According to an indictment, a sportswear company acted improperly in pursuing a sponsorship deal from Brazil.
BY JACOB PALMER | DIGITAL NEWS EDITOR
According to an indictment, a sportswear company acted improperly in pursuing a sponsorship deal from Brazil.
That deal is similar to the one obtained by Nike, Bloomberg reports.
“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 isn’t named in the indictment, which describes only “a multinational sportswear company headquartered in the United States (‘Sportswear Company A’), the identity of which is known to the Grand Jury.” 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.
Negotiations between the unnamed sportswear company and a “high-ranking official” ended with the company paying $160 million for a 10-year contract.
From the Portland Business Journal:
The sportswear company also signed an agreement with a Brazilian sports marketing company called the Traffic Group that permitted the Traffic Group to invoice the sportswear company for “marketing fees,” according to the indictment. Federal prosecutors claim Traffic Group invoiced the sportswear company for $30 million between 1996 and 1999. Prosecutors also allege the owner of the Traffic Group then paid “half of the money he made from the sponsorship deal, totaling in the millions of dollars, as a bribe and kickback” to the same Brazilian team official who negotiated the sponsorship deal with the sportswear company.
The indictment does not provide any information as to whether the sportswear company had knowledge of the alleged kickback payments. The deal was terminated before the end of the 10-year agreement on Jan. 25, 2002, according to federal prosecutors.
According to the Bloomberg report, Nike is cooperating with the investigation.
