Adidas hit with lawsuit from competitor Skechers after FBI bribery probe
Shoe company Skechers is suing Adidas, alleging that by allegedly funneling money to college recruits — as brought to light by an FBI investigation into corruption in college basketball — Adidas hurt Skechers’ ability to compete.
According to the lawsuit, filed Wednesday in U.S. District Court in California, “These illicit payments denied competitors like Skechers who play by the rules a fair opportunity to compete for the cachet of having trend-setting high-school and college athletes seen in their products.”
The suit went on to claim that this “effectively blocked Skechers and other companies from competing on a level playing field for young, NBA-level endorsers, and unfairly bolstered consumer perceptions of (A)didas’s overall brand quality and image well beyond the basketball footwear.
Adidas has been implicated in the FBI’s investigation of corruption in college basketball.
Last September, the bureau arrested several individuals for their involvement in the scandal, including Adidas marketing executive Jim Gatto. Authorities say Gatto directed payments to top recruits and their families in exchange for them committing to play at Adidas-sponsored college programs, ESPN reported.
“Skechers’ and other competitors’ basketball businesses cannot effectively compete for players’ footwear choices while they are amateurs — or for their endorsements when they turn professional — because (A)didas has sought to ‘lock up’ players by paying secret, illegal bribes to them and/or their families,” the suit claims.
Skechers, represented by the Los Angeles law firm of O’Melveny & Myers, is seeking a jury trial.
The company claims it was harmed by Adidas’ actions, which it says led to increased advertising and marketing costs and lost sales, as well as lost market share and lost goodwill, according to the Louisville Courier Journal.
As a result, Skechers is seeking “an award of the profits … unlawfully derived as a result of wrongful conduct (by Adidas),” the lawsuit says.
“Defendant (A)didas has engaged in a deliberate, deceptive, and illegal campaign to prop up the reputation and supposed brand appeal of its footwear products,” the suit reads. “(A)didas would have consumers, investors, and the public believe that hot, up-and-coming collegiate basketball players, as well as talented young players who move on to the National Basketball Association (‘NBA’), choose (A)didas’s products due to their supposed superior performance and style.”
“In fact, however, (A)didas has co-opted young players into wearing and expressly or implicitly endorsing its products by funneling hundreds of thousands of dollars in secret payments to players, their coaches, and/or family members in violation of National Collegiate Athletic Association (‘NCAA’) rules,” the suit continues.
Adidas released a statement calling the suit frivolous.
“The Skechers complaint is frivolous and nonsensical and should be summarily dismissed,” Adidas said, according to The Washington Post.
It should be noted that Skechers is not exactly a major player in the basketball sneaker market.
However, current NBA players Jamal Crawford and Josh Smith have signed endorsement deals with Skechers, the lawsuit says, as well as former NBA players Karl Malone, Kareem Abdul-Jabbar and Larry Bird, former NFL stars Joe Montana and Joe Namath, and NHL great Wayne Gretzky.
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