ASU plays footsie with Nike

Reebok again failed to respond to White's letter. Adidas, however, wrote ASU it wasn't interested in an all-school deal with ASU because it had just signed major deals with Notre Dame, the University of Tennessee and the University of Nebraska.

ASU purchasing manager Ray Jensen, Cantrell's boss, says that the negative responses from Reebok and Adidas gave White the green light to continue negotiations with Nike.

Taking a more liberal view of the state procurement code than Cantrell, Jensen says that since ASU had sought competitive bids but none was forthcoming, it was appropriate for the university to engage in direct negotiations with a single supplier.

"When you get to the place where you only have got one [viable supplier], and you have already gone through the competitive exercise, then, you know, common sense says get the best deal that you can with the one party that is showing interest," says Jensen.

ASU, Jensen says, briefed the Arizona Board of Regents on the unusual Nike negotiations.

Nevertheless, Jensen acknowledges that ASU is venturing into uncharted territory by continuing to negotiate with Nike after the company had failed to respond to the RFP.

"The [procurement] code is silent in terms of where we go from here," Jensen says.

Where ASU went was to Nike, on bended knee.
In his March 17 letter to Nike's Kit Morris, White made a generous offer.
"In order to further justify (from the Nike perspective) the enhanced relationship, ASU will consider several inordinately large (mammoth) and well-placed venue signage opportunities, i.e., the roof of the University Activity Center and on the respective straight-aways on our new track . . ."

White also reiterated previous pledges that ASU would be a strong "political" friend of Nike's.

White's groveling strengthened Nike's hand.
Nike knew it had no competition, that neither Reebok nor Adidas had responded to ASU's RFP.

Instead of the $1 million-a-year deal ASU expected when it prepared the RFP under Nike's instructions, Nike offered a $565,000-a-year annual package for five years.

ASU countered, seeking $700,000 a year in products for all teams and cash for three men's coaches.

The negotiations stalled in March after Miller, who was still in the loop from his new post in Japan, became upset over White's aggressive approach with Nike.

White wrote Miller a three-page letter of apology on March 27, 1997, and offered to cease seeking an all-school agreement.

White also sent Nike chairman Phil Knight a kachina figurine to smooth ruffled corporate feathers. The apology and gift apparently worked.

By June, a tentative nine-year deal beginning in 1999 was hammered out; it called for ASU to receive $608,000 in apparel and cash a year during the first three years; $685,000 in years four through six; and $718,000 during the final three years. The contract also called for bonus payments of up to $50,000 for winning the national football or basketball championship.

In exchange, ASU athletes would wear Nike products and participate in certain promotional events. (The blueprint contained no mention of giant Swooshes on the Activity Center or track; ASU officials say those inducements no longer are being offered.)

ASU president Lattie Coor gave ASU formal approval to sign a contract with Nike on August 8, and ASU sent Nike a redlined copy of the proposed contract.

But negotiations stalled again.
Nike agreed in November to increase cash payments to ASU football coach Bruce Snyder from $7,500 a year to $30,000 annually. But there has been no formal action taken on the contract by ASU or Nike. Snyder said he preferred not to comment on ongoing negotiations.

Nike forwarded ASU another draft contract in late December that showed ASU receiving $140,000 in cash in addition to the $30,000 payment to Snyder. White says he expects $125,000 will go to the ASU basketball coach and $15,000 to the baseball coach.

The $125,000 earmarked for basketball is the same sum former basketball coach Bill Frieder got from Nike, and is much less than the $500,000 a year Utah's Majerus reportedly gets from Reebok.

The amount of cash Nike would provide down the road, however, steadily increases, according to the draft contract. The sum available for the basketball and baseball coaches would rise to $190,000 from 2000 through 2003 and to $250,000 from 2003 through 2008. The ASU athletic department would retain the right to allocate the money to coaches as it chooses, making it possible that a new basketball coach could receive all the money.

While White insists that the Nike negotiations are separate from ASU's search for a permanent head basketball coach, he acknowledges that Nike is a basketball-driven company.

White says that even with the successful team it fielded this year under Newman's direction, ASU's basketball program is in no position to squeeze more money out of Nike.

"We are not in a position to barter up," White says.
But that doesn't mean a topflight coach like Majerus, whose teams are consistently in the top 10, wouldn't increase ASU's leverage.

Whether ASU will ever sign an all-school contract with Nike remains to be seen.

Student protests over reported working conditions in Nike factories in Asia have caught the attention of the Arizona Board of Regents. The regents apparently instructed ASU president Coor to negotiate an escape clause that would allow ASU to void its contract if Nike or its subsidiaries violate labor laws abroad.

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