University of North Carolina Athletics
Carolina, Nike Extend Agreement for Eight Years
October 16, 2001 | General
Oct. 16, 2001
CHAPEL HILL -- The University of North Carolina at Chapel Hill and Nike Inc. have agreed to extend their contract for an additional eight years, an agreement that will provide benefits to both athletic and academic interests and will also implement consistent labor standards for team uniforms and licensed merchandise.
UNC and Nike signed the contract extension Monday (Oct. 15). It becomes effective July 1, 2002, and runs for eight years at a combined monetary and product value of approximately $28.34 million, nearly 64 percent of which is shoes, apparel and other equipment. It is among the largest contracts of its kind between Nike and a collegiate athletic department.
The agreement is the third between UNC and Nike. Carolina's first with the Oregon-based company in 1993 was valued at approximately $4.5 million over five years. The contract was renewed in July 1997 for another five years at an approximate value of $11.6 million. That current arrangement runs through June 30, 2002.
A key component of the new contract is an annual $100,000 to the athletic department for academic and athletic excellence. The academic and excellence stipend provides funding for incentive bonuses to be determined and paid by the athletic department based on achievements of excellence in the classroom and in the competitive arena.
esides the monetary compensation and product, Carolina will receive 10 percent in royalty payments from Nike for all Carolina-logoed merchandise sales. This is an increase of 2 percent from the previous contract. (Seventy-five percent of the royalty goes to UNC's general scholarship fund, the remaining 25 percent goes to the athletic department.) Royalties from UNC-related Nike sales have averaged more than $539,000 over the last three years. Carolina is typically one of the top schools in the country in licensed merchandise sales.
Under the current contract, Nike adheres to codes of conduct set out by the university and the Fair Labor Association for all licensed merchandise. UNC requires full disclosure by Nike of all manufacturing plants making that merchandise and outside independent monitoring of labor standards at those plants.
Under the new contract, Nike will also manufacture Carolina's game uniforms under the same codes at sites that are disclosed. For its part, UNC has committed to implementing a campus wide policy requiring that purchases of logoed apparel for university use (such as employee uniforms) be made from licensed dealers who are subject to site disclosure, the FLA monitoring program, and the university's licensing labor standards.
Nike will finance a trip by a university group to a manufacturing plant and host with UNC a forum on labor issues. In past semesters, Nike has been a participant in academic forums researching labor policy and globalization.
"This contract takes a significant step forward in the area of labor issues," said Dick Baddour, UNC athletics director. "I am proud the university and Nike were able to discuss and agree to a relationship in which these issues are addressed in a serious and practical matter and move forward in a way that has a positive impact on people's lives. We expect Carolina to be a leader in many areas, and I believe both the university and Nike are leaders in labor standards.
"What Nike provides us makes a major difference in the athletic department's ability to remain a nationally competitive broad-based program," Baddour said. "Without a contract of this kind, it would be impossible to offer opportunities to so many student-athletes at UNC. I believe we have demonstrated over the last nine years that our relationship with Nike has not compromised our fundamental beliefs and values. We are proud Nike wants to sign a contract with Carolina because of our values and how we work toward competitive excellence within the framework of the university's academic mission."
Said Kit Morris, Nike's director of college sports marketing, "The University of North Carolina is one of America's great institutions, both academically and athletically, and we are honored that they once again have affirmed Nike as the product of their choice for their student-athletes, teams and programs. The extension of this partnership demonstrates not only Nike's shared values with the university, but also our commitment to work in cooperation to ensure that Tar Heel varsity teams will continue to receive the highest quality and most technologically advanced performance footwear, apparel and equipment."
UNC is a dues-paying member of two national labor-monitoring organizations - the Fair Labor Association (FLA) and the Worker Rights Consortium (WRC). UNC joined both upon the recommendation of the Chancellor's Licensing Labor Code Advisory Committee, formed about four years ago and comprised of students, faculty and administrators, including Baddour. UNC's top goal remains to improve working conditions in factories producing UNC-licensed goods.
FLA is a White House-originated non-profit organization made up of corporations, non-government/human rights organizations and universities. WRC was conceived by a coalition of student and worker-rights organizations.
In 1998, UNC adopted the Collegiate Licensing Co.'s draft workplace standards and put licensees on notice that compliance with those standards would soon be a requirement. In January 2000, the workplace standards from that code were added to every licensing agreement, along with the university's requirement of full public disclosure of manufacturing sites. In February 2001, the licensing contract was further modified to require participation in the FLA and its programs for implementing the code and monitoring. UNC, through the chancellor's advisory committee, continues to address issues such as independent monitoring and a living wage standard.
While UNC's primary goal is addressing problems identified in connection with the manufacturing of goods bearing the university's name, significant instances or patterns of non-compliance can lead to the non-renewal of a company's license.
"This contract sets a new standard for social responsibility because it reflects this university's continuing commitment to a strong licensing labor code policy and appropriately balancing the roles of athletics and academics," said UNC Chancellor James Moeser. "Both UNC and Nike made labor code standards a prominent part of the discussions leading to this new agreement. Dick Baddour and his colleagues representing the university did so in a way that I think very appropriately reflects both the values and interests of the university and the athletics department."
Carolina's compensation from the contract includes $800,000 to the Chancellor' s Academic Enhancement Fund and $200,000 a year to the athletic department. Included in the $200,000 is the $100,000 stipend for academic and athletic excellence. Carolina's contract with Nike provides the Tar Heels with $18 million worth of official Nike products, including shoes, uniforms, coaching gear, balls and other equipment. Nike will provide UNC with $2.2 million worth of product in each of the first four years of the contract and $2.4 million in contract years five through eight. The current contract called for an estimated $1.6 million annually for product and equipment.
The contract also calls for Nike to pay up to $175,000 each for five foreign exhibition tours, two each for the men's and women's basketball teams, and one for women's soccer.
Teams, coaches and staff must exclusively use Nike-provided products for official games, practices and clinics. Nike receives tickets to home games and postseason tournaments, full-color sponsorships in football and men's basketball game programs, acknowledgement in media guides, public address announcements and TarHeelBlue.com, the athletic department's official Web site.
Nike also has the right to use UNC marks to advertise its product, subject to university approval. Signage in Kenan Stadium or the Smith Center is not included in the contract, as there currently is no such corporate signage in those facilities. Should the university decide to include corporate sponsorships in those facilities in the future, Nike retains the right to receive signage as part of the contract.
Selected head coaches will receive approximately $920,000 per year in separate personal contracts with Nike. Those head coaches include men's basketball coach Matt Doherty ($500,000), women's soccer coach Anson Dorrance ($150,000), football coach John Bunting ($150,000 -- half from Nike and half from the university), women's basketball coach Sylvia Hatchell ($75,000), men's soccer coach Elmar Bolowich ($15,000), men's and women's track coach Dennis Craddock ($15,000) and baseball coach Mike Fox ($15,000).
It is anticipated the coaches will sign contracts valued at approximately those figures prior to July 1, 2002. The coaches are compensated for their work as product-line consultants and for lecturing at Nike-sponsored clinics.
