The University Record, January 22, 2001

U, Nike sign 7-year contract to outfit, equip athletes

By Julie Peterson
News and Information Services

The University of Michigan Athletic Department has signed an agreement with Nike that will equip all 25 varsity men’s and women’s sports for the next seven years, Athletic Director Bill Martin announced Jan. 16.

The agreement also provides cash payments of $1.2 million per year to the U-M and grants the University 10 percent royalties on the sale of all licensed products sold by Nike bearing the University of Michigan name and/or logos.

The new contract (valuing the equipment at retail price) is estimated to be worth between $25 million and $28 million. The contract was signed Jan. 8 and will run Aug. 1, 2001–July 31, 2008. It represents the culmination of several months of negotiations between Nike and the University.

“I am very pleased that we were able to negotiate this agreement,” Martin said. “One of my priorities has been to outfit our student athletes and teams. Our coaches and athletes have told me Nike is their top choice for supplying our athletic equipment, and Nike has tailored the product to meet our needs.”

The new agreement represents a significant increase over the previous contract, which paid $600,000 in cash annually and 7 percent royalties on licensed products. The six-year contract expired in August 2000. During the six years, Nike provided about $7.8 million in equipment (retail value) and paid $3.2 million to the University in royalties.

Martin noted that U-M has been at or near the top in university licensing royalties for the past several years. “Our brand is one of the most recognizable in college sports,” he said. “And we have just completed the 20th season in which Nike has served as the supplier for our Wolverine football team. That continuity has been valuable to our football team and to the Athletic Department as a whole.”

The contract includes important new provisions in the University’s ongoing work on labor and human rights issues, Martin said. The contract language describes a “shared commitment” to improving the working conditions in factories that make University-licensed products.

The agreement calls for:

  • Manufacture of licensed products in accordance with the Collegiate Licensing Co. (CLC) Code of Conduct, which is widely used by universities across the country. Fifty-eight colleges and universities have signed on to the CLC code.

  • Systematic internal and independent external monitoring of subcontracted factories.

  • Provision by Nike, for the first time to any university, of annual summary reports of factory locations, implementation and enforcement of the CLC code, and monitoring of factories where U-M-licensed products are manufactured.

    The CLC code is substantially similar to the draft code of conduct developed by the U-M Standing Committee on Labor Standards and Human Rights, Martin said. The draft code was still in committee review and undergoing revisions at the time the Nike contract was negotiated.