Saturday, October 10, 2015

Bucky breaks out the Under Armour

Bucky Badger's going to have a new symbol on his sweater in the near future, as a new 10-year contract for Under Armour to outfit UW Athletics was signed off on at the UW Board of Regents yesterday. And it seems to work out very well from the side of Athletic Director Barry Alvare and those who want UW Athletics to continue to grow, because new revenue streams are needed in a time of other budget pressures surrounding both the Badgers, and the UW System as a whole.

If you look at the Board of Regents agenda, the Under Armour agreement fell in the middle of a number of other contracts the UW is receiving from various corporations, including a few million to perform clinical trials for various drug companies (oh, but studying science doesn't have any economic payback, right Robbin' Vos?). Here are a few of the topline items on the Under Armour contract, and the first thing you'll notice is that UW gets a lot more to pay for gear than they did with their old contract with Adidas, and a lot more straight-up cash.
UW-Madison would receive an annual product allotment of Under Armour shoes, apparel and equipment at no cost to UW-Madison, to outfit and equip its 23 intercollegiate teams. Under the existing contract, Athletics received an annual product allotment from Adidas totaling $1,300,000 in year one of the contract, increasing incrementally to $1,375,000 in the final year. Under the proposed Agreement with Under Armour, Athletics would receive $3,300,000 in product during the first year to account for the increased product needs associated with a change in Sponsors. Thereafter, Under Armour will provide Athletics with $2,450,000 in product for year two of the contract, increasing incrementally to $3,050,000 in year ten.

• UW-Madison would receive an annual amount of cash compensation from Under Armour to provide income to Athletics. In addition, UW-Madison would be eligible to receive annual bonus compensation based on the overall performance of the university’s athletic teams. The amount of annual cash compensation made under the existing contract with Adidas varied from $750,000 in the first two years of the term to $800,000 in the last three years. Under the proposed Agreement with Under Armour, Athletics would receive an annual cash contribution of $4 million.

• UW-Madison would receive an annual guaranteed minimum licensing royalty from Under Armour. Under the current agreement, Adidas pays UW-Madison an annual guaranteed minimum licensing royalty of $100,000. In the proposed agreement with Under Armour, that amount increases to $450,000.

• The term of the Agreement would be ten (10) years.
From a fiscal standpoint, you can't really argue with the move. That's a much better deal for Bucky than they were getting, and as then-State Journal writer Andy Baggot noted last May, UW Athletics is going to need the extra money, because changes in compensation to athletes and budget cuts by Gov Walker and the Wisconsin GOP Legislature are putting a squeeze on the folks at 1440 Monroe Street.
Cost of attendance - personal expenses above and beyond tuition, room, board, and fees - will run approximately $5,000 for a full scholarship, according to UW athletic director Barry Alvarez, while the comprehensive meal arrangement for all 900 or so student=athletes will be between $1 million and $2 million annually.

Both measures are pushed by the Big Five conferences - including the Big Ten - as part of their push for NCAA autonomy.

Meanwhile, the UW athletic department will increase its annual services contributions to Bascom Hill [UW-Madison Administration] from $2 million to $5.5 million starting in '15-'16. That came about because Gov. Scott Walker's proposed state budget for 2015-'17 seeks $300 million in cuts to the UW System. The trickledown effect to UW[-Madison] is about $91 million, according to chancellor Rebecca Blank.
And while $50 million of that cut was able to be reduced during budget negotiations, that still leaves a serious cut to the university, leaving it with the need to make up the difference in other ways (including the measure passed yesterday by the Regents to allow more high-tuition out-of-state students to attend Madison). However, those extra tuition funds are unlikely to make much of an impact (at least short-term) on the finances of UW Athletics, and the financial realities led to Chancellor Blank giving an interesting statement this week in USA Today on the college football arms race, and how it relates to the highest-profile UW Athletics job there is. Blank reflected on the $7 million Michigan paid to get Jim Harbaugh to leave the San Francisco 49ers and the nearly $6 million Urban Meyer pulls down at Ohio State, and said it wasn't a good sign.
Those are the choices [those schools] make,” she said in an interview for a story about coaching salaries. “That really begins to threaten the whole sense that we are not professional athletic teams. I’m not terribly happy about the fact that they made those choices. That’s my opinion.”

Wisconsin athletics director Barry Alvarez doesn’t share it.

“I look at it as their business,” he says. “I do. I don’t concern myself. I don’t feel like we’re in competition with salaries at Ohio State or Michigan. … When you’re Ohio State and football is as important as it is in that state, and you have an opportunity to hire someone who has a couple of national championships in his hip pocket and is from that state, it makes sense to pay him. He’s that valuable. … And Harbaugh, I think it’s a coup for Michigan and our league. I think he is worthy of that salary. That’s what they can command. The market drives that.”

Blank understands market forces. She was acting secretary of commerce in the Obama administration and holds a doctorate in economics from MIT.

“Well, clearly the market for football and basketball coaches is a whole lot tighter than the market for chancellors and presidents,” she says, chuckling. Her salary is $499,950. First-year Wisconsin coach Paul Chryst is making $2.3 million.
I find Barry's comment about not having to compete with OSU or Michigan a bit concerning, although I agree that maybe UW isn't as willing to be an SEC-type factory like OSU is or have donors as desperate for football success as Michigan does (and I find that to be generally a good thing, because having graduates win Nobel prizes are pretty cool to talk about as well). But the realities of 2010s college athletics and the fiscal constraints from the University of Wisconsin make deals like the one Bucky is striking with Under Armour more common, and I find that OK as well...well, up until UW starts taking sponsorship money from anti-education organizations like Koch Industries.

But I'll talk about that sleazy relationship at a later point :) In the meantime, get ready to PROTECT THIS HOUSE in Madison starting in the Fall of 2016!

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