Nike Inc., in its recent 10Q filing, indicated that obligations under endorsement contracts have increased noticeably since it filed its 10K last May, apparently due to its new licensing agreement with the NFL. The contract, which gives its on-field uniform rights, begins in 2012.
Its 10Q notes that as of Nov. 30, 2010 cash payments due was $704 million for the fiscal year ended May 31, 2012; $716 million for its 2013 fiscal year; $656 million in its 2014 fiscal year; $540 million in its 2015 fiscal year; and $1.27 million “thereafter.”
In its 10K, Nike indicated that as of May 31, 2010; cash payments due was $638 million for the fiscal year ended May 31, 2012; $568 million for its 2013 fiscal year; $508 million in its 2014 fiscal year; $411 million in its 2015 fiscal year; and $990 million “thereafter.”
Adidas owns the current license for the NFL on-field apparel as well as headwea. Its Reebok brand is featured on the items. The headwear license goes to New Era under the new deal.
Nike said the amounts listed for endorsement contracts represent approximate amounts of base compensation and minimum guaranteed royalty fees it is obligated to pay athlete and sport team endorsers of its products. Actual payments under some contracts may be higher than the amounts listed as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods.
