Sheehan & Associates, P.L.C.

Michigan's contract with Adidas 'most lucrative' of its kind

A recent study conducted by the "Portland Business Journal" found that the University of Michigan and sportswear giant Adidas have the "most lucrative public apparel deal in the country." That may account for the many varieties of gold and blue uniforms worn by the school's various teams during the last year – some better than others.

So what does Michigan get with this contract, which was signed back in 2007? The university receives $3.8 million in cash and $4.4 million in apparel and equipment for their Wolverines. According to the study, the school brings in twice as much from Adidas as the school with the second most lucrative Adidas contract among Big Ten schools, which is the University of Nebraska.

The terms of Michigan's contract with Adidas virtually assure that it will remain the most lucrative one. It specifies that if Adidas signs a deal with any other school, or otherwise provides them with "more favorable average annual value" than Michigan, the company has to offer the university "that same more favorable average annual value on the same terms and conditions" in thirty days or sooner.

The study did not include private institutions like another Big Ten team, Notre Dame. The terms of their contracts with apparel manufacturers do not have to be made public. However, Michigan clearly negotiated highly favorable terms with Adidas. If those terms are paying off for both parties, it will help smooth the negotiations once the contract expires in 2016. Law firms with experience representing companies and organizations when negotiating this type of contract can help ensure that the terms are beneficial to both sides.

Source: mlive.com, "Study: Michigan's apparel contract with Adidas (worth $8.2 million) most lucrative public deal in America" Nick Baumgardner, Jan. 06, 2014

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