How Nike scored exclusive rights to Jabari Parker’s feet
Seventeen-year-old basketball phenom Jabari Parker, the reigning national player of the year, stood dutifully in his Chatham high school gym in December. On his right sat Robert Smith, Parker’s coach at Simeon Career Academy. On his left, a table with five ball caps, representing the five colleges vying to sign the 6-foot-8 forward. Parker smiled into the TV cameras, leaned behind the podium, and pulled out a jersey sporting the Duke University logo — and the Nike Swoosh.
But Nike didn’t have to wait for the commitment ceremony to get its logo on Parker. The young star has been obligated to wear Nike gear on court since his sophomore year, when Smith signed a four-year contract with the Oregon-based shoemaker. The contract, obtained by Grid through a Freedom of Information Act request, provides players at Simeon, a public high school, with new Nike shoes and apparel worth about $26,000 per year. And it has resulted in more than $1 million worth of exposure for Nike, mostly thanks to Parker’s rarefied status.
The contract also offers a rare glimpse into the world of unregulated deals between public schools and sports marketers. Sponsorship deals like Simeon’s have become common for top-tier high-school athletic programs — but public schools without blue-chip talent get little or no corporate largesse. Apparel-makers and other companies cut deals with individual schools without the involvement of Chicago Public Schools, allowing sponsors to lavishly underwrite some schools and ignore others. The district lets individual schools sign sponsorship deals and doesn’t track the contracts, according to a spokesman. Nike and other companies won’t disclose how much they spend or which schools they do business with. Nike’s contract contains a confidentiality clause prohibiting Simeon staff from discussing the deal’s terms.
“The companies are really careful about covering their tracks, and the schools are very careful about covering the money,” says Howard Schlossberg, a journalism professor at Columbia College who has written a sports-marketing textbook.
The sponsorship deals provide cash-strapped athletic programs with needed equipment. They also come with strings attached, granting Nike broad rights designed to maximize its marketing exposure.
As the cameras rolled on Parker’s announcement in the Simeon gym, a Swoosh banner hung from the wall behind him like an embassy flag. The banner is there for every Simeon home game, as required by the contract with Nike. The agreement also gives the company “the exclusive right in perpetuity” to use footage of Parker’s high school games in future marketing campaigns.
Smith signed the four-year agreement with Nike, a company with $49.5 billion in market value, in the fall of 2010. Smith says the agreement, which he calls Nike’s “standard contract,” simply continues arrangements made under his predecessor, Bob Hambric, whom Smith succeeded in 2004.
“When I took over as head coach, one thing that Hambric said to me was, ‘You have to make sure you’re loyal to people who are loyal to you,’ ” Smith says. “Nike was loyal to me. I was an unknown to them, and they didn’t have to keep our school on, but they did.”
Nike rewards Smith’s loyalty by supplying his program with shoes and apparel with an estimated retail value of more than $100,000 over the life of the contract.
The Nike contract did not undergo review by CPS, according to Smith. The coach says he needed approval only from Simeon principal Sheldon House, who co-signed the contract but declines to comment.
Official district policy requires schools to report all equipment donations to CPS officials. After inquiries from Grid, a spokesman says the district has recently re-emphasized the rule to principals, and that it is looking into the “matter associated with Simeon.”
“Nike does arrange partnerships … with individual schools,” the spokesman, Frank Shuftan, acknowledges in an email. “Most of the sponsorships are directly between schools and the manufacturers and not something that is tracked centrally either through Sports Administration or through the Partnerships Office,” Shuftan writes separately.
The Illinois High School Association, which regulates high school athletics, also has minimal oversight. “We don’t really get involved in that sense of ‘this is what you should or shouldn’t do,’ ” says IHSA Assistant Executive Director Matt Troha.
Without central oversight, it’s not clear exactly how many other public-league schools have sponsorship deals with shoe companies. Observers estimate that Nike provides sponsorship support to at least 20 of the 106 high schools in CPS, a figure Nike won’t comment on. A few schools, like Simeon, have formal contracts that supply most or all of the team’s gear. These are schools at what Scott Kirkpatrick, a partner at sports-marketing firm Chicago Sports and Entertainment, calls the “influencer level,” wielding cultural clout with the kids in their community.
Indeed, players at Whitney M. Young Magnet High School, Farragut Career Academy, and Morgan Park High School routinely take the court wearing matching Nike shoes and jerseys. A Nike spokeswoman says Nike has no signed agreement with Morgan Park but wouldn’t comment on the other schools, citing company policy against discussing partnerships.
Orr Academy High School runs the court in Under Armour sneakers, provided under a five-year contract signed by head coach Lou Adams, who also says he cut the deal without review or approval from CPS.
“Nike Basketball has a 30-year track record of supporting players at all levels in Chicago and around the globe,” Nike says in a written statement. “We are committed to providing young players with the elite coaching, training, inspiration and product they need to raise their games and enhance the quality of the sport on- and off-court.”
In exchange for its support, Nike gets valuable exposure to young athletes and their fans. The company hit the jackpot with Parker, whose star power put him on the cover of Sports Illustrated last year and has drawn national TV coverage to seven Simeon games in the past two seasons. For one December game in Texas broadcast live on ESPN, most of the Simeon squad wore custom shoes that a Nike rep had flown in to deliver the day before.
Nike, whose contract requires Parker and his teammates to exclusively wear Nike shoes and apparel in “all basketball-related activities, including photo shoots, practices, clinics, exhibitions, games, and game-related travel,” reaped a marketing windfall worth an estimated $1.2 million. That estimate is based on the prices Nike would likely have paid for the advertising equivalent of Simeon’s media appearances.
“Simeon is the hot property,” says industry veteran Sonny Vaccaro. “You’re getting millions of dollars of exposure with Simeon High School.”
Vaccaro should know: He ran the high school basketball marketing programs at Nike and then Adidas for decades, before stepping down in 2007. In the 1980s, he pioneered the aggressive marketing of sneakers through young athletes. Vaccaro’s tactics — paying coaches, sponsoring tournaments, and giving gear away to kids — remain widespread among the Amateur Athletic Union clubs that play in the summer, according to Vaccaro and former Nike-sponsored AAU coach Larry Butler. “Nike owns that whole grass-roots scene now,” says Vaccaro.
Nike isn’t the only company capitalizing on the visibility of high school basketball teams. At Simeon home games, banners for Gatorade and headphone-maker Skullcandy hang alongside the Swoosh. Gatorade didn’t respond to Grid’s inquiries, but Skullcandy’s director of sports marketing, Tom Czarnowski, says: “Our brand is very driven by our involvement in sports, and right now basketball is a very important sport for us.”
In October, Skullcandy and Simeon’s principal signed a five-year agreement, a copy of which Grid also obtained through a FOIA request.
According to its terms, the company provides 75 pairs of headphones each year for the school’s media lab and boys’ and girls’ varsity basketball teams, along with an annual $1,000 sponsorship fee paid to the school. In return, the contract requires Simeon staff to encourage varsity basketball players to “make positive references to the Skullcandy brand particularly during interviews and public appearances.”
The contract also grants Skullcandy two days of access to the varsity teams each year to photograph them for advertising material. In December, Skullcandy released a five-minute promotional video starring Jabari Parker, who’s seen wearing Skullcandy headphones.
It’s understandable why CPS and the schools’ athletic departments would seek corporate sponsorships — they face constant, intense budget pressures.
“When schools run out of funding, the first thing they do is cut athletic funding,” says Scott Andresen, a sports law attorney who has worked with the IHSA. “That being said, Nike is not doing this out of altruism.”
Since the economic downturn, schools have increasingly turned to corporate sponsors for support, says Josh Golin, associate director at the Boston-based advocacy group Campaign for a Commercial-Free Childhood. He objects to the sponsorships because “advertising is not an equitable funding mechanism.
“If youth sports are important, we should be funding them, not relying on Nike to pick winners and losers,” Golin says.
The exposure it gets from high-school sponsorships has helped Nike achieve dominance. The company accounts for at least 90 percent of basketball-shoe sales in North America, according to Paul Swinand, a Morningstar analyst.
Coach Smith, who says he doesn’t get a dime from Nike personally, brushed aside the sponsorship deal’s potential downsides. “It doesn’t bother me,” he says. “I know the kids like it — they like wearing the shoes.”
Read our follow-up to this story.