I have a feeling this could be big for Nike
Is Nike the Unidentified Company in the FIFA Bribery Case?http://www.bloomberg.com/news/articles/2015-05-27/nike-s-deal-seems-to-track-u-s-claim-of-fifa-bribery-in-brazil-ia73w47cNike Inc. said it’s cooperating with authorities on the same day the U.S. unsealed charges saying an unidentified sportswear company bribed a Brazilian soccer official for a sponsorship agreement.
The deal described in an indictment of FIFA officials mirrors one obtained by Nike. The charges refer to a U.S. company that signed a partnership with the Brazilian federation in 1996. Nike, based in Beaverton, Oregon, announced its decadelong pact with Brazil that year.
“Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery,” the company said Wednesday in an e-mailed statement. “We have been cooperating, and will continue to cooperate, with the authorities.” Nike, which isn’t named in the indictment, declined to comment on the allegations.
Nike shares fell 0.6 percent to $102.84 on Wednesday at the close in New York. The stock has gained 7 percent this year.
Winning the Brazilian sponsorship put Nike on the global soccer map. In 1994, its sales from soccer totaled $40 million. More than two decades later, it is challenging Adidas AG for the title of biggest brand in the sport, with revenue from soccer reaching $2.27 billion in fiscal year 2014.
Hotel Raid
Swiss police raided the luxury Baur au Lac hotel in Zurich at dawn Wednesday and arrested seven FIFA officials. Two former soccer executives were also charged by the U.S. in the wide-ranging corruption indictment, which includes counts of racketeering, wire fraud and money laundering.
In New York, Justice Department officials vowed more arrests, and to widen the investigation of FIFA officials and banks that may have been used in the alleged conspiracy.
$160 Million
According to the indictment, unsealed Wednesday in Brooklyn, New York, federal court, the unidentified company made a deal to pay $160 million over 10 years for the right to exclusively sell Brazilian national team apparel and footwear.
In a separate agreement, the unidentified company allegedly paid $40 million through a Swiss bank account to an official at a firm that buys and sells marketing rights in Brazil. Some of those funds were used to pay off a “high-ranking” FIFA and Brazilian soccer executive, according to the indictment.
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Nike: Cooperating With Authorities on FIFA AllegationsIndictment alleges bribery involving ‘multinational sportswear company’ in U.S.
http://www.wsj.com/articles/nike-cooperating-with-authorities-on-fifa-allegations-1432752855By Sara Germano
Updated May 27, 2015 5:51 p.m. ET
The sweeping U.S. crackdown on alleged corruption at FIFA appears to have snagged Nike Inc. in its net.
Among the details in the Justice Department’s 161-page indictment are allegations of bribery involving efforts by “a multinational sportswear company headquartered in the United States” to win an apparel licensing deal with Brazil’s national soccer team.
Nike isn’t named in the indictment, which refers to the party as “Sportswear Company A.” But according to Nike’s website, the company signed a sponsorship deal with Brazilian national soccer federation CBF in 1996, the same year in which the events described in the indictment take place.
Nike wouldn’t comment specifically on the issues raised in the indictment but said it is concerned by the allegations and is cooperating with the investigation.
“Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery,” the company said in an emailed statement. “We have been cooperating, and will continue to cooperate, with the authorities.”
According to the indictment, Sportswear Company A in 1996 signed a 10-year, $160 million agreement to become a co-sponsor of the CBF and its “exclusive footwear, apparel, accessories, and equipment supplier.” Three days later, the indictment alleges, an official from the sportswear company signed a one-page agreement with a representative of a sports-marketing agency called Traffic Brazil allowing the agency to invoice the company for additional marketing fees.
A Traffic affiliate proceeded to invoice Sportswear Company A for an additional $30 million in payments between 1996 and 1999, payments that were used in part for bribes and kickbacks, according to the indictment.
The owner and founder of the Traffic Group, José Hawilla, earlier pleaded guilty to charges related to the probe, according to the Department of Justice.
Nike didn’t respond to repeated requests to comment on the specifics of the indictment Wednesday. None of the named defendants was identified as having ties to a sportswear company.
The Beaverton, Ore., company made its name selling running shoes and its fortune with basketball shoes like Air Jordan. But over the past 20 years, it has plowed money into soccer in an effort to win fans and sales abroad. The effort has involved signing outfitting deals with national soccer federations including those of England, France, the Netherlands and the U.S., as well as some of the world’s top players, including Cristiano Ronaldo and Neymar.
The relationship with Brazil, one of the top countries in the game, played a big role in the strategy. On the company’s website, Nike co-founder Phil Knight is quoted as saying, “We will only truly understand football when we see the game through the eyes of Brasilians.”
Part of the strategy behind Nike’s acceleration into soccer has been to better compete overseas with chief rival Adidas AG . Executives at the German sportswear maker have often described soccer as the lifeblood of the company, and Adidas has been an official supplier of FIFA for more than 40 years.
Last year’s World Cup in Brazil spurred a global marketing blitz for both companies. For their most recent fiscal years, Nike took in $2.3 billion in sales of soccer products, a rise of 21%, compared with €2.1 billion ($2.29 billion) for Adidas, up more than 20%, according to annual reports.
Adidas said Wednesday that it expects “the highest standards of ethics and compliance” from its partners.
The wide-ranging probe by the Department of Justice, which lists 14 named defendants as well as 25 co-conspirators, describes a pervasive culture of corruption over 24 years in the global world of soccer.
