Michigan lands largest apparel deal in the country, but Nike became ‘obvious’ choice well before cash

Thursday, July 9, 2015 - 8:47pm

With all three companies offering similarly substantial sums, Hackett insists that the decision to go with Nike was not solely a financial one.

Jim Hackett knew as soon as he took the keys as Interim Athletic Director that Michigan’s pending apparel deal would be one of his biggest decisions on the job. 

He also knew that the school he worked for would have power in such a deal, but it wasn’t until a rival Athletic Director spelled it out to him that he realized just what kind of machine he was driving.

“ ‘I just want to set your mind in the right context, Michigan is one of the most valuable brands,’  – and he paused –  ‘in sports,’ ” Hackett recalled his colleague saying. “ ‘I'm talking about auto racing, golf, baseball, NFL, NBA … the Michigan brand, Jim, is one of the most valuable assets in sports.’ 

“I had a lot of pride hearing that, but it really got me to think what does the most valuable brand in sports deserve?”

As negotiations progressed, Hackett would find out that Michigan’s potential partners were thinking about that too. According to Hackett, Adidas, Nike and Under Armour all offered Michigan the largest apparel contract in the country. Full financial details are expected to be released as soon as next week, but currently the largest contract is Notre Dame’s 10-year, $90 million deal with Under Armour.

But with all three companies offering similarly substantial sums, Hackett insists that the decision to go with Nike was not solely a financial one.

“(Being the largest contract) was never in any stated goal of where we are or what we wanted,” Hackett said. “In your exposure to the firm, from visits and meeting with leadership, you learn there’s a lot of value in different ways than money.”

In an extensive process that began in February, Michigan sought to turn over every stone in research to not only pick a winner, but also prove that winner right to any naysayers. A giant board with "investigative lanes" including pages upon pages of market research, performance evaluations, fan, player and alumni feedback and analytics filled an entire room in the athletic department.

And as the room filled, so did Hackett’s confidence in his final decision. 

“In the end it was obvious that it was going to be Nike,” Hackett said. “I found myself in the position where I could not argue the decision of picking them. Early on you could make the argument; there were some really good competitors in this mix.”

With a bidding war larger than any other in the history of college athletics, Hackett and his team sought to challenge all three companies beyond their wallets. Among those challenges was a 15-year plan, highlighting Hackett’s focus on the long-term success of the deal.

“I was looking for the future,” Hackett said. “It didn’t matter that Nike was really successful here in the past, it didn’t matter that Under Armour had invented a wicking system no one else had, it didn’t matter that Adidas had this global dominance, we’re signing a new 15-year deal.
 
“I said to each one of them ‘I want to be ahead, not just a fast follower, I want be ahead of everyone out there.’ We gave each of them a challenge in that regard, and Nike did the best job.”

Nike’s eye on the future was nice, but would not have resulted in a deal had it not been for its current standing. More then tripling the revenue of Adidas and Under Armour combined at $11.2 billion, Hackett found it to be far and away the leader in athletic apparel.

More importantly to Hackett, however, was Nike’s standing as a market leader in the eyes of coaches, athletes, alumni and fans. In dozens of formal and informal discussions, students and student athletes informed Hackett of their sentiments. Michigan football coach Jim Harbaugh revealed his preference for the brand his second day on campus. Michigan alums playing in the pros — some of whom played for the Wolverines during Nike’s previous contract with Michigan from 1994-2007 — also voiced their opinions.

The overwhelming majority supported Nike.

“That voice really came through,” Hackett said. “I was delighted that they loved the University that much, that they really care about the decision now and want us to be great.”

It took four months to make the call, but by suspending all biases, Hackett learned not only how powerful the Michigan brand was, but that Nike is exactly what one of the most valuable brands in sports deserves.

“I can’t exaggerate enough that we suspended our decision as long as we could to make the right one,” Hackett said. “We’re really excited for what the future holds.”