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Carolina 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.
The University and Nike signed the contract extension 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 Carolina 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 stipend 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.
Besides 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 the University's general scholarship fund; the remaining
25 percent goes to the athletic department.) Royalties from Carolina-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. The
University 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, the University
has committed to implementing a campuswide 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 Carolina 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, Carolina 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 Carolina. 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."
Carolina is a dues-paying member of two national labor monitoring organizations
-- the Fair Labor Association (FLA) and the Worker Rights Consortium (WRC). The
University joined both upon the recommendation of the Chancellor's Licensing
Labor Code Advisory Committee, formed about four years ago and made up of
students, faculty and administrators, including Baddour. Carolina's top goal
remains to improve working conditions in factories producing Carolina-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, the University 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. Carolina, through
the chancellor's advisory committee, continues to address issues such as
independent monitoring and a living wage standard.
While Carolina'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 Chancellor James Moeser. "Both Carolina 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 Carolina 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 www.TarHeelBlue.com, the athletic department's official Web
site.
Nike also has the right to use Carolina 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.
In addition to base salaries, 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.
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