Nike deal boosts Boise State revenues

Pending Idaho Board of Education approval, Boise State University has signed its first all-sports contract with Nike. Boise State has had three separate contracts with Nike that pay about $280,000 per year in cash and product, but that number will rise substantially under the new contract.

Boise State will receive $850,000 in product and equipment each of the first two years of the contract, $1 million in each of the next two years and $1.15 million in each of the last two years. Those amounts are set to increase by $75,000 each year following the Broncos’ move to the Big East. The contract is retroactive to 2011-12.

Performance bonuses such as $25,000 for participating in a BCS bowl game and another $25,000 for winning a national championship are included.

The contract also calls for cash payments each year: $30,000 in each of the first two years, $40,000 in each of the next two years and $50,000 in the each of the final two years.

A lot of those figures change, however, should Chris Petersen no longer be the head coach of the Broncos football team. Nike has reserved the right to reduce the cash payments by an amount to be determined “taking into account the diminution of value resulting from such” change.

The head-coaching clause isn’t without precedent, although it is more common at schools that have only recently signed their first all-sports contracts.

Memphis had a similar clause in its Nike contract that it struck in early 2009. Under the terms of that deal, Memphis was to receive $660,000 per year in cash compensation, but that amount would be reduced to $400,000 per year if John Calipari was no longer the men’s basketball head coach. Calipari left just five months after the contract was signed.

Nels Popp, a professor of sports management at Illinois State University, said the coaching provisions in Boise State’s and Memphis' contracts reflect the difference between a coach who puts a school on the map versus schools with longer brand histories.

"A single coach could indeed put a less prominent school in the spotlight, such as Gary Patterson at TCU, while the brand equity or brand recognition a storied program enjoys is certainly not as deeply impacted, marketability-wise, by coaching turnover,” he said.