A sponsorship deal between USRowing and Nike that excluded traditional and popular longtime vendors from all USRowing owned regattas has led to the departure of the association's chief marketing officer, and at least the regatta exclusivity component of the deal has apparently been determined to be non-binding.
While the association would not comment on "personnel matters," it did make a statement late Tuesday night in response to row2k inquiries that suggests a review of the deal has determined the clause banning competing vendors from regattas may not be binding.
"US Rowing has received a number of inquiries regarding reported deal terms with a Nike licensee, APS" (Athletic Performance Solutions), the statement said. "After conferring with outside counsel, we believe that USRowing is not under any obligation to APS that would preclude vendors from being present at any US Rowing events. Our lawyers will continue to advise and we'll update you on any new developments. We remain committed to our mission of fostering community, cultivating excellence and developing Olympic Champions."
Beth Kohl, who was responsible for USRowing's marketing, sponsorship and fund raising efforts, is leaving the organization after weeks of hand wringing among the association staff and its board of directors that resulted from an outraged and public social media firestorm when the deal became public.
The change and legal determination are apparently just the first public results of the consequences of the mishandled deal, which up to this point was expected to (and may yet) end up in court before it is resolved.
Reports of Kohl's release began circulating Tuesday morning on social media and among members of the small and often tight knit rowing community, and by afternoon the action of the association had been confirmed.
While the specifics of the upheaval resulting from the Nike deal remain unclear, several sources close to the situation confirmed reports that USRowing is suffering not just from a public relations blow, but a revenue shortfall from a lack of sponsorship money and donor support that the not-for-profit Olympic National Governing Body depends on to function.
Several high-level positions are currently unfilled, including roles for CEO, marketing director, communications director, and head men's coach. Additionally, a blitz of job openings posted in January have gone unfilled after a hiring freeze was imposed. Further staffing and benefit cutbacks may occur.
It is the second very public disruption USRowing has experienced since the beginning of the New Year, initiated in large part by the findings of a task force formed to determine how the association and its national teams should move forward after a poor performance at the 2016 Rio Games.
In January, four members of the board of directors resigned and CEO Glenn Merry left the organization in the wake of the task force's findings. The association was conducting a search for a new CEO with a new board that had been reconstituted via both election and appointment when news of the Nike deal emerged.
Among the more vocal of the vendors who were told they "could no longer" come to the USRowing events was longtime rowing apparel company JL Racing. Owner and founder Joline Esparza posted a passionate response to her company's Facebook page that sought support from the rowing community; see more at USRowing-Nike Deal Engenders Optimism, then Consternation in Rowing Community.
That post caused an immediate, sizeable, and sustained outraged response from the USRowing membership and athletes, and inspired public comments, phone calls and emails to USRowing board members, and a barrage of one-star ratings on the association's Facebook page. Almost immediately following news of the deal, a recently posted combined Nike and USRowing logo was removed from the USRowing website.
Continued pressure from within association and from the rowing community, including from vendors and regatta officials who threatened to set up alternate vendor villages outside of USRowing's jurisdiction at regatta venues, has mounted since.
Members of the board of directors, including both the new members and those who remained on the board after Merry left and four members resigned, are longtime rowers and members of the community. Many were embarrassed by the fallout of the deal and are now working to form a better relationship, sources close to the situation said yesterday.
One recently elected board member who spoke with row2k, Lisa Stone, mother of Rio silver medalists Gevvie Stone and also a former athlete and longtime junior and scholastic rowing coach, said she opted to run for a vacant seat on the board to help broker that improved relationship.
"The board is aware of what the rowing community is hearing, and we are working and hoping for a result that will best serve our membership," she said on Tuesday.
The actual terms of the deal - and answers to who initiated negotiations with Nike who signed off on the terms, have still not been publically disclosed. However, the details that have emerged are said to include a $125,000 a year cash contribution and a deal to provide apparel to the U.S. national team's athletes and staff.
According to multiple sources, including brand managers, apparel vendors, and others familiar with apparel and team merchandise relationships both with USRowing and other national athletic organizations said the Nike deal seems to be very similar to previous uniform deals structured as "gear and cash" packages.
The deals often include a specific amount of gear provided to the various teams, and cash provided to the organization that the apparel company then hopes to recoup through exclusive rights to sell merchandise with the logo or mark of the organization (e.g., the USRowing logo).
In some cases, once the apparel provider sells enough merchandise to recoup the cash guarantee, a profit-sharing model kicks in. Beyond the logo exclusives, however, no previous apparel deals have included any exclusives or restrictions on other vendors selling rowing gear to attendees at regattas.
In rowing, rough numbers for provided gear over a four-year quadrennial might amount to $1.2-1.4 million range when reckoned at retail value; the actual manufacturing costs can range from 10-40% of that number, depending on how and where the merchandise is manufactured. Unconfirmed information seems to indicate that the current deal may include less merchandise than has typically been provided. Additionally, the deal appears to restrict the type of gear that can be used in equipment, such as the shoes in rowing shells, for example, the sources explained.
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