High school sponsorship contracts raise concerns, but also benefit programs
Kristin Murphy, Deseret News
Editor's note: This is part one in a series dedicated to sponsorship of high school athletics programs by athletic apparel companies. In this piece, Amy Donaldson examines the regulatory environment surrounding these deals and how local coaches have gotten into legal trouble with respect to such contracts.
Finding ways to pay for high school athletics, while money for academic needs seems to be in short supply, has caused parents and coaches to become creative about raising money.
After all, supporters only want (or need) so much cookie dough.
So when Nike called Bingham head coach Dave Peck several years ago and asked about sponsoring his football team, the coach listened.
"They said we'll give you a free shoe for every cleat your kids buy and a 40 percent discount," Peck said. "That's a big deal to the kids."
Bingham agreed to a deal with Nike, and then in 2011 when that original deal expired, Peck and administrators took bids from several companies and decided to switch to Adidas. The company offers 40 percent off apparel, accessories and footwear, and gives the team rebates to be used on products depending on how they perform.
The program receives $10,000 annually that it can use on uniforms, every athlete gets a free shoe, and they also get two for one hoodies and sweats. Bingham, however, has to spend $40,000 annually through Universal Athletics to receive the discounts, although it counts sales to the football program, booster club and school administration. Also, the more success the program has, the more it receives in rebates.
Peck isn't the only coach who saw an opportunity in a sponsorship deal. The Deseret News asked school districts along the Wasatch Front and found every district except Salt Lake and Weber had at least one deal. Most often it was a sponsorship deal between Under Armour and a school's football program.
While the contracts have been around for years, most district and State Office of Education officials were unaware of the contracts as most were entered into by coaches and principals.
That is, until last year.
That's when an audit by the Utah State Office of Education revealed a contract between Timpview High football and Under Armour. State officials said the deal violated both ethics rules for educators and state procurement laws (which require a competitive bidding process on any contract or purchase made by government entities over $2,000) and forbids those entering into the deals from benefiting personally in any way.
The code says, " is guilty of a felony if the person asks, receives, or offers to receive any emolument, gratuity, contribution, loan, or reward, or any promise thereof, either for the person's own use or the use or benefit of any other person or organization from any person interested in the sale of such supplies, services, construction, real property, or insurance."
State and district officials pointed to a section of the Timpview contract that provided $2,000 in apparel for coaches. Former Timpview High coach Louis Wong told investigators he used that allowance to buy clothing for his staff, administrators and those who worked at the games. His principal also signed off on the contract.
Bingham's contract is written differently and doesn't provide for a specific benefit for coaches or administrators. Still, it gives the program rebate money, which Peck said he used much in the same way. He purchased shirts for everyone from the grounds crew to other teachers, as well as helping student athletes who couldn't afford the required gear.
"None of that comes from public money because of the deal we have with Adidas," said Peck, whose agreement was signed by his principal. "It helps create an atmosphere of unity and it allows everyone to feel like they're part of the program."
He and other coaches point out that parents are buying gear for their student athletes anyway. The deals allow parents to get deep discounts and most offer rebates that the school or program can use in whatever way they need, including helping financially disadvantaged students.
Hillcrest head football coach Casey Miller coached in California where he said the contracts are standard operating procedure. One of the first things he did when he took over the program was ask district officials and school administrators to help him secure a contract.
"You have to find a company to work with and get one of these contracts so you can afford to get nice stuff," he said. "It brings a sense of pride to a program."
Miller said he sought a contract, in part, to keep his players excited about his program as nearby schools had contracts that players see as prestigious. Open enrollment allows students to attend any school for any reason.
"If we have to buy things one at a time, we pay more," said Miller. "It's like Walmart, you can buy in bulk so it's cheaper."
While initially alarmed about the contracts, state officials now agree that the contracts are not necessarily a bad thing. It is, however, crucial that schools and districts abide by state law in securing the contracts. Coaches and booster clubs have to realize that in being affiliated with a school, they are subject to strict financial rules.
"These are governmental entities and it's important that they abide by state law," said Carol Lear, attorney for the Utah State Office of Education, who's been involved in writing a new state rule to clarify many of the issues raised in the Timpview case. It has been finished and after a public comment period should go into effect on April 22, 2013.
The new rule asks districts to write clear and specific rules on these types of issues, as well as others raised by the Timpview situation, like fundraising. Many districts have already begun that process, including Granite, Canyons, Jordan and Alpine. Provo District currently has no apparel contracts with its sports programs.
That process began with school districts finding out which programs had entered into deals.
"We had to say, 'Who has a contract?’ ” said Alpine School District spokeswoman Rhonda Bromley. "We needed to review it and we said it's null and void until our attorney and business administrator reviewed those. It's not bad or wrong to have a contract, but we wanted to make sure coaches were protected."
The district was aware of Lone Peak High football coach Tony McGeary's contract with Under Armour and told him he needed to go through Rob Smith, the Alpine District's business administrator. Instead, an email exchange with a representative of Universal Athletic revealed that he decided to do as the representative suggested and just engage in a handshake deal.
The documents he gave to his players, however, said the team had a sponsorship deal with the Under Armour and that if they all purchased their apparel through Universal Athletics, they would all enjoy 40 percent off their purchases.
Some parents said they felt they had no choice in the matter, while others said not only did they feel it was optional, but their children wore other brands of shoes and gear and were not penalized.
Bromley declined say why the Lone Peak principal opted not to renew McGeary's coaching contract, which in turn, prompted the coach's resignation last week, but she did say the district has been very clear on why those contracts must go through the proper channels.
"We want our coaches to be transparent on those issues. We want to make sure we're following the law."
This is part one in a series dedicated to sponsorship of high school athletics programs by athletic apparel companies. In this piece, Amy Donaldson examines the regulatory environment surrounding sponsorship deals and how local coaches have gotten into legal trouble with respect to such contracts. On Thursday, Donaldson will examine how two schools hope to leverage the success in some sports for the good of all their athletic programs.
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