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Nike Can Terminate Vick Now

Tuesday, 14 Aug 2007 | 4:07 PM ET
CNBC.com photo composite

Believe me, I think by suspending Michael Vick and suspending the release of his shoe, Nike has done enough to disassociate itself with Michael Vick. But if they wanted to terminate him, they can do so without any financial penalty. That's right, sources are telling me now that Nike has a clause in the contract that says that if Vick is indicted, Nike can terminate him unilaterally.

I thought this had to be precedent-setting and would have to say to me that Nike must have known something about Vick or must have felt a little uneasy in signing him. After all, I thought all morals clauses only provided for termination without financial penalty only if there was a conviction. That was until I spoke with another agent who told me that his client's deal with Nike not only provides for the same thing (right to terminate on indictment), but also allows Nike to make a move if the athletes does something that causes harm to the company.

The latter part might wind up in court as to the definition of harm, but the fact that that's in there anyway is surprising. That means that the famous John Hancock clause, developed by the company's former CEO David D'Alessandro, is now finding its way into athlete endorsement contracts. Troubled by the ethics of the International Olympic Committee about eight years ago, D'Alessandro devised a clause that said that his company could cut its sponsorship if he could prove that an action by the organization caused detrimental harm to his business.

For years, agents have been able to argue for general, less specific language in morals clauses, but perhaps the perception that there are more high-profile athletes getting in trouble and bigger endorsement contracts being given out, that the power is now in the hands of the company.

Just to make sure this was the case, I called up former sports marketing director Fred Schreyer.

Said Schreyer: "By and large, the language of indictment has become the standard."

Questions? Comments? SportsBiz@cnbc.com

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