Inside Odell Beckham Jr.’s $20 Million Nike Lawsuit

Odell Beckham Jr. at the NFC Wild Card Playoff game in January 2022. Image via Getty

Beckham says that in 2017, Nike agreed to sign him to a guaranteed five-year contract extension by matching a lucrative offer Adidas brought to him. In Adidas’ offer, Beckham’s contract could extend for an additional three years, affording him $4 million a year in base compensation alone, if the net sales of the products tied to him met the minimum amount of royalties guaranteed to him. Beckham says that in matching Adidas’ offer, Nike explicitly agreed to these same terms around a possible extension based on net sales.

Beckham says that Nike made an error on its term sheet by not upholding the same provisions in the Adidas offer and used that error to try and deny him the money and extra contract years he was owed.

The lawsuit says that, unbeknownst to Beckham, Nike altered the offer letter in a way that made the thresholds he needed to hit to guarantee more years on his contract significantly higher. It alleges that Nike’s extension at the end of the guaranteed five years hinged on whether “earned royalties” met or exceeded “guaranteed royalties.” In contrast, the Adidas offer, which Beckham says Nike agreed to match, only needed net sales to meet or exceed guaranteed royalties to extend beyond the five-year term.

According to the lawsuit, the difference meant that instead of needing net sales to reach $3.9 million across the fourth and fifth years of his contract, Nike’s “newly crafted position” required the net sales across those years to hit $78 million.

“The parties never discussed, much less agreed to, these excessive increases in the benchmarks for triggering the automatic extensions,” the lawsuit reads.

Beckham’s lawsuit says that, per the royalty statements he received from Nike, the net sales of his products were consistently above the guaranteed royalty minimum, meaning that he was eligible for the extra years on his contract. But Nike never extended the contract; the lawsuit says the brand considered it terminated as of June 30, 2022.

Beckham believes that Nike breached his contract by refusing to honor the extensions it allowed. He’s accusing the brand of withholding an additional $2 million in payments from him while he was contesting the terms of the deal in 2022.

The lawsuit says that when Beckham signed his first Nike deal on March 26, 2014, the brand agreed to pay him $45,000 per year for three years. He was given a percentage of net sales on all products tied to him and other incentive payments.

Beckham’s initial Nike deal gave the brand first right of refusal, meaning that if another footwear brand wanted to sign him, Nike would first have the option to match any offer and keep him. The lawsuit says that Beckham would have to give Nike 10 days to match a competing offer to sign him.

Nike extended its deal with Beckham in 2017, signing him to a new five-year contract. The lawsuit includes a contract summary that breaks down the terms of Beckham’s five-year Nike extension.

The summary shows Nike gave Beckham a $5,000,000 signing bonus. His cash compensation in the first year of the extension started at $3,250,000 and moved up to $3,750,000 for the 2021-’22 NFL season, which was the final guaranteed year on the contract. The contract started out with zero guaranteed royalties in its first year and moved up to $2,000,000 in its final guaranteed year.

The contract was subject to extension of up to three years if the net sales of Beckham’s Nike line met certain thresholds. If the net sales of the Beckham Nike lines met the minimum royalty requirements, Nike would extend the deal. These possible extensions, which never happened, are at the core of his complaint against Nike. 

The lawsuit says that Nike agreed to make player-edition product, running shoes, training shoes, apparel, and a kids product offering for the star wide receiver. Beckham was given a 5 percent royalty fee on products bearing his endorsement, per the contract summary.

The contract summary shows that the five-year extension expired on June 30, 2022.

Beckham’s lawsuit says that when his original Nike deal was nearing its end in 2017, Adidas offered him a contract “that included up to $47 million in guaranteed extensions.”

The deal included an upfront payment, a yearly base salary between $3.2 and $4.2 million, and royalties with a multiyear extension based on net sales. The proposed Adidas deal featured a plan to make an Odell Beckham Jr. line of apparel and kids product, along with a 5 percent royalty on gross sales. If his line of Adidas gear generated enough sales, it would enable a contract extension, earning him millions more dollars. 

He took this deal to Nike, the lawsuit says, prompting them to match its terms. The figures in his Nike deal that are included in the complaint are a mirror of those offered to him by Adidas.

The lawsuit accuses Nike of “inventing” contract violations and withholding more than $2 million in payments to Beckham as punishment. It recounts how, in March 2022, a Nike lawyer told Beckham that the brand was reducing his payments because the footwear he wore in week 17 of the 2021-’22 NFL season, along with the gloves he wore in weeks 17 and 18, violated his endorsement contract.

The notice of his violation came, the lawsuit says, after disputes over his contract began.

Per the lawsuit, his contract prevented him from concealing the Nike logos on his shoes. Beckham says he never did this but that Nike considered a custom pair he wore a violation. Beckham’s lawsuit says that he wore a custom cleat made to look like the black-on-black Nike Air Force 1, because Nike had failed to provide him with Los Angeles Rams-colored cleats after he left the Cleveland Browns in November 2021.

“Because Mr. Beckham’s old Nike cleats were designed to match the orange and brown of his prior NFL team, the Cleveland Browns,” the lawsuit says, “Mr. Beckham personally undertook to obtain customized Nike cleats that would not clash with the Rams uniforms.”

His Nike contract barred him from wearing non-Nike gloves or concealing the brand logos on them. The lawsuit says Beckham never did this, pointing out that he’d worn custom Chrome Hearts Nike gloves in weeks 17 and 18, but that Nike considered it an infraction anyway and withheld payment as a result.

The lawsuit says that Nike tried to negotiate the penalties under the condition that Beckham forfeit his option to have his contract renewed at its original rate and re-sign at a reduced rate.

“The supposed violations were nothing but a ploy to try to leverage Mr. Beckham into letting Nike out of a contract that it no longer wanted to honor,” the lawsuit reads.

The lawsuit makes multiple references to Nike failing to carry out its commitments to make and sell footwear and apparel for Beckham. It says that he repeatedly inquired about the promised running, training, and kids product to no avail.

“Despite repeated assurances,” the lawsuit says, “Nike never followed through on its obligation, which directly reduced the value of the contract to Mr. Beckham.”

The complaint alleges that after 2020, Nike stopped making products that would generate a royalty for Beckham in order to intentionally depress his sales numbers and keep him from hitting thresholds that would trigger a contract extension.

Beckham is suing Nike for breach of contract, reformation, and breach of the covenant of good faith and fair dealing. He says that he’s suffered damages of $20,625,000 plus interest. Beckham also wants the court to reform his Nike deal so that the provisions in it around royalty payments reflect those extended to him in the Adidas deal, which he says Nike was meant to match.