Nike shares “slipped about 1%” in afternoon trading yesterday after celebrity lawyer Michael Avenatti’s tweet about a potential high school/college basketball scandal involving the company, but Nike “ended the day little changed, up 14 cents to $82.33,” according to a front-page piece by O’Brien, Rothfield & Randazzo of the WALL STREET JOURNAL. Shortly after his tweet, Avenatti was arrested and "charged with attempting to extort" more than $20M from Nike. Federal prosecutors allege Avenatti "told lawyers for Nike that he and an unnamed co-conspirator would release damaging information about the company if Nike didn’t pay them to conduct an 'internal investigation' and to settle a client’s claim, according to a complaint unsealed" yesterday (WALL STREET JOURNAL, 3/26). In L.A., Finnegan, Queally & Barabak in a front-page piece note Avenatti "allegedly threatened to hold a news conference if Nike didn’t pay his client," AAU coach Gary Franklin Sr., and "hire Avenatti for an internal investigation." Franklin, whose California AAU program produced Suns C Deandre Ayton and other elite prospects, "alleged the company was paying families of high school basketball prospects." After Avenatti and Nike’s attorneys met on March 19, federal investigators "launched a sting operation." They "recorded a call on Friday, during which Avenatti allegedly threatened to take" $10B off Nike’s market capitalization "if his demands were not met" (L.A. TIMES, 3/26). At presstime, shares of Nike were trading at $83.58, up 1.52% (THE DAILY).
POTENTIAL ACCOMPLICE: In N.Y., Tracy, Draper & Ruiz front-page piece note the charging documents in the Nike case "refer to an unnamed co-conspirator, another lawyer who worked" with Avenatti. Sources said that that lawyer is Mark Geragos, a "top celebrity lawyer" who is "best known in the sports world for representing" Colin Kaepernick in his collusion case against the NFL. He also played a role in talks that resulted in Nike’s making Kaepernick "one of its highest paid football endorsers and a face of a new advertising campaign" (N.Y. TIMES, 3/26).
