Nike Successfully, but Temporarily, Prevents Rising Track Star From Running in Rival’s Gear
On June 7, 2016 an Oregon federal court granted Nike’s request for a temporary restraining order which would prevent track star Boris Berian from wearing or endorsing any of Nike’s competitors for a short period of time. The order handed down on Tuesday will keep Berian out of New Balance products until at least June 21, when a more permanent solution to the contract dispute is handed down.
Berian is the 800-meter world indoor champion and has become one of the faces of middle distance running due in large part to his interesting and rapid road to success. Berian and Nike are at odds over his first contract with the sporting goods giant. Last June, Nike and Berian agreed to a seven-month contract that contained first-refusal rights allowing Nike to match any third-party deal that Berian deems favorable at the expiration of the contract. Berian accepted a three-year $125,000 per year offer with potential performance bonus money from New Balance, which also sponsors his Track Team. Berian has run in New Balance gear since January 2016. Nike claims that they exercised their first-refusal rights and matched the New Balance deal so Berian, by running in a competitor’s product, is in violation of the sponsorship agreement.
In opposition, attorneys for Berian claim that Nike did not match the New Balance deal and therefore Berian’s sponsorship agreement is with New Balance. Although Nike may have agreed to a base salary per year equal to the New Balance agreement, Berian contends that Nike’s agreement contains “reduction clauses” that can reduce his salary if he doesn’t perform well or if he gets injured. Thus, because New Balance’s company policy is to never include such provisions in their contracts the value of the two contracts is not the same and therefore Nike never matched the offer. Nike filed suit for breach of contract on April 29, 2016. As a result of the lawsuit Berian has withdrawn from two upcoming events, which is not an ideal situation as the U.S. Olympic trials are set to begin on July 1, 2016.
Since the temporary restraining order was handed down on Tuesday Nike has moved to expedite the process as contractually they have until June 28 to match New Balance’s offer, and to determine sponsorship for the U.S. Olympic Trials and ultimately the Olympics. An interesting wrinkle in the whole case is that should Berian make the U.S. Olympic team — as is expected – he will be wearing Nike regardless as they are the official 2016 Olympic Sponsor.