With Washington and Penix Jr. deals, adidas hits the jackpot

As tonight’s national title game fast approaches, these are high times for adidas, which for the first time has one of its sponsored schools in the College Football Playoff championship.

But the reason why executives at the three-stripes company are wearing smiles as wide as Houston’s city limits runs much deeper.

Consider these brand masterstrokes: Beginning in 2019, adidas chose to invest $120 million over 10 years to sponsor and outfit Washington. And this October, the company made quarterback Michael Penix Jr. and wide receiver Rome Odunze its first NIL football student-athletes.

Those moves, sponsorship experts say, served as a pitch-perfect one-two punch. Now – as Penix’s high-octane aerial assault brings the Huskies to the brink of the national title – adidas’ return on investment is nothing short of Texas-sized enormous. 

“When you think about NIL and the transfer portal – whether you love or hate those things – for the business of sport, those two things factor into some incredible value for smart, sophisticated sponsors that are leveraging it in the right way,” Mark Keaney, chief revenue officer at Greenfly, told On3.

Greenfly is a platform that helps more than 500 organizations, including the NHL, MLB, ESPN and the Big Ten, optimize their content and drive revenue for sponsors, including jersey sponsors.

“If the agreement with Washington was $120 million and the agreement with Michael Penix Jr. was [an undisclosed figure], that is a very small side bet with an incredibly amazing result.”

Adidas’ decisions result of ‘big bet, perfect timing’

Keaney said Penix alone has generated 23% of the earned media value that Washington has brought adidas during the College Football Playoff. That will generate millions of dollars in value, Keaney said, and – combined with merchandise sales — means it’s the “best investment adidas could have possibly made.”

Adidas executives, many of whom descended upon Houston this weekend, are ecstatic. Washington is the first adidas school to play in college football’s championship since January 2013, when Notre Dame, which signed with Under Armour the following year, lost to Alabama.

“It’s hard to describe the level of excitement for the Huskies at adidas right now,” Chris Murphy, senior vice president of brand communications at adidas, told On3.

Adidas executives declined to disclose the dollar figure involved in the NIL deal with Penix, who has an On3 Valuation of $1.3 million. That ranks No. 16 in the On3 NIL 100, the first of its kind and defacto NIL ranking of the top 100 high school and college athletes ranked by their On3 NIL Valuation.

The value generated for adidas during the College Football Playoff is the result of the two key decisions by the company. Neither may have been a no-brainer. But each struck gold.

“There’s a lot of different kinds of themes that really put this at like the pinnacle of big bet and perfect timing,” Keaney said. 

“I think it’s the seventh-ranked [most lucrative] investment in a college football program – they spent $120 million to sponsor the Huskies. The quarterback is a portal success story. Injuries abound, we didn’t know what we’re getting, and all of a sudden you’ve got this kid reinvented through the portal system, the starting quarterback leading the team, the first adidas-sponsored NIL [football] athlete, leading their sponsored team to the national championship. All of that boils into an incredible value proposition.”

Value for adidas extends beyond game broadcast

The value for adidas does not merely stem from the visibility of the three-stripe logo on the upper portion of the Washington jerseys during tonight’s national broadcast, which could be viewed by more than 20 million people. While that exposure is no doubt significant, the social media reach in today’s second-screen world is exponentially more profound.

Consider a generation or two ago, when exposure was limited to the game broadcast, ESPN highlights on SportsCenter and images in the daily print newspapers – remember them? – the next morning. Those days are gone – long gone.

Compare those seemingly ancient times with today’s world and how fans of all ages now consume sports and short-form content. As Keaney said, now the lifespan of a jersey impression – outside of the game broadcast – is where the majority of value truly resides.

The aggregate audience of star players is so much greater than the aggregate audience of the actual teams, Keaney said. We’re talking 10 times higher if players engage at a high level in strong social programs.

Immediately after Washington’s victory over Texas in the Sugar Bowl, adidas through its X football U.S. account was promoting Penix with a link to Washington’s championship merchandise store at adidas.com. 

Someone posted: “If you don’t drop gear we riot.”

After adidas dropped the link, another simply posted: “MORE!!!”

“It’s not just the game highlights and the plays of the week and the actual broadcast – it’s the thousands of posts that are being shared and the millions of impressions being generated in real-time that is taking jersey sponsorship to the next level,” Keaney said. “For the hundreds of thousands of followers of Michael Penix Jr., they are getting an adidas ad that looks like a Michael Penix post that they’re celebrating, sharing, liking, commenting on. And they also can click right on the shirt that they see and be pulled into a shoppable gallery.”

If that isn’t enough, adidas luminary Damian Lillard hand-delivered a treasure trove of three-stripe footwear and gear to Washington players on Saturday, all of which was captured in a viral Instagram video.

Adidas’ sponsorship is ‘future of college sports’

Keaney is a big fan of the recent movie “Air,” which chronicles how power broker Sonny Vaccaro’s deft ability to pinpoint and pursue a young Michael Jordan for a Nike contract instead of courting a host of other prominent players changed the course of marketing and endorsement history.

In today’s brave new world, both new opportunities and challenges abound because of the NIL Era and dizzying transfer portal machinations. The ability for brands to effectively explore the depths of the transfer portal and pinpoint the perfect player for an NIL deal at the ideal school where he/she will shine is the new secret sauce.

And with the masterstrokes of landing the school deal with Washington and the NIL deal with Penix, adidas’ secret sauce is impeccable.

“It’s the future of college sports,” Keaney said. “How can you bring that together in almost like a formulaic approach to driving the most value for merchandise sales and earned media? it’s going to take a really interesting layer of creativity and sophistication. To make this particular bet required a great stroke of incredible luck or incredible genius – one of the two. But it’s coming to bear right now.”

Three-stripes executed strong one-two punch

In 2019, it made sense for adidas to seek to establish a presence with Washington in Seattle, just a few hours north of so-called Nike U, otherwise known as Nike-sponsored Oregon. But how many observers could have envisioned adidas’ first NIL football athlete, Penix, the Indiana transfer plagued by injuries, to become one of the most captivating players in all of college football?

Dating to adidas’ signing of its first NIL roster of all female athletes in the summer of 2022, adidas’ Murphy said, the brand has taken a different approach with business strategy when it comes to NIL deals.

The company of course considers sales. But what it is most interested in is creating a pipeline for future generations and working with its 44 university partners to provide staff and players with innovative gear to perform, exposure to different audiences and experiences, and driving collaborative business decisions between partners and players. 

“Our results show that these athletes are driving meaningful brand momentum and awareness, especially through their robust social media channels that help us reach target audiences and drive deeper connections with university partners,” Murphy said. 

In an email to On3, Murphy punctuated it with two obligatory words: “Go Huskies!”

Washington stands one victory away from college football’s pinnacle.

And adidas this season, propelled by the one-two punch of the team sponsorship and quarterback NIL deal, already sits atop the mountaintop.