Selling their Soles: The commercialization of college sports

BY IAN HERBERT
Managing Sports Editor
Published September 21, 2005

When Michigan first baseman Samantha Findlay blasted a three-run shot to left field, the Michigan softball team became the first team east of the Mississippi River to win a softball championship. Michigan Athletic Director Bill Martin spent most of that week in Oklahoma City with his wife - the two of them watching the Wolverines win game after game of the Women's College Softball World Series. To Martin, the Nike swooshes on the players' jerseys were probably insignificant - hardly noticeable after so many years. What he was focusing on was the ping of the aluminum bats and the roll of the ball across the dirt infield.

Kit Morris wasn't in Oklahoma, but he cared about the game almost as much. For that first week in June, Morris centered his life on the women of the Michigan softball team. Morris is an executive at Nike, and he is in charge of all of Nike's collegiate contracts - Michigan, Arizona, Texas and more.

Morris roots for Michigan regularly. The school is one of his company's longest-standing partners; plus, he's always sort of liked the Wolverines. He even makes it out to the occasional football game at the Big House.

That week, Morris spent a lot of his time with the channel stuck on ESPN. Because he lives and works in Beaverton, Ore., he went home early from work to watch the Wolverines take on UCLA. He spent the weekend with his wife at home watching softball. For Morris, and probably for some executive at Adida, the California college's big-time corporate sponsor, the game meant something.

In his office at Nike, Morris even keeps a picture of the 2001 national champion Michigan field hockey team that is autographed by all of the players and coaches.

It seems odd that big-time executives at multi-million dollar companies care so much about what happens in the Women's College Softball World Series, but these teams and games mean a lot to corporate America.

 

University lands on Planet Nike

Michigan was involved with Nike for many years before 1994, but it was that year that still defines the Michigan-Nike relationship. In Oct. 1994, the Michigan Athletic Department - led by then-Athletic Director Joe Roberson - signed the first school-wide contract. In the deal, Nike agreed to provide jerseys, shoes and equipment for all 25 Michigan athletic teams. It also agreed to pay Michigan a substantial sum of money.

Including royalties for Nike products bearing the Michigan name, the total came to about $7 million during the six-year contract, or more than $1 million per year. Michigan's current agreement, which was signed in January 2001 and runs through August 2008, will pay Michigan nearly $30 million for the opportunity to put the Nike swoosh on all Michigan apparel.

Roberson, who is now 70 years old and retired, insists that the money was the last consideration he made when negotiating the sponsorship deal - and it's true that the Michigan Athletic Department was already running a pretty strong surplus throughout the years with Roberson at the helm.

"The first thing I wanted to get was control," Roberson says. "I wanted to be able to have the say in what our coaches were getting, what they were giving away. The second thing I wanted to have was equalization - I wanted the whole department to have it. And the third thing I wanted was to maximize it. - We didn't need money, but if you're going to do that kind of thing, you might as well get as much as you can out of it."

Roberson, sitting at a small restaurant that is walking distance from his house in Bloomfield Hills discusses one of the more stressful periods of his eventful life. Standing up, his nearly 6-foot-6 frame gives him away as a former athlete - he played minor league baseball for five years out of high school before getting degrees in education and athletic administration. But sitting down, wearing a golf shirt with a country club emblem, khaki shorts, sneakers and white tube socks, his athletic frame is disguised as he discusses his former life as a Michigan athletic director.

"I took heat like you can't believe," Roberson recalls. "The number of times people told me that I had sold out - which was insane."

For the same reasons he did a dozen years ago, Roberson says he still believes that signing with Nike was the right call. At the time, many Michigan coaches had individual contracts with apparel companies. Even though Nike and the Michigan athletic department confirmed the coaches' contracts, neither would discuss how much they were worth.

Roberson estimates that both former basketball coach Steve Fisher and former football coach Gary Moeller were raking in more than $100,000 a year to guarantee that their players wore Nike products. And even though Nike had wrapped up the two major revenue-producing sports, other corporate sponsors could be found on the jerseys, shoes, socks and wristbands of dozens of other teams.

"To me the issue then became, who was giving what to whom for what," Roberson says. "Sometimes these contracts were written, sometimes they were handshakes, and nobody knew who was providing what to whom."

"Frankly, our women's soccer team looked like a walking ad for Adidas - they had huge letters all over their jerseys."

Roberson claims that he wanted to reel in these corporate contracts under one roof. Uncomfortable with Nike and Adidas and Reebok paying his coaches more than he was, he wanted to replace all the existing contracts between individual coaches and apparel companies with one, all-encompassing contract.

"The whole notion that intercollegiate athletics wasn't commercial - and that Michigan wasn't commercial - before this contract was totally off-base," Roberson says. "If anybody sold their soul, intercollegiate athletics did it. They sold it a long time ago, and they sold it to television."

 

"We're in show business"

So with that argument, Roberson took a proposal for the Nike contract to the then-University president James Duderstadt.

If it had been a couple of years earlier, he probably wouldn't have even approached the president. A few years earlier, Michigan required the athletic director to get approval of higher University authorities - the president and the chief financial officer - on any outside agreements. For his own conscience, Duderstadt probably wishes it had stayed that way. The president emeritus is now one of Michigan's most outspoken critics of the growing commercialization of collegiate athletics.

"There's a disconnect between big-time college sports," Duderstadt claims with conviction. "Michigan is not competing so much with Ohio State commercially. They are competing with the Detroit Lions. I mean, we're competing for broadcasting dollars, for paying spectators. I think we're beginning to push the limits of that."

Duderstadt comes from an education background. He was - and still is - a professor at the University and shows, even today, an unparalleled interest in the students of Michigan. He was an athlete himself, playing on the football team while at Yale for undergraduate work. Even though he played collegiate athletics, Duderstadt still managed to graduate near the top of his class.

He sits, hair receding but maintaining its dirty blond tint, in his office on North Campus - in a building aptly named the Duderstadt Center. Out of this office, the former president of the University helps run the Millennium Project, a laboratory designed to bring students and faculty together in an environment in which they can try to work through new ideas.

But it is also from this office that Duderstadt discusses the importance of a nationwide paradigm shift in college athletics and the importance of bringing education back to the student athlete.

"We're in show business," Duderstadt says calmly. "We're not in providing opportunities for students. If we were really in the business of providing opportunities for students, we'd be investing in intramural athletics. That's for students."

Yet even with his reservations about the growing problem of the corporate takeover throughout collegiate athletics, it was Duderstadt's signature that led to what is now the athletic department's biggest licensing agreement. At the time, he was skeptical, but he trusted Roberson. Duderstadt hired Roberson in September 1993 in part because of Roberson's education background. He wanted someone who he could trust to put the values of the student athlete first - and he thought he had found that in Roberson. Roberson said the two were so close and so similar that people told him many times that he had to prove he wasn't "Duderstadt's man."

"It stunned me because, first of all, he was president of the University and, secondly, he appointed me," Roberson said. "It was pretty clear that we must have had some compatibility. - I worked for him, I respected him, and, if you want to call me his man, then call me his man."

They are still good friends today, but one of the few things that they disagree on is the signing of the Nike contract.

Duderstadt says now that the Nike contract was a mistake - and one that he would not make if he were to do it all over again. In his eyes, the contract sent Michigan down the wrong path and set the school's priorities in the wrong place - with money and not with education.

"The difficulty right now is that college sports is caught between one extreme - to provide highly competitive opportunities for student athletes - and on the other hand to pay for it through highly commercialized activities," Duderstadt says. "And my own sense is that the commercialization of it is now calling the shots and has destroyed it. It has not only taken universities farther and farther away from what universities are all about, but are also completely damaging universities by exploiting student athletes for all of the standard concerns. And I don't see any signs that it's getting better."

Logically, Nike pays more money to schools that are more successful - or at least more prominent. For example, Nike signed a contract extension with Clemson earlier this summer that agreed to pay the school approximately $200,000 per year in cash and give the Tigers $125,000 worth of equipment every year. By comparison, Michigan's contract from 2001 is worth $2 million in cash and provides $1.2 million worth of equipment every year.

The same way executives at Nike root for a winning softball team in order to be associated with winning, corporations all around the world are willing to spend more money to be recognized as supporters of successful sport programs.

Duderstadt's worry is that it is coming at the expense of the students. The vast majority of athletes at an athletically dominant school such as Michigan become professionals in areas other than sports. With the pressure mounting to win, the idea of a student athlete gets thrown out the window.

"I think it's hurting," Duderstadt says. "Nike is most inclined to support winning programs, and therefore puts even more of a priority on having successful programs. You get successful programs by recruiting outstanding athletes, whether they can succeed academically or not."

 

"The urge to win at all costs"

In 1989, the Knight Commission for Intercollegiate Athletics was formed as a way to get a handle on the increasingly out-of-hand world of intercollegiate athletics. During the next three years, the Knight Commission released three reports outlining its concerns. The reports proposed "a new model for intercollegiate athletics."

After years of interviews, surveys and discussion, the commission released its first report, Keeping Faith with the Student-Athlete: A New Model for Intercollegiate Athletics, which detailed the most serious problems facing intercollegiate athletics at that time. These problems included recruiting and boosters, academic eligibility and, of course, commercialism. The report explained that America believed intercollegiate athletics had gone off the deep end.

According to the report, three of four Americans believed that television dollars controlled college sports and most thought that colleges were guilty of a double standard on admissions of athletes. Eighty percent of all those polled believed that intercollegiate athletics were out of control.

"All of the positive contributions that sports make to higher education, however, are threatened by disturbing patterns of abuse, particularly in some big-time programs," the commission wrote in that first report. "These patterns are grounded in institutional indifference, presidential neglect and the growing commercialization of sport combined with the urge to win at all costs."

Morris, the Nike executive with the autographed field hockey photo, was actually the first staff director of the Knight Commission. Like the commission, which was supposed to be around for a year and a half, Morris was planning on spending just 18 months outlining a plan for collegiate athletics. But it wasn't long before 18 months turned into six years.

Ironically, Morris, who describes himself as "a recovering (athletic director)," spent most of his life working in higher education, helping the people who Duderstadt claims are being most directly hurt by commercialization in collegiate athletics. He was an English major at Mississippi and a teacher in Fairfax, Va., before going to Harvard to get a masters degree in education. While continuing his education at Harvard, Morris got a job as the assistant to the athletic director with the Crimson, and, after a few years, he got another job offer - this time with Yale. At Yale, he was responsible for the scheduling and details of Yale's varsity sports programs, and he spent four years with the Ivy League school before becoming an athletic director in 1985 for Davidson College - where he stayed until the Knight Commission came calling four years later.

"It was on the different side of the table," Morris says now, his slight southern drawl still slipping into his speech occasionally. "Obviously, I didn't have the same kind of relationship (with Nike that I do now)."

Morris left the commission in 1995 when Nike offered him a job as the director of NCAA relations - where he oversees all of Nike's contracts with colleges around the country. At the time, Keith Peters, a Nike representative, said that hiring Morris would help improve Nike's relationship with the NCAA. "That's not to say that on occasion we won't continue to challenge the establishment," Peters said in a public statement in 1995. "It's the nature of doing business."

Tom Goss, athletic director at Michigan for nearly three years between Roberson and current Athletic Director Bill Martin, had nothing but praise for Morris. Goss dealt with the Nike executive regularly while renegotiating with Nike.

"He's a good guy," Goss said. "(Nike is) fortunate to have him because he has brought some balance to where they were. They were off the chart."

Morris doesn't see his new job as a contradiction with the man he used to be pre-1995, but rather he thinks of it as more of a balance between the two sides. And he disagrees with Duderstadt's - and the commission's - claim that intercollegiate athletics are being poisoned by commercialism.

"A higher education is something that I take very seriously," Morris says. "And the way that we implement our business plan is out of respect for higher education and to try to help. If I felt I was damaging it, I would either work to correct it or I would go somewhere else."

In Morris's opinion, corporate contracts are one of the many ways Michigan gets the revenue it needs to support 25 competitive varsity sports teams. And in that line of thought, he has some company.

 

The future of the contract

Even though the Athletic Department didn't need money when Roberson was athletic director from 1993 to 1998, the same can't be said for his successors. Though Roberson would never publicly criticize a Michigan athletic director - "every day you're out of that job brings you further out of the loop," he says - the fact is that more recent Michigan athletic directors have oftentimes had trouble making a profit.

Tom Goss took over for Roberson in 1998, and, financially, the program went dry. Increasing costs and a few years in a row of just six home football games had the Athletic Department looking for new ways to make money.

"You always looked for new revenue streams because, when you have 800 scholarship athletes, there is never enough money," Goss says. "There's still not enough today."

Goss and then-University President Lee Bollinger had a contract extension pretty much worked out with Nike, but the negotiations stalled when issues over factory working conditions for Nike's overseas factories arose. When the University tried to work in language to stay consistent with their new code of conduct policy, Nike pulled the plug.

"We had had a relationship with Nike, and, as a result of our policies on human rights and labor standards, we wanted to see that reflected in the contract with Nike," University General Counsel Marvin Krislov said. "We wanted to make sure that it was implemented in all of our licensees, but obviously Nike, because of its size and importance, was one that these issues were particularly relevant to."

The loss of Nike revenue put new Athletic Director Bill Martin into quite a bind. In his first year on the job, Martin had to pay out of the Athletic Department's budget for all of the equipment that his sports teams used - a cost of about $1.8 million. So one of his first tasks as Michigan's Athletic Director was to negotiate a new Nike contract with Morris to help get the sports budget back into the black.

"Kit Morris was certainly involved in every discussion," Martin said. "He's got great interpersonal skills that you can't get in a classroom."

With his program struggling, Martin, a real estate developer by trade, maximized the contract. He got every dollar he could out of Nike: $2 million worth of sports apparel every year for seven years, $1.2 million every year in straight cash and a percentage of royalties of all Nike equipment sold that bore the Michigan name. In total, the contract was worth almost a whopping $30 million over seven years.

Martin's intensions were almost certainly good. He had to support 25 varsity athletic teams, he wanted all of them to be near the best in the nation and he wanted to do it without getting help from the University. Martin takes pride in telling all of his coaches to recruit the best athletes available - no matter what the cost.

"We pay full scholarships for every one of our scholarship athletes, and 70 percent of our athletes are out-of-state," Martin says. "We tell all of our coaches to go out and get the best student athletes, and we tell them that we will fund the maximum number of scholarships allowed by the NCAA. A lot of schools don't do that."

A few years from now, whoever is the Michigan athletic director will have to renegotiate the contract that Michigan athletics has with its biggest apparel supplier. There will almost certainly be new obstacles, such as 12 regular-season football games per year and more television stations covering more college games. But whether it's a former coach, a former teacher or a former business man, the athletic director will have to decide which way to take the department - toward where the money is or away from commercialism. And history has shown that it's tough to predict in which direction the leaders of Michigan athletics will go.

Martin argues that collegiate athletics have always been commercial. He looks around his office overlooking the corner of State and Hoover streets for a speech he gave at the Michigan Business School in March 2001. In that speech, he talks of the first intercollegiate contest ever - a rowing match between Harvard and Yale that was sponsored by a local railroad company. He leans back in his chair, chuckles and says, "History is fascinating."