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College basketball in the United States is watched by millions and has become lucrative for the universities who compete and the companies who sponsor the teams. But college sport can also carry reputational, legal, and financial risks. We have seen the latest reminder in New York this week, when prosecutors expanded their investigation into bribery and corruption in college basketball.
U.S. college sports are big business. Having a good sports team can help a university attract students and raise more money from wealthy donors. Athletic departments raised $1.2 billion for sports programs in 2015, which is double the amount raised ten years ago. Companies see college sports as a chance to reach a wide audience through advertising and sponsorship. But in the heat of competition, some of those involved are prepared to commit bribery and corruption to win.
This week James Gatto, an executive at Adidas, has been accused of taking part in a scheme to bribe promising high school basketball players to attend two universities, whose teams are sponsored by Adidas. Investigators say he funneled payments of at least $130,000 to the parents of prospective students. Gatto had already been charged on suspicion of bribing students to attend two other universities that also have sponsorship agreements in place. Many athletic brands engage in such sponsorship activities with universities in the hope of promoting their brand to sports fans, but as the latest allegations demonstrate, brands face potential reputational damage and legal action when safeguards for ethical business conduct—including due diligence and ongoing risk monitoring—are not in place.
Companies are not the only organizations at risk from corruption in college sports. In the race to recruit the next Michael Jordan, universities sometimes fail to carry out proper due diligence on prospective students and sponsors or act unethically in other ways. Last year, the 2013 national college basketball title was stripped from a university because it allegedly paid for strip shows and sex for prospective recruits in a bid to convince them to join the team. The scandal has also hit their finances. Not only did the college sport’s governing body impose a financial penalty, but the scandal prompted major donors to withdraw multi-million dollar pledges to the university, including a $5 million bequest from a single donor.
Bribery in the cause of recruiting top players isn’t the only reputational threat to universities, sporting organizations and brands. As we’ve seen from recent headlines around sexual abuse in U.S. women’s gymnastics—or those six years ago involving a former college assistant football coach—organizations must not turn a blind eye to unethical conduct for the sake of sporting success. In the last few years, a cautionary tale has unfolded: The university has paid a $60 million fine to college athletics governing body and $2.4 million to the U.S. Department of Education for its handling of the sexual abuse allegations. The university’s president, vice-president and athletic director were charged with perjury, obstruction of justice and failure to report suspected child abuse in 2012. They were subsequently fired or resigned. Six years later, the scandal continues to taint the university’s reputation. Research suggests that young people want to buy from ethical companies and work for ethical firms, and they surely expect the same standards from their places of learning. The lesson is clear: unethical behavior is never worth it, even if it leads to short-term glory on the court.
Actions You Can Take Now
1. Visit our Sporting Analytics microsite that looks at how LexisNexis media intelligence and research technology helps organizations understand the risks and rewards of global mega sport sponsorships.
2. Learn how LexisNexis® Entity Insight can help you proactively monitor for emerging risks—including threats to your reputation—so you can make informed decisions.
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