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UA, Nike sign athletic equipment contract

By Susan Carroll
Arizona Daily Wildcat
September 1, 1998
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Arizona Daily Wildcat

Peter Likins

After more than a year of tug of war between UA human rights advocates and Nike, the university emerged yesterday with a $7 million deal and the power to call for inspection of Nike factories.

In exchange for outfitting 14 of the University of Arizona's athletic teams with the "swoosh" for five years, Nike will shell out $1.4 million a year for the same length of time. The UA made the deal public about two weeks after the contract was formally signed Aug. 17.

"In the scheme of things, it ($7 million) is a very moderate number," UA President Peter Likins said. "The primarily operational significance is that it spreads the benefit among all 14 sports."

The softball, swimming and diving teams were excluded from the deal because they already have contracts with Reebok and Speedo.

But when those contracts expire, the teams may switch over to Nike, said John Perrin, UA's senior associate director of athletic business affairs.

"Currently the contract does not include those teams," he said. "They will probably, undoubtedly follow into the Nike contract."

About $500,000 each year will be allocated for independent contracts for the teams' head coaches, said UA Attorney Michael Proctor. The apparel and footwear deal will ultimately bring in "just a hair under a million" dollars a year, he said.

For those such as men's basketball coach Lute Olson, who already receive Nike money, the new contract supersedes all pre-existing ones.

"It is a somewhat larger flow of money, but it is a significantly larger flow of goods," Likins said. "The athletic department has a $20 million budget, so that will be somewhat easing for them but not a radical change in their lives."

The UA will also receive 8.5 percent of retail sales through the Collegiate Licensing Co., which markets UA apparel with Nike logos.

Beyond money matters, the contract includes humanitarian stipulations. The shoe and apparel manufacturer created a Code of Conduct in 1994 after allegations of human rights violations in overseas factories surfaced.

Likins met in April with Nike Chief Executive Officer Philip Knight to request an out-clause in the pending contract, enabling the school to void the deal if Nike "knowingly violates its code of conduct or overlooks human-rights violations made by subcontractors."

"I think we've gone a little bit further than we did when we talked to Philip Knight," Likins said yesterday.

In the code, updated in May, Nike pledges that it will not use forced labor or child labor. Under the code, workers are entitled to benefits mandated by local laws, including sick leave and minimum wage.

Included in the final contract is a clause permitting the UA to call for an independent investigation of conduct overseas.

"I have to give credit to Students Against Sweatshops. They caused me to give extra consideration to determine whether an independent entity was necessary," Likins said. "It is a very substantial step to put a clause like that in a contract."

The contract states that the UA can void the agreement if there is a "material breach" of the code, as determined by a "mutually agreeable independent monitor."

A "material breach" is defined as a recurring violation of Nike's Code of Conduct that is identified but not rectified.

The UA can call for an independent investigation if wrongdoing is suspected. The contract does not state whether the UA or Nike would pay for such an investigation.

Proctor said the phrasing was an "intentional ambiguity" - that Nike has to have an opportunity to fix problems because the corporation conducts business in countries where monitoring can be problematic.

Nike has 30 days to rectify any violations or, "if for logistical or other reasons," it is impossible for Nike to cure the problem in the allotted amount of time, UA and the corporation will have to agree on a "commercially reasonable" timeline.

Proctor said the UA can conduct scheduled or surprise checks to examine labor conditions overseas.

"It gives us quite a bit of flexibility, but is still quite enforceable," he said, adding that it would not be realistic to send someone from the UA overseas every few months. "Frankly, we didn't want to put in something that was just a window dressing."

Arne Ekstrom, a neurosciences graduate student and head of Students Against Sweatshops, said he was happy to hear that there was an independent monitoring clause in the contract, but was not entirely convinced it would be enforced.

"We feel that most of what the administration has done is empty," Ekstrom said. "I don't think that most of the dialogue we have had was effective by any means."

He said the contract was signed mainly for monetary gain, adding that the athletics department had "absolutely no interest in human rights issues."

Nike spokesman Dave Mingey said student concerns are taken seriously at the athletic apparel company.

"It is very important for us to be the leader in fair and safe labor practices," he said. "We are very concerned about the students' concerns."

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