Nike has suspended its endorsement contract with Houston Texans quarterback Deshaun Watson, per CNBC. The suspension comes after lawsuits were filed by 22 women who have each accused Watson of sexual misconduct.
While Watson is also under criminal investigation by the Houston Police Department, he has not yet been arrested nor convicted. However, that likely does not matter when it comes to a company like Nike deciding to suspend its endorsement relationship with the professional athlete.
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The specifics of Watson’s contract have not yet been revealed. That said, Nike rarely negotiates its standard terms and conditions attached to its athlete endorsement deals, which typically allows the brand to terminate its relationship with the athlete endorser if the commercial value of the athlete endorsement and related services is substantially impaired by the athlete’s commission of any act which shocks or offends the community or which manifests contempt or disregard for diversity, public morals, or decency.
To be clear, Nike has not announced a termination of its agreement with Watson. That is likely because Watson has not yet been shown to have committed any act. Furthermore, the brand may still see future value of associating with Watson if he is cleared of all the claims that have been made.
Nike, in a statement, said that “we are deeply concerned by the disturbing allegations and have suspended Deshaun Watson. We will continue to closely monitor the situation.” As noted by Nike, the claims against Watson, at this juncture, are merely allegations. Thus, it is likely that Watson will continue to be compensated by Nike during the suspension. That compensation could come to a close if Nike determines that Watson committed any of the acts that have been alleged, which would then likely result in an actual termination of their endorsement contract.
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Darren Heitner is the founder of Heitner Legal. He is the author of How to Play the Game: What Every Sports Attorney Needs to Know, published by the American Bar Association, and is an adjunct professor at the University of Florida Levin College of Law. You can reach him by email at [email protected] and follow him on Twitter at @DarrenHeitner.