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Marketplace Morning Report

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Marketplace Contributor Jul 17, 2015
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We got details this week on the biggest apparel deal in college sports history: Nike will pay the University of Michigan $169 million to be the school’s official athletic brand.

And if that sounds like a lot of money just to put the iconic swoosh on Wolverine jerseys, then you have to understand the battle that brands are waging right now to own college campuses.

For fans, this stuff matters. 

When Michigan fans found out the school would be leaving Adidas, which it partnered with in another major apparel contract back in 2007, and going back to Nike, the reaction was big.

There was mass celebration on fan blogs. Athletes rejoiced on Twitter. Interim Athletic Director Jim Hackett even told reporters that beloved Coach Jim Harbaugh had voiced his desire to go with Nike just two days after taking the job at Michigan.

There were rumors and hints that Michigan had actually left even more lucrative offers from Under Armor or Adidas on the table.

At the Coach and Four Barbershop in downtown Ann Arbor, junior Brian Cook laughed at how much this all meant to him and other fans: “We have such, like, a big feeling about this stuff!”

Now sports fanatics, and maybe college fans especially, are known for sweating the small stuff: the details and stats and minutiae that totally escapes the less devoted. But this felt different. This didn’t just feel like navel gazing about jerseys and cleats and helmet design. Because on campuses in recent years, the emotion about whether your school is Nike or Adidas or Under Armor – it’s real. 

“It’s less about money and more about keeping up with the rest of college football, really,” says barber James Price. “When you see Nike, you know they’re going to do what they have to do promote the school, and put the school on that pedestal.”

“The battleground for American universities”

And that belief that Price just voiced? That’s obviously priceless to brands like Nike.

That’s why Nike is in a kind of arms race with Under Armor and Adidas to throw more and more money at apparel contracts with big sports schools.

Because they’re not just trying to sell shoes — although, yeah, they want to sell shoes.

They’re also trying to be college football and basketball, at least in the fan’s mind. They are trying to be the biggest, fastest, sexiest parts of college ball.

Take Nike’s ad for its football camp, the Opening, for top high school players, where a gravel-voiced coach shouts at a bunch of teenagers that “every year, 163 of the strongest and baddest will come to play, with another thousand killing themselves to get here!”

The Opening may not be the kind of industry staple that Nike would like it to be — at least not yet.

But it’s one of the ways that brands are trying to drive and even create content, not just apparel, when it comes to college sports.

And it’s smart. Because right now, in these slow July days, there just isn’t a lot of football happening. So reporters and blogs write about — and then fans endlessly dissect — what’s happening at camps like this one. Clips from great plays go viral. It makes “news.”

Then, hey, look at that: Nike also conveniently allows you to purchase every $200 pair of cleats and $50 camo tights that players at the Opening are wearing. 

Morningstar analyst Paul Swinand, who focuses on sporting and luxury goods, says this is all part of a new national approach.

“The battleground for American universities is part of the strategy to get the consumer early to lock in their emotional ties to the brand,” Swinand says. “That’s made it imperative to get the biggest, and the needle-moving schools in your camp. So I don’t want to say that they’re ready to write blank checks to universities. But they’re competing much harder and willing to spend more. That’s driving the price up.”

Plus, as audiences becomes increasingly fragmented between all the competing offerings on TV, Web and mobile, live sports is one of the few ways brands can get national attention.

And teams with deep, rabidly loyal fan bases like Michigan’s? Those are worth more than ever.

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