Nike Inc.'s entanglement with the biggest scandal in the soccer world began with a headlong plunge into unfamiliar territory two decades ago.

Fresh off the U.S.-hosted World Cup and desperate for a real foothold in the world's most popular sport, Nike's top officials aggressively pursued an endorsement with Brazil's soccer federation. The effort culminated in a $200 million 10-year deal in 1996 that was staggering in size and put soccer powerhouse Adidas AG on notice that it faced a real competitor.

Signaling its importance to the company, the agreement was signed by Nike co-founder Philip Knight, President Tom Clarke, soccer chief Sandy Bodecker and soccer sports-marketing director Cees van Nieuwenhuizen, according to a translation of the contract in the record of a Brazilian parliamentary inquiry that took place in 2001.

But interviews with people involved in soccer marketing at the time of the deal indicate that Nike entered a country—and the top echelon of a sport—without much knowledge about how deals there were negotiated. The result was missteps that ultimately caught Nike up in a far-ranging U.S. investigation of corruption at the International Federation of Association Football, or FIFA, soccer's governing body.

Nike's contract, according to the Brazilian translation, says the company was to pay the Brazilian soccer federation directly, not a middleman working on its behalf. A 161-page indictment made public last week, however, alleges in a barely veiled reference to Nike that $30 million of the sponsorship pact was paid out through a side deal between the company and a middleman. The middleman used part of that money to pay bribes, the indictment alleges.

A person familiar with the matter confirmed the company is Nike.

Nike isn't named in the indictment, and neither it nor any of its executives have been charged with wrongdoing. The company said it is cooperating with authorities. It declined to make Messrs. Clarke, Bodecker or Knight available for comment. Efforts to reach Mr. van Nieuwenhuizen were unsuccessful.

Nike wouldn't comment on specific issues raised in this article. In a 1997 interview with The Wall Street Journal, Mr. Knight indicated the company's introduction to big soccer had been a learning experience.

"We were surprised a little bit in terms of soccer politics and how business is done in that world," he said. "In some ways it is the most political of all the sports."

The indictment sheds light on how the big-money business of soccer created big risks for its sponsors. Spurred by the deal, Nike now reaps about $2.3 billion in revenue from soccer, neck and neck with Adidas. In 2014, the company sponsored more World Cup teams than its German rival.

But the people Nike negotiated with to secure the Brazilian sponsorship now are under scrutiny by law-enforcement authorities, and the bribery allegations against senior officials of FIFA have cast a long shadow over Nike's signature win.

Steve Miller, who spent much of the 1990s working in Nike's sports-marketing department, said the company went "totally blind" into a region where it had few people on the ground.

"Brazil was a place where we had no serious engagement, we did not have a head of Brazil," Mr. Miller said.

Nike appeared to be out of the race in soccer by the mid-1990s, and finding a way back in was a priority, according to interviews with current and former executives in the sports-marketing industry. The company set its sights on Brazil, and when Nike landed the Brazilian team, the soccer-marketing community buzzed about its willingness to pay up.

Doug Logan, who served as commissioner of Major League Soccer from 1995 until 1999, said the deal reset expectations. "It meant that our shoe suppliers and apparel suppliers were going to have to up the ante," he said.

Peter Moore, a onetime Nike employee who was chief executive of Adidas America from 1994 to 1998, said the deal was the turning point at which the company first began to take Nike seriously in soccer, its "mother sport."

But there was fallout as well. To secure the deal in Brazil, Nike had to negotiate with a middleman—called Traffic Brazil—which was the marketing agent for the Brazilian soccer federation, CBF. The owner of Traffic Brazil, Jose Hawilla, whose name also appears as a signatory to the contract, has admitted to crimes including money laundering, fraud and extortion related to the broad soccer probe. Information accompanying his guilty plea includes a veiled description of the Nike deal.

Nike's negotiating counterpart at the Brazilian federation was Ricardo Teixeira, who also appears as a signatory to the contract. He isn't named in the FIFA indictment, which refers to the federation's negotiator and signatory as "Co-Conspirator #11."

Mr. Teixeira's whereabouts aren't known.

The FIFA indictment discusses Nike's pursuit of the contract in some detail, though it doesn't name the company, referring only to "Sportswear Company A," which it describes as a multinational sportswear company based in the U.S. Information filed in Mr. Hawilla's plea added further detail.

According to the documents, a federation official, Mr. Hawilla of Traffic Brazil, and four representatives of the company met in New York to sign off on a 44-page endorsement agreement that required the company to pay $160 million over 10 years.

"Nike won't be asked to pay any remuneration to Traffic, in accordance to this contract," the contract says, according to the Brazilian parliament's translation. "CBF will be responsible for all payments to Traffic, in accordance to this agreement."

Yet, according to the indictment, there were other financial terms that weren't reflected in that agreement: Sportswear Company A agreed to pay a Traffic affiliate with a Swiss bank account an extra $40 million in compensation. Three days after the main contract was inked, a representative of the company signed a one-page agreement with Traffic that said the Brazilian federation had authorized Traffic to invoice the company directly. Traffic invoiced the company for $30 million over the next three years, some of which Traffic paid as bribes and kickbacks, the indictment alleges.

Mr. Miller, who left Nike around the turn of the millennium, said he didn't have any reason to believe Nike did anything illegal in its Brazilian deal.

And for all the fallout, the endorsement has paid off for Nike.

The company sponsored five national teams at the time the Brazilian deal was announced, according to a news report at the time. In the last World Cup, Nike sponsored 10 teams to Adidas's nine.

Sonny Vaccaro, a prominent sports-marketing executive who worked at both Nike and Adidas, said the Brazilian deal was the turning point. "That's the last time Adidas owned the world," he said.

Write to Sara Germano at sara.germano@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com

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