Friday, October 12, 2018

As allegations mount, KU mum about Adidas ties and extra $1.5M it has received from the company

A University of Kansas-branded Adidas basketball is pictured in March 2018.

A University of Kansas-branded Adidas basketball is pictured in March 2018.


The University of Kansas has seemingly increased its financial partnership with Adidas at the same time the apparel company finds itself at the center of a federal trial alleging crooked basketball recruiting practices.

For the past year, Kansas Athletics officials have said a multimillion-dollar deal to extend Adidas’ contract to be KU’s official athletic apparel provider remains unsigned. However, the chief financial officer for the KU athletic department has disclosed to Kansas Athletics’ board of directors that KU already is receiving increased royalty payments from Adidas based on the pending deal.

“We had $1.5 million in extra Adidas royalties based on the new pending agreement that we are working up a long form as we speak,” Pat Kaufman told the Kansas Athletics Inc. board last month as part of a report about the 2018 fiscal year, which ended June 30.

As the federal corruption trial has unfolded the past two weeks in New York, the Journal-World began seeking more details about any interim deal KU may have with Adidas. On Thursday, the Journal-World sought answers to a variety of questions related to the $1.5 million in extra Adidas royalties the school has received. The Journal-World also filed a Kansas Open Records Act request for any written agreements related to the $1.5 million in extra Adidas royalties.

A university spokesman declined to answer any questions about KU’s relationship with Adidas.

“It is not appropriate for the university to comment on these topics while legal proceedings are ongoing,” Joe Monaco, a spokesman in the Chancellor’s office said.

Monaco said the university was processing the records request, but based on his response it was unclear whether any records related to how KU came to receive the extra $1.5 million in Adidas money exist.

The federal trial is providing new specifics about how both current and former Adidas executives are linked to the allegations of basketball recruiting corruption. Defendants James Gatto and Merl Code both formerly worked for Adidas. On the opening day of the trial, their attorneys said they didn’t intend to deny that they directed payments to college basketball recruits to steer those recruits to attend schools that have partnerships with Adidas. Nor do they intend to deny that they broke NCAA rules in the process. Instead, they will argue that universities benefited from their actions, and in some cases were willing partners, and thus were not victims of any crime.

Thomas “T.J.” Gassnola, trial documents show, has been paid hundreds of thousands of dollars by Adidas for his work as a coach of an AAU basketball team and for grassroots player development. Gassnola already has pleaded guilty to one count of conspiracy to commit wire fraud connected to the recruiting scheme. This week he testified under oath that he paid the family or guardians of KU recruits Billy Preston and Silvio De Sousa to attend KU. Such payments are assumed to be illegal under NCAA rules and could subject KU to penalties, including forfeiture of last year’s Final Four appearance, conference championship and others depending on how the NCAA views the matter.

Among the questions posed to both Kansas Athletics Inc. and Chancellor Douglas Girod’s office are:

  • Does the acceptance of $1.5 million in extra royalty payments commit KU to finalizing the larger 10-plus year deal that was publicly announced but never signed in September 2017, just days before the allegations against Gatto became public?
  • Do the terms of the $1.5 million in extra royalty payments subject KU to any penalties if the university ultimately decides not to renew its agreement with Adidas, which is scheduled to expire in July?
  • Has KU signed any documents such as nondisparagement clauses that limit what KU is able to say about Adidas and the alleged conduct of its executives?

Just days before the Gatto indictment was unsealed in September 2017, KU and Adidas announced they had reached agreement on a deal that would keep the company as KU’s official apparel provider for more than a decade and would provide about $190 million in cash, product and services to Kansas Athletics.

Following the unsealing of the indictment, KU Athletics said it had not signed the deal with Adidas, and it declined to release copies of the agreement, saying it was not required to release the documents since they were still in draft form.

At the time, though, Kansas Athletics spokesman Jim Marchiony said the delay in executing the agreement was not related to the allegations against Gatto, but rather was part of the normal due diligence in putting an agreement together. This week, KU declined to comment on the status of the negotiations with Adidas.

KU previously has declined to comment about whether it has any concerns about entering into a partnership with Adidas given the allegations. The Journal-World renewed that question on Thursday, asking whether the information that has come out at trial has created concern that Adidas was lacking institutional control over many of its employees involved in AAU and college basketball. KU declined to respond.

In addition to Gatto, Code and Gassnola, the trial has highlighted allegations against Adidas grassroots executive Chris Rivers. A Feb. 17, 2015, email written by Rivers was entered into evidence this week, according to a report from Matt Norlander of CBS Sports. The email, which was sent to Gassnola and others, referenced a confidential “Black Opp’s” (short for black, or covert, operation) run by Adidas.

The trial also has highlighted past deeds by Gassnola that call into question why Adidas felt he could be trusted to operate within the rules of college basketball recruiting. Among the details are that Gassnola, an AAU coach, was barred by the NCAA in parts of 2012 from being a part of NCAA sanctioned events because he had a relationship with a professional sports agent.

Much of Gassnola’s past has been part of the public record and available to Adidas for more than a decade. The Boston Globe in 2006 did a substantial story on Gassnola, his criminal history and his battles with the NCAA. The article reported Gassnola had “become a pariah among many youth coaches for his history of breaking laws, rules and promises.”

According to the article, Gassnola has been convicted of larceny on three occasions, as well as assault, and he acknowledged in an interview that he previously had been involved in bookmaking. Through his employment by Adidas he had access to the KU basketball program that an ordinary member of the public would not have.

As part of its deal with KU, Adidas gets tickets for six “premium” seats for each men’s home basketball game, plus can purchase up to 10 additional seats for each game, according to a copy of the agreement. In court this week, Gassnola testified that he and Gatto were “ambassadors” at KU’s Late Night in the Phog event in 2016. He also testified that he had a conversation with KU men's basketball coach Bill Self about recruiting targets and assured him “we are here to help.” Gassnola also testified he met with KU assistant coach Kurtis Townsend. Gassnola testified that before De Sousa became a player for KU that Townsend asked Gassnola to reach out to De Sousa’s guardian for the stated reason of helping De Sousa’s guardian obtain Adidas gear for the Angolan national basketball team. Gassnola said he never made Self or Townsend aware of any of the payments he made to KU recruits.

The money involved in a new deal with Adidas is significant for KU Athletics as its finances have struggled to break even in recent years. At the September board meeting, Kaufman acknowledged that KU Athletics had to dip into operational reserve funds for $2.7 million to cover expenses that came in above department revenues.

A previous review by the Journal-World found that between fiscal years 2006 and 2017, the revenues of the nonprofit Kansas Athletics Inc. increased by 68 percent but its expenses increased by 93 percent.


Joe Joseph 2 years, 6 months ago

Not gonna lie... It's a bad look for the university to continue its partnership with Adidas. Regardless of innocence or guilt.

Adam Engelbrecht 2 years, 6 months ago

That doesn't go against what Joe said. Adidas can certainly be a loyal partner with KU and still make KU look bad externally by continuing the relationship. Not sure why that's hard to grasp.

Danny Hernandez 2 years, 6 months ago

Where do we go? Nike? they've been implicated! Under Armor? They've been implicated!

I don't think because a few bad apples should ruin it for Adidas, they're a great partner and just need to get to the bottom of this mess. Personally, it's all the fault of these AAU teams. Myron Piggie anyone?

Phil Leister 2 years, 6 months ago

I agree it's a bad look to maintain a relationship with a company who could have done some serious damage to KU, if in fact they were doing all this without knowledge of any KU coaches. So let's go to Nike or Under Armor? Like they didn't do the same stuff.

Adidas is just the company who got busted.

Tony Bandle 2 years, 6 months ago

I think I just heard a mic drop at the NCAA Headquarters in Indianapolis, Indiana!! [in their own way, are they're any better than the shoe companies?.....I think not].

Gary McCullough 2 years, 6 months ago

The NCAA is worse than the shoe companies. It steals the student-athletes' contributions to the economic health of the university. If States properly funded their universities so students weren't driven into crazy debt for their educations, then the athletes could share in the revenue stream created by their talents. But to think a college degree offsets this ripoff by the NCAA is akin to justifying slavery because the owner provided them food and shelter.

Steven Haag 2 years, 6 months ago

Agreed. All these show companies have stains on their hands. These players can’t play barefooted and naked. How about Payless? Don’t they make Sketchers😂😂😂😂😂. Maybe we could go with them

Steve Corder 2 years, 6 months ago

De Sousa will, most likely, be held out of competition until all this is “cleared” by all parties.

Dane Pratt 2 years, 6 months ago

At the rate at which the NCAA operates it could take years for them to sort this out. It’s not just Silvio they have to decide on and in the interim do you think Bill will allow him to play? Jim Gatto will have already gotten out of prison before the NCAA decides Silvio’s fate.

Steve Corder 2 years, 6 months ago

I believe Self has the roster depth to be cautious.

Craig Carson 2 years, 6 months ago

yep..he held out Preston last year despite the desperate need for front court help...Azibuike, Lawson and McCormack can more than handle the load..

Freddie Garza 2 years, 6 months ago

Again, anyone who thinks that every top 150 recruit hasn't been paid, or hasn't at the very least been OFFERED payment is naive. I guarantee you, EVERY competitive program is paying recruits. That's how the game is set up to be played, and everyone knows it, INCLUDING the NCAA who is COMPLICIT.

Wait until they start investigating football, you ain't seen nothing yet ladies and gentlemen.

Craig Carson 2 years, 6 months ago

that is an absolute lie....99.999999999999% of players dont receive a are just letting your paranoid feelings make you say some irrational unfounded mess...if all 150 kids were getting money, this scandal would have come out decades ago..hell, there would be thousands of players named..stop watching so much Alex Jones..its got you seeing conspiracy everywhere

Freddie Garza 2 years, 6 months ago

No, you WANT it to be a lie. But it's not. It's how the games played. Burying your head in the sand isn't helping matters when we can come up with an entire laundry list of players who had problems, from Darnell Jackson, Cliff Alexander, JR Giddens, Mario Chalmers dad being hired to the coaching staff, etc etc etc.

Look, I hate that it's happening too. And I DO NOT blame the coaching staff nor the athletic department.

But the truth is the truth...5 star players don't come for free.

Mike Maddox 2 years, 6 months ago

Teams are allowed to hire a player's family as coaches. There are stipulations that must be followed. I think they have to be hired as full time/on the road asst, and teams are limited as to how many of those they can have on staff. So they use up a valuable coaching spot to do it.

It just happened last year with the Porters at Mizzou, and goes back at least as far as Danny Manning. It's sanctioned by the NCAA, being specifically allowed by their own rules.

Craig Carson 2 years, 6 months ago

im not burying my head in the sand, im just not making a mountain out of a mole hill like you are grossly over exaggerating what goes on

Lawrence McGlinn 2 years, 6 months ago

I pretty much agree, but it may be handlers like guardians, etc. who are getting paid. Big-time recruits are commodities in a very profitable business. Money is just swirling around them from the time they are flown all over the country as teenagers to play in big tournaments. The idea that no money changed hands in determining where big recruits end up is beyond naive. The shoe companies pay, and it keeps the universities looking relatively clean...plausible deniability!

Robert Brock 2 years, 6 months ago

So, it looks like KU is going with K-Swiss.

Curtis Hedrick 2 years, 6 months ago

AND1 or FUBU, there are tons of other options..............who needs Adidas.

Barry Weiss 2 years, 6 months ago

this whole thing sucks! I preferred it when we all just looked the other way.

Gary McCullough 2 years, 6 months ago

Because that has worked so well thus far...

Seth Nesmith 2 years, 6 months ago

KU will become the highest paid university by Adidas.

Karen Mansfield-Stewart 2 years, 6 months ago

I’m pretty sure KU is already the highest paid school by Adidas. Personally I’m partial to Reebok, but I like Adidas too.

Martin Rosenblum 2 years, 6 months ago

Big Baller Brand still out there? They can't have any skeletons in their closet!

Tracey Graham 2 years, 6 months ago

So far I haven't seen any evidence that Bill Self, any of the other coaches or anyone who works in the athletic department has been involved in any of these payments. If that's the case, I don't think the program will face any sanctions, although De Sousa may never play another college basketball game. Same thing with the other schools involved in this probe -- for the most part, there seems to be very little actual involvement by the coaches -- it's almost all players and/or their families getting the money directly from the Adidas person. I don't think the NCAA can punish a program simply because a coach talked to the Adidas guy about what players they have interest in.

So while this is a giant mess, it doesn't seem like the schools and coaches aren't going to get any kind of significant punishment. Maybe some sort of slap on the writst if it appears there was a lack of institutional control.

But if this investigation results in no real punishment for the coaches/schools, what are the chances of anything really changing?

The NCAA could've saved themselves this mess if they simply paid the players some kind of stipend and and/or gave the players a share of the profits on the merchandise that the NCAA and the individual schools make millions of dollars off.

Gary McCullough 2 years, 6 months ago

I hope that's true, but afraid something will come to light that puts us in the dog house. I feel like we're whistling past the graveyard on this issue. We need to be proactive and get ahead of the issue. We'll look like Mexico Beach if we don't start preparing for the coming storm.

Jim Stauffer 2 years, 6 months ago

Starting to sound like the Coaches new generally what was happening but were smart enough to be kept in the dark about anything specific. Having said that, there remains no proof of any involvement by KU or its personnel in any of this stuff. Yes it probably happens regularly with the very best players, but it does seem the primary motivation for all this is Adidas, Nike, etc. getting new players to wear and advertise their stuff. Naturally then they want the kids to go to a school where they have the apparel contract. I still think the greed of the apparel companies is the primary motivation of all this.

Lawrence McGlinn 2 years, 6 months ago

Power schools wink, and the shoe companies do the dirty work of getting players to them. And they both are enriched. Unfortunate, but it is making more sense as I hear more of the trial. It is going to make watching the team a little less fun. Darn..

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