Just Do It...or Not: Odell Beckham Jr. Sues Nike.

On November 14, 2022, Odell Beckham Jr. filed a lawsuit against Nike seeking over $20,000,000 in damages due to Nike’s alleged failure to pay pursuant to an endorsement agreement. Let's break it down.

Pursuant to a 2014 endorsement agreement, Nike agreed to pay Odell $45,000 per year for three years (which was an absolute steal considering the reach and notoriety that OBJ would soon achieve.). At the end of the three years, Nike had the right of first refusal to match any other third-party’s offer. Meaning, if any competitor offered Odell a deal, Nike could match those terms in order to keep Odell on its athlete roster. Good for both Odell and Nike.

Whether you’re a serious football fan, fantasy football manager, daily fantasy player, or even someone who has no interest in sports, most are familiar with Odell. Whether it be his catch of the decade with the New York Giants, fashion impact, social media presence, or simply his swagger, the value of Odell’s name, image, and likeness is in a tier above the rest. With that notoriety, Odell was sure to get a massive offer from a Nike competitor, which he did.

Three years later, in early 2017, after the first endorsement deal with Nike was complete, Adidas offered Odell an endorsement contract with a yearly salary ranging from $3,200,000 - $4,200,000 (roughly a 7000% increase from his first endorsement agreement with Nike) which also included up to $47 million in guaranteed extensions. The Adidas offer also included various royalties for his endorsed products.

Odell presented the Adidas offer to Nike, and Nike immediately matched Adidas' offer with an identical term sheet. Here is where the fun starts.

In March of 2022, around the time the extensions for Year 6-7 were set be exercised, Odell received an alleged underpayment, which led him to reach out to Nike for clarification on the underpayment, as well as the extensions for Year 6-7. In response, Nike's position was that Contract Years 6-7 were not guaranteed as the extensions hinged on “earned royalties” exceeding “guaranteed royalties”, not “net sales”.

Odell alleges that while Nike’s term sheet was identical to the Adidas term sheet, the final agreement was different. Unbeknownst to him at the time of signing the final agreement, the final agreement from Nike was different than Adidas’ in that the guaranteed extensions for Years 6-8 of the contract would be based on “earned royalties” rather than “net sales meeting or exceeding Guaranteed Royalties”. Odell alleges that such a language change was never discussed and inconsistent with Adidas’ term sheet, as well as Nike’s previously provided (and collectively agreed upon) term sheet.

In short, here's Odell's issue with Nike.

As explained in the Complaint, the net sales of royalty bearing products would had to have earned $78,000,000 over Contract Year 4 and 5 in order to trigger the guaranteed extension for Contract Year 6 and 7 - roughly a 1900% increase in earnings compared to Adidas's offer. In comparison, Odell alleges that under the Adidas offer, the royalty bearing products would only have to earn $3,900,000 to trigger the guaranteed extension.

Odell also alleges that Nike failed to create, market, and sell various products bearing his name and that Nike stopped manufacturing/selling certain royalty generating products to prevent Odell from hitting those certain marks that triggered the guaranteed extension(s).

Odell further alleges that Nike withheld approximately $2,000,000 for "concealing" the Nike swoosh on his shoes and/or gloves. Odell claims was not the case and he did not conceal the swoosh. He was inspired by and mimicking the iconic Nike Air Force 1’s with his all-black cleats. (Below is a picture of the cleats at issue…can you see the swoosh?).

From an outside perspective, both Odell and Nike and have some potential flaws in their arguments.

Nike:

Nike’s withholding of the $2,000,000 appears to be disingenuous. The cleats at issue clearly show the Nike Swoosh - there is no attempted "tape-job" or brace blocking it. Allegedly, Nike claimed that the footwear violation was for "'polishing out', 'spatting', taping over or otherwise covering the Nike Marks on his football shoes in any manner." Further, the cleats got an enormous amount of publicity and were featured on numerous footwear sites that referenced the cleats as inspired by the Black Air Force 1’s, one of Nike’s historically best-selling shoes. Positive press for both Nike and Odell.

Odell:

As for Odell and his allegations surrounding the “earned royalties” v. “net sales meeting or exceeding Guaranteed Royalties” language which was inconsistent with Adidas’ term sheet and Nike’s term sheet, but included in Nike’s final agreement, Odell may have an issue.

Almost every contract includes what we in the legal world call an “Entire Agreement” clause which typically states that the final signed agreement is the entire agreement and understanding between the parties. This means that the final agreement supersedes any and all other agreements between the parties concerning the subject matter of the contract. Simply put, the final agreement is the final agreement and every previous agreement or understanding means nothing. ?If the final signed agreement has a clause along those lines, Odell may have some problems.?

As a lawyer with sports law experience, where do Nike and Odell go from here?

Settlement, settlement, settlement. Odell knows the value in having a partnership with Nike. Nike is arguably the most recognizable sports brand in the world with an almost unlimited amount of resources. There is almost nothing Nike cannot do. On the other hand, Nike knows the value of having Odell Beckham Jr., a sports icon, on its roster of athletes. At present, the sports news cycle is constantly talking about him and fans are invested in his professional journey and where he will sign in free agency. Regardless of where he signs, his influence is immeasurable - great for a brand like Nike. Frankly put, Odell may have one the most valuable name, image, and likeness in the NFL, and he isn’t even on an NFL roster…yet.