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Tuesday, October 30, 2018

KU now refuses to share info with public on $1.5M in Adidas payments; last week it said lack of personnel was reason for delay

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

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

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KU accepted $1.5 million in extra payments from the shoe company at the center of a college basketball corruption case, but now KU is refusing to release documents detailing the conditions attached to the money.

An attorney for Kansas Athletics Inc. on Monday evening denied the Journal-World’s open records request seeking documents related to $1.5 million in extra royalty payments the department received from Adidas during the last fiscal year.

Kansas Athletics’ chief financial officer briefly mentioned the extra payments while giving a verbal report to the Kansas Athletics Inc. board of directors during a meeting last month. Since the meeting, though, KU officials consistently have refused to answer the Journal-World’s questions about the payments.

Those questions include whether, by accepting the money, KU has obligated itself to remain in partnership with Adidas or face significant penalties if the university seeks to end the partnership. Three former Adidas employees or consultants have either been convicted or pleaded guilty to fraud charges related to a pay-for-play basketball scheme. Testimony at a recent federal trial for two of the former Adidas officials raised the specter of KU being punished by the NCAA for recruiting violations related to the scheme.

On two occasions earlier this month, Kansas Athletics told the Journal-World that it could not produce the documents because of “personnel limitations” in the athletics department. On Monday, an attorney for Kansas Athletics said it would not release the documents because Kansas Athletics believes the law does not require it. The department cited a provision of the Kansas Open Records Act that gives public entities the option to withhold the release of notes, preliminary drafts, research data in the process of analysis, unfunded grant proposals, memoranda, recommendations or “other records in which opinions are expressed or policies or actions are proposed.”

The response has left unclear under what authority Kansas Athletics accepted the $1.5 million in extra royalty payments. The Journal-World on Monday evening asked Megan Walawender, interim corporate counsel for Kansas Athletics, for clarification on whether KU was using a memo or a draft document to enter into a million dollar-plus arrangement with Adidas. As of Tuesday morning, the Journal-World had not received a response.

It also wasn’t immediately clear how the cited provision in the Kansas Open Records Act applied to the documents sought by the Journal-World. The newspaper sought documents showing any agreement that called for Kansas Athletics to receive royalty payments over and above the amount called for in the signed 2012 agreement KU has with Adidas. The section of the open records act cited by KU gives public entities the ability to withhold records related to proposed actions. However, the university in this instance has not disputed that KU Athletics already has received the extra payments from Adidas.

Also on Monday evening, the Journal-World submitted a question to both the athletics department and Chancellor Douglas Girod’s office asking whether the university felt the public had a right to know the details of an arrangement that allowed a public entity to accept more than $1 million from a private company? As of Tuesday morning, the Journal-World had not received a response from either office.

In late September 2017, KU and Adidas announced an extension of an Adidas sponsorship agreement with Kansas Athletics. The extension was valued at about $191 million over 10-plus years, making it the largest dollar value sponsorship agreement Adidas has with any university.

But just days after the announcement, a federal criminal complaint was unsealed alleging that Adidas executive Jim Gatto was part of a pay-for-play college basketball scheme. Shortly thereafter, KU clarified that it had not yet signed the extension with Adidas, but was initially reluctant to acknowledge the delay had anything to do with Gatto’s indictment. In November 2017, athletics department spokesman Jim Marchiony said the delay was just part of the “normal course of putting a contract together.”

By April, though, the federal case had grown to include an indictment that alleged Gatto and others had paid the family or guardians of two recruits to attend KU. Gatto and former Adidas consultant Merl Code were convicted on fraud charges related to that indictment earlier this month. A third Adidas representative, T.J. Gassnola has pleaded guilty to a fraud charge related to a pay-for-play scheme involving KU recruits.

No Kansas coaches or officials have been charged in the case, although the recent federal trial included the partial transcript of a wiretapped phone conversation involving KU assistant basketball coach Kurtis Townsend making comments that have raised concerns that Townsend was willing to break the fundamental NCAA rule prohibiting paying a recruit or his family. KU officials have yet to make any public statements that directly address what Townsend meant by those comments.

KU officials now say they are not certain what the future holds for the Adidas deal. In a joint statement following last week’s federal trial, Girod and KU Athletic Director Jeff Long said the university continues to evaluate its options as it relates to the Adidas contract. No timetable for a decision has been set.

“A strong apparel partnership is important and beneficial to all our student-athletes and our institution, and we will take great care in making the right decision for KU,” the duo said in the statement.

KU’s current contract with Adidas expires in July.

The money involved in a new deal with Adidas is significant for Kansas Athletics, as the department's finances have struggled to break even in recent years. At the September board meeting, the board received a report that it 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.

Comments

Kyle Helmer 1 year, 9 months ago

Is KU obligated to share this info with the LJW? If not, then F off and mind your own business!

Joe Joseph 1 year, 9 months ago

That's the point Kyle. The LJW clearly believes the U is obligated. The U, not so much.

Mike Hart 1 year, 9 months ago

That's fine... if KU told LJW that to begin with. But instead they chose to say: We are staff-limited, come back Oct 23rd. Then on 10/23, they said we are still staff-limited, come back on Oct 28th. Now that that line had been used twice... they came up with "We aren't obligated to provide that". That's pretty weak... and CERTAINLY raises eyebrows.

Barry Weiss 1 year, 9 months ago

I'm not that wound up by this. What difference does it make? What is the LJW after or what do they think is wrong? Business is business, let sleeping dogs lie.

Brian Wilson 1 year, 9 months ago

The way I understood it, we have a contract that is not signed that pays KU 1.5 million more per year than the previous contact. So Adidas paid KU that extra money based on a hand shake. And, until things are settled, my guess is Adidas will continue to pay the extra money while we are doing business by handshake.

And so I am guessing, once the investigation is over, we will either sign the contract or tell Adidas we no longer have a gentlemen's agreement.

The only issue I have with this that KU is a state institution and so they should probably not be doing business in this manner.....but in essence....the old contract is still in place with the addition of the additional payments.

Brian Skelly 1 year, 9 months ago

Except that the KUAC is not a state institution, and it's entirely funded from sources outside of the school.

Jeff Coffman 1 year, 9 months ago

So the university is still being provided Adidas equipment and Adidas is still paying the face of the contract in good faith. I would guess that KU will want to remain the #1 school for such a powerful brand in basketball.

This is where I'm not sure an open records policy is always optimal.

I feel like this is one of the times when LJW is doing a little ambulance chasing. I also think that KU is doing the prudent thing and letting the dust settle with the contract and then evaluating, but in the meantime still being rewarded for a valuable product.

Joanie Calder 1 year, 9 months ago

"ambulance chasing" isn't the first term that jumps into my head. It's their job and I support the public's right to know - especially after not being transparent re: "lack of staff" to provide information.

I'd say....get ahead of everything they can because with KU's name coming up in the most recent trial......you get the point.....

Thomas Green 1 year, 9 months ago

So the reason for not disclosing has changed... interesting! Seems to me someone is trying to hide something. My guess is LJW’s next move is to sue, which I believe would be appropriate!

Glen Miller 1 year, 9 months ago

Yeah, because it's easier just to sue someone than mind your own damn business and wait like everyone else. I think we all would like to know what is going on, but the problem is there is too much half hearted information coming out and folks like you have the torches burning already. I'd wait until my ducks were in a row too if I were the University.

Marius Rowlanski 1 year, 9 months ago

When was the last time KU had all its ducks in a row? Had to be before Wiggins arrived on campus. Every year of late has had at least one major recruit waiting for eligibility.

Marcus Balzer 1 year, 9 months ago

the current adidas deal expires in July. adidas is well aware that KU is now, at least thinking about testing the open market to see what other options are available for an apparel partner and I believe that adidas gave KU that 1.5 almost as an advance or in good faith to retain KU.
I believe the LJW's interest lies in that this 1.5 million payment was suppose to come to KU under the new royalties agreement that was part of the larger, long term extension that KU was set to sign over the summer but now has mysteriously not signed and remains mum on. With the college basketball corruption trial now finished which exposed un-ethical and illegal practices that took along with the fact that finance is a hot button topic across campus there are plenty of questions and not many answers.

Joe Ross 1 year, 9 months ago

Two thoughts on this:

  1. Not knowing the particulars of any financial agreements, it is hard for me to speculate or suggest that the money exchanged hands for any nefarious purpose, however;

  2. The relationship with Adidas has, at a minimum, sullied the reputation of Kansas and its program--deserved or not. At most, the lure of money and recruiting leverages has the potential to cause Kansas to incur consequences with the NCAA, and it seems to me reasonable therefore that good from the relationship must be weighted against any fallout (including reputation, sanctions, etc.).

Jaston Archie 1 year, 9 months ago

KU will extend the contract with Adidas or else Adidas will release proof that the coaches were very aware of the payments to players.

In other news, it looks like Jeremiah Robinson-Earl is trending to Villanova. This mess is negatively impacting recruiting

Karen Mansfield-Stewart 1 year, 9 months ago

So, you're alleging that Adidas is now blackmailing the University of Kansas?

Steve Corder 1 year, 9 months ago

Contract negotiations or renegotiations are not the concern of anyone out side those vested parties.

Stir the pot then move on to another story.

Robert Brock 1 year, 9 months ago

Follow UCLA’s lead. Dump adidas for Under Armour.

Freddie Garza 1 year, 9 months ago

Hey guys I've got an idea! Let's all bury our heads in the sand!

Joe Black 1 year, 9 months ago

I don't have big opinion one way or the other on this issue but this article title sounds like a little whiny kid!

Pius Waldman 1 year, 9 months ago

Poor Chad: Seems like he is not getting attention. Man see who I am?

Jacob Bateson 1 year, 9 months ago

It's astounding to me the amount of people who just want to bury their head in the sand or look the other way. This is a public institution and LJW is doing fine investigative journalism.

If LJW find's that KU or Adidas is doing untoward, we should all want to know that so we can get it cleaned up. If KU is operating on the up and up, they should have no problem adhering to the Kansas Open Records Act - not doing so gives the perception that they have something to hide.

Brian Skelly 1 year, 9 months ago

Except the KUAC is not an public institution. It's an corporation designed explicitly to be separate from the university. Virtually ALL (big ones anyway) schools have it set up this way.

Jacob Bateson 1 year, 9 months ago

Are you contending they are not subject to the Kansas Open Records Act? If that were the case, I doubt they'd even bother listing the athletics department on their website regarding KORA.

https://provost.ku.edu/open-records-act

Joanie Calder 1 year, 9 months ago

I have zero affiliation with MIchael Sokolove, but please read or listen to this book! I'm listening now and every chapter I think - please God, don't let this be "us"........

Mike Hart 1 year, 9 months ago

For all of you defending the University... they have aggravated their own situation in the handling of the open records request. Don’t say that you can’t supply records due to tight staffing .. come back Oct 23rd. Then on Oct 23rd say you are STILL staffing limited .. come back October 28. Then after Oct 28... now say “I don’t think we are obligated to share”. If true, then say that in the FIRST place, because you know look like you have something to hide. I don’t give a crap at what other Universities are doing. Kansas should be doing things the right way. If there is nothing shady... nothing to hide... then share it and prove to the world KU has not engaged in impropriety. You can’t make the optics for this any worse by how they have handled this...

Danny Hernandez 1 year, 9 months ago

I have a suggestion, why doesn't the LJW pay the 1.5 million each year in place of Adidas. I really doubt all of Adidas is corrupt! damn, they're the sponsor of World Cup soccer and I sure didn't hear anyone bitching then.

A few bad apples and do you think Under Armor or Nike are any better? they're not so take your heads out of the sand and quit being so naive

Dustin Peterson 1 year, 9 months ago

This is so messy, but here is my guess as to what’s going on:

(1) The LJWorld is getting ahead of itself by lumping KU and Adidas together as complicit in something. This is getting serious clicks, so it isn’t likely to stop. Read with skepticism. America.

(2) KU was probably not lying when it cited lack of personnel as to the reason they weren’t ready to release any documents. Every attorney and research assistant they have is probably trying to figure out if there is a possible way out of the Adidas deal, should they want to extricate. A contract doesn’t always have to be signed to be enforceable.

(3) Adidas and KU made an agreement, and Adidas may have dropped some kind of advance consideration in KU’s lap, which of course is common knowledge to have been accepted. With an agreement made, but without an executed document, it may be up to courts to decide if the deal is enforceable if KU tries to back out. If it has to go to litigation to be resolved, Adidas’ payment to KU, which was accepted, may look to a judge like Adidas is starting to perform on the agreement and is relying on that agreement in lieu of signed document. From a legal standpoint, if any of this is actually what’s happening, the issue may be not whether KU accepted that money, but whether KU, in any way, ASKED for that money. If they did. It’s probably a contract. If they did not. They may be able to back out.

Mike Hart 1 year, 9 months ago

Uh... and what does any of that have to do with KU's refusal to share the documents... which was the entire point of the article?

Dustin Peterson 1 year, 9 months ago

Sorry, Mike, I should have been more clear. This is all hypothetical, but the idea behind it is that IF KU is thinking about backing out of a 9-figure deal with a shoe company that no longer reflects advantageously on KU’s brand, then the shoe company is probably going to sue for breach of contract, regardless of whether a document is signed. If KU turns over any of its documents (emails, phone logs, meeting notes...) to the press, then they’ll effectively be handing them over to Adidas. Until such time as ordered to do so, I’d also refuse to turn them over. Wouldn’t you?

Larry McGlinn 1 year, 9 months ago

It is interesting when I see statements like, "mind your own business" or "let sleeping dogs lie." You think there is something wrong; you just don't want it to get out because it might cost us recruits and/or wins. Are you also people who encourage kids to get into sports because it teaches them good values? I love KU B-Ball, but if they are doing shady stuff I would like to know. I really despise places like Lexington, KY and Tuscalosa, Al where the local media seems to be complicit with remarkably successful sports programs. The LJW is not an alumni booster club.

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