Adidas’ PR team is scrambling in the wake of what could be one of the largest scandals in college sports history.
On Tuesday, federal investigators announced that 10 people involved with four NCAA basketball programs would be charged with fraud.
Among those arrested were Adidas employees and affiliates, including James Gatto, the company’s global sports marketing director. Four college basketball coaches were also indicted for their roles in accepting bribes in exchange for steering college athletes toward specific financial advisors.
The Adidas reps stand accused of conspiring to pay prospective student athletes’ families up to $150,000 if the player committed to Adidas-sponsored schools (reportedly Louisville and Miami) and subsequently signed endorsement deals with Adidas when they turned pro.
After the news broke, NCAA’s president, Mark Emmert, issued a statement:
The nature of the charges brought by the federal government are deeply disturbing. We have no tolerance whatsoever for this alleged behavior. Coaches hold a unique position of trust with student-athletes and their families and these bribery allegations, if true, suggest an extraordinary and despicable breach of that trust. We learned of these charges this morning and of course will support the ongoing criminal federal investigation.
Gregory Postel, interm president of the University of Louisville, also released a statement:
Statement from U of L acknowledges school is under investigation “involving criminal activity” with basketball recruiting pic.twitter.com/309Thh8Jge
— Jason Riley (@JasonRileyWDRB) September 26, 2017
Adidas’ statement, which came later in the day on Tuesday, was terser:
Today, we became aware that federal investigators arrested an Adidas employee. We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.
Though backchannel pay-for-play schemes are nothing new in the world of college sports, it’s rare that an organization such as Adidas is embroiled in a scandal.
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Acting U.S. attorney Joon H. Kim said the allegations suggested an ugly situation.
“The picture painted by the charges brought today is not a pretty one,” Kim said. “Coaches at some of the nation’s top programs soliciting and accepting cash bribes; managers and financial advisers circling blue-chip prospects like coyotes; and employees of one of the world’s largest sportswear companies secretly funneling cash to the families of high school recruits.”
The charges will probably put a spotlight on college basketball endorsement deals, potentially adding rules and restrictions for athletes and brand managers in the future.
Tuesday’s revelations all but ensured a renewed debate about two rules central to college basketball. One is the N.C.A.A.’s longstanding restrictions on compensation, a central part of college sports that has been under attack in recent years by polemicists, antitrust lawsuits and even some players.
The other is the so-called one-and-done rule, agreed to jointly by the N.B.A. and its players’ union, which generally prohibits players from entering the league before they have turned 19 or until a year after they graduate from high school.
Before the rule’s implementation, the best high school basketball players in each class had the option of simply entering the N.B.A. and receiving a salary, as well as lucrative endorsement deals, and above all not needing to worry themselves over N.C.A.A. rules.
The crisis has also already affected Adidas brand. Forbes reported its stock prices fell after the news broke:
Shares of the German apparel maker, which trade as an ADR under the symbol ADDYY in the U.S., were down 3% Tuesday morning while the overall stock market was flat.