Nike Confirms It’s ‘Cooperating’ in FIFA Corruption Inquiry

FacebookTwitterLinkedIn

Nike CBF Brasil Brazil first soccer football jersey 1997

Nike has always been clear about its goal when it comes to soccer (football) worldwide: it’s playing to win, and it wants to dominate. With soccer sales growing 21% to nearly $2.3 billion just for its fiscal year that ended May 31, how much Nike was willing to do and pay to reach that goal is now in the spotlight, as the global sportswear giant has been implicated in the FIFA corruption scandal that’s now unfolding.

Among the details in the US Justice Department’s 47-count indictment that was handed down today in a New York court are allegations of bribery involving efforts by “a multinational sportswear company headquartered in the United States” to win an apparel licensing deal with Brazil’s national soccer team.

While it’s not named in the indictment, which refers to a 10-year, $160 million deal with Brazil’s national soccer team by an unidentified “Sportswear Company A” that is headquartered in the US, the Wall Street Journal notes that Nike signed a sponsorship deal with the Brazilian national soccer federation CBF in 1996, the same year in which the events described in the indictment take place.

Indeed, Nike’s deal with Brazil, considered the world’s most successful and high-profile national team, is heralded on its website as proof that the brand “makes its commitment to the world’s most popular sport undeniable.”

Nike Neymar Brazil

According to its website, Nike started making kits for CBF in 1997, a year after signing on as Team Brasil‘s official apparel sponsor. In addition to sponsoring CBF, it has featured Brazilian futbol star Neymar in its World Cup ad campaigns.

As Bloomberg notes, “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.”

Nike today acknowledged it’s “cooperating” with Justice Department officials who are investigating the claims against FIFA and its representatives. “Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery,” a spokesperson told the Wall Street Journal in a statement. “We have been cooperating, and will continue to cooperate, with the authorities.”

The Justice Department indictment also alleges that a South American Football Federation official and a sports marketing agency called Traffic Brazil were involved in a bribery scheme that led to the exclusive 10-year deal to outfit Brazil’s national team.

The section of the indictment in question covers “alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.”

Specifically, it continues,

Sportswear Company A in 1996 signed a 10-year, $160 million agreement to become a co-sponsor of the CBF and its “exclusive footwear, apparel, accessories, and equipment supplier.”

Three days later, the indictment alleges, an official from the sportswear company signed a one-page agreement with a representative of a sports marketing agency called Traffic Brazil allowing the agency to invoice the company for additional marketing fees.

Traffic Brazil proceeded to invoice Sportswear Company A for an additional $30 million in payments between 1996 and 1999, payments that were used in part for bribes and kickbacks, according to the indictment.

Bloomberg reports that Nike shares fell 0.6 percent to $102.84 on Wednesday at the close of trading in New York, having gained 7 percent this year.

FacebookTwitterLinkedIn