UNC has had a long working relationship with Nike and is close to completing a new, highly lucrative deal with the sports apparel giant.
The current Nike contract, worth about $36.85 million to the university the past 10 years, is a public record. Financial details of the upcoming extension, likely to be for 10 years and expected to be signed this month, also will be made public.
UNC basketball coach Roy Williams and football coach Larry Fedora have separate, personal service contracts with Nike but are not required to disclose the value of their deals. The coaches must file university forms each year outlining any external duties, but financial details of the Nike agreements are not made public or listed on the forms.
Williams, for example, has listed one speaking engagement on the state form as his only Nike activity for 2017-18. How much will he be paid? That figure remains private. In 2007, The News & Observer reported that Williams made at least $500,000 a year from Nike. According to USA Today, Williams’ compensation at UNC is almost $2.1 million a year, not including his sneaker deal. He is also eligible for a maximum bonus of $1,000,000.
Fedora, who received a seven-year extension that runs through 2022, had a base salary of $460,000 for 2017 with additional compensation totaling $1.83 million, not including his sneaker contract. He is due to receive raises in the next three seasons. Fedora’s state form listed several speaking engagements for the apparel company, but not how much Nike pays him.
UNC, Fedora, Williams and chancellor Carol Folt all turned down public records requests by The News & Observer to obtain copies of Williams’ and Fedora’s personal services contracts with Nike.
“The University respects the privacy interests of its employees in their personal affairs,” UNC spokesman Joel Curran said in an email.
Fedora, Williams and Folt declined to comment on the coaches’ private deals with Nike.
UNC would not confirm whether Williams and Fedora will continue to have personal services contracts with Nike until the university extension is finalized.
The role of shoe companies in college sports has come under heightened scrutiny after the announcement in September of a federal investigation into corruption and fraud by shoe companies trying to influence the college recruiting of young basketball players. Ten men were arrested and charged, including four college assistant coaches.
Coaches have long had “shoe deals” with these companies, but contracts by state employees that are not disclosed to the public raise questions about transparency and potential conflict of interest, particularly in the wake of the federal investigation. Folt had pledged greater transparency following lengthy NCAA investigations into academic fraud at UNC.
UNC employees such as Williams and Fedora are not subject to the State Ethics Act, which sets standards for outside work by state employees, said Patrick Gannon, public information officer for the state’s Board of Elections and Ethics Enforcement. At the university level, he said, the act applies only to the chancellor, vice-chancellors and voting members of the university board of trustees.
UNC athletic director Bubba Cunningham said the coaches’ personal services contracts are allowed by the university.
The University’s agreement with Nike recognizes that coaches may enter into personal services agreements with Nike.
UNC athletic director Bubba Cunningham
“The University’s agreement with Nike recognizes that coaches may enter into personal services agreements with Nike,” Cunningham said. “The University has determined that those agreements do not present a conflict of interest.”
Asked if Williams’ lengthy association with Nike – Williams had a Nike deal while coach at Kansas – in any way influenced negotiations for a new apparel contract, Cunningham said, “No, it did not.”
Cunningham said he is “familiar” with the terms of each coach’s personal contract, saying he reviews the agreements but does not retain copies.
Cunningham said it’s up to each coach whether to make the contracts public.
“You can argue it’s a private contract but it’s inextricably linked to the university,” said Bob Orr, a retired N.C. Supreme Court justice. “It may not be a conflict of interest to have one, but the question is does it have to be declared and in what capacity?”
You can argue it’s a private contract but it’s inextricably linked to the university. It may not be a conflict of interest to have one, but the question is does it have to be declared and in what capacity?
Retired N.C. Supreme Court justice Bob Orr
Dan Rascher, a sports economist at the University of San Francisco, said UNC or the coaches should treat the contracts with the company as public documents and release them.
“Transparency is the big deal here,” he said. “Any lack of transparency ought to be remedied. You would think in light of what’s happened at UNC they would want to come forward with the contracts.”
N.C. State and Duke
N.C. State has a five-year deal with adidas worth $6.45 million a year. An NCSU spokesman said apparel company money goes into athletic department funds, which are used to pay the school’s contracts for Wolfpack men’s basketball coach Kevin Keatts and football coach Dave Doeren. There are no private third-party contracts.
“I would argue that N.C. State is doing it the right way,” Orr said. “That’s probably the proper way to do it.”
Private schools such as Duke are not required to make contracts available to the public. The N&O reported in April 1993 that Duke Coach Mike Krzyzewski had signed a 15-year contract with Nike that paid him a $1 million signing bonus, an annual salary of $375,000 and gave him stock options.
Duke basketball coach Mike Krzyzewski explains the team's switch from adidas to Nike years ago as the Blue Devils ready for PK80 Tournament celebrating the 80th birthday of Nike founder Phil Knight.
In October 2015, Duke announced a new deal with Nike, reported to be worth $4.25 million a year, that extends through 2027 and outfits 27 athletic teams. The university did not announce financial details and it is not known if Krzyzewski continues to be paid by Nike.
UNC’s current 10-year contract with Nike was signed in 2009. The university has been working with Nike since 1993.
Ohio State and Texas have each recently negotiated deals with Nike worth more than $250 million for 15 years, but Cunningham did not anticipate UNC’s extension to be quite that lucrative.
“It will be a very good deal but not a blockbuster,” Cunningham said last month.
At UNC, faculty and other professional staff are required each year to turn in “external professional activities for pay” forms in accordance with the UNC board of governors’ policy on conflict of interest and commitment. The form lists an employee’s outside duties, but not the amount of compensation for the work.
Williams’ EPAP form for Nike for 2017-18 lists his project title as “ambassador for the company.”
Fedora’s duties for the company were public speaking engagements between July 1, 2017 and Dec. 31, 2017 that would require 16 university business hours that would be missed.
Fedora’s 2017-18 EPAP form with Nike was electronically signed Nov. 7, 2017. Williams’ was signed on Nov. 3, 2017. The N&O public records request for the forms was made Nov. 14, 2017.
According to the UNC policy, EPAP forms are to be submitted at least 10 days before engaging in the activity.
The N&O subsequently requested the EPAP forms for Williams and Fedora in previous years – the request was made Nov. 27, 2017. Williams’ EPAP form covering his personal duties for Nike in 2015-2016 was electronically signed by Williams on Nov. 28, 2017. The same was true for Fedora.
UNC spokesman Robbi Pickeral Evans, a former Tar Heels beat writer for The News &Observer, explained the tardiness in filing the forms, saying the university for years used the EPAP forms to satisfy an NCAA annual requirement of reporting outside income to the chancellor and athletic director.
When the NCAA lifted that requirement in 2016, Evans said, “There was some confusion, and our coaches got behind on doing their EPAP forms. We asked them to get caught up.”
In September, the FBI and other federal authorities announced a sweeping investigation into bribery and corruption in college basketball.
At the core of the investigation was money from athletic apparel giant adidas allegedly being used to pay the families of basketball recruits in exchange for attending colleges with adidas deals, to bribe college coaches to veer those players toward certain agents and financial advisers linked to the apparel company.
According to the FBI indictments, families of college basketball recruits were paid $100,000 and more.
The case raises questions of whether coaches’ deals with sneaker companies have the potential to influence their recruiting decisions, creating a potential conflict of interest.
Rick Pitino, the Hall of Fame coach fired at Louisville in the wake of the FBI case, received $2.25 million from adidas in 2016-17, the Louisville Courier Journal reported. When Pitino was fired, adidas immediately terminated its contract with the coach, who has denied any wrongdoing.
The case brought into sharper focus the decades-long association between college basketball coaches and shoe companies such as adidas, Nike, Reebok and the newest big player in the sports apparel business, Under Armour.
The apparel companies have a long history of using connections with athletes and coaches as a way to market their brands. Everyone profits financially from the arrangement but the athletes.
“So you have a personal services contract with an apparel company,” said David Ridpath, a professor of sports business at Ohio University and former college sports administrator. “Your kids have to wear that apparel and that apparel is getting commercial exposure. The kids aren’t getting any money for it but the coaches are getting a ton of money for it. To me that’s unethical and wrong.”
After two years undercover, the FBI found members of top NCAA basketball programs involved in corrupt bribery schemes. Here's how those schemes worked.
Dean Smith’s deal
When UNC agreed to a four-year, $4.7 million deal with Nike in 1993, former basketball coach Dean Smith received a $500,000 bonus – about $850,000 in 2017 dollars. Smith, who retired in 1997, was paid $300,000 annually by the shoe company, splitting half of it with his assistant coaches and other staff members, according to an Associated Press story.
The late Paul Hardin, then UNC’s chancellor, said in a 2016 interview in the Chapel Hill News that he told Smith to make the details of the contract public, despite Smith’s objections.
“I was right and he was wrong,” Hardin said in the interview.
Art Padilla, former vice president of academic affairs for the UNC System, recalled longtime UNC president William Friday saying “There’s way too much money” in college athletics. Friday, who later co-chaired the Knight Commission on sports reform, believed the increasing flow of that money would have a corrupting effect, perhaps inviting Congressional intervention.
Where it all started
Williams, before the season, said that the scheme uncovered by the FBI, was so far-reaching that, “I didn’t completely understand who was paying who for what … (and) who’s getting what from where.”
Williams and others know how it began – when Sonny Vaccaro, representing Nike, first starting paying college basketball coaches to have their teams wear Nike sneakers.
Vaccaro, with the blessing of Nike CEO Phil Knight, began signing such coaches as Jim Valvano at N.C. State, Jim Boeheim of Syracuse and others in the 1980s and by 1990 had 60 coaches under contract.
Padilla said the UNC board of governors was “dubious” of such shoe contracts but approved them, saying the board then likened the deals to faculty members consulting with outside firms.
“That’s where everything started, with the shoe deals,” Padilla said. “Those things became pretty well-entrenched.”
I would think the shareholders of the company could ask are they getting good value for their money in these contracts?
Dan Rascher, a sports economist at the University of San Francisco
The “shoe deals” would morph into bigger, university-wide athletic contracts. Vaccaro signed the University of Miami athletic department to a Nike deal in the late 1980s, outfitting all the Hurricanes’ teams. Other schools followed suit.
“I did that, I don’t deny it,” Vaccaro said in a 2009 interview with The N&O. “They took my check. The day they took my check, they lost all credibility with me. …I played within the rules. All they had to say to me was that I couldn’t do it.”
Rascher said another question could be raised about coaches’ private shoe company deals.
“I would think the shareholders of the company could ask are they getting good value for their money in these contracts?” he said.
WHICH ACC SCHOOL IS AFFILIATED WITH WHICH SPORTSWEAR COMPANY?
ACC schools with sportswear company affiliation, contract length and per-year value
Sources: Forbes, USA Today