Nike products will help UM collect royalties; here is how many

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ANN ARBOR, MI – With the University of Michigan’s highly anticipated return to its Nike-affiliated school status approaching midnight on August 1, fans are preparing for a new season of football with even more anticipation than d ‘habit.

The long-awaited day that officially marks the start of the school’s new $ 173.8 million contract with Nike and the Jordan brand begins with the unveiling of Michigan’s new gear at M Den on State Street in Ann Arbor.

M Den owner Scott Hirth describes anticipation for new Nike gear as the highest he has seen during his time with the outlet – the official UM retailer.

“The only thing that can even come close, I think, would be a national football or basketball championship. We had one in 1997 and it was a big deal, but the nature of the licensed product has radically changed since 1997, “Hirth said on July 20. “So I think that’s as important as anything that could be on the licensed product front here at the University of Michigan – without winning a national championship.”

This anticipation is expected to help M Den generate significant retail sales after it opens at 11:59 p.m. Sunday night, providing the first opportunity for fans to purchase new merchandise at M Den and MDen.com.

So what do these clothing sales mean to the bottom line of the UM sports department?

Under its contract with Nike, UM receives 15% net royalties from Nike sales on all licensed products other than footwear. UM receives 5 percent of net royalties on sales of footwear products.

Subject to the retail license, Nike is expected to pay a minimum of $ 18.37 million in aggregate royalties over the initial contract term through 2026-2027, or if UM exercises the option, $ 25.05 million. total compensation dollars guaranteed until 2030-2031.

In the official contract, UM receives a total of $ 85 million in Nike clothing and products over the span of the 15 years, and a total of $ 88.8 million in base compensation. That figure includes a $ 12 million lump sum payment made by Nike in Michigan within 10 days of closing the deal.

Each contract year, UM has the right to order products from Nike for use by athletic programs, clinics, camps, coaches, staff, or for any other purpose the athletic director deems appropriate.

For 2016-2017, this amount totals $ 5.3 million, falling to $ 4.7 million in 2017-2018 before increasing by $ 100,000 each year for the remaining years of the contract (until 2030-31 ). Products include play and training uniforms, competition balls and footwear for use by Covered Programs.

Compensation received through contract and product sales royalties is strictly used for functions within the sports department, said Kurt Svoboda, UM’s associate athletic director for external communications and public relations.

“There is no specific exception in this agreement for the transfer of money from athletics to the university,” Svoboda said in an email. “Instead, athletics uses a global figure as part of its annual budget, which was approved as part of the University’s budget in June.”

As a result of new contract, UM athletic director Warde Manuel expects corporate sponsorship revenue to grow from $ 16.2 million in last fiscal year to $ 17.7 million in 2016-2017.

Fans attending the August 1 unveiling can expect around 300 Nike items to be on sale at that time – the entire fall launch except the soccer jerseys. All other football clothing – including Jim Harbaugh’s coach shirt, touch shirts, hats etc. – are available for purchase.

The M Den will host a party outside of its main store with members of the Michigan Marching Band, the school dance team, a DJ, and food and drink. From 10 p.m. to 2 a.m., State Street is blocked between William Street and Liberty Street.

All other M Den locations will unveil their new products at 10 a.m. on August 1, while Nike and Jordan Brand will unveil Michigan’s new soccer jerseys and uniforms at a private, invitation-only press event on August 2. August in Detroit.

The new Michigan soccer jerseys are available for purchase starting at 9 a.m. on August 6 at all M Den stores and at MDen.com. The “AJ Trainer 1” shoe is only available at M Den on State Street and MDen.com and there are a limited number of pairs available.


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