Workers pack shoes at a Nike factory in Tangerang in West Java province August 2, 2007. (Photo: Reuters, Crack Palinggi)
Last weekend’s PK80 celebration—a 16-team college basketball tournament in Portland, Oregon—was organized to honor Phil Knight on this 80th birthday. If you watched ESPN’s coverage of the games, then you experienced a big dose of homage paid to Knight, including Bill Walton’s effusive adulation for Knight and his corporate success.
And why not? Knight has been responsible for putting big money in the pockets of universities and head coaches. Nike executes exclusive contracts with schools—“Nike schools” they’re called—to outfit schools with Nike equipment and manufacture merchandise with the “Nike swosh.”
Nike isn’t alone, of course. Adidas and Under Armour do the same thing. For perspective, here’s a list generated recently by Sports Illustrated showing which major schools are under contract with which company.
It’s a huge business, too. The Portland Business Journal estimates it amounts to about $300 million dollars to schools each year. That’s per year, mind you—not the amount generated for universities via long-term contracts. For example, Forbes reports that UCLA’s contract with Adidas (through 2032) is worth $280 million. Mega-deals are common for schools with elite athletic brands—schools like Ohio State, Michigan, and Texas.
But Nike has what Adidas and Under Armour do not—a face. The public has no idea who runs either of Nike’s major competitors. Not so with Nike. Phil Knight is the face of the franchise.
That doesn’t mean Nike’s competitors aren’t getting news coverage. Adidas has been in the news recently, but not by its own choosing. The news is about scandal—the FBI’s investigation into alleged money-laundering and collusion in the recruitment of college basketball players.
But rather than focus on how shoe-apparel companies have contributed to the underbelly of collegiate sports (there’s plenty of treatment in that regard), in this piece I’ll write about a question that came to mind while I was watching PK80 last weekend: “Well, just what kind of company is Nike?”I don’t mean what kind of company it is in relation to competitors. I mean what kind of company it is in terms of corporate social responsibility.
What I learned is this. As many of you know, Nike does most of its manufacturing overseas. For years the company had been accused of questionable practices, including using sweatshops and children to produce products. But to its credit, Nike—and Phil Knight, specifically—acknowledged problems. Nike went about reform seriously, spending about a decade cleaning up its working conditions.
But activists started protesting again this year. Here’s why (source Quartz):
“There are claims that workers at a Nike contract factory in Hansae, Vietnam, suffered wage theft and verbal abuse, and labored for hours in temperatures well over the legal limit of 90 degrees, to the point that they would collapse at their sewing machines. Nike is also accused of cutting jobs at the Hansae factory and pulling production from a factory in Honduras with a strong union presence, resulting in hundreds of workers losing vital jobs. The company has also allegedly denied the independent monitoring group Worker Rights Consortium (WRC) access to inspect its contract factories. The WRC was founded in 2000 by universities, international labor rights experts, and student groups…to ensure that products bearing university logos were made under conditions that respected workers’ rights.”
To get a broader perspective and overall assessment of Nike, I turned to “Good on You.” Its purpose is simple—to evaluate companies in terms of corporate social responsibility. What I found was a balanced assessment of Nike—praising Nike for making significant improvements and raising questions about what it considers to be a devolution of progress.
“Though Nike has successfully improved its reputation,” the site writes, “and it has become the top-selling activewear brand in the world, many of its practices are still problematic.“ Specifically, “Good on You” evaluates Nike on environmental practices as “Making Progress,” and on labor conditions and animal welfare as “Not Good Enough.”
“Good on You” gives Nike an overall grade of “Not Good Enough” and recommends purchasing products from higher-rated peers.
The challenge for major universities is that Nike isn’t just another company. It helps bankroll major college athletics. That’s why the answer to the question of why universities won’t distance themselves from Nike is easy – they benefit financially in a very big way. And those financial benefits make it very difficult for universities to raise questions about – let alone call out – Nike on matters of corporate social responsibility.
Let’s face facts: universities are corporations, too. They focus on an interrelated bottom line—just like Nike—of generating revenue, managing the brand, and beating competitors. Companies like Nike contribute significantly to the university bottom line. They are allies, not villains to question or call out.
Keep in mind that Phil Knight didn’t organize PK80. His company didn’t, either. Universities did.