Editor's note: The above video is from June of 2015.
The Cal Golden Bears just added a gold-plated apparel sponsorship contract with Under Armour for a reported $86 million dollars. The 10-year deal includes cash and product including a $3 million dollar signing bonus, $3.5 million in cash per year and an average annual product donation of $4.76 million.
Cal is currently a Nike school and will be until July 1, 2017. Just to show what a win this is for the Bears, they currently get $150,000 in cash and $2 million in product from the "swooshers." In October, Nike signed a 15-year deal with Texas for $250 million and Ohio State for $252 million.
The size of this deal is a bit surprising since the Berkeley ballers aren't exactly a national sports powerhouse. This is now the No. 1 deal for a school in the PAC-12 and puts Cal in the Top 10 of national collegiate apparel sponsorships.
Under Armour has apparel deals with several institutions similar to Cal that are justifiably proud of academic and athletic excellence, including Notre Dame, Northwestern and Yale -- universities where the term “student-athlete” still applies.
The Cal coffers will be helped by this deal with Under Armour at a time when this type of cash infusion is critical. The university is facing a mountain of debt piled up from the remodeling of Memorial Stadium, which cost $321 million. Much of that was spent on the complex seismic upgrades. The University has a $445 million dollar debt load which includes the $143 million they spent on the new student athletic center. Cal won’t start paying principal until 2032 when its yearly payments rise to $26 million. Cal will owe $82 million in 2053. It will then have six decades to pay off the final $75 million. No shoe deal in the universe will make this humongous debt load go away.
The business of collegiate athletics is changing rapidly. A new model will become the norm in the next few years. Instead of sponsors just signing up to benefit the athletic department through football and basketball, they will look at school-wide deals. Major universities are billion dollar businesses. Athletic directors who came from the coaching ranks are being replaced by seasoned sports business executives. University presidents who were defined as educators are now being tasked with having the skills of Fortune 500 CEOs. In many institutions the debate over the balance of the student-athlete rage on. University-wide sponsorship deals will be negotiated. It won’t just be the athletic department leading the charge and receiving most of the net benefits.
Cal is looking at more good news in the future. They have a competitive horse race for their multimedia rights between incumbent IMG College and Learfield Sports which should increase the fees from a media rights reseller. They are expected to pocket more than a million dollars for their Aug. 27 football game against Hawaii in Sydney, Australia.
Under Armour founder and CEO Kevin Plank and his team have gone from "The Little Dry-Fit that Could," founded in 1996, to a global powerhouse nipping at the “Just Do It” megabranders from Beaverton, Oregon. Plank can be my investment advisor any day. Just look at his signings of Steph Curry, Jordan Spieth, Bryce Harper, Buster Posey, Clayton Kershaw, Tom Brady, Cam Newton, Lindsey Vonn and ballet supergirl Misty Copeland.
The Under Armour alliance has sewn themselves nicely into a $5 billion business with threads that are spreading fast from iconic athletes around the world to campuses around the country to your neighbor's wardrobe.