Irregular Jonathan Speaks

Nike University: Hooked on Sweatshops


I didn't know it until recently, but I am a student at Nike University. If you attend a large NCAA university in the United States, chances are you're a Nike U. student, too. The University of North Carolina, the University of Kentucky, Florida State, the University of Arizona, Clemson University, and the University of Colorado are just a few of the schools that make up Planet Nike.

How can you tell that you go to Nike U? Just take a look at the uniforms of your school's favorite sports team. If you see the telltale swoosh plastered on jerseys, helmets, shorts and shoes, then you'll know for sure.

Gear sponsorship deals are nothing new in sports - for years, athletes have endorsed bats, balls, gloves and various other sport-related items for their own financial gain. Endorsement deals at the university level, however, are more recent in origin and more dubious in nature. The deals are the outcome of two separate processes: the money loop and the education squeeze.

The Money Loop

In its zeal to win over the hearts, minds and shoes of America, Nike has constructed a pretty neat little system: a money loop that begins with production, continues with advertising, moves on to purchasing and then returns to production. Let's travel the loop and see what happens.

Production: The Sole of Nike

Regardless of what your parents might have told you, shoes don't grow on trees. Someone has to make them. While he was in the MBA program at Stanford in the late '60s, Phillip Knight came up with a great idea about who should make them. In a paper for a class, he wrote that a big problem in the shoe industry was the relatively high wage paid to American factory workers. Knight's solution: put your factories in Asia where you can pay workers a whole lot less, and get ready to rake in the profits.

As cofounder and CEO of Nike, that's exactly what Knight did. According to CBS News, the New York Times, the Campaign for Labor Rights , and Thuyen Nguyen of Vietnam Labor Watch, workers making Nike products in Vietnam, China and Indonesia make only $1.60, $1.75 and $2.46 per day, respectively. Numerous human rights abuses have been reported.

To get the full story on Nike's Asian sweatshops, visit these organizations' informative web pages. There are two important points to remember here.

  1. When a pair of Nike shoes is made, only one or two dollars is set aside to pay for labor expenses (The Oregonian 12/1/96). Because Nike spends so little on labor, it rakes in huge amounts of profit - more than $550 million alone last year (Forbes).
  2. Nike gains this profit through the perpetuation of human suffering. The wages Nike pays are less than workers need to live on ( Vietnam Labor Watch). No one can survive in the long term on Nike pay. That's ok by Nike, though: after the factory has chewed them up and spit them out, older workers are replaced by younger workers fresh for the exploiting.

The average Nike pair of shoes costs $63. At this rate, it would take a Vietnamese worker 40 days to make enough money to buy the shoes they make. Of course, this assumes they don't have to spend their money anywhere else. The fact that all of their meager earnings must go toward food and shelter makes it unlikely that they will ever be able to purchase the shoes they make.

Advertising: Just Buy It

Of course, it's not the workers who make Nikes that are supposed to buy them. Relatively affluent Americans are. So in the next step of the money loop, Nike has to convince the rest of us to buy the goods its workers have made.

When you pay your workers pennies an hour and sell your shoes for tens or hundreds of dollars, you've got a lot of spending cash. Nike's marketing and promotion budget for 1997 is a whopping $978 million per year. Where does that go? Well, some of it goes toward simple television and print advertising, but a surprising amount goes toward endorsement deals. At the professional level, Michael Jordan gets $20 million dollars a year to endorse Nike and wear the swoosh. Monica Seles and Tiger Woods receive $40 million a year combined. At the university level, millions of dollars are provided yearly to each university with a signed Nike contract.

When Michael Jordan wears the Nike swoosh, it is a matter of his own choosing and he gets paid big bucks to do it. When university athletes wear the Nike swoosh, they get paid absolutely nothing for their display. The only choice they have in the matter is to wear the swoosh, or not to play at all. On the other hand, coaches receive handsome compensation. For instance, Lute Olson of the champion Arizona Wildcats rakes in $200,000 a year from Nike. This past summer, all the NCAA coaches in the Nike stable were invited to take a cruise on the Carribean Sea. Guess who paid the bill? That's right, Nike (Arizona Daily Star 3/11/97).

Nike would like you to think it is sponsoring universities out of the kindness of its corporate heart. Nothing could be further from the truth. As part of these contracts, Nike insists that all athletes wear Nike gear. If other brand gear is used, then brand symbols must be covered by tape. Nike also receives a certain portion of game tickets to distribute as favors, as it sees fit. Finally, in some contracts with schools such as the University of Kentucky, Nike specifies that the university is to make no disparaging comments about Nike. As universities take in payments, they flush the first amendment down the drain.

Consumption

The production and promotion schemes that make up two parts of the money loop are pretty sleazy. But the loop completes itself as the rest of us buy the shoes that Nike makes. As Nike CEO Phillip Knight once said, "it doesn't matter who you offend as long as you're getting your message to your consumers." The proof is in the pudding: in the fiscal year 1996 alone, Nike sold $6.5 Billion dollars worth of shoes. That represents millions of people who responded to the hype created by Nike's advertisements, professional endorsements, and university contracts. These billions of dollars were reinvested into production, allowing the entire process to continue and even accelerate.

The Education Squeeze

Of course, it is important to recognize that the Nike scheme couldn't have worked its way into our universities without what I call the Education Squeeze. We simply do not spend enough money on higher education in the United States. One reason that sports programs have grown so large at universities, particularly state universities, is that successful teams bring in donations, not only to fund athletics but also to support research and teaching. The key phrase here is "successful teams," and athletics programs need money in order to succeed. With legislators holding the pursestrings so tightly, it is understandable that university administrators would seek money from private corporations like Nike. And as soon as one university signs a multimillion dollar contract with Nike, other universities must scramble to do the same in order to keep up. If we had sensibly funded our education system in the first place, we wouldn't be in the mess we're in now.

Let's review: Nike executives reap hundreds of millions of dollars for thinking this whole scheme up. Nike stockholders reap many millions more for supplying the initial cash. Universities get a few million dollars a year for slapping the swoosh on helmets, jerseys, shorts and shoes. Coaches get a couple hundred thousand in spending change and go on cruise. Asian workers get paid pennies an hour, and student athletes get paid nothing at all.

All in all, this is a pretty sneaky scheme, and the system seems hard to beat. And if you are a part of a Nike University or buy Nike shoes, you may unwittingly play a part in maintaining the system. On the bright side, that means that you can help stop Nike's abuses too. We can make a difference, and there is a way out. For instance, although New Balance and Saucony shoes still do some cheap business involving low wages, they are increasingly paying their workers a living wage. And after the Associated Students at the University of California, Irvine voted 25-1 to join the Nike Boycott, Athletic Department Director Dan Guererro decided to end Nike contracts as soon as they expire, beginning this year. Here are just a few suggestions on how to help Nike, and your university, change their ways.

  1. Stop buying Nike shoes. Nike is a consumer-driven corporation, and it will reform if its bottom line is threatened.
  2. Get in touch with Nike and let them know why you aren't buying their shoes.
    Send them your comments over the web by clicking here.
    Give them a call at 1-800-344-6453 and press 3 on their voice mail system to make comments.
    Or, if you believe in snail-mail, here's their postal address:
    Phillip Knight, CEO
    Nike
    One Bowerman Drive
    Beaverton, Oregon 97005.
  3. Write your University. If you notice the swoosh on your alma mater's uniform, write your university president and director of athletics. Tell them you won't go to games as long as the swoosh is around. If you are an alumnus, write the alumni center and let them know you won't be making any donations until Nike is out of the picture.
  4. Spread the word. Tell your friends about what's going on. Write a letter to the editor of your local newspaper. One person alone cannot make much of a difference, but together we can.

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