LSU’s 4-Year Extension with Nike

Absent any announcements to the contrary as the 2022 college football season approached, it was widely understood that LSU and Nike had come to terms on an extension for their footwear, apparel, and equipment sponsorship agreement. The terms of the school’s new contract with Nike are now available, and they are sure to be of interest to other market participants.

LSU’s previous arrangement with Nike, signed in 2013, was separated into three agreements (a Sponsorship Agreement, a Trademark Licensing Agreement, and an Appearances Agreement). The new agreement, signed in 2022, replaces those three agreements.

Under both deals, the two primary forms of compensation to LSU are cash and product. The tables below lay out the contractually scheduled amounts to which LSU is entitled in each year. Clearly the cash compensation to LSU (“Sponsorship Fee” and “Base Compensation”) remains unchanged at $1 million per year. However, LSU’s product allotment increased from $3.5 million in the 2021–2022 contract year to nearly $5 million in 2022–2023.

To compare the two deals while accounting for the shorter duration of the new contract, it is most useful to compare each deal’s average annual value (“AAV”). The $5.8 million AAV of the new 4-year contract represents a 34 percent increase over the $4.3 million AAV of the prior 9-year deal.

This represents a nice increase, especially in a challenging market environment, but the value of the deal is likely lower than what LSU might have been able to achieve had their rights been available 5–7 years ago. The market for college footwear, apparel, and equipment sponsorship rights was particularly hot in the 2014–2016 timeframe, driven largely by strong competitive bidding dynamics and increasing media exposure. Had Nike, adidas, and Under Armour been approaching the market the same way in 2021 and 2022, LSU might have been able to secure a contract at values closer to some of the top programs that transacted in that 2014–2016 window.

In many ways, the length of LSU’s new contract is most instructive. While schools like Texas, Ohio State, and Michigan signed 15-year deals, LSU’s 4-year extension is relatively short. This suggests that LSU might not have found exactly what it was looking for, instead opting for a short-term extension with the hope that market dynamics might be more favorable in 2025 and 2026.

Many of the issues highlighted here are discussed in detail in Appraisal Economics’ report on college footwear, apparel, and equipment sponsorships, available here.