Sneaker Money

By Connor GoodwinDecember 26, 2018

Sneaker Money

University of Nike by Joshua Hunt

DURING THE COLD WAR, some big US universities took on research funded by the CIA, Department of Defense, and other government entities. One of the earliest and most infamous projects was MK-Ultra, which examined the effects of LSD for possible uses as a tool of torture.

When the dirty covert money slowed, universities had to create alternative sources of revenue. For Dave Frohnmayer, former president of University of Oregon, raising tuition rates and out-of-state enrollment was not enough to cover the cuts in state funding. Then the football team played in the 1995 Rose Bowl. Though they fell to Penn State, they did win the attention of Phil Knight, founder and CEO of Nike.

University of Nike by Joshua Hunt gives a compelling account of what happened next in the ongoing story of the commercialization of higher education. Written in short clips that pivot between several story lines, Hunt’s book has a remarkable sense of pace that turns what might be considered a sludgy read into a page-turner. The race between Pepsi and Coca-Cola to close exclusive deals with public school systems reads as suspenseful as a late drive in the fourth quarter to win a championship.

The fragments of this story reveal a damning portrait of the modern American university. But while Hunt does an excellent job of mapping disparate threads, the timelines are confusing. When the narrative pivots from one story to another it is, quite frequently, also a time hop. Given the several moving parts, simply showing the reader a visual timeline of key events would be helpful.

In Phil Knight’s world, business partners and rivals are sometimes indistinguishable. His cutthroat business tactics, what Hunt calls “the Nike way,” ranged from corporate espionage to outsourcing labor and were evident from the very beginning. Before Knight founded Nike, he was a distributor for a Japanese shoe company and, after cultivating a mole and obtaining their manufacturing subcontractors, he decided to cut out the middleman and deal directly with the manufacturers, and then, after he founded Nike, the athletes.

This is where his true business acumen shines. While other shoe companies were at trade shows, Nike was on the track and in the gym. Bill Bowerman, University of Oregon’s track coach who had mentored several Olympians, was instrumental in these early efforts to establish Nike as a shoe company worthy of consideration.

In college athletics, the best way to get to the athletes was through the coaches. And getting to the coaches was simple: pay them. Before NCAA lifted the ban on formal contracts between coaches and private companies, Nike had to rely on handshake deals, which were as good as a contract anyway, because the “sneaker money,” as much as 20 percent of a coach’s salary, would cease if Nike was unhappy. Later, NCAA would rewrite the rules to allow for “sneaker money” to be included in “all-school apparel deals” that allowed only Nike apparel at university retail outlets, the first of which was arranged with the University of Miami in 1987.

Coach salaries are a simple way to measure the “college football arms race.” It is now standard for coaching contracts to include huge bonuses for bowl game appearances, number of wins, and other financial incentives. For example, the base salary of Mario Cristobal, head football coach of the Oregon Ducks, is $2.5 million and on top of that he could earn as much as $1.575 million in bonuses. Coaches who didn’t play ball were not invited to Nike’s training camps with top high school recruits. The college market was a way of cultivating fans and also hedging into professional sports, which were already saturated by other companies like Adidas.

Star athletes made Nike’s brand recognition and profits skyrocket. Knight wanted “a truly iconoclastic athlete,” someone who would destroy the image of rival shoe companies. From Steve Prefontaine to Michael Jordan to LeBron James, Nike signed the best of the best. The greatness of these athletes seeped into the Nike brand and had significant payoff. With Prefontaine, Nike passed $1 million in annual sales; with Jordan they passed $1 billion. In the peak Jordan era, “one out of every three pairs of shoes sold in America were Nikes.” Nike went from selling running shoes to college athletic apparel to, with the help of Jordan, becoming a “total brand” dealing in “dreams.”

Knight’s bullying approach colored not only his business career, but also his philanthropic efforts. His enormous donations to University of Oregon were also investments from which he expected returns. He cultivated “an unusual amount of leverage” over University of Oregon President Dave Frohnmayer, becoming the largest donor to research of a genetic disorder that Frohnmayer’s daughters suffered from, with an annual gift of $1 million. When Frohnmayer didn’t side with Nike in a scandal over abhorrent working conditions, Knight withheld that annual gift.

Knight also invested in “dizzyingly luxurious” buildings for the football team, often more so than the facilities used by the NFL. One can imagine high school recruits being seduced by the sleek buildings and charming cheerleader made to accompany them around campus.

Hunt describes the infusion of Nike dollars as a kind of “trickle-down economics” where “good players ensured more lucrative television contracts […] more donations and licensing revenue […] and higher performance bonuses for the coach.” Athletes, according to Hunt, are an asset to universities increasingly reliant upon athletic programs as sources of revenue.

In one disturbing example after another, Hunt demonstrates the terrible lengths universities will go to in order to recruit and protect asset-athletes, often at the expense of the larger student body and the mission of universities. After a year of #MeToo, it has become public knowledge how organizations silence and discredit victims of sexual assault while protecting the abusers, typically men in positions of power. For student-athletes on campus, it is no different. “[I]nstead of a criminal investigation, there would be a public-relations strategy,” not unlike Nike’s response to public outrage over abhorrent working conditions.

One might argue that student-athletes are not wealthy like Harvey Weinstein and that Nike cannot be held responsible for the actions of an individual wearing its clothes. Although student-athletes are unpaid, they are backed by powerful institutions with significant legal resources and a shared interest in quieting scandals. What parent wants to send their child to a university making headlines for sexual assault?

While not directly culpable, Nike created a climate that pushed university administrators into the business of cover-ups. “Decisions are being made based on how bad thing might look,” said one administrator, “and how likely we are to get sued.” As Hunt points out, “recruiting scandals, sexual-assault accusations, and legal troubles among student-athletes have been persistent side effects of Nike’s experiment at the University of Oregon.”

What happened at the University of Oregon became a blueprint. Indeed, the 2018–’19 college basketball season begins under a shadow of controversy. Three Adidas-sponsored schools, including number-one-ranked Kansas, were involved in a pay-for-play scheme to recruit players. Drastic cutbacks pressured universities to create new streams of revenue and university presidents, fearful of losing their job, reached for the nearest short-term solution. Schools around the country noted the public-private partnership between Nike and University of Oregon, and, when their own states cut taxes, they followed the example of University of Oregon. This has lead to the corporatization of higher education wherein universities are so dependent upon corporate sponsors that the needs of Nike are prioritized over those of the students.


Connor Goodwin is a writer and critic living in Brooklyn, New York. His writing has appeared or is forthcoming in the Washington PostBOMB MagazineModern PaintersX-R-A-Y, and elsewhere.

LARB Contributor

Connor Goodwin is a writer and critic living in Brooklyn, New York. His writing has appeared in the Washington Post, BOMB Magazine, Modern Painters, Fanzine, X-R-A-Y, and elsewhere. He is working on his first novel.


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