Former defensive end Sam Montgomery spent much of his time at LSU adorned in purple and gold, an unmistakable swoosh dotting that wardrobe from the practice field to the classroom.
That look became second nature for Montgomery, as the Nike logo pervades LSU’s Athletic Department, with the apparel giant pumping nearly $11.9 million into Tiger sports during the course of its potential seven-year deal with the department.
The contract, guaranteed for six years with a school option for a seventh, could be up for renegotiation this year, and several factors would shape those talks.
The waning value of the present deal, the half-million-plus sum LSU still foots to outfit its teams, minor incentive bonuses and a small cash payout highlight Nike’s current commitment.
“You grow up seeing that check, that swoosh everywhere,” Montgomery said in November. “To wear it every day for your team and school, that’s a dream.”
ACTUAL VALUE
Nike isn’t the only company to sponsor Tiger athletics — Wilson has a deal with the baseball team and negotiations for a new softball equipper are ongoing — but it helps outfit or equip all of LSU’s teams.
LSU doesn’t see most of that $11.9 million value in cash.
Like all collegiate deals, most of that number involves Nike allotting the school inventory — facemasks, shoes, jerseys, etc. — to buy at wholesale or retail price.
“You see a lot of gaudy numbers released, but the major breakdown comes from how much you can buy wholesale vs. retail,” said Mark Ewing, the LSU Athletic Department’s chief financial officer. “If your contract is for $10 million but includes mostly retail guarantees, then it’s worth probably more like $5 million.”
$9.8 million of LSU’s deal goes toward covering equipment and apparel purchases from Nike.
The other $2 million plus change is paid in cash via yearly installments called “sponsorship fees.”
LSU’s deal is in its fifth year, making this athletics season an appropriate benchmark for the contract’s terms.
For the 2012-13 school year, Nike owes LSU $300,000 in cash while providing access to $1.27 million and $187,000 in wholesale and retail gear, respectively.
That wholesale allotment jumps to $1.35 million for each of the next two years, assuming LSU exercises its option for 2014-15.
According to Neal Lamonica, the department’s director of fiscal operations, that money flows into the Athletic Department, not the University.
LESS THAN IT SEEMS
Lamonica said those figures seem exorbitant but don’t cover the full cost of equipping the Tigers.
Despite Nike’s sponsorship, Athletic Department expenditures reveal LSU still spent more than $505,000 on athletic equipment for the 2012 fiscal year.
Unsurprisingly, $173,512 of that (34 percent) went toward football. However, only $7,590 covered additional costs for basketball, LSU’s second most profitable sport.
Ewing said those numbers can be misleading, possibly because a sport’s roster size plays a substantial role in determining how to allocate resources.
“We’re always trying to stretch Nike dollars as far as we can, and [Nike] is a premier supplier for basketball gear,” Ewing said. “There’s also a great amount of [football] stuff — you’re talking pads, uniforms, cleats, helmets — and it involves equipping 115 to 120 student-athletes. A sport like basketball or soccer has far fewer players and not as much equipment.”
Lamonica said Nike doesn’t specify how much money goes to any sport, and the company’s apparel contribution doesn’t extend to officially licensed products the University sells.
The monetary distribution is instead determined through a collaborative effort between the equipment room (namely, equipment manager Greg Stringfellow) and the Athletic Department’s upper brass.
BONUS ROUND
The only sport-specific contributions Nike makes are incentives. Five LSU teams reap financial rewards for postseason success.
The football team receives $50,000 for winning the BCS title, $30,000 for a BCS Championship Game appearance, $10,000 for making a BCS bowl or winning the SEC title and $5,000 for playing in the SEC Championship Game.
Men’s and women’s basketball have equal bonus packages, highlighted by Nike paying $30,000 for an NCAA title and $10,000 for a Final Four appearance.
Both the men’s and women’s track and field squads tally $5,000 bonuses for winning NCAA team titles, among other incentives.
ELITE STATUS?
Considering the incentives and guarantees, Lamonica and Ewing each estimated LSU’s deal to be among the nation’s most prestigious.
Their accuracy depends on their definition of prestigious.
Football drives these contract deals, and LSU’s brand is among the nation’s most visible, said ESPN uniform expert Paul Lukas.
“LSU is interesting because they have a well-respected football look that is traditional but not stodgy,” Lukas said. “They wear the whites at home and away. They’re extremely identified with one uniform, which is rare. It makes LSU a valuable commodity.”
That visibility could make for a more lucrative payout soon, since LSU’s current deal appears more outdated by the day when assessing the collegiate landscape.
Every school’s deal isn’t publicly available, as private institutions aren’t required to comply with public record laws. Still, the available numbers suggest LSU’s deal doesn’t rank among the nation’s dozen most lucrative.
Michigan has the mammoth deal, raking in $66.5 million in value over eight years from its deal with Adidas, while Nike doles out a $33.7 million value to North Carolina for a 10-year commitment.
Those institutions own two of the largest athletic programs in the country, with Michigan fielding 27 teams and North Carolina boasting 26. LSU offially sports 18.
“We also have that deal with Wilson for baseball [totaling $390,000 combined annually in product and cash] and the money is fueling fewer sports,” Ewing said. “There’s always a caveat that affects how the numbers should be viewed.”
Even among SEC schools, which have comparable athletic departments, LSU’s contract isn’t elite.
Last January, Ole Miss and Nike agreed to a seven-year contract worth $13.9 million.
Auburn reworked its arrangement with Under Armour in 2010, resulting in $27.45 million over seven years. South Carolina finalized a six-year, $19-million contract in 2011.
Alabama inked an eight-year, $30-million agreement with Nike in 2010 that included a $2 million “signing bonus.”
DOWN THE ROAD
With LSU’s deal entering the home stretch, Lamonica said the Athletic Department is prepared to renegotiate later this year and would be looking for “fair market value.”
“When negotiating, it’s always about making sure you’re compensated fairly,” Lamonica said. “We research what Florida and Alabama and the schools we’re on par with are getting to assess our worth. That’s just doing your homework.”
As long as the Tiger football team sustains success, Lukas said LSU’s place near the head of the endorsement table during renegotiations is assured.
“If you have major exposure, that’s the attraction,” he said. “LSU could change the look of the uniforms around or disregard tradition, and it wouldn’t damage the brand with the recognition winning brings. That’s why Nike will throw money at a school like [LSU].”
Lamonica said LSU is “very happy” with Nike, but acknowledged the Athletic Department would listen if another company “swept us off our feet.”
For Montgomery, his collegiate memories will always include that famous swoosh, and he wouldn’t want it any other way for future Tigers.
“LSU will look good no matter what,” Montgomery said. “There’s something special about the purple and gold with Nike, though. It commands respect, just like we do on the field.”
LSU sophomore wide receiver Jarvis Landry (80) celebrates after a catch during LSU's 37-17 dismantling of MSU on November 10, 2012.
