The Nike Deal that went down last December ought to go down in history as a clear example of a state cutting an unnecessary sweetheart deal with a corporation — granting a concession for something that the corporation was already doing.
If you recall, in mid-December 2012 Gov. Kitzhaber took Oregonians by surprise when he announced a special legislative session to enact the Nike Deal law. Rushed through in less than one week, the law gave the Governor the power to cut a deal with Nike to lock in place for 30 years a 90+ percent cut in Nike's taxes that Nike and the Loophole Lobby won a few years back.
In the December 19 contract that the Governor and Nike quickly signed after the special legislative session closed, Nike got the State of Oregon's promise that the formula by which its state income taxes are computed will stay in place for 30 years. For its side of the bargain, Nike promised to create 500 jobs and invest $150 million over five years.
The contract, however, states that Nike’s investment in Oregon “commenced on January 1, 2012.” Thus, the contract language shows that Nike was already expanding in Oregon well before it extracted a concession from the state.
A recent article by Allan Brettman in The Oregonian confirms that point.
Brettman, who reviewed documents between the state and Nike obtained under a public records request, reported on the drafting of the agreement. He explained that in late November — before the Governor called the special session — Nike’s lawyers and lawyers with the Oregon Department of Justice met at Nike’s headquarters. Nike’s lawyers came to the meeting with a document in hand that already contained “the basics” of the deal that Nike and the Governor would ultimately sign after the special session.
Subsequent to that meeting at Nike, Oregon Department of Justice lawyer Keith Kutler and Nike’s attorneys made some drafting changes to the document, “[b]ut the basics of the pact were all there” in the initial draft that Nike’s lawyers wrote. One of those basics was the January 1, 2012 date:
And, like others who viewed the hastily prepared deal, Kutler wondered about a phrase in the agreement saying Nike’s financial commitment to “Project Impact” commenced on Jan. 1, 2012. A year earlier.
In his emailed, marked-up copy to Gary, Kutler highlights “2012” and in the margins writes, “Should this be 2013?”
No, Nike informed the state. It wanted credit for work and spending that already had been taking place in 2012.
So there you have it, Nike’s new slogan: “I was already just doing it.” Nike extracted a concession from the State of Oregon for something the company was already doing — spending money to expand in Oregon.
For Governors and legislatures around the country dealing with tax-dodging and subsidy-seeking corporations, their new watchword ought to be "Don't get Nike'd."