The University of California-Berkeley and Under Armour have agreed to a 10-year deal that will begin with the 2017-18 school year.
Sources say the deal is worth almost $86 million in cash and product. It includes a $3 million signing bonus, $3.5 million in cash per year and an average annual product allowance of $4.76 million.
The new pact is worth much more than what Nike was paying the Golden Bears. In the final year of its Nike deal, Cal will receive $2 million in product and $150,000 in cash. Its cash intake will increase more than 2,000 percent in 2017-18.
Cal signed what might be the most comprehensive deal in college sports. By involving the whole campus in negotiations, athletic director Mike Williams was able to offer Under Armour assets that haven't been available in other partnerships.
This deal, for example, will include outfitting the school's 34 official club sport teams in the brand. It will also guarantee that Cal's faculty and student body get a discount on Under Armour's connected fitness bundle, UA HealthBox, and make Cal the home for Under Armour's entrepreneurial contest Future Show.
"We're thrilled to have found a partner that is as excited about what makes Cal Cal as we are," Williams said. "We share Under Armour's vision on innovation, and it's apparent we have the same work ethic."
Under Armour CEO Kevin Plank said the company is placing greater emphasis on schools that experience success both on the field and in the classroom, as the company has sought to make a smarter product for college athletes to use. In January, Under Armour signed on to outfit Yale, and the brand has been worn by athletes at Northwestern since 2013.
"That we've aligned ourselves with these types of schools is no accident," Plank said.
Williams said the deal with Under Armour will serve the Golden Bears well as the company continues to embody cool to younger Americans, especially those in the Bay Area, as the brand is on Steph Curry's feet and on Buster Posey's chest protector.
"We recently offered a high school freshman football player a scholarship, and one of our Pac-12 competitors offered an eighth-grader," Williams said. "Under Armour is the buzz brand among boys and girls, and it could help make a difference."
One component in the huge financial increase is the fact that Cal's deal comes up during a feverish race to sign long-term, lucrative deals with schools.
In October, Nike signed Texas to a 15-year deal worth $250 million, topping Under Armour's 2014 deal with Notre Dame that is worth more than $10 million a year. Ohio State's new deal with Nike will hit $252 million over 15 years when factoring in the school's guaranteed royalty income.
"Fortunately for us, we saw this coming years ago as the arms race accelerated and we knew we wanted to play in this game," Plank said.
Revenues for the company keep growing. On Thursday, Under Armour announced it was projecting $5 billion in sales for fiscal 2016, a jump from just under $4 billion in sales in fiscal 2015.
"These deals hurt you on the front end, you feel pretty good in the middle, and you feel even better at the end," Plank said.
At current prices, Plank said these deals no longer pay for themselves in licensing royalties.
"You make sense of these types of deals by hoping that your association with a school, and their future success, leads to a crescendo, a waterfall effect that makes your brand top-of-mind outside what a fan normally purchases," he said.
Last season, Cal was 8-5 in football and 23-11 in men's basketball, one of four Pac-12 teams -- along with Oregon, USC and Utah -- to win at least eight games in football and 20 games in men's basketball. Utah is the only other team in the Pac-12 that has an Under Armour deal.
Earlier this week, former Cal quarterback Jared Goff, who could be selected No. 1 overall in the upcoming NFL draft, signed with Nike.