Va Tech AD’s Nike Junket Violates State Conflict Law? 

I happened to see today a report in the local Blacksburg Daily News, about Va Tech AD Whit Babcock’s January 2016 junket to Vietnam, Hong Kong and China. Babcock was hired at Va Tech in January of 2014, and signed a new Va Tech contract with Nike on February 19. three weeks later.  That 8-year contract, effective July 1, 2014, pays “$275,000 annually, $150,000 of which is earmarked for football coach Frank Beamer,” with $1.6 million annually in apparel during the first half of the contract, and $1.8 million during the back half. As Daily New reporter David Teel summarized, “that’s $15.8 million in cash and apparel over eight years, or $1.98 million annually.”

Babcock

Babcock’s trip was a junket entirely funded by Nike. I’ll make an educated guess that the cost of a trip like that, for 10-14 days, if negotiated on an arms-length basis by an ordinary traveller, might have $15,000.  (Because Nike is the equivalent of Exxon in Southeast Asia, who knows what was ‘comped’ by Nike, and never shows up on any expense report.)

The reason this trip caught my eye is that I am well-acquainted with the events, back in the late 70’s and 1980’s, which resulted in Nike making substantial payments to big-time football and basketball coaches. These were bribes to get those coaches to command their players to wear Nike shoes and apparel, and no one spoke up back then, to point out that those payments, in almost every case, violated one or more precepts: a) university rules; b) state employee regulations; c) state civil statutes; or d) state criminal statutes. These kinds of constraints (all of which still exist today, with variation by school and state) generally forbade university employees from taking cash or other favor from vendors. The public policy behind these kinds of rules and statutes is to insure that, for example, a state employee isn’t promised personal ‘extra’ benefits, in order to allow the vendor to get a ‘better deal’ in the contract which the state employee is responsible for negotiating on behalf of the school  All rules to protect the public interest.

In fact, the ugly ‘optics’, if not outright illegality, of these coach-payoffs from Nike (and other shoe companies) may have been the reason that, in the early ’90’s, the Knight Commission recommended that the contracting and payments generally run to the school, not the coach. And in ’89, Sonny Vaccaro did the first Nike “All-School’ contract with UMiami.

David Teel’s article about Babcock’s boondoggle is well-done, but it reeks of the dilemma presented to every sports beat reporter assigned to a big-time college program: the reporter gets a call, and then must sit through an excruciating, pompous and self-serving set of statements by the AD, in which that AD wants to ‘spin’ recent events for the public. And Babcock did a whole lot of high-minded such spinning — it’s painful to read, for all the narcissistic preening by Babcock:

“It was a great trip,” Babcock said of the couple week trip. “It was outside of my comfort zone, and I feel like when you get outside your comfort zone, you can grow. So I think it made me a better athletic director.”

And Babcock, whose department has for years utilized many of the fantastic, working class, usually very poor black athletes who come out of the Virginia/Newport News area, has a contract defining a “comfort zone” which many of those poor black players would choose to die for, rather than “get out of.”: 1) Annual salary: $470,000, with a minimum 5% raise each year; 2) Annual “retention incentive” of $140,000; 3) Annual paid dues at the Blacksburg Country Club; 4) Two courtesy cars; 5) a $325,000 ‘signing bonus’ when he signed his January 2014 contract; 5) A cap on his annual income, at $750,000, just so that, with all the bonuses he is entitled to under the contract, based upon the performance of the “kids”, his pay doesn’t get too high.

Babcock’s bonuses are almost too lengthy to list in detail, but include: a) if football players do so well that they go to a bowl game, Babcock gets 1 1/2 months salary; b) if the bowl is a CFP game, he gets two month’s salary; c) with a national championship, Babcock gets another $25,000. hs’ salary — and another $25,000 if the basketball team wins a national championship (there are a bunch of other bonuses, all of them in multiples of $10G, for wins by the men’s basketball team, and then similar, but slightly smaller ones, for such performances by the women’s basketball team; d) a number of other bonuses, again calculated in multiples of $10G, for various kinds of alleged academic success by the players working below him.

Each year, according to Babcock’s spin, “Nike invites several ADs from its affiliated schools to tour overseas factories where its shoes and other apparel are manufactured” (Iowa State’s Jamie Pollard and Oregon State’s AD Rick Stansbury went with Babcock).

The trips, as Babcock waxed eloquent to reporter Teel, are “cultural,” because they “explored” the Great Wall, saw the Viet Cong tunnels used in the war, and toured a women’s support center which Nike supports.

The trips are also, Babcock pronounced to Teel, “educational,” because Babcock told Teel that “you couldn’t help but learn management lessons from a 25,000-employee factory that is essentially its own city.”

This is nonsense, and Babcock needs to be called on it, not just because he is bullshitting anyone who hears it (I’ve done factory tours in SE Asia, and so has my daughter, for work, and we both know it’s mostly all just face-painting.)  Babcock is fooling himself, but also failing the genuine, working class people in his region, many of whom live in small towns cratered by Asian competition encouraged by outfits like Nike.

This sort of junket is given to many AD’s who “do a deal” with Nike on behalf of a school. The AD purports to act as an independent agent for his school, negotiating a deal at arms length, but Nike’s long-time propsensity for handing out junkets has repeatedly generated contract-bidding conflicts of interest, or appearances of conflicts of interest, on the part of the coaches and AD’s — a newly aristocratic set of fantastically-paid (often public) employees.

But Babcock’s failings are even more profound. Instead of jet-setting like fat-cat, and then calling in the local beat reporter, to strong-arm him into printing the stuff that Babcock wants to spin about his Nike boondoggle, Babcock should spend his time, here in his economically-depressed Virginia/North Carolina region, pressing Nike to begin switching its manufacturing back to the U.S., as so many other manufacturers have started to do. The pre-1990 great Virginia and North Carolina textile and furniture operations have been gutted by Asian competition over the last twenty years. (cf., Beth Macy’s excellent “Factory Man,” on Barrett Furniture’s struggles with its 100-year old Va/NC operations’ efforts to cope with the Asian competition) And, even accepting, for a moment, Babcock’s laughable “education” justification for his junket, his time would be much better spent touring remaining manufacturing in the Virginia region.

Teel’s account lets us see the extent to which Babcock, and so many AD’s, are sufficiently  deluded by the tsunami of cash which has flooded Power 5 schools, so as to now view themselves as though they are as indispensable as neurosurgeons, whose absence might jeopardize the very lives of those left behind, as he leaves his “comfort zone” to “educate” himself about “culture”: “They certainly knew if they had to get a hold of me, they could,” Babcock assured those of us who were sniffling in fear into our handkerchiefs back home. “I had great faith in [the staff below him] to run the day-to-day. … The confidence level in the staff, the culture we have coming together. They’re teaching me things and maybe I’m teaching them things.” Whoa. Perhaps, based upon Babcock’s example, his underlings were back home trying to find contracts they could execute on Va Tech’s behalf, with vendors who might similarly give them a junket on the side?

It’s worthwhile to compare Babcock’s actions, as the head of a department of ‘Amateurism’, with the detailed constraints which his department places upon any economic transactions in which their players might be engaged:

The Va Tech Student-Athlete Handbook says that the SA is “responsible for  ” … Reporting any offers or gifts, money or favors  in exchange for supplying team information or for attempting to alter the outcome of any contest [and] maintaining a clear understanding of what constitutes gambling and bribery activities and reporting any suspected infractions …  

And the handbook reminds the SA: “Remember your involvement in any form of gambling or bribery, even in the most minor fashion, will jeopardize your athletic career per NCAA regulations. For example, you may not enter a March Madness Basketball Bracket that requires an entry fee with the opportunity to win a prize.

The SA Handbook also directs that amateur status is lost if the SA: 1. Uses his or her athletics skill, directly or indirectly for pay in any form in that sport, or  2. Accepts a promise of pay even if such pay is to be received following completion of intercollegiate athletics participation.” What if the AD accepts the promise, or appears to accept the promise, of a junket “following completion  of intercollegiate athletics participation?”

And broader NCAA rules proscribe the SA’s receipt of, not just pay, but any ‘extra benefit.‘ Those rules proscribe “free or reduced-cost services,”but also “entertainment services,” defined as “A student-athlete may not receive services (e.g., movie tickets, dinners, use of car) from commercial agencies (e.g., movie theaters, restaurants, car dealers) without charge or at reduced rates, or free or reduced-cost admission to professional athletics contests from professional sports organizations, unless such services also are available to the student body in general. Finally, this list of proscribed items for the SA refers to gifts or inducements from boosters or other strangers.

The SA Handbook constrains student-players, but, with respect to AD Babcock’s junket, there are reasons to require that he similarly shun all ‘extra benefits’ — because the potential for undue influence is exponentially more profound with respect to the negotiation of contracts on behalf of a public entity: the inducement is from a major vendor, who has done, or hopes to do, a favorable contract with the university, the details of which involve millions of dollars.

“It was neat to see where it all starts,” Babcock gushed about his Asian junket. “That Virginia Tech shirt we saw is coming … to a Virginia Tech bookstore.”

It might have been neat. But it also may have violated the university’s Business Conduct Standards which apply to all employees, and prohibit “the acceptance of gifts and gratuities or promises of future employment from contractors or individuals seeking to do business with the university. Meals and travel offered by vendors are included in this prohibition.”

Nike has been paying-off coaches and AD’s for four decades now. AD Babcock had partial or complete authority to commit his university to a contract with a major vendor; some 18 months after inking that contract, he took a fully-funded junket, paid for by the university vendor. Any ordinary employee employed in Va Tech’s purchasing department would have, most likely, at least been called on some carpet to explain what happened, and how the events didn’t present at least an appearance of conflict of interest, and face significant sanction.

But, it is worth noting, any ordinary employee in Va Tech’s purchasing department was not working for an annual income, as Babcock does, in the range between a half million and 3/4 million dollars per year. Babcock could’ve easily, unlike most Americans, just put it on his Amex Card.

But Babcock also misses the irony: one of the phony pretenses for his junket is that he needs to go inspect Nike’s contract factories in Vietnam, to insure that there are no employee abuses. But Babcock, a modern-day Babbit aristocrat, can’t see the employee abuses within his own department, fueled by his own department’s blithe treatment of mostly black, poor, undereducated ‘revenue’ basketball and football players who labor at wages capped at levels way below market. Babcock’s football team — the de facto leaders of VaTech’s entire ‘Development’ Office, and the principal funders of Va Tech’s non-revenue sports — are paying, with their labor, for Babcock’s trip to go wipe out labor abuses in Asia. As he left for his trip, did Babcok go down to the weight room, to tell those football players, “Make sure you wear those ‘not-promotional’ Nike logos while I’m gone, boys!”

These ‘wink-and-a-nod’ junkets funded by Nike and other vendors to athletic departments need to stop, and state AG’s need to sit up and take notice. And AD’s at Power 5 schools need to put pressure on Nike to start bringing its manufacturing back to the U.S.

 

 

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About brewonsouthu

Michigan and Big Ten fan, former lawyer, with interest in college sports and NCAA oversight and decisions, and sports generally.
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