Nike is looking pretty gross here, and if it costs the US team Berian's contributions at 800m (particularly when he'll be competiting with a big, fat swoosh on his chest in the Olympics if he makes the team) then this might turn the corner from eyerolling pettiness to legitimately damaging to the sport.

http://www.wsj.com/articles/nike-plays-hardball-to-keep-its-athletes-1465258535

Nike Plays Hardball to Keep Its Athletes
Sportswear giant sues world indoor 800-meter champion Boris Berian over move to New Balance

By SARA GERMANO
Updated June 7, 2016 9:29 a.m. ET
38 COMMENTS

One of America’s best Olympic running prospects attended a track meet in Los Angeles last month looking for heated competition, but got served with a lawsuit from Nike Inc. instead.

Boris Berian—the world indoor 800-meter champion—was approached by a Nike representative with papers alleging the 23-year-old violated his swoosh endorsement deal when he agreed to a sponsorship with New Balance Athletics Inc. and declined what Nike described as a matching offer.

Just weeks ahead of the trials to determine the U.S. squad for the Summer Games, Nike is seeking a temporary restraining order that prevents Mr. Berian from competing in any non-Nike gear.

Nike is known for its aggressive pursuit of athletes, say sports agents, coaches and industry executives, but such a lawsuit is unusual. That the world’s biggest sportswear maker is battling over Mr. Berian, a little-known runner who flipped burgers at McDonald’s until recommitting to the sport a year ago, shows how much Nike wants to avoid having another potential star run with a competitor’s logo.

Mr. Berian has withdrawn from two upcoming races and may skip the Olympic Trials starting July 1, according to his agent, Merhawi Keflezighi. “If Boris has to compete with a Nike affiliation, as Nike is claiming he has to, he will think twice about doing so,” Mr. Keflezighi said. He said Nike’s contract included conditions that New Balance’s didn’t.

Last June, Nike signed Mr. Berian to a short-term contract that expired Dec. 31 but kept rights to match any competing offer for 180 days. Mr. Berian accepted an offer from New Balance in January and has run in New Balance shoes, even though Nike argues in the lawsuit that its sponsorship remains in effect.

“Nike values its relationships with athletes and we expect them to honor their contractual commitments,” the company said on Monday. “Where necessary we’ll take steps to protect our rights.”

In papers filed in U.S. District Court in Portland, Ore., the sneaker giant said it “would suffer serious, substantial, and irreparable harm if endorsed the products of a competitor.”

Tensions between athletes and companies that bankroll Olympic sports have risen as of late. Nike and Adidas AG clashed at two events last year, interfering with U.S. sprint-relay teams and leading to the involvement of U.S. Track & Field chief Max Siegel to mediate a detente at the world championships in Beijing.

“If Ford, Chevrolet, and Toyota can all find a way to be on the track in Nascar, then the shoe companies have got to figure out a way to coexist,” Mr. Siegel said in an interview.

Nike has a stranglehold on track and field. It has sewn up sponsorship deals with the top national teams including Kenya, China, Germany and Canada and its deal with the U.S. team has been extended to 2040, meaning the swoosh is on all those uniforms. Running remains the largest individual sport category by sales for Nike, pulling in $4.9 billion for its most recent fiscal year.

Its strength comes in large measure from its top marketing executive for the sport, John Capriotti, who over 24 years has overseen a massive expansion of the company’s portfolio in track and field. A former Kansas State track coach, Mr. Capriotti oversees an annual marketing budget of between $60 million and $90 million, edging higher in Olympic years like 2016, according to a person familiar with the matter.

But New Balance, Puma SE and others are ramping up their contract offerings to promising young talent hoping to chip away at Nike’s dominance. It has happened before. Puma snagged an early sponsorship with Usain Bolt and held on to it for the duration of his career. The 29-year-old sprinter, who has won six Olympic gold medals, has said he would retire next year, creating an opening for the sport’s next superstar.

In the lead up to Rio, the battles for talent have heated up. Two promising sprinters, Andre De Grasse of Canada and Trayvon Bromell of the U.S., signed pro contracts with Puma and New Balance, respectively. Brooks Running Co. lost its sponsorship of long-distance runner Amy Hastings Cragg to Nike in January. Just over a month after switching, Ms. Cragg won the U.S. Olympic marathon trials, securing her ticket to Rio.

“You’re never going to beat them in the numbers game,” said Jesse Williams, Brooks director of sports marketing, referring to Nike’s approach to sponsoring as many athletes as it can. He said Brooks, a subsidiary of Berkshire Hathaway Inc., simply can’t afford to pay endorsements for medal contenders in the sprints, which agents say can easily pass six figures annually.

“We were founded as a running company and we have a rich history of supporting the sport,” a Nike spokesman said. “Our investments support countless athletes from grassroots to elite level.”

Mr. Capriotti, whose office is leading Nike’s charge against Mr. Berian, is known for his win-at-all-costs approach, according to rivals. During the U.S. national championships in Eugene, Ore., last year, he threatened to kill a Brooks-employed coach, according to a complaint filed with the police there.

In the confrontation, which occurred in a medical tent at the event, Mr. Capriotti approached the coach, poked him in the chest, and engaged in an expletive-laden yelling match pertaining to allegations of a doping scandal, according to the complaint. Police said Monday that no charges have been filed.

Through Nike, Mr. Capriotti denied the allegations.

The year before, also in Eugene, Mr. Capriotti hosted an annual dinner for sport agents and officials at which a satirical video—presented by Nike—depicted the Nike sports marketing department as Mafia members, taking “hits” on rival athletic companies, according to two people who were present.

Sally Bergesen, chief executive of the women’s athletic apparel brand Oiselle Running Inc., said she later learned she was included in the list of enemies depicted in the satirical video. “Certainly, it was a little rattling,” Ms. Bergesen said. Since 2013, her company has signed two distance runners formerly supported by Nike, while a third Oiselle runner switched to Nike earlier this year.

New Balance offered Mr. Berian a three-year sponsorship worth at least $405,000 that could be sweetened by performance-based bonuses, including $150,000 for winning an Olympic gold medal or $100,000 for setting a world record at the Games, according to a copy of the contract filed with the court.

The New Balance contract didn’t include provisions that would reduce his pay based on poor performance or injury, according a company spokeswoman, who said New Balance is planning to file an affidavit in support of Mr. Berian. Mr. Keflezighi​ said Nike’s agreement included such reduction clauses, as they are known in the industry.

One irony in the dispute is that if Mr. Berian makes the Olympic squad, he will be wearing Nike’s swoosh. “If Mr. Berian makes it to the Olympics he will be training, competing, and essentially living in Nike gear for the entire 2016 Summer Olympics—except for footwear—regardless of whether he is under contract with Nike, a Nike competitor, or no one,” his lawyer wrote in a court document.

Write to Sara Germano at sara.germano@wsj.com

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