Two U.S. universities are re-evaluating their sponsorship contracts with Adidas following the FBI's previously reported investigation into the alleged bribery of basketball players. The scandal has also led one of Adidas shareholders, the company of Bronstein, Gewirtz & Grossman, to announce its intent to ask for an investigation into whether the company violated U.S. securities legislation through its behavior.
Adidas had no comments besides stating that it was going to cooperate in the investigation fully. Meanwhile, ESPN has reported that federal prosecutors have also started to question under oath some employees of Nike's Elite Youth Basketball League, a key recruiting ground for college basketball programs.
As reported in our last issue, Jim Gatto, Adidas' global sports marketing director for basketball, is one of ten individuals being charged by U.S. federal authorities of using bribes of up to $150,000 to steer top high school prospects to national collegiate basketball programs on condition that they would subsequently sign up with Adidas. He has been placed on administrative leave.
Gatto and his assistant, Merl Code, who worked for Nike's Elite Youth Basketball League before, were due to appear in court last week to be heard about the charges. Gatto was freed without posting bond. The indictment also involves a basketball coach, Rick Pitino, and an athletic director, Tom Jurich, who have been fired by the University of Louisville because of the investigation.
The case has led the University of Louisville to re-examine a $160 million sponsorship deal recently concluded with Adidas, which was set to start in 2018 and run for ten years, claiming that it had been negotiated without properly informing its board of directors. Reportedly, it has also led the University of Kansas to re-consider an extension of its existing six-year contract with Adidas, which is due to expire in 2019. It appears that Kansas had only verbally agreed to the new $191 million, 14-year deal, which has yet to be finalized.
