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College football championship game is a win-win for Nike

Daniel Roberts
Senior Writer

On Monday night in Glendale, Ariz., the University of Alabama faced Clemson University for the national college football title—and Nike faced Nike. Both Alabama and Nike came away big winners.

It was the second year in a row that the final two teams in the College Football Playoff (CFP) were Nike-sponsored schools. And this was only the second year of the CFP system, a new structure in which a committee selects four final teams to play in two semifinal games, then a single championship game. It is a more traditional system than the much-derided Bowl Championship Series (BCS), which ended after 2013.

In fact, in both years of the CFP, all four of the final teams have been Nike (NKE) schools. The other two teams this year were Michigan State University and the University of Oklahoma. Nike, as an apparel sponsor, has dominated the CFP thus far. The brand renewed its deal with Clemson in August, signing an eight-year contract reportedly worth $23 million to the school. Alabama is even pricier: Nike signed an eight-year, $30 million deal with the school in 2010.

That means Nike, still the number one sports apparel brand in the U.S., was free to grab all the television eyeballs for itself. And college football’s biggest stage draws many, many eyeballs. Last year’s championship game between University of Oregon and Ohio State University garnered 33 million viewers, an all-time record for cable TV.

It is a contrast to a few years ago, in the 2011 BCS National Championship, when the University of Oregon, Nike’s flagship school (the apparel giant is headquartered in nearby Beaverton, Ore.) faced Auburn University, considered to be the flagship school of Under Armour (UA). (Founder and CEO Kevin Plank played football at the University of Maryland, but Auburn is a more renowned football factory and the most prominent of Under Armour’s exclusive school deals.) Marketing experts and media considered it a major milestone for upstart Under Armour, and a compelling sort of brand battle on the field and television.

Comparing this year’s championship game to that 2011 game is also a reminder that the money involved continues to multiply. In 2011, “automatically qualifying” conferences that had a team in a bowl game were given $21.2 million to divide evenly among their schools. This year, conferences with a team in the Orange, Rose, or Sugar Bowl got $51 million to divvy up.

In addition, each conference (there are 10) with a team that reached a semifinal game this year earned $6 million, so that purse went not only to the Southeastern Conference (SEC) and the Atlantic Coast Conference (ACC), in which Alabama and Clemson play, but also to the Big Ten and the Big 12, in which Michigan State and Oklahoma University play. In total, last year the CFP paid out more than $500 million to participating schools, the highest total ever, according to an April report from the NCAA.

It isn’t clear whether this year’s championship game was the same mega-hit as last year’s, when the CFP structure had the sheen of being brand new. ESPN already suffered a 37% drop in ratings for the two semifinal games this year by holding them on New Year’s Eve, a decision made by the powers that be at the CFP, not by ESPN, and one that ESPN pushed against.

Even though the ratings took a hit, the CFP still plans to hold the semifinal games on New Year’s Eve seven more times in the next 10 years.

Switching allegiances

Regardless of ratings, sports apparel companies care deeply about their portfolio of sponsored schools, and both Under Armour and Adidas have ramped up efforts in recent years. Prominent schools often switch sponsors when their contract ends; last year, the University of Miami left Nike to sign a 12-year deal with Adidas, seen as a big coup for the German company which has struggled in the U.S. for the last few years. But more recently, the University of Michigan decided it will leave Adidas for Nike when its contract ends in July. For the big-name schools that are perennial contenders, brands have made a contest out of designing new, flashy jerseys each year. (Once the final four schools were set this year, Nike quickly rolled out “classic looks” for each to wear.)

Adidas Group (ADDYY) CEO Herbert Hainer has specifically pointed to school deals as one of his company’s biggest keys to gaining back U.S. market share. “We are taking on more universities, like Miami and Arizona State University, and taking more [professional] players,” he said early last year. “I am absolutely sure that will help us get back on track in America.”

Do fans even notice what sports apparel logo is running around the field as they watch a game? Doug Shabelman, president of Burns Entertainment and Sports Marketing, thinks they do. “The fans for sure notice,” he said before the game. “Especially when it’s both teams wearing Nike. I think you stand a very good chance of the announcers even talking about the fact that it’s both Nike schools.”

Can you put a specific value on that kind of brand exposure? Some outlets estimate it could be worth as much as $5 million for a brand to have a team in the final game. (For reference, a 30-second advertisement in this year’s championship game cost just over $1 million.) Nike, this year, had two teams, so Shabelman tags the value at around $8 million. But “it also depends on how prominently it’s displayed by the coaches. They show those guys a lot. But look, either way, you’re guaranteed that a winner is going to be wearing Nike, which is a big help.”

If it’s really worth millions in exposure, then Nike executives likely watched Monday’s game with delight. Their counterparts at other brands will have to just cross their fingers for next year.