With ongoing FBI investigation, Huskies have a "termination clause" in new contract with Adidas.
Timing was paramount, and just about ideal, for the Washington athletic department in its efforts to maximize its new 10-year sponsorship deal with Adidas.
The Huskies’ return to national prominence in football under Chris Petersen, and the men’s basketball program’s bounce-back season this winter with first-year coach Mike Hopkins, strengthened UW’s marketing brand and were significant factors in Adidas’ willingness to offer one of the top sponsorship deals in college athletics.
UW announced its agreement with Adidas on Tuesday morning. The timing of that could not have been much worse.
On Tuesday afternoon, federal prosecutors added more criminal fraud charges in an indictment against former Adidas executive James Gatto, who allegedly made cash payments to former basketball players (or their families) at Kansas, Louisville, N.C. State and Miami, all Adidas-sponsored schools.
The UW Board of Regents, after a presentation from athletic director Jennifer Cohen, on Thursday afternoon formally approved the Huskies’ new deal with Adidas, but not before several regents raised concerns about Adidas’ link to the federal investigation.
News of the FBI’s wide-ranging probe into college basketball’s pay-to-play scheme surfaced last fall, about the time Cohen began negotiations on the Huskies’ new apparel deal.
She said she has had “a lot of conversations with Adidas” about the FBI investigation and felt strongly that Gatto’s actions were that of a rogue agent.
“They have had an employee that allegedly made some very poor and very unethical decisions, and of course this has been extremely concerning to us,” Cohen said. “From what we know, this person was acting independently. There is nothing that we have seen, that anybody has seen, that has indicated there is systemic issues within the organization.
“What we also know,” she added, “is that Adidas has addressed this issue with urgency. Adidas immediately hired an outside law firm to audit the organization, and they made quick changes to their reporting structures to provide more checks and balances for their employees.”
Cohen pointed to the “Extraordinary Termination Rights,” as detailed in the agreement with Adidas, that allows UW to terminate the contract if Adidas “engages in conduct that attracts national publicity which, based on objective evidence, has a material adverse effect upon the status or reputation” of the Huskies.
“We really feel strongly that (Adidas is) committed, as we are, to promoting a culture of compliance, ethics and integrity within their organization,” Cohen said. “And that’s been demonstrated by their eagerness to include this ethics clause in the contract.”
According to media reports, the new federal charges against Gatto, and another Adidas consultant, Merl Code, allege a payment of $100,000 to a recruit’s father in an attempt to steer that recruit to Louisville. Gatto and another unidentified Adidas consultant conspired to provide at least $90,000 to the mother of a former player at Kansas.
“What bothers me,” regent Joel Benoliel said to Cohen, “and what I’m asking you to be really cognizant and diligent about, is that the sums of money involved were large. So in a best-case scenario, where the company was not aware of what this employee was doing, he still had access to $30,000 for this family, $40,000 for that family and so forth. And the numbers kept getting larger and larger. So what concerns me is that a company that allows latitude to an employee for that kind of money without properly identifying how it’s being used. …
“I think we collectively have an obligation in approving this to ask you to be super diligent (because) people are watching.”
Regent David Zeeck suggested to Cohen that she consider what her response would be “if Adidas does get pulled into this in a deeper way, because as we pursue this we are binding ourselves to them. …
“Because we have high standards,” he added. “We’ve chosen to be an athletic department that looks for character as well as success on the field. And that’s something to be protected.”
Cohen largely drew praise from regents over the deal, and from UW President Ana Mari Cauce.
Cauce said Cohen had kept her informed of the negotiations “every step along the way,” and Cohen during the process had asked her to reach out to the presidents at Miami and Arizona State, two new Adidas-sponsored schools. Both were “very pleased” with their relationships with Adidas.