👟 What the Hell is Going on with OBJ and Nike?

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Do you remember where you were on November 1, 2020?

If you’re a football fan, you were probably watching JMU legend Ben “Gucci” DiNucci running for his life on Sunday Night Football.

Or, as he’s better known today, the co-owner of one of the NFL’s most successful athlete-led brands ever.

It’s seriously impressive stuff for a guy who almost worked at Northwestern Mutual.

In today’s newsletter:

🗞 The Big Story: Caleb Williams Almost Broke the NFL

📉 Biggest Loser: The Next Billion-Dollar Idea in Sports

🏆 Winner’s Circle: What the Hell is Going on with OBJ and Nike?

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🗞 The Big Story

Caleb Williams almost just found a contract loophole that would have changed the NFL forever, but there’s a specific reason the NFL shut it down.

Background: Williams and his dad, Carl, have been pushing back on the NFL Draft process for years. It started back when Williams was still in college, and reports came out that his dad was asking teams for equity if they were to draft him.

These rumors were quickly squashed after league owners passed a new rule that prevented players and other team employees from receiving ownership stakes in teams.

But that didn’t stop Williams and his dad from still trying to do things their way.

Contract Request: Leaked details from Williams’ recent contract negotiations with the Bears show that they actually tried to exploit three different loopholes to make the rookie QB more money:

1. Williams requested a no-franchise tag clause, which no rookie has ever received. The Bears rejected this request, but it would have meant that Williams could have hit free agency sooner after his first contract.

2. Williams tried to get paid through an LLC to avoid taxes in Illinois, presumably by incorporating the business in a zero-income-tax state like Florida or Texas.

3. Williams then tried to get his salary paid through a forgivable loan, meaning he would have paid zero taxes on his earnings for as many as ten years into the future.

However, the NFL rejected the last two ideas, even though nothing in its rules explicitly says they aren’t allowed.

But why?

Rookie Wage Scale: In my opinion, this all has to do with the rookie wage scale that Caleb and his dad have been trying to fight since before the QB was even drafted.

Since 2011, every draft pick has received a predetermined salary based on their draft position. And with the addition of the franchise tag, this often means top players like Caleb can’t reach free agency until year five or six of their career, severely limiting how much money they can make.

However, from the NFL’s perspective, allowing Caleb to use one of these loopholes would open the floodgates and potentially make the rookie wage scale less effective in keeping rookie salaries down for owners.

Still, you can’t knock Williams for at least trying.

📉 Biggest Loser

This shirt is worth over $3 million and it reveals one of the biggest problems in women’s sports.

Background: As coverage for women’s sports has more than tripled in the past five years, merchandise for these sports has severely lagged behind.

In fact, a study now shows that women’s sports leagues have seven times fewer apparel options than men’s leagues, and for every nine pieces of men’s sports merch available, there’s only one option for women.

And it’s not because there isn’t demand.

Sold Out: For example, an hour after Caitlin Clark was drafted, Fanatics had sold out of nearly every jersey size.

Not to mention that the women’s sports apparel market is actually estimated to be worth $4 billion in the US alone, and still, 80% of consumers said that they would buy more women’s sports merchandise if they could, but they claim that good options just don’t exist.

The Problem: For decades, sports leagues have just taken the “shrink-it-and-pink-it” approach, according to former Olympic hockey player Angela Ruggiero.

But the truth is that consumers want better options.

Just look at what Kristin Juszczyk accomplished on her own last year. There was such a strong demand for her creative designs that the NFL literally signed her to a deal to help her with their women’s merch.

Or take this shirt (below) from Togethxr, which has generated $3 million in revenue in the past seven months, according to Front Office Sports. At a price of $45 per shirt, that’s over 66,000 units sold in less than a year.

If that’s not enough demand for leagues and teams to start focusing their attention on the other 50% of the population, I don’t know what is.

🏆 Winner’s Circle

What the hell is going on with Odell Beckham Jr?

Because after claiming he won a $20M lawsuit against Nike, it now looks like he might have actually lost the trial.

Background: In 2017, OBJ re-signed with Nike, who matched a five-year offer from Adidas that paid:

• Base salary of $3.2-$4.2 million per year

• Large signing bonus

• Millions in guaranteed royalties

• And offered a three-year extension based on sales

The contract's total value was estimated to be upwards of $47 million, but by the final year of the deal, in 2022, Odell claimed that Nike had withheld more than $2 million in payments without explanation.

Furthermore, Odell claimed that Nike had changed the terms of his deal in order to make it harder for his automatic extension to kick in, even purposely releasing fewer branded products to make it more difficult for him to hit his new $78 million sales goal.

And now, we finally have a verdict two years later, and both sides claim they won.

Two Winners? Now, Odell ended up suing Nike for $862,000 in damages - the total he was owed for royalties the company withheld from him.

Meanwhile, Nike was countersuing Odell for damages between $7M and $15 million after it claimed that he breached his contract by wearing custom gloves and cleats and leaking the terms of his deal to the media.

So, who actually won?

Well, everyone and no one…

The Verdict: The jury first ruled that Nike had waived its right to enforce the contract regarding Odell’s glove and cleat customizations after letting him play several games in violation of the rule before imposing a penalty.

They then said that Odell did nothing wrong by allegedly leaking the terms of the deal to the press.

However, they also found that Nike didn’t breach its contract with Odell by withholding royalties since his glove and cleat customizations were technically prohibited.

In the end, the judge called it a draw, and neither side was paid a penny in damages.

And if you want my opinion, it’s clear that Nike wanted out of this expensive deal with an aging athlete, so they pulled some legal trickery to do it three years early.

⏱ In Other News

• NFL QB with a $1M+ Side Hustle: The (Unlikely) History of Ben DiNucci

• Did EA Sports rip off college athletes?

• The $1M College Softball Player.

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