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Ohio State’s exclusive, multimillion dollar apparel contracts still pending more than 1 year after announcement

January 5, 2014

mitchell.935@osu.edu

apparelOhio State announced an exclusive apparel contract with two private companies more than a year ago, but the university only completed a deal with one firm and has been quietly considering other vendors for the other.

It was announced in November 2012 that OSU had entered a 10-year, $97 million agreement with two apparel and retail businesses, J. America Sportswear and Fanatics Inc., to exclusively produce and sell university apparel. According to a Dec. 31 email from OSU spokesman Gary Lewis, however, “no agreement has been finalized” with Fanatics Inc.

Lewis also said “over the past six months, other vendors have been considered to fill this role and it remains pending.”

The names of the considered vendors however, were not disclosed. Representatives from J. America Sportswear and Fanatics Inc. did not return multiple requests for comment.

“We continue to work towards finalizing the terms of the contract and as in past practices, upon its completion those potential bidders who expressed an interest will be disclosed at that time,” Lewis said.

Lewis also said a separate license agreement was signed with J. America in December and had an effective date of Jan. 1.

The J. America contract is valued at $85 million which Lewis said “is consistent with the previous announcement” of $97 million for the two companies. The 10-year time frame originally announced is still being finalized, Lewis said, but is consistent with the November 2012 announcement as well.

Fanatics opened a distribution center in Frazeysburg, Ohio, in 2013 that, according to previous Lantern articles, would employ about 300 full-time workers and more seasonal employees.

According to a November 2012 press release, Jeff Kaplan, former senior vice president and executive officer to the president at OSU, said the university chose J. America, which is based out of Webberville, Mich., and Fanatics, a Jacksonville, Fla.-based company, from three finalists and about 40 bids, according to previous Lantern articles.

Kaplan confirmed that Dallas Cowboys’ Silver Star Merchandising, which has come under fire in the past from organizations like United Students Against Sweatshops for mistreating employees, was also a finalist at that time.

The deal with J. America is just one of the private contracts the university holds, which add up to more than $660 million altogether, including deals with Coca-Cola Co., Nike Inc., Huntington National Bank and QIC Global Infrastructure.

Kaplan said in 2012 the apparel deal was expected to stabilize funding for hundreds of student scholarships, about 1,000 student organizations and invest in library collections.

In 1998, OSU and Coca-Cola agreed to a more than $32 million, 10-year contract that made the company the university’s exclusive beverage vendor. The contract was renewed in 2008 for an additional 10 years with the purpose being to increase revenue to the university to enhance the student experience, Lewis said.

Roughly a decade after renewing with Coca-Cola, OSU and Nike signed three separate seven-year contracts that went into effect Aug. 1, 2007. Recently, Nike exercised a contract option to extend all three agreements until July 31, 2018. Over 11 years, the contract is expected to yield $46 million for OSU, much of which is set to go to the Department of Athletics, Lewis said.

The deal with Fanatics was set to cover the production, marketing and design aspects as well as the distribution of all apparel categories with the exception of officially licensed OSU apparel made by Nike. Fanatics’ guarantee for retail was $12 million over 10 years.

OSU signed with Columbus-based Huntington next, in February 2012. The 15-year, $25 million contract brings in an additional $100 million in loans and investments to improve the university district area. The contract money is set to go toward “scholarships, education and alumni giving,” according to the Huntington website.

Also in 2012, the university agreed to a 50-year lease on its parking assets for the upfront price of $483 million. QIC Global Infrastructure, an Australian investment firm, placed the bid and created CampusParc to operate the parking facilities. The deal was finalized and approved by the Board of Trustees in June 2012. The money from the contract was put into OSU’s endowment fund, which is being used for student scholarships, increased staff grants, adding tenure-track faculty and to support the Campus Area Bus Service.

According to Lewis, OSU recently received $20 million in guarantees from J. America Sportswear, which was an “advance against royalties,” and the remainder of the contract is still being finalized.


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