U. of North Carolina at Chapel Hill and Nike Agree on $28-Million Deal With Anti-Sweatshop Clause By GOLDIE BLUMENSTYK
The University of North Carolina at Chapel Hill has signed an eight-year contract with Nike worth more than $28-million in cash and athletic shoes, apparel, and equipment.
Under the agreement, signed this week, all merchandise carrying the university's logo -- including, for the first time, team uniforms -- will be manufactured under anti-sweatshop labor codes set out by the university and the Fair Labor Association, an organization backed by apparel makers and major universities.
Rutledge Tufts Jr., a licensing official at Chapel Hill, said that it is rare for universities to include team uniforms in their fair-labor codes because companies like Nike have resisted being held to manufacturing standards that universities do not apply to other apparel they might buy. UNC was able to persuade Nike to go along with the requirement in the deal for team uniforms by agreeing to abide by the fair-labor rules for all of its apparel purchases, Mr. Tufts said. He is on the board of the Worker Rights Consortium, a Washington-based group that is campaigning for better conditions in apparel factories worldwide.
Mr. Tufts says the agreement breaks new ground. It means, he said, that university computer technicians and groundskeepers, as well as basketball players, will "have on shirts that are made under fair working conditions."
The Worker Rights Consortium's executive director, Scott J. Nova, also praised the deal. "At first blush, it seems positive," he said, noting that he had not seen the exact terms of the contract. "It's a significant precedent. We'll all have to see where it leads."
A Nike spokesman referred questions about fair-labor aspects of the contract to a corporate-communications official, who could not be reached for comment on Tuesday.
Steve Kirschner, the spokesman for the Chapel Hill athletics department, said the department was pleased to have struck a deal that set a standard for good labor conditions and provides "long-term financial stability for the athletics department."
The deal, which runs three years' longer and is worth substantially more than Chapel Hill's previous two agreements with Nike, calls for the Beaverton, Ore., company to provide the university with more than $18-million worth of uniforms, shoes, and equipment for eight years.
Nike will also increase the amount it pays in royalties on T-shirts, hats, shorts, and other licensed goods that it sells bearing the UNC logo. The rate will go from 8 percent to 10 percent of the wholesale price of the items. The university received an average of $539,000 a year from such sales over the past three years. The university uses 75 percent of its apparel-licensing revenue for general scholarships for students, and gives the rest to the athletics department.
The deal also calls for Nike to pay a total of $920,000 a year to eight coaches, in varying amounts, for personal contracts.
In addition, the company will pay $100,000 a year to the athletics department for general use, and an additional $100,000 a year to the department for an incentive program designed to reward coaches or programs for such achievements as winning championships or having a number of team members do well academically. The football and men's and women's basketball teams will not be eligible for the incentive, which is reserved for the institution's 25 other teams.
Nike is also providing $100,000 a year to an academic-enhancement fund controlled by the chancellor, who plans to spend that money on undergraduate education.
Should Chapel Hill change its policy and allow corporate sponsorship in its basketball arena or football stadium, Nike would have the right to advertise there under the new contract at no additional cost. Mr. Kirschner said there are no plans to change the policy. The company's ads will appear in game programs and the athletics department's Web site, and Nike can use UNC logos in its advertising.
Nike said the contract is "among the largest" of its kind between the company and a university, but would not confirm that it is the largest. The new deal will go into effect in July, when the existing $11.6-million agreement expires.