With its contract with Adidas, Georgia Tech won’t receive a boatload of cash, but the Yellow Jackets will be well-clad.
Tech will receive an average of $3.11 million annually from Adidas in cash and product over its six-year contract, according to the school’s memorandum of understanding with the shoe and apparel company, obtained by the AJC through an open-records request.
The school will receive $200,000 annually in cash over the six-year contract that begins July 2018 while the allowance for gear will average $2.91 million, beginning with $3.05 million in the 2018-19 academic year. The actual contract has not been signed as both sides work through details.
Tech’s $200,000 cash allocation is near the bottom of Power Five conference schools, when compared with the amounts that they are receiving in the 2017-18 school year, according to data compiled by the Center for Research Intercollegiate Athletics (CRIA) at North Carolina. Only nine schools whose apparel contracts were obtained through the center’s open-records requests are earning less. (Tech is receiving $950,000 this year from Russell Athletic in the final year of their contract.)
But Tech’s $3.25 million take for 2018-19, including both cash and product, would rank 31st among power-conference schools for the current academic year , according to CRIA. That means Tech athletes and coaches should have plenty of three-striped gear, $3.05 million’s worth. By comparison, Florida State can order up to $2.8 million in gear from Nike this year, Virginia is receiving $2.6 million and Virginia Tech is permitted $1.6 million in product. In the final year of the Russell contract, the company is obligated to provide $1.35 million in apparel, although Russell does not supply cleats or shoes, as Adidas will.
Apparel is measured in retail value. What can’t be measured is the good feeling that simply not being contracted with Russell will provide both Tech athletes and fans. Disparaged as “uncool” and criticized for a lack of gear to purchase, Tech athletes and fans rejoiced over the decision to part ways at the end of the contract. Further, Adidas has expressed its intent to work closely with Tech on branding, innovation and developing the Atlanta market, benefits that a contract can’t capture.
The contract does leave open the possibility of Tech’s cash intake to increase over the contract. The memorandum of understanding notes that the contract will include language for a “look-in” after the third year for both sides to re-evaluate the market and Tech’s athletic performance. The length of the deal is also shorter than the norm.
“The thought there was that we feel our numbers are going to look a lot different with Adidas as our partner, and so we didn’t want to lock ourselves in based on our current numbers as it relates to retail and licensing,” athletic director Todd Stansbury told the AJC.
Last year, Tech negotiated at a time when Under Armour had just spent big on UCLA and California and its stock-market price was dropping. Nike’s interest was not strong, as it may be focusing more on powerhouse programs such as Texas, Michigan, Georgia and Ohio State. Further, Tech clearly was leaving Russell Athletic. Its leverage was not great.
“I think that, while you always want more money – where is the market right now?” Stansbury said. “Unfortunately, given the timing, we were sailing into a pretty strong headwind, when you look at their competition and where they are. And so I think the thing that we ended up looking at was the fact that Adidas gives us a great opportunity in the long run, as well as was willing to bet on us at a time when the market was a little bit soft.”
Tech’s hope is that, at the look-in in three years, the football and basketball teams will be performing better, Yellow Jackets fans will be buying more gear (Adidas undoubtedly will have more of it available than had Russell Athletic) and the market will be stronger.
Further, the contract also allows for Tech to make up considerable ground with its performance on the field. The cash “retainer fee” will increase annually by $1 million if the Jackets win a football national championship, $500,000 if they win the ACC and $250,000 if they appear in the ACC title game two years in a row. The retainer fee will be adjusted by $450,000 if the team wins nine games in a row in back-to-back seasons.
The contract will be increased for performance by the men’s basketball team, as well – $500,000 for a national championship, $250,000 for an ACC championship and $125,000 for reaching the ACC championship game two years in a row.
The memorandum also stipulates bonuses for championships and other accomplishments in football, men’s and women’s basketball and baseball.
Jonathan Jensen, a professor at North Carolina’s CRIA, said that the contract structure is unusual for its language to increase the retainer fee.
“I’ve looked at a lot of these contracts,” he said. “I don’t know that I’ve looked at every single contract, but I’ve never seen a bonus structure that is structured like this. It’s not just about a bonus, but the actual cash outlay. In a way, they’re kind of betting on themselves and they’ve definitely provided an opportunity for themselves to significantly change the structure of the contract if they outperform it.”
It bears mention that, of those seven incentives, Tech has accomplished one of them (football ACC championship in 2009, since vacated) since 1998. On the other hand, coaches have been counting on the partnership with a non-Russell apparel partner to improve recruiting. Further, recent commitments to the football team and coach Paul Johnson have been designed to increase the team’s competitiveness.
Stansbury said that football uniforms “are well underway in being produced” and will be revealed to the public in the latter part of the spring. That and other new elements, such as word marks, will be rolled out in coming months. Tech gear from Adidas will hit the shelves in July, when the contract begins.