Sports fans know the thrill of watching a game and some travel for miles to attend one in which their favorite team is playing. However, behind the wins and losses, a lot of work has to be done, and expenses must be incurred. Still, everyone wants to make some money out of what they do, and the University of Louisville is no different. With the basketball program incurring lots of expenditure, it is only prudent that it looks for more sources of revenue. Luckily, Louisville basketball has several ways of funding itself such as:
Ticket prices can be high, but that does not stop fans from attending games to support the University of Louisville. Most of the revenue that the men’s basketball makes is from ticket sales for home games, and in 2011-12, the ticket sales for the men’s basketball team were $13,887,535. However in June 2018, the University of Louisville Athletic Association (ULAA) prepared for a 13% drop in revenue for the 2018-19 fiscal year which began on July 1, 2018.
The predicted decline was based on the ticket sales in the prior season and also the team’s schedule which has one fewer home game than the previous season. In the 2017-18 fiscal year, ULAA had projected revenue of about $16.3 million from men’s basketball ticket sales, but the actual amount realized was $13.7 million.
The decline then was caused by a recruiting scandal which involved FBI investigations and the ousting of Coach Rick Pitino and athletic director Tom Jurich. While the ULAA predicted in June 2018 that the 2018-19 fiscal year basketball revenue would be $25.6 million, the season’s income from ticket sales was projected to be $13.1 million.
Apparel contract with Adidas
In April 2014, the athletic program of the University of Louisville announced a five-year extension contract with Adidas worth $39 million. The deal made the school have the third-largest public contract of its kind in college sports, with the company. In the contract, the school would receive $7.8 million per year, and the amount would cover the uniforms, accessories, and footwear for the 23 varsity sports teams. Of the $39 million the cash received would be $7.7 million over the five years, translating to around $1.54 million per year.
In 2017, the university and Adidas decided to continue with their partnership by extending their deal further for ten years. The deal made the University of Louisville have the fourth-richest apparel agreement in college sports. The contract worth $160 million over the ten years, or $16 million per year will run through the 2027-28 academic year and was effected on July 1, 2018. The terms of the contract include $10 million base compensation from 2018-2021, then a decline to $7 million per year from 2021-28. Still, it is quite a lucrative contract given the former contract’s base compensation of $1.5 million per year.
Inclusive in the contract is also an activation fee of $16 million divided into $3 million from 2018-21 and $1 million from 2021-28. The activation funds are for the school’s athletics marketing internship collaboration with Adidas as well as strategic brand initiatives. Moreover, the university will enjoy a performance bonus that was the same as in the previous agreement. For a national title, the men’s basketball team will earn $300,000, and for the Final Four appearance, it will receive $150,000. The women’s basketball team will receive $200,000 and $75,000 for a national title and Final Four appearance, respectively.
Before amending their contract with Adidas in 2011, the University of Louisville received 10% of the wholesale cost which then changed to 14%. When they extended their partnership in 2014, the minimum guaranteed royalty was $235,000 per year, and in 2013-14, the school received gross royalties valued at $244,122. By the 2018-19 fiscal year, the fees had increased to $275,000. In the extension running through 2027-28, the minimum guaranteed royalties have increased even further, and the school will receive $4.5 million which translates to $450,000 per year.
Adidas has been in partnership with the University of Louisville since 1998, and it provides the school with product support worth millions. During 2014-15, the product support was worth $1.87 million and in 2018-19, it had gone up by nearly a million dollars to reach $2.78 million. In the contract negotiated to take effect from July 1, 2018, the product support was for $6 million for 2018-2020. It will then increase by $100, 000 from 2020-23 and in 2023-28, the support will be $6.2 million.