The Texas A&M athletic department has entered into a new five-year equipment and apparel contract with Adidas worth more than $47 million over the course of the deal.
The Texas A&M athletic department has entered into a new five-year equipment and apparel contract with Adidas worth more than $47 million over the course of the deal, according to the contract which was obtained by The Eagle via an open records request.
The contract’s term began on July 1, 2022, and runs through June 30, 2027. The parties operated on a term sheet for approximately a year of the deal as they continued to iron out the final contract, which was finalized on Aug. 18, 2023, according to former A&M athletic director Ross Bjork.
“In the market of sports apparel and college athletics, it’s really a top-15 deal,” Bjork, who was a part of the negotiations, told The Eagle. “In a suppressed market, with Under Armour being out of the market, there’s two players: it’s Nike and Adidas. And when we went through the negotiation, it was clear that Adidas was the best option, financially — equipment, apparel, all the components that they do from a marketing standpoint. And they’ve just been a good partner here at A&M.”
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A&M will receive $3 million per year in base compensation, plus $6 million in products. Adidas also will provide a guaranteed minimum royalty payment each year, beginning at $380,000, followed by four years of $400,000 and another $380,000 in the final year of the deal.
In addition to the $47 million, Adidas will provide A&M $1 million a year for mutually agreed upon marketing initiatives.
A&M began its relationship with Adidas in 2007, moving on from Nike. The first contract, which ran through 2014, provided $1.6 million per year in base compensation and $1.1 million annually in products. A&M renewed it’s partnership with a contract that began in 2014 and ran through 2022. This last contract provided an average base compensation of $1.8 million per year as well as $2.2 million in product, annually.
With the new deal, A&M remains near the top of annual college apparel compensation. Looking at just the annual payout in base compensation, product and royalties for the 2023-24 season, the Aggies sit behind Louisville (Adidas), Texas (Nike), Michigan (Jordan Brand), Ohio State (Nike) and Kansas (Adidas), nationally.
Louisville has the most lucrative contract as the flagship of the Adidas brand, which focuses heavily on basketball-centered programs. The Cardinals receive $7 million in base compensation this season, to go with $6.2 million in product and $450,000 in minimum royalty payments, according to the contract obtained by The Eagle via open records request. Louisville’s most recent amendment to its deal began in 2018.
In-state rival Texas will earn $12.8 million this season, with $6.5 million in base compensation, $4.6 million in product and $1.7 million in minimum royalties, according to the contract obtained by The Eagle via open records request. Texas’ newest extension began in 2023.
Comparing contracts signed in the last five years can be a difficult proposition, North Carolina professor Jonathan Jensen said. Jensen is a researcher with the Center for Research in Intercollegiate Athletics and was a part of a team that created a 2017 report on college apparel agreements. He has continued to follow the industry.
“The marketplace has totally changed,” he said. “You really can’t pick up UT’s contract with Nike… and say, ‘Well, why are they getting this and A&M is getting this?’”
To understand how A&M’s new contract fits in the ecosystem of college athletics apparel deals, it’s important to understand the current health of the industry. In 2016, Under Armour signed the largest sponsorship agreement in college sports history at the time, a 15-year, $280 million deal with UCLA. The new deal effectively upped the already potent endorsement arms race between Under Armour, Nike and Adidas.
However, in 2020, Under Armor attempted to terminate the contract, citing “marketing benefits” that UCLA failed to provide due to not playing during the start of the COVID-19 pandemic. According to a New York Times report, bad business decisions regarding the company’s sponsorship contract with NBA star Stephen Curry, as well as continued attempts at innovation in sports equipment put the company financially behind Nike and Adidas.
Ultimately, Under Armour settled with UCLA for approximately $67.5 million and returned the college athletic apparel game to a two-horse race.
He listed Georgia Tech as a perfect example of this new marketplace taking shape. In 2018, Tech took a pay cut to move from Russell Athletic to Adidas. Nike, ultimately, didn’t need Georgia Tech in its portfolio, having already inked a deal with Georgia, Jensen said. Georgia Tech’s deal is worth an average $3.11 million annually, according to a report by the Atlanta Journal-Constitution.
“When you only have two brands competing, if Nike doesn’t feel like it needs to pay up, then you’re stuck with Adidas and vice versa,” Jensen said. “If Adidas doesn’t feel like you really need to play a part of their portfolio, then you’re kind of stuck with Nike and that just depressed prices.”
Deals like that of Louisville (10 years, $160 million), Texas (15 years, $250 million) and Michigan (15 years, $173 million) will not continue to be a thing of the future, Jensen said. Even $10 million annual deals, such as A&M’s, might be rare, he said.
Adidas’ continued relationship with A&M, which has included increased base compensation and product through every new contract renewal, is a sign of two partners who want to be together, Jensen said. And, it’s no coincidence that Adidas wants a foothold in the state of Texas, alongside Nike’s deal with the Longhorns, he said. Texas Tech also will become an Adidas school beginning in July.
“Adidas thinks highly of A&M,” Bjork said. “They think highly of the state of Texas. That’s why they did a deal with Texas Tech recently, because they want to have a footprint and we’re the anchor school here. The timing was really good to get that thing done, because the market has been shifting and it’s hard to believe its going to be up for negotiation soon, because it’s a five-year deal.”
Per the contract, Adidas and A&M will meet again after June 30, 2025, to discuss the competitiveness of the deal compared to the open market, but will not be under obligation to extend or amend the current contract. Beginning 180 days before the end of the contract term, the two parties will come together again to give Adidas the first shot at negotiating an extension.
An incentive compensation package is also included in the contract that gives A&M an extra $1 million if the Aggies win a football, men’s basketball or women’s basketball national championship, along with other monetary incentives for winning conference championships and coach of the year honors.
A&M track and field teams will continue to remain separate from the deal, wearing Nike equipment and apparel.
“So, with all that backdrop, essentially, if you look at Texas A&M getting $10 million a year from Adidas, it’s a really huge deal,” Jensen said.