No business in shoe business
by Dan Wetzel, Yahoo Sports
March 29, 2004
Here was Jerry Tarkanian, head coach of UNLV in 1978, sitting down in Las Vegas, Nev., with Sonny Vaccaro, a longtime friend who was best known then for running a high school all-star game. At the time Vaccaro was working for a fledgling shoe company named Nike, which Tarkanian had never heard of.
And he wanted to give Tark the first shoe deal in college basketball history.
"Prior to this what we'd do with Converse is they'd come to town, take us to lunch and offer us a deal to buy shoes two for one," Tarkanian said Monday. "I really appreciated it. I thought two for one was a hell of a deal."
Nike could do much better. It offered Tarkanian free shoes and gear for his entire program – players and coaches – and to sweeten the pot, a contract worth $2,000 per year for him, ostensibly to run some clinics.
No gimmick. Vaccaro cut the check on the spot and the first Nike deal for a coach was done.
"From there," Vaccaro said, "We went out and signed everyone."
Maryland's Lefty Driesell, South Carolina's Frank McGuire and Iona's Jim Valvano signed soon after. Within a year Georgetown's John Thompson, Iowa's Lute Olson and a dozen others followed. Soon the deals grew sweeter. Vaccaro says that at one time top-tier coaches had packages worth more than a half-million dollars per year. Thompson even became a member of Nike's board of directors.
"We paid them more than the schools," Vaccaro said.
College athletics were rocked by the concept; coaches were making huge sums to outfit players who were paid nothing. And there was little the schools could do about it, even if the reason for the deal was a bit unsettling.
Nike wanted to use the athletes as human billboards, splashing the swoosh across national television and the covers of magazines. Plus Nike gained access to future NBA stars, who one day could become paid pitchmen.
It was a brilliant marketing concept and Nike was all over it. By 1985, every team in the Final Four was a "Nike school."
"Why we did it was it got us into the locker room," said Vaccaro, who left Nike for adidas in 1992 and then went to Reebok last fall. "The shoe company [had] access to all the players on the team. If you had Michigan, you had the Fab Five; you had access to Chris Webber, Jalen Rose and the rest.
"We bought our way into the locker room."
And so the deals went on.
"I had carte blanche," Vaccaro said.
That was then. This is now.
As college basketball assembles later this week in San Antonio for the Final Four and the annual convention of the National Association of Basketball Coaches, the days of lucrative shoe deals being sprinkled around are drawing to a close.
Nike, adidas and Reebok still are involved, but the spending sprees are over. Only the biggest-name coaches get big contracts and many of those are now done directly with the schools. Lesser programs are back to the Tarkanian days, receiving no money and even buying shoes and gear.
"Reebok sees no need to do anything at the college level," Vaccaro said. "There is not any return unless it is a huge program or a high-profile school."
Said Nike's Martin Newton, "We'll always be involved in college athletics, just not in the way we were before. We call it smart spending."
The result is a dramatic drying-up of a revenue stream for many schools. Gone are the days when athletic departments could expect a shoe company to underwrite a significant part of a coach's compensation package.
Consider Xavier, which until three years ago was able to pay then-coach Skip Prosser a competitive amount because Reebok was footing more than half the bill. It allowed the small Catholic school to keep Prosser from jumping to just any big-money job offer. But when Prosser finally left for Wake Forest in 2001, the shoe money went with it.
"Basically we lost that whole deal," Xavier athletic director Mike Bobinski said. "It just completely evaporated. They left a hole in our coach's compensation that we had to then suck up and pay. [Thad Matta's] package still had to be what it needed to be so if it wasn't coming from outside, it had to come from somewhere."
It speaks to the changing face of basketball and the reduced significance of the college game.
Because most top NBA prospects now attend college for only a brief time, if at all, the access to the locker room is overrated. Buying Ohio State doesn't get you LeBron James anymore. Signing his high school team (Akron's Saint Vincent-Saint Mary), which Vaccaro did when he was at adidas, does.
Saint Vincent-Saint Mary "was more important a deal than [adidas] had with any college other than the real big ones," Vaccaro said. "We owned the world. Adidas got as much out of LeBron James' celebrity as anyone."
Nike wound up signing James on the strength of a seven-year, $105-million contract, which far outpaced the bid of adidas. Had adidas, whose lone advantage was James' tight relationship with Vaccaro, matched Nike's offer, it stands to reason James could be wearing three stripes today.
Reebok, meanwhile, offered slightly more money than Nike, but had no presence in high school basketball. James went with Nike, with whom he felt more comfortable.
That scenario pushed Vaccaro to Reebok, which is willing to bid top dollar on the next LeBron and needs Vaccaro's connections to level the playing field against Nike.
No matter how it all plays out, it illustrates the focus of spending in basketball. All three major shoe companies vow to remain heavily involved in the search for the next great superstar, with Reebok increasing its funding of grassroots hoops (summer camps, AAU-style tournaments) at the expense of the college game.
"I don't have to be in the [college] locker room anymore to get to know the great players," Vaccaro said. "Today, my relationship with the great players is often better than the school."
Meanwhile, the saturation of television exposure (everyone is on TV these days) has weakened the impact of having a single team wear a particular brand.
"In the past it would be more about brand exposure, getting product on the court," said Newton, who has spent 22 years in the business with Nike and Converse. "That's still important but today it as much about driving retail. You can't just tie it to brand visibility. There has to be return on investment."
Xavier now has a deal with Nike that provides no money but a considerable amount of free product. But there is a catch, part of Nike's "Return on Investment" plan. Where the basketball gear may be free, Nike will ask schools to pay for some product, maybe practice jerseys or balls for non-revenue sports teams.
"Because of the loyalty we provide by giving [schools] some stuff for free, [we ask them to] buy some stuff as well," Newton said. "It's been a huge success. They were spending that money with other companies anyway. We want them to see Nike as a one-stop deal."
The only schools still getting big deals are major universities that can drive retail sales. Most are major football schools, which sell to a huge fan base.
"You see a 100,000 orange shirts at Tennessee, you want to be part of that," Vaccaro said. "Those schools pay back their debt. You are making them business partners."
But rather than make a deal directly with the coach, as companies did in the past, they now sign with the athletic department and let them dole out the cash to coaches.
"Twelve years ago we went [to] Reebok and said we want one contract," said Texas athletic director DeLoss Dodds, whose school now has a deal with Nike. "We want the money to come to the university, we want the equipment to come to the university. We were one of the first schools to do that.
"It is better that the school has the money and is deciding what the coach makes than the coach deciding what the coach makes."
What that means for college basketball remains to be seen. Obviously the advantage plays to major state universities with big football programs.
In the 1980s, Vaccaro was intent on signing Big East coaches to get a foothold along the Northeast Corridor. He notes that Nike helped the Big East become a power because shoe money allowed schools such as Georgetown (Thompson) and Seton Hall (P.J. Carlesimo) to keep top coaches from jumping to wealthier state universities.
Now those non-football schools scramble for deals.
"There's been a tremendous change," Seton Hall athletic director Jeff Fogelson said. "The market changed. We don't have an all-school deal in the sense of Tennessee or Notre Dame."
And the next generation of coaches can't count on that major shoe cash anymore.
"It used to be guys knew if they got an ACC job or an SEC job, they'd receive some type of footwear and apparel money," Newton said. "It's not always the case anymore."
Two-for-ones and a free lunch might soon sound like a good deal again.
Dan Wetzel is Yahoo! Sports' national columnist. He is the co-author of the book "Death to the BCS: The Definitive Case Against the Bowl Championship Series," which following five printings of the first edition was re-released in a second, updated edition in October. Follow him on Twitter. Send Dan a question or comment for potential use in a future column or webcast.
Updated on Tuesday, Mar 30, 2004 12:18 am, EST