Adidas Could Lose College Athletics Contracts Over Indonesian Labor Issue

The Adidas epidemic in college athletics may end soon. Not because of numerous sartorial blights but because of a labor issue in Indonesia. Workers’ rights groups have censured the company for not paying severance after an Indonesian factory closed in 2011 (Nike and the Dallas Cowboys did so).

"The WRC, United Students Against Sweatshops (USAS) and other worker rights advocacy groups claimed adidas was refusing to pay $1.8 million in legally mandated severance owed to the 2,800 workers of PT Kizone. Total severance and other pay due under Indonesian law to the workers, who had no advance notice of the factory’s closure, totaled $3.3 million. Both Nike and the Dallas Cowboys contributed partial severance, but for nearly two years, adidas has maintained it does not owe any of the monies."

This has caused a backlash with colleges. Some have progressed beyond the “we’re really angry about this” stage. Several schools have terminated contracts with Adidas. Wisconsin has sued. Perhaps most significantly, the labor strife could cost the company its contract with Michigan.

"University of Michigan president Mary Sue Coleman told Adidas in a letter dated March 14 that “failure to produce an adequate plan could lead the (University’s Advisory Committee on Labor Standards and Human Rights) to examine recommendations concerning the future of our partnership.” "

Such pressure forced Adidas to settle last week, finally. But, even if it does not affect current contracts, campus pressure may affect schools’ willingness to renew with Adidas. Michigan’s $60 million deal expires in 2015.