The eight-year agreement will pay U-M $7.5 million per year and begins with the 2008-2009 season. It will cover all 25 of Michigan's varsity sports teams. The old Nike deal paid Michigan $1 per year when it was first signed in 1994.
Adidas also has deals with Notre Dame, Nebraska, UCLA, Tennessee, Wisconsin and Indiana.
When informed by the MZone that Michigan was leaving the fold, Nike founder Phil Knight declared that, "Henceforth, Michigan shall be banished from participating on college gridirons across all the land!"
Told that he was just the CEO of a shoe company and couldn't do that, Knight said he could do as he so pleased because he owned college football and was also going to smite our MZone correspondent for challenging him.
In a related story from the future, Michigan announced it is raising prices on season tickets, seat licensing fees, parking, merchandise, programs and the air fans breath in and around Ann Arbor for the 2008-2009 season due to budget shortfalls in the athletic department.
UPDATE: According to the Detroit News, that $7.5 per is in cash and merchandise, with the cash value being $3.8 million annually. On top of that, "Michigan will receive $2.2 million worth of product to outfit all 25 of the school's intercollegiate athletic teams. The school also will receive $600,000 annually in guaranteed licensing and an $800,000 signing bonus."
The current Nike deal signed in 2001 was for 7 years at $1.2 million per year in cash with a total of just over $3 million annually including merchandise and 10% royalty on all Nike gear.
UPDATE, PART II: Bri at MGoBlog also notes (via the Detroit Freep) that there is a "most favored nations" clause in the deal which will keep Michigan as Adidas's highest paid college team for the length of the deal.