“You could get killed for that!”: Where did Nike apparel money go?

3/5/2015: No, of course I’m not talking about the $30K that UO administrators get each year as part of the lousy apparel contract they signed with Nike. That seems like an interesting potential conflict of interest, but I’m sure UO’s Office of Internal Audit has carefully vetted it, just as they must have done with Vin Lananna, the UO Foundation, Track Town, and UO’s lobbying efforts.

I’m talking about this report by Jeffrey Gettleman in the NYT (thanks to a helpful reader for the link):

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… In the documents, Nike provided detailed instructions on how the $100,000 yearly honorarium was to be used (to cover travel costs and phone bills, among other things). No details were provided for the commitment bonus, though, even after the former employee, who worked as an administrative assistant and in other jobs at Athletics Kenya for more than 10 years, wrote to a Nike executive asking him.

In a sworn statement provided to Kenyan investigators, the former assistant said the $500,000 commitment bonus was “bribe money from Nike” so that the top officials could pay back the $200,000 from the scuttled deal with the Chinese company and then make even more by agreeing to sign up again with Nike.

The former administrative assistant requested that his name not be revealed, saying it was extremely dangerous to expose high-level corruption in Kenya — a sentiment shared by others.

“Put that away! You could get killed for that!” exclaimed a member of Athletics Kenya’s board, his eyes widening when a reporter pulled out the amended contract from Nike listing the $500,000 commitment bonus during an interview at a quiet Nairobi restaurant.


6/17/2015 update: The WSJ has a good summary of the apparel deal between Nike and the Brazilian soccer team, and the secret Swiss bank account side payment, here. (Gated, also try here.)

UO has its own apparel deal with Nike, some stories about that are below. The public records were heavily redacted by Dave Hubin’s public records office, so it’s unclear whether or not the same UO administrators who signed off on the deal – which doesn’t seem that good for UO –  get free shoes or other swag from the $185K annual “discretionary apparel” budget. And if they do, would that be illegal?

The UO / Nike contract and discretionary apparel list are here, and Matthew Kish’s excellent database on these deals is here.

12/18/2014 update: Athletic department ditches Nike for Adidas, gets twice the cash

Matthew Kish has the story in the Portland Business Journal, here.

McElroy was hired from the Dallas Cowboys in May and charged with increasing the department’s revenue. The Adidas deal does that. It’s worth $4.2 million annually through 2023, more than double the $2.1 million the university will receive from Nike this year.

That’s at Arizona State University. Nike’s contract with UO is far stingier – just $600K in cash. Doesn’t someone have a fiduciary responsibility to get a better deal on this?

12/9/2014 update: Which football championship team has the worst Nike contract? The Ducks.

From Matthew Kish in the Portland Business Journal:

Here’s a breakdown of Nike’s [athletic apparel] deal with each university in the playoffs. The terms cover the 2014-15 academic year [reordered in descending order of cash payment]:

– Ohio State: $2.5 million in equipment and apparel and nearly $1.5 million in cash. The university also gets $150,000 in discretionary apparel, typically for athletic department personnel.

– Florida State: $3 million in equipment and apparel and $1.4 million in cash.

– Alabama: $2.8 million in equipment and apparel, $780,000 in cash.

– Oregon: $2.2 million in equipment and apparel and $600,000 in cash. The university also gets $185,000 in discretionary apparel, typically for athletic department personnel.

But hey, we’re #1 in “discretionary apparel”!

From what I can tell from Dave Hubin’s redacted public records, $30K of that goes to our colleagues in Johnson Hall, presumably including some who signed off on the contract. So they’ll be looking good on their Jan 1 Rose Bowl junkets.

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2/3/2014 update: Under Armour pays Notre Dame $9M, Nike pays UO $600K

Nike just signed Tennessee to a new deal for $1M cash a year, plus $2M signing bonus.

1/23/2014: Our Uncle Phil drives a tough bargain. Nike’s merchandising deal with UO pays us just $600K a year. Meanwhile Notre Dame just closed on a 10 year deal with Nike competitor Under Armour for ~$9M a year. Bloomberg financial news has a report here:

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Adidas and Under Armour would love to get a marketing deal with the Ducks. Why won’t UO use this to negotiate with Nike for more money?

In part because a sweetheart deal for Nike is just part of the price the UO administration is willing to pay for the vague promise of $1B for the endowment, someday. It would pay off big in outside offers and raises for every admin involved. And perhaps also because Nike gives UO administrators $30K worth of free sneakers and clothes. Portland Business Journal reporter Matthew Kish has a thorough report on these deals, here.

Cornell to end Nike deal

7/26/2010: Sure enough, Nike folds and pays the back wages themselves, according to Steven Greenhouse in the NY Times. Though they can’t quite bring themselves to admit that:

A Nike spokeswoman, Kate Meyers, said Monday that the $1.5 million was for “a worker relief fund” and was not for severance.

Speaking of things that people don’t seem to be able to admit, at this rate maybe Howard Slusher will stop trying to get UO students and employees to pay for the Matt Court Arena parking?

7/5/2010: From Jack Stripling of Insidehighered.com:

Absent “significant progress” toward the resolution of an ongoing labor dispute in Honduras, Cornell University will follow the University of Wisconsin at Madison’s lead and end its licensing agreement with Nike. The decision, issued by President David Skorton in an internal letter Monday, is being heralded by anti-sweatshop activists as a significant victory in a battle over Nike’s refusal to pay severance to displaced workers in its supply chain. …

While Nike has offered training and vocational programs, the company insists the payments are the responsibility of the subcontractors. That position, however, runs afoul of many university codes of conduct – including Cornell’s, which holds licensees responsible for the actions of subcontractors, the university’s oversight committee maintains.

I am guessing Nike will fold on this and pay the back wages themselves.

How to raise sweatshop wages:

7/18/2010: The NYT has a story on the WRC plan: convince socially progressive shoppers to pay more for college branded clothing from factories that pay a “living wage”. Add political action and boycotts to taste. Then there’s the Nike method: just create a lot of new jobs and let labor shortages drive up wages. The WRC plan seems to be working for a few factories here and there. The Nike approach seems to be working for most of China. Easy choice – unless you care more about ideology than results.

Nike saves China from the idiocy of rural life

3/7/2010: Great story by Richard Read in the Oregonian about what all those exploited Nike sweatshop workers are doing: Saving their paychecks, sending the money home to build houses and finance new businesses.

It turns out that factory workers — not the activists labeled “preachy” by one expert, and not the Nike executives so wounded by criticism — get the last laugh. Villagers who “went out,” as Chinese say, for what critics described as dead-end manufacturing jobs are sending money back and returning with savings, building houses and starting businesses. …

The pay is minuscule by Western measures. But Mon Xijian, a 31-year-old who has worked at Ever Rich since 1996, has saved enough with his wife, who also works there, to buy a six-unit apartment building back home….

“They’re sleeping 12 in a dorm, and it looks like a pretty crappy life,” Chang said. “But you don’t hear workers say, ‘Oh, I have no hope, I’m a slave.’ They say, ‘I want to save some money. My dream is to be Bill Gates or to own a restaurant.'” 

Just like people did in the US and have all over the rest of the world ever since the industrial revolution started. If Frohnmayer had taken an economics class or two he could have explained this to those WRC kids, instead of caving in to some shouting and signs and pissing of Phil Knight to the point where he stopped what had been a very generous series of donations to UO academics.