike “the official supplier of the athletic footwear and authentic apparel products” of these teams. This means OSU team members, coaches and staff must exclusively wear and use Nike product for all practices, games, exhibitions, clinics and any university or team-organized activities.
Appearance and consultation agreement
Under the appearance and consultation agreement, Nike is also contracted to pay OSU $28,000 annually for coach appearances and $22,000 for coaches’ and staff’s “design and marketing consultation,” the appearance and consultation agreement states.
The head coaches of OSU’s football, men’s and women’s basketball and men’s and women’s soccer teams are required to each make four public appearances annually. The purpose of these appearances, the contract says, is to “promote sports participation and the values associated with such participation.” All other coaches are required to be made available for one annual appearance.
This article was made possible through the generosity of Patty Miller. Look for further coverage from The Lantern about the Nike contract.
Clarification: An earlier version of this article said, Nike must pay OSU 12.5 percent of net sales on all OSU-branded Nike products, when in fact Nike is contracted to pay OSU 12.5 percent of net sales on products that it has the exclusive rights for. Royalty for all other OSU products Nike sells is set at 11 percent.