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Adidas (ADDYY) Stock Sinks On NCAA Basketball Corruption Allegations
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Shares of Adidas (ADDYY - Free Report) tumbled on Tuesday after U.S. federal authorities brought charges against a company executive in connection with a larger NCAA college basketball fraud and corruption case.
“Federal criminal charges have been brought against ten people, including four college basketball coaches, as well as managers, financial advisors, and representatives of a major international sportswear company,” the United States Attorney for the Southern District of New York wrote in a statement Tuesday.
The allegations focus on a set of schemes where agents, apparel executives, and financial advisers bribed college basketball coaches and players in attempts to sway student athletes to their companies or services.
Coaches from schools such as the University of Arizona, the University of Southern California, and Oklahoma State University were charged with accepting tens of thousands of dollars worth of cash bribes.
The U.S. Attorney office went on to say that FBI and federal prosecutors have been investigating “the criminal influence of money on coaches and student-athletes who participate in intercollegiate basketball governed by the NCAA” since 2015.
One of the non-coaches named in the corruption and fraud charges is James Gatto. He was not directly identified as an Adidas executive, but instead as the head of basketball-related global sports marketing for “Company-1.” However, Gatto’s LinkedIn profile confirms that he currently works for Adidas in that role.
According to the indictment, the Adidas official reportedly paid $100,000 to the family of a high school all-American and top college basketball recruit in order to persuade him to attend an Adidas sponsored college basketball program. The indictment notes that news reports described the player’s choice of school as a surprise in June.
The Kentucky-based university in question was not named directly, but the University of Louisville is a direct match based on numerous details, including the school’s enrollment numbers.
Louisville, a long-time Adidas-sponsored school, landed the final five-star player available in the class of 2017 this summer and signed a new 10-year, $160 million apparel contract with Adidas in August.
Gatto also supposedly made similar deals with other players, families, and schools. But the German sportswear giant said in a statement that it is unaware of any wrongdoing:
“Today, we became aware that federal investigators arrested an Adidas employee. We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.”
Shares of Adidas sank over 2.80% to fall as low as $110.20 per share, which is almost $9 below its 52-week high reached earlier this month. The second largest sportswear company in the world has made major inroads in the U.S. over the last few years (also read: Should You Buy Adidas Stock As It Passes Jordan Brand?).
Fellow sportswear giant and NCAA team apparel sponsor, Under Armour (UAA - Free Report) —despite not being named in this investigation—saw its stock price fall over 1.35%. Shares of Nike (NKE - Free Report) experienced a marginal gain.
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Adidas (ADDYY) Stock Sinks On NCAA Basketball Corruption Allegations
Shares of Adidas (ADDYY - Free Report) tumbled on Tuesday after U.S. federal authorities brought charges against a company executive in connection with a larger NCAA college basketball fraud and corruption case.
“Federal criminal charges have been brought against ten people, including four college basketball coaches, as well as managers, financial advisors, and representatives of a major international sportswear company,” the United States Attorney for the Southern District of New York wrote in a statement Tuesday.
The allegations focus on a set of schemes where agents, apparel executives, and financial advisers bribed college basketball coaches and players in attempts to sway student athletes to their companies or services.
Coaches from schools such as the University of Arizona, the University of Southern California, and Oklahoma State University were charged with accepting tens of thousands of dollars worth of cash bribes.
The U.S. Attorney office went on to say that FBI and federal prosecutors have been investigating “the criminal influence of money on coaches and student-athletes who participate in intercollegiate basketball governed by the NCAA” since 2015.
One of the non-coaches named in the corruption and fraud charges is James Gatto. He was not directly identified as an Adidas executive, but instead as the head of basketball-related global sports marketing for “Company-1.” However, Gatto’s LinkedIn profile confirms that he currently works for Adidas in that role.
According to the indictment, the Adidas official reportedly paid $100,000 to the family of a high school all-American and top college basketball recruit in order to persuade him to attend an Adidas sponsored college basketball program. The indictment notes that news reports described the player’s choice of school as a surprise in June.
The Kentucky-based university in question was not named directly, but the University of Louisville is a direct match based on numerous details, including the school’s enrollment numbers.
Louisville, a long-time Adidas-sponsored school, landed the final five-star player available in the class of 2017 this summer and signed a new 10-year, $160 million apparel contract with Adidas in August.
Gatto also supposedly made similar deals with other players, families, and schools. But the German sportswear giant said in a statement that it is unaware of any wrongdoing:
“Today, we became aware that federal investigators arrested an Adidas employee. We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.”
Shares of Adidas sank over 2.80% to fall as low as $110.20 per share, which is almost $9 below its 52-week high reached earlier this month. The second largest sportswear company in the world has made major inroads in the U.S. over the last few years (also read: Should You Buy Adidas Stock As It Passes Jordan Brand?).
Fellow sportswear giant and NCAA team apparel sponsor, Under Armour (UAA - Free Report) —despite not being named in this investigation—saw its stock price fall over 1.35%. Shares of Nike (NKE - Free Report) experienced a marginal gain.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away. Download the new report now>>