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.

Tuesday, October 30, 2018

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.