It's a trap. The target enters, takes the bait. The door snaps shut behind him.
It's a system created to lure the nation’s best basketball players, often capturing them when they’re still in high school.
The trap is operated by sports agents, coaches and financial advisers who lock promising young players into their networks, controlling their careers through college and the NBA, all to maximize their value to apparel companies intent on driving sales in the multibillion-dollar sneaker market.
It can take different forms. Often a player has no idea he is being played. Often his parents, coaches or friends — the people he most trusts most — are active participants. And once a prospect or his family takes the bait by accepting cash or plane tickets or hotel rooms or any other benefit, the trap door snaps shut.
With his amateur eligibility damaged, his basketball career may no longer be his own.
An ongoing FBI investigation, focused on agents and coaches working with Adidas, last fall turned a spotlight on the trap, though it's been an open secret in basketball for decades.
The latest: Complete coverage of the FBI recruiting investigation
More: A look at connections between Kentucky and FBI documents
Three federal criminal complaints released in September detailed some aspects of the process: Coaches, financial advisers, agents and the shoe company allegedly working together to control a prospect’s basketball career and business dealings for their own enrichment.
Ten men were criminally charged. The revelations helped bring down University of Louisville coach Rick Pitino and athletic director Tom Jurich and continue to cause widespread shockwaves in college basketball, threatening the NCAA and perhaps legal trouble for more colleges.
It’s a scandal that could reshape the business of basketball for generations.
"Everybody is involved in this scandal. There's nobody left out," Sonny Vaccaro, a retired shoe company executive, told Courier Journal on Saturday. "... The most important person in the transaction is that high school kid ... and he's the poorest of all of them. And they're all bidding on his ability to play basketball — to win championships, go to the Final Four, to sell shoes, to sell suits, to put money in investments."
To understand how the trap works — and the damage it can do — all you have to do is listen to the people who work it.
“If we take care of everybody and everything is done, we control everything. … You can make millions off of one kid,” sports agent Christian Dawkins allegedly told an undercover FBI agent when asked how he could “guarantee” a player would sign with a particular financial adviser.
'They want to win'
"Temptation is unbelievable," Vaccaro said. "I guess we believe in Adam and Eve? That's what happened here. They bite the goddamn apple every time they can do it. They want to win. That's the whole point."
Vaccaro, 78, is the undisputed godfather of the basketball-endorsement industry. Basketball's modern-day story can't be told without his role, which goes back into the 1970s.
Working for Nike, Vaccaro signed Michael Jordan in the 1980s — a move that took the shoe industry to a new level of success. The Air Jordan brand alone was worth $2.8 billion per year, according to figures from May 2016 reported by Forbes. Jordan, though long retired, made $110 million from a shoe endorsement contract covering 2016-17 — more than triple the $32 million Nike paid the top current NBA star, LeBron James.
Vaccaro, who ran operations at Adidas and Reebok after his tenure at Nike, started the ABCD camp to showcase the nation’s best high school basketball prospects. It set the stage for today’s top-flight AAU tournaments and all-star events sponsored by shoe companies, offering exposure for prospects.
“Temptation is unbelievable. I guess we believe in Adam and Eve? That's what happened here. They bite the goddamn apple every time they can do it. They want to win. That's the whole point.”
Sonny Vaccaro, retired shoe company executive
"This is not virgin territory." Vaccaro said when asked about the FBI investigation.
"There's been scandals in college athletics forever," he said. "And there's been a word in college athletics forever: Amateurism. And amateurism and scandal go together."
James Gatto — whom Vaccaro once told ESPN he had hired and had known since birth — is now the director of global sports marketing for basketball at Adidas, the second-largest athletic shoe seller in North America.
Gatto was placed on administrative leave after his arrest by the FBI. He has been indicted on a charge of conspiracy to commit wire fraud. He was alleged to have conspired to pay five-star recruit Brian Bowen's family to entice him to attend the University of Louisville.
Bowen has said he had no knowledge of any payments. Vaccaro said he believes it.
"During that 20 years when I was totally involved with signing these kids up, I know they had no clue that Jimmy was doing this with Joey,'' Vaccaro said. "Really?' Most of the time if the parent was involved, I would get a 'Well, Mr. Vaccaro, we really didn't have a lot. And we didn't think anything was wrong with that, because coach took care of me when I got there' or something like that."
South Carolina's Brian Bowen goofs around with teammates before a Jan. 16 game in Columbia, S.C., against Kentucky.
South Carolina's Brian Bowen goofs around with teammates before a Jan. 16 game in Columbia, S.C., against Kentucky. (Photo: Sean Rayford, AP)
For the shoe companies, and executives such as Gatto, the stakes are enormous.
In 2016, Adidas reported nearly $24 billion in sales and more than $1.2 billion in profits worldwide. But Adidas is only second-best. Oregon-based Nike reported $34.4 billion in revenue for the fiscal year ending last May.
Last month, Adidas’ chief financial officer told the Boersen-Zeitung newspaper that the German company is working to double its current U.S. market share of 10 percent.
Central to that effort is a group of U.S.-based Adidas executives once led by Gatto. The group included sports marketing directors concerned with all levels of basketball — from the NBA at the top end to the shoe company’s own grassroots youth basketball program.
How significant is shoe money to basketball?
Last year, 32 of the world's 100 highest-paid athletes were basketball players, according to Forbes. James was No. 2 on the Forbes list, thanks to $55 million in endorsements on top of his $31.2 million player's salary.
Most NBA players make more in salary than endorsements, but eight current or former players collected at least $10 million from a shoe contract in 2016-17, according to the website Hypebeast.com.
For some top NBA players, the shoe money doesn’t stop at the end of their playing days. Tracy McGrady’s NBA career ended in 2013, but last year he started a five-year, $5 million Adidas endorsement contract submitted by Gatto. The deal names McGrady an “ambassador” of Adidas.
Catch them young
McGrady, who was discovered in the 1990s by an Adidas scout while in high school, illustrates the type of support shoe companies can provide top basketball players before, during and even after an NBA career.
Not only do players benefit from endorsement money, their contracts often include payments that cement the relationship between the shoe companies and AAU coaches long after a top prospect moves on.
NBA player Derrick Rose’s incentive-laden Adidas endorsement deal, for example, requires the company to pay an AAU team or teams of his choice a total of $150,000 to $165,000 per year, plus as much as $85,000 in Adidas products — as long as the team is an Adidas affiliate.
Separate contracts obtained by Courier Journal also specify that Rose and Charlotte Hornets center Dwight Howard each can name a high school to receive $50,000 per year in Adidas gear.
New York Knicks star Kristaps Porzingis’ current Adidas contract specifies $200,000 per year for the AAU team of his choice.
At the AAU level, the shoe companies sponsor programs that regularly feature top prospects, who are lured to a limited number of teams that play in high-profile events sponsored by the companies.
Shoe companies also sponsor high school and prep school programs, but nothing is guaranteed. As with many AAU teams, the loss of top talent may mean the end of shoe company funding.
The setup creates an incentive for basketball coaches at all levels to remain loyal to a shoe company brand — and have players do the same — while also continuing to recruit fresh talent on behalf of the shoe company.
The value to the shoe company extends beyond fans seeing a top player wearing a certain logo on a shoe or T-shirt. The investment creates a relationship with the prospect and those around him, giving the sponsor a say in which college he’ll attend and the shoes he will ultimately endorse as an NBA star.
Pitino has been one of the more outspoken critics of shoe company influence. In 2014 he criticized the system, saying that because U of L is an Adidas affiliate, he couldn’t recruit a player from a Nike-sponsored AAU team.
"In the last five years I've seen tremendous change on this," Pitino said, "and believe me, it's a very competitive thing by these shoe companies to get players. They're going out and recruiting like us, in the summertime. 'Let's get this kid to the (Nike) EYBL. Let's get this kid in the Adidas Nations.’”
It's hard for coaches to buck the system, Pitino said, because “our pockets are lined with their money."
Ironically, 98 percent of the cash in Louisville’s latest Adidas sponsorship deal went directly to Pitino. In 2015-16 Pitino was paid $1.5 million through his personal services agreement with the apparel company while just $25,000 went to the program, according to records obtained by Courier Journal under the state public records act.
Nike did not respond to a request for comment Saturday.
Adidas issued a statement saying, in part: "Following the allegations, we immediately engaged outside counsel to conduct a thorough investigation of our grassroots and college basketball programs. We continue to fully cooperate with the authorities."
'I was the chum'
Key players in the trap are sports agents who work tirelessly to identify players at a young age and bind them to their networks. They reward those around the player — and can push out those who might present a challenge.
The relationship between Vaccaro while at Adidas and former agent Arn Tellem was at the crux of a 2002 lawsuit filed by Ahmad Matari, a New Jersey clothing store owner-turned sports agent with just one client.
Tellem, who did not respond to requests for comment, became vice chairman of the Detroit Pistons in 2015 after more than three decades as a top-flight sports agent. In 2002, he was CEO of SFX Basketball Group, an agency later acquired by industry giant Wasserman Media Group.
Tellem, Vaccaro, Adidas and former NBA player Tim Thomas were named as defendants in Matari's lawsuit filed in U.S. District Court in New Jersey.
Thomas' cousin worked in Matari's store, and the high school basketball standout often "discussed the untrustworthiness of agents" with Matari, and asked him to be his representative, according to Matari's lawsuit.
“I was going to be the buffer between them and the sharks, right?’’ Matari recently told Courier Journal. “Meanwhile, I was the chum.”
Matari said he bought Thomas a car, clothes, shoes, a computer and furnishings for his Villanova dorm room. He also helped pay the rent on an apartment for Matari’s mother, all with the understanding he would be repaid after Thomas turned pro.
Thomas, who could not be reached for comment, played just one season at Villanova before going pro in 1997. But before the NBA draft, Matari found himself on the outside looking in.
“Vaccaro told Matari that Adidas had expressed interest in developing a Timothy Thomas sneaker. Vaccaro, however, would not discuss details of the offer from Adidas (with Matari). Vaccaro insisted that Defendant Tellem was to be Thomas' agent in order for Thomas to get the Adidas endorsement deal,” according to the lawsuit.
Vaccaro flew Thomas to California without Matari, according to court papers. After that, the player suggested Matari and Tellem as co-agents.
Over breakfast in Elmwood Park, New Jersey, the agents and Thomas hashed out a deal: Tellem would negotiate Thomas’ NBA contract. Matari would get a percentage of Tellem’s fee.
To celebrate, Tellem bought the 20-year-old a Mercedes-Benz on the spot. The agreement was quickly drafted and signed. But according to court papers, Tellem scribbled an addition while they were at the car dealership.
“This agreement is subject to further review and modification by Ahmad Matari, Tim Thomas and (Tim’s mother) Dorothy Thomas,” reads the hand-written addition, which was submitted in evidence. “In the event that any of these parties cannot agree to the modifications, this agreements (sic) shall be null and void.”
Matari said he was reluctant, but Tellem assured him it “was a necessary formality.”
“Thomas was eager to retrieve his new Mercedes-Benz, and all parties exerted pressure on Matari to sign the addendum,” according to the court papers.
An attorney representing Thomas soon told Matari the deal was off. Thomas stopped talking to him.
“They tried to make me look like the devil incarnate, like I was the problem here,” Matari told Courier Journal. “Meanwhile, this is why the family asked me to get involved, so we could keep people like that at bay. They have it down to a science, man. When you’re in there, you’re swimming with the sharks, and they know what they’re doing.”
In the lawsuit, Matari alleged “a secret and anticompetitive quid pro quo arrangement” between Vaccaro and Tellem. It pointed to “the cross-promotion and tying of each other’s services with respect to existing and potential clients whereby they swapped and shared undisclosed referral fees, revenues, kickbacks, and/or other reciprocal favors and benefits.”
In response, attorneys for the defendants filed papers calling the allegations “vague” and lacking evidence that “any understanding between these persons to refer clients to each other would in any way be anti-competitive or unlawful.”
“They tried to make me look like the devil incarnate, like I was the problem here. Meanwhile, this is why the family asked me to get involved, so we could keep people like that at bay. They have it down to a science, man. When you’re in there, you’re swimming with the sharks, and they know what they’re doing.”
Ahmad Matari, New Jersey clothing store owner-turned sports agent
"The irony of the guy, Matari, is that he was doing a little something (to help Thomas) while the kid was at Villanova," Vaccaro said.
The lawsuit was ultimately settled on confidential terms, Matari said.
Vaccaro said he didn't pay Matari.
"Tim Thomas was a great player," Vaccaro said. "He was going to get signed to a shoe contract. I was at Adidas then, and it would behoove me to get the best players. ... It would have been illogical to not to sign Tim Thomas or LeBron James or something because of who represented them. ..."
"Knowing Arn was certainly helpful, but to be involved in giving Timmy something or threatening him, I mean, it's an inconceivable thought,'' he said.
Matari, who now works in real estate, said the power of shoe money to turn Thomas against him soured him on being a sports agent.
“They took a 19-year-old and they dangled $15 million in his face or whatever they dangled," he said. "He’s going to do what he’s got to do to take care of his family. … If a kid like that who knows who I am and knows what I’m about can do this, can easily turn — literally turn — to a point where they don’t even know who you are anymore, what’s a guy coming out of left field that doesn’t know you from a hole in the wall going to be like?”
Asked if he thinks basketball could ever be cleaned up, Matari said, "It's just ludicrous to think (that)."
“There’s so much money in this,” Matari said. “... These guys are wooed from the time they’re in eighth, ninth grade. That’s how far back these guys go. … It’s the sharks sitting in the stands."
Another effort to edge out a young player's early adviser was outlined in a 2009 lawsuit filed in U.S. District Court by Thomas Rogers against sports agent Andy Miller of ASM Sports.
In court papers, Rogers said that in 2005 he was signed to represent Monta Ellis, a Mississippi High School star who went on to an NBA career, but Miller swooped in.
Rogers said Ellis’ high school coach, Thomas Billups, worked with Miller — going so far as sneaking Miller, disguised with a wig and sunglasses, onto a team bus to gain access to the star player. Miller could not be reached for comment for this article.
Billups, who was also named in Rogers' lawsuit, told Courier Journal that he knew Miller because he had represented his nephew, one-time NBA player Chauncey Billups.
“(Miller) never tried to give me anything,” said Billups, now the coach at Tougaloo College in Mississippi. “... I never caught him in a lie. To me, Andy was a good guy. I thought he was good guy. I don't know about what nobody else says. He was a good agent. He'd go out and help players.”
Billups denied letting Miller on a bus and said Ellis himself chose Miller over Rogers, a local car dealer who was in a relationship with Ellis’ mother.
Rogers in court papers said he was negotiating a Reebok shoe endorsement deal with Vaccaro but Miller and Billups persuaded Ellis to skip two high school all-star games that Reebok wanted him to play. Reebok cut off negotiations, and Miller “persuaded” Nike to give Ellis a contract that excluded Rogers.
The lawsuit was dismissed for “lack of subject matter jurisdiction,” or the authority of the court to hear cases of a particular type.
Billups, who won 13 state championships in 22 years at Lanier High School in Jackson, Mississippi, said the attention received by Ellis — who turned pro immediately out of high school — is common for star players
“This is the worst part. ... You try to stop it from happening, but some way it still happens,'' Billups said. "They let them talk him into it, because these other people are giving them stuff.”
'You gotta get the college coaches, too'
The one-and-done rule adopted in 2005 to prevent high school stars such as Ellis from turning pro without attending college changed the career paths of many top athletes.
"The universities are now co-conspirators to everything that happens," Vaccaro said. "... It's a willing co-conspiracy. The shoe company wants to sell shoes. The university wants to win games so they get more money from the shoe company."
With so much money at stake, the trap expanded to include colleges that would take in shoe company prospects for at least a year. The entry-level team sponsorships soon became big money for the most successful college and university programs.
And prospective agents and shoe company representatives gained more say in determining which college an NBA-bound prospect would attend.
"The one-and-done brought every sin of college basketball to the forefront, to the altar of the church," Vaccaro said.
“The universities are now co-conspirators to everything that happens. ... It's a willing co-conspiracy. The shoe company wants to sell shoes. The university wants to win games so they get more money from the shoe company.”
Sonny Vaccaro, retired shoe company executive
While many factors might influence the college selected by a young athlete, the weight of early affiliation with a shoe company is apparent in a Courier Journal analysis of where five-star basketball prospects — the best of the best young players in the sport — attended college.
Since 2003, roughly 80 percent of five-star prospects from Nike-affiliated AAU or travel teams went on to play for a Nike-sponsored college. Of all five-star players who reached the NBA, roughly 87 percent of those who were affiliated with Nike through youth teams and colleges continued to wear or endorse those shoes as professionals.
Nike colleges landed more than 85 percent of the five-star prospects who have signed with a school since 2003, and roughly 75 percent of all of those five-star players who reached the NBA wear or have worn Nike, compared to 18 percent for Adidas and 3 percent for Under Armour.
The inclusion of these coaches presented a window in how relationships play out well into a player’s career, beyond just a player being recruited to a school.
The FBI accused Christian Dawkins, a 20-something who worked as an ASM Sports “runner” while trying to reach the big time himself, of participating in schemes to secure Adidas funds for payments to ensure high school prospects attended certain schools, including Bowen’s enrollment at Louisville, and were represented beyond college.
An attorney representing Dawkins did not respond to a request for comment.
In any industry, there are the youngsters who are ambitious, hungry, brash and impatient. By many accounts, this was Dawkins.
International Management Advisors hired Dawkins in April 2014 “to assist in developing relationships with future NBA players such that the players would select IMA to serve as their agent and/or financial advisor during and after their NBA playing career,” the agency said in a 2016 lawsuit accusing Dawkins of working for agent Andy Miller and ASM Sports while still employed by IMA.
Dawkins is accused by the federal Justice Department of orchestrating payments to multiple prospects in hopes of later signing them as clients — the trap, as spelled out in pages of documents and in recorded conversations.
The FBI raided ASM in September and seized Miller’s computer, according to Forbes.
Documents from Miller’s agency and emails by Dawkins, obtained by Yahoo Sports, included detailed records of what appear to bepayments to players and their families. The emails covered all levels of basketball, from youth teams to the NBA, and exposed the trap in relationships involving agents and coaches.
More telling are emails from Dawkins to Miller, saying he was trying to trade Bowen to assistant coaches at Michigan State and Indiana in return for ASM getting to represent players at those schools.
Dawkins also helped broker deals with assistant college coaches in an effort to represent players reaching the NBA, the Justice Department says.
"Agents obviously have influence, but you gotta get the college coaches, too,” Dawkins allegedly said during a recorded conversation with an FBI cooperating witness. “It's almost like you skipping a step if you just deal with agents."
In court papers, former Oklahoma State assistant coach Lamont Evans, one of the four coaches charged, allegedly said on a call with an FBI witness that he had been offered as much as $50,000 to help steer a player for representation.
“The parents believe in me and what I do,’’ Evans said, according to charging documents. “… That’s why I say, if I need X, so if I do take X for that, it’s going to generate (business) toward you guys.”
The Justice Department complaint also relayed an intercepted conversation between financial adviser Munish Sood and Dawkins in which Sood tells of a sports agent who paid Evans “like twelve or thirteen grand” in the previous year but discovered other athlete advisers also paid Evans.
Dawkins was allegedly working with others arrested in the FBI’s sting, including Sood and Merl Code, a former Nike employee later hired by Adidas. The complaint recounts a recorded conversation where Code “explained how athletic apparel companies masked other, similar payments to high school athletes.”
The reports from Yahoo, much like the arrests, shook the college basketball world and threatened NCAA punishment for a wide range of programs.
That doesn’t mean basketball insiders were surprised. They know the trap.
"It's probably just the tip of the iceberg, if people really wanted to be honest about it,” University of Georgia coach Mark Fox told reporters Friday. “I'm not surprised, sadly. ... I wish I could say it will have a significant impact on our game. I do not have great confidence that will happen. ... It always seems to be, 'Did it really happen? Did it not happen? We'll do this. We'll do that.' And then the behavior just continues.
"Until there is significant consequences for the behavior, then it's going to continue."
