Nike wants $1.228 million from BCCI for not honouring contract
Sports equipment giant Nike, the official kit suppliers to the Indian team, has slapped on the cricket board a compensation claim of up to $1.228 million for "huge losses" incurred because of the board's inability to live up to the contract between them.
Accusing members of the Indian team, including Sachin Tendulkar, of continuing to prominently display logos of its rivals Reebok and Adidas on their gear and casual wear, Nike has alleged that it has incurred huge losses. This could also affect the royalties the company is to pay to the Board of Control for Cricket in India (BCCI), it says.
In a recent letter to the BCCI, a copy of which is with IANS, Nike has also alleged that some players did not turn up for a TV commercial and photo shoot twice in Hyderabad, resulting in a loss of $200,000.
The board has acknowledged this and other points highlighted in the two-page letter addressed to Lalit Modi, chief of the BCCI's marketing committee and board vice-president.
"Nike has brought to our notice that players are still using logos on bats and protective gear of their competitors, which has had a negative impact for Nike, and their competitors are getting exposure," say the minutes of one of the BCCI's working committee meetings.
Pointing out specifically Clause 12(c)(3) of the contract, under which the BCCI was to protect Nike from ambush marketing, the company tells the board that it has failed to live up to its promise that "no competitors' logo will be allowed on the bats, pads and gloves of the players".
"When this was brought to the notice of the BCCI right in the very first series (in January 2006 in Pakistan), Nike was assured that the new players' contracts would be executed soon and this clause will be enforced," says Sanjay Gangopadhyay, marketing director of Nike India in the letter.
"In the meanwhile, competition continues to sign Indian team players for bat logos (including new players who have represented the team since the signing of the sponsorship deal - Ramesh Powar, Munaf Patel, Robin Uthappa, RP Singh etc)."
While claiming that there were "seven players who were displaying competition logo" at the World Cup in March, Gangopadhyay said Nike's competitors have "received significant exposure despite contractual promises to the contrary, and we would expect to be compensated for such harm.
"In the event that this clause is not enforceable, Nike will have no option but to 'buy out' these existing individual contracts. The estimated cost of such buy out is approximately $760,000 per annum," he wrote.
Nike further reminded the BCCI that as per 'Exhibit B (sponsorship benefits) Clause 7' of the contract, the board was to make national team players available for shooting commercials.
"During 2006, on two occasions (August and November) we were given confirmed dates and availability of players - only for it to be cancelled at the last minute. Nike has incurred expenses $200,000 towards advances paid to film producer, photographer, crew and sets for these aborted shoots," said Gangopadhyay.
"Further, we have been unable to market the BCCI product and Nike in general, causing significant loss of sales, and we would expect to be compensated for the same."
Nike's other complaint is that Adidas has dragged it to the Monopolies and Restrictive Trade Practices Commission (MRTPC) for producing Hero T shirts involving Tendulkar, as per the rights conferred by the BCCI.
"Also, upon receiving legal notice from Adidas (it has signed Tendulkar individually), we have been informed by BCCI that we need to stop the Hero T's programme. We have a stock of approximately 6,600 Hero T's in our books besides an estimated stock of 4,000 units at various retail outlets," says Gangopadhyay.
"The total liability on account of finished goods and fabric write off is $168,000."
Nike further says that a month after launching a new ODI team jersey this February in India and overseas, the BCCI told it to change the size and colour of the team sponsor logo, Sahara.
"The implication of this change involves a write off of $100,000 towards finished goods and fabric of the Indian team as well as potential write off of garments returned by retailers," says Gangopadhyay.
"If the BCCI is unable to grant Nike the rights to sell various merchandise as laid out in the contract, we would request the BCCI to provide us necessary and adequate relief on the minimum royalty amount with retrospective effect."
Noting Nike's complaints, the BCCI is proposing a negotiated settlement.
"Mr Lalit Modi was authorised to discuss with Nike on this matter and a negotiated settlement may be placed before the working committee for approval," say the minutes.