30-year deal keeps Nike's favorable taxes in place

PORTLAND, Ore. (AP) -- Gov. John Kitzhaber and athletic-wear giant Nike Inc. agreed Wednesday to a 30-year deal that promises Nike will only be taxed on its in-state sales.

Nike requested the deal while it plans a $150 million expansion and 500 or more jobs.

Nike told the state it would only pledge to expand if the so-called "single sales factor" tax benefit remains in place, a calculation favorable to the global apparel giant. The guarantee means Nike won't later be taxed on its payroll expenses if it hires hundreds more workers.

"We appreciate Gov. Kitzhaber's leadership and the Oregon Legislature's support," said Nike CEO Mark Parker. "Our roots are here in Oregon, and over the last 40 years we've grown from a small company to a global one connecting with consumers in markets all around the world."

State lawmakers approved legislation authorizing the deal during a special session Friday.

Oregon calculates taxes for multistate corporations based only on the company's in-state sales, something Nike wanted to ensure would continue.

It was unclear whether Nike would have actually moved to expand outside of Oregon — a company spokeswoman refused to say — but the mere threat was enough to prompt action.

Nike has deep roots in Oregon, where it was created in the 1960s by a former middle-distance runner and his college track coach. Together, Phil Knight and Bill Bowerman built the company into one of the globe's most influential brands.

Knight also is the largest contributor to University of Oregon athletics, and his money is considered a key factor in vaulting the school's football program into national prominence.

Nike said in its agreement with the state that it began work on the expansion Jan. 1.