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January 31, 2014

Vols to 'just do it' in 2015

Beginning July 1, 2015, the "swoosh" is returning to the orange and white uniforms of all 20 Tennessee athletic teams as Vice Chancellor and Director of Athletics Dave Hart announced on Friday a new, comprehensive apparel and equipment contract with Nike for the University of Tennessee's athletics department that will marry the Vols and the globally recognized "Just Do It" company into the 2020s.

The deal is an eight-year, $35-million agreement, which puts Tennessee in the top 10 among colleges with Nike agreements.

The completion of the deal ends a negotiation with Nike and adidas, Tennessee's partner since 1997. Under Armour and Tennessee did have discussions, but a formal proposal was never made to Hart by Under Armour.

Year Nike adidas
2015-16 $6.6 $4.7
2016-17 $3.8 $4.7
2017-18 $3.9 $4.9
2018-19 $4.0 $4.9
2019-20 $4.0 $4.9
2020-21 $4.1 $4.9
2021-22 $4.2 $4.9
2022-23 $4.3
"We were very thorough and deliberate in assessing and evaluating our options with our apparel partner decision," Hart said in a University release. "NIKE is the right partner for the University of Tennessee moving forward. We appreciate our current partner and the strong relationship we have had for many years. We will continue to work together through the end of the existing contract."

That thoroughness included members of the Vols' athletics department who traveled to Oregon last summer to meet with Nike executives, and apparel talks took place with multiple people in advance of the Vols' road football game at Oregon in mid-September.

The current adidas contract runs through June 30, 2015, but Tennessee will feel the effects of Nike in its bank account before then. According to a contract obtained by Volquest.com, via an Freedom of Information open records request this month, Nike will pay the University of Tennessee a $2 million signing bonus on July 1, 2014. The front-loaded contract also will give Tennessee an extra $800,000 in product in the first year to help with the transition from adidas to Nike.

Year product cash total
2015-16 $3.6 mil. $3 mil. $6.6 mil.
2016-17 $2.8 mil. $1 mil. $3.8 mil
2017-18 $2.9 mil. $1 mil. $3.9 mil.
2018-19 $3.0 mil. $1 mil. $4 mil
2019-20 $3.1 mil. $900k $4 mil.
2020-21 $3.2 mil. $900k $4.1 mil.
2021-22 $3.3 mil. $900k $4.2 mil.
2022-23 $3.4 mil. $900k $4.3 mil.

According to those with knowledge in the negotiations, Nike's contract offered a more comprehensive deal. According to the pact, adidas' proposed contract reduced their guaranteed cash from a current $1.8 million annually to $1.1. adidas' 7-year contract proposal did offer more product, a total of $26.2 million over their 7-year offer compared to Nike's $25.2 million over 8 years.

Hart noted to Volquest.com in 2013, it wasn't just about money. Other factors included recruiting impact, quality of product, product availability for all 20 sports, customer service, and branding and marketing assets.

The recruiting impact was felt immediately when VolQuest.com broke the news of the impending switch.

"Not only will we be the best team, but we will be the best dressed. I'm so excited," 2015 offensive line commitment and Top 100 prospect Jack Jones told VolQuest.com.

Recently graduated All-SEC specialist Michael Palardy, a former U.S. Army All-American, echoed Jones' sentiments.

"I think it's a huge edge for recruiting in upcoming years," Palardy said. "Everyone knows Tennessee for the orange and white and the 'Power T.' Adding Nike into the mix will boost Tennessee's selling points immensely."

Meanwhile, four-star safety Cortez McDowell, who will sign with the Vols next week, took a more pragmatic approach in just emphasizing the Tennessee brand.

"I like adidas, and I like Nike; as long as the 'Power T' is on the side, I'll be fine with it," McDowell said.

Another key element in the decision was product royalties off retail sales of officially licensed merchandise where Nike offered a 44 percent greater return off of those sales than adidas. adidas' current contract and proposed contract was 9 percent to Tennessee while it's 13 percent in the new Nike agreement.

Part of that product availability also includes equipment as Tennessee will move to a Nike football, basketball, women's basketball and soccer ball. Softball and baseball equipment such as bats, balls, and gloves are not included in the deal and neither is golf clubs.

The contract runs through June 30, 2023 and Nike has exclusive negotiating rights on the contract from 12-30-21 through 3-30-22, but extensions can be agreed upon at any time. Also, worth noting obviously any changes in uniforms in any sport has to be agreed to by the University of Tennessee.

BONUS CASH

The new Nike contract will also award Tennessee for on the field and on the court accomplishments. In football, Tennessee receives $10,000 for going to the SEC Championship game, $20,000 for winning the league championship, $25,000 for playing in a playoff game, $50,000 for playing in the National Championship game, and $100,000 for winning the National Championship.

In men's basketball, the gift from Nike is $10,000 for winning the SEC Tournament, $25,000 for an NCAA Final Four Appearance, and $50,000 for winning the national title.

In women's basketball, the bonus is $5,000 for winning the SEC Tournament, $10,000 for making it to the NCAA Final Four, and $15,000 for winning the national title.

All the bonuses are cumulative meaning Tennessee would get up to $205,000 in football bonuses and $85,000 in men's basketball bonuses should it achieve each level of the bonus platform.

NIKE PROTECTS ITSELF

One other item of note in the contract is the protection Nike has given itself. According to the Nike contract released, if coaches, staff or team members fail for any reason to wear or use Nike products Nike shall provide written notice of the violation and will work in "good faith" with the University to resolve the violation. After submission of written notice and good faith efforts to resolve violations, Nike shall have the right to reduce the University's base compensation by 10 percent --- or $100,000 in the front half of the contract. A second violation would result in a 15 percent penalty and a third violation would result in a 25 percent reduction in the base compensation of the contract.

Also in the contract, in the event that the NCAA Divison 1 Committee on Infractions sanctions the University by placing the institution on probation for a "major violation" of NCAA that results in either a post-season competition ban, or a ban on television appearances for any flagship program (football, men's basketball or women's basketball) or a reduction of scholarships (2 or more scholarships for 2 or more seasons in men's basketball or women's basketball or 6 or more for tow ore more seasons for football) then Nike has the right to extend the term of the number of contract years that corresponds to the number of impacted seasons on the same terms in effect at the time of the sanctions.

For example, if the football program was subject to a 2-year postseason competition ban, or 2 years' loss of 6 scholarships, Nike would be entitled to extend the agreement for a period of 2 additional contract years.



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