USATF, Nike in apparent $500 million deal

USA Track & Field on Tuesday announced a groundbreaking 23-year deal with Nike apparently worth $500 million, an arrangement that holds the potential to transform the leading sport of the Olympic movement in untold ways in the United States for a generation.

The Nike deal comes 13 days after USATF announced a seven-year partnership with Hershey, the chocolate maker. In February, 2013, USATF announced Neustar, the administrator of the .US top-level domain, as the three-year sponsor of its national road-racing championships.

Two more significant deals are expected to be announced next week.

Olympics Day 14 - Athletics

The U.S. women’s 4×100 women’s relay team celebrates after setting a new world-record — 40.82 seconds — at the London 2012 Games // photo Getty Images

“We are a more robust organization and, frankly, it is creating a lot of positive momentum for people who want to engage with us,” USATF chief executive Max Siegel said, adding of the Nike arrangement that while the Oregon company is “a significant part of our funding, it is one sponsor.”

Neither USATF nor Beaverton, Ore.-based Nike would disclose the financial details of the arrangement, which runs from 2017 through 2040. It is believed, however, to be at least double USATF’s current annual financial and in-kind support from Nike. Based on USATF financial documents and past media reports, that would put it in the $17-20 million dollar range annually.

“Nike was founded as a running company, and our passion for track and field is at the core of our DNA,” Mark Parker, the company’s chief executive and president, said in a statement, adding, “We have been a longstanding partner of USATF since 1991 and are extremely proud to extend our partnership and commitment to the sport.”

Half a billion dollars is the kind of money that might regularly fly around the NFL, NBA or Major League Baseball.

In Olympic sport in the United States, not so much — and particularly in track and field, bedeviled in recent years by virtually every manner of issue, challenge, problem, crisis, whatever imaginable, everything from rules imbroglios to political turf wars to governance matters to repeated doping scandals.

Despite it all, Team USA keeps racking up medals: 29 at the London 2012 Games, testament to the world’s best grass-roots, high school and college programs.

Because it’s USATF, and it has such history, there is the easy temptation to wonder what’s the catch in a deal of this magnitude.

For sure, the deal will likely result in more pressure for more track and field events in Oregon. On Tuesday, for instance, the IAAF, track and field’s international governing body announced that Eugene, along with Barcelona and Doha, Qatar, were candidates for the 2019 world championships; the IAAF will decide in November. The world championships, which date to 1983, have never been staged in the United States.

Will Nike be just “one sponsor”? It has provided USATF uniforms for the last six editions of the Summer Games. It is the driver behind the Oregon Project, the group founded more than a dozen years ago to promote distance running — where Alberto Salazar directs the likes of Mo Farah, Galen Rupp, Jordan Hasay, Shannon Rowbury and, now, Mary Cain.

Nike assuredly doesn’t do deals unless it has run the financial analysis and figures it makes sense, or more. Nike surely considered the present value of some $20 million annually, and the 2040 value of those dollars.

Then again, there’s this:  in a deal, it’s always good — for everyone — to find certainty.

What if this deal is indeed a game-changer for USATF and beyond, for the entire U.S. Olympic scene, prompting everyone to think big?

When he took over nearly two years ago as USATF’s chief executive, Siegel took a look at the federation’s financials. USATF had roughly $2.7 million in operating reserves. Now: $6 million. By year’s end: $20 million.

Siegel has simultaneously undertaken a campaign to use increasing amounts of interest income to pay for USATF operating expenses in Indianapolis.

With more money freed up, the theory is to use dollars for programming and athlete support.

“One of the things I wanted to make sure I was able to do was install a really solid financial foundation to give us plenty of runway to [develop] programming,” Siegel said.

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USATF chief executive Max Siegel // photo courtesy USATF

USATF has long operated in a space where there is consistent, if not chronic, push-and-pull from an incredible array of interests — athletes, agents, organizers from the track as well as road racing, and more.

Half a billion dollars would seem to spell “leverage.”

Siegel would say only, “It definitely gives us the ability to set a very high standard, both in terms of accountability and expectation with our constituents. Every single program in the federation is going to benefit significantly in terms of the infusion of capital.

“We can engage with our leadership and set a new standard of leadership: ‘You are going to have to perform at a very high level.’ “

At the same time, as the pushback from the controversial disqualification of Gabriele Grunewald — and then reversal of that DQ — at the women’s 3,000-meters at the U.S. indoor nationals in February in Albuquerque underscored, USATF needs, now more than ever, to make sure its governance is up to a $500-million standard.

“What I have heard since I got involved with the sport is people talking about professionalizing, or raising the level of professionalism, in the sport,” Siegel said.

“I have read through all the levels of coverage, even the criticism of our sport, from Albuquerque. As CEO, I don’t disagree. For the last 20 years, I have been a talent and athlete advocate. We want to be a big brand and to make money. To do that, what these issues have done, have highlighted, is the need to sit down and make sure our governance lines up with the desired commercial outcome.”

The time is now, he emphasized for a wide-ranging governance review — “across-the-board.”

“We are looking at a pretty comprehensive governance review,” Siegel said, noting that while USATF has already announced a review of “field-of-play” decisions, “To be effective, you have to take a comprehensive look at all of it.” He observed that “special interests” tend “to be passionate,” and USATF “has done patchwork over the years.”

He said, “We need to take a look at governance change for the whole organization.”

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7 thoughts on “USATF, Nike in apparent $500 million deal

  1. That is literally, yes literally, two days of revenue for Nike. who negotiated this? two days of revenue and they will own the sport for the next 23 years. And Max Siegel isn’t interested in track–this isn’t even his main job! This is just something he gets paid millions of dollars to do on the side. (Yes, Siegel makes more than any of the athletes, as do all the 15 or so USATF execs.)

  2. $500 million is pocket change? What planet are you on? The truth is, track and field has been the most undervalued sport in the global world for decades, mostly because of the self assassination that those inside the sport do, from media, to sponsors, to athletes and fans. Take the time to analyze Nike’s new sponsorship before you make comments like pocket change.

  3. If the deal is worth 500 million, its not 500 million in the pocket today, its 500 million over a 23 year period that starts in 2017. Any basic business class teaches that the value of a dollar is worth more today than it will be tomorrow, much less the value of a dollar by the year 2040. What other business would sign a sponsorship deal through the year 2040? It just doesn’t happen. There are too many uncontrollable variables for that long of a time frame. Big numbers make it sound like an amazing deal, but these kind of deals don’t happen for a reason – they aren’t good for business to be “locked” into a deal that long. Doesn’t make sense.

  4. For 500 million the USATF championships will never leave Eugene. It is no longer a national championship but a NIKE championship. It will never be on the East Coast again!Q

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