Battle of the Brands with NIL: Marvin Harrison Jr. v. Fanatics
In NCAA v. Alston (2021), the Supreme Court found that the NCAA violated federal antitrust laws by placing restraints on education benefits that universities’ can give to athletes.[1] In response to this ruling, the NCAA board of directors implemented a rule that allowed name, image, and likeness (“NIL”)[2] to enter into the college athlete landscape changing the perception of what was thought to be amateurism, forever. NIL breakthroughs can be traced back to when former UCLA Bruins basketball star Ed O’Bannon sued the NCAA for not allowing players to make a share of the money from the revenue they generated from their likeness in broadcasting deals.[3] Another breakthrough came in 2019 when California passed a law that allowed college players to collect money for their participation in sports.[4] Finally, this leads us to where we are today with the Alston decision.[5] Three years later, after the board’s decision, NIL continues to be a headache for almost everyone, as it is a change to college sports like never before.[6] The NIL world of college sports continues to be unchartered territory for all sports and parties involved.[7] However, this new situation involving Marvin Harrison Jr. and Fanatics takes the drama further. Harrison’s ongoing legal battle with Fanatics emphasizes the challenges of implementing NIL agreements that extend beyond college sports, impacting the professional sports industry.
Background
Marvin Harrison Jr. was The Ohio State Buckeyes’ star wide receiver, drafted fourth overall to the Arizona Cardinals in the 2024 draft.[8] In 2023, Harrison Jr. allegedly signed a contract with Fanatics, a global digital sports platform [9] with a multi-year licensing agreement regarding distributing autographs and game jerseys.[10] This deal is massive because Harrison was one of the biggest names in college football at the time. While redacted in the suit, the deal’s value is reportedly worth over one million dollars.[11] Fanatics claims that they made payments to Harrison, but that he never fulfilled his end of the contract of delivering any of the agreed upon memorabilia.[12] Not only that, but Harrison “publicly asserted that the contract does not exist.”[13] Fanatics, on the other hand, has a different narrative of the situation. According to a complaint Fanatics filed, the contract is described as a “Binding Term Sheet” throughout the document.[14]
So, you might be asking yourself: why is this lawsuit a big deal? A few reasons.
Here is where this situation gets a little bit weird. Fanatics filed the lawsuit in May 2024 just after the NFL Draft.[15] This lawsuit comes just after Harrison Jr. signed his rookie contract, where he is set to earn $35 million.[16] First, good luck getting your hands on a Harrison Jr. jersey because of this dispute. Consequently, no official Harrison Jr. jerseys are available in the NFL shop because Fanatics is the official licensing brand of NFL merchandise, specifically jerseys.[17] Harrison has not signed the group licensing agreement (“GLA”) for the NFL through the NFL Players Association.[18] The GLA allows the NFL’s partnering companies, like Fanatics and EA, to use players’ likeness.[19] All rookies usually sign the GLA and are given a revenue share of the advertisement and likeness money contracted with different companies.
Harrison allegedly did not sign this contract because it was believed that he wanted to leverage this deal against the previous one he had signed with Fanatics.[20] Because of this, fans cannot purchase authentic league merchandise with the star rookie’s name attached to it, nor can they use the rookie in the video game Madden, along with other branding partners usually associated with signing the GLA.[21] This is the traditional way for rookies to get fan exposure early in the year before the NFL season starts, but Harrison was already a giant name in college football and well known by NFL fans.[22]
Next, Harrison made multiple different statements about the status of this contract. He has said that it does not exist. He also alleges that he did not sign the term sheet, instead, his collective “The Official Harrison Collection”[23] signed it as an agent to Harrison Jr.’s principal. According to the sports podcast Conduct Detrimental, this type of deal, signed through a ‘loan out company’ and not in an official capacity, is standard throughout the sports world.[24] The podcast mentions that if Harrison can succeed on his claims, it would upend loan out company case law that is currently in place within the field.[25]
It is interesting to note that Harrison Jr. was also not represented by a traditional agent in any capacity during this process.[26] This practice becomes part of a trend in the current NFL that includes well-known names like Lamar Jackson and Caleb Williams.[27] More star players are negotiating their contracts on their own behalf instead of through an agent.[28] It is interesting to see how this situation could have played out had Harrison sought help from a professional instead of trying to negotiate independently.[29]
Fanatics has refiled their complaint to include Marvin Harrison Sr., father of Harrison Jr., a former NFL wide receiver and Hall of Fame player for the Indianapolis Colts.[30] It is alleged that Harrison Sr. advised his son and signed his son’s name on the term sheet as an authorized representative of the Harrison Collection, which takes us to where we are today. [31]
The Lawsuit: Fanatics Collectibles AC, INC., v. Marvin Harrison JR. et al
Fanatics amended their complaint to include Harrison Jr., Harrison Sr., and their collection as parties on August 23, 2024.[32] Fanatics alleges a list of causes of action, including breach of contract and promissory estoppel claims against the Harrisons.[33]
Breach of Contract
The first count of what Fanatics is alleging is that Harrison Jr and the LLC breached the contract by failing to perform on the agreement to deliver merchandise.[34] Fanatics is seeking equitable and monetary relief, including to compel specific performance by Harrison Jr.[35] Specific performance means if Harrison Jr. was found to be in breach of contract on this specific count, the court could order him to perform his duties related to this contract.[36] Fanatics would be looking for “(i) enforcement of Fanatics' exclusivity rights, (ii) delivery of Harrison Jr.'s promised autographed sports trading cards, (iii) damages for Defendants' harm, and (iv) any other relief the Court deems proper.”[37]
To be found in breach of contract would mean that the court would have to find that Harrison Jr. had materially breached his end of the contract in some manner detrimental to the deal.[38] In determining whether failure is material (essential to the contract), there are five ways: (1) the extent the injured party will be deprived of benefit; (2) the extent the injured party can be made whole for the part of the contract that has been deprived; (3) the extent the party that failed to perform will suffer from forfeiture of the contract; (4) likelihood that the party not performing will end up performing; (5) if the party that is not performing is acting in good faith.[39]
In the complaint, Fanatics alleges that Harrison Jr. knew about the binding sheet and that he signed it either himself or through an agent of his collection. Fanatics claims that Harrison Jr. has yet to perform any of these duties.[40] Not only that, but Fanatics also alleges that Harrison has disclosed confidential information from the binding sheet,[41] and now, if the case goes to trial, it would be up to Fanatics to prove this in court.
Interestingly, Fanatics asserts that they could attempt to recover from the Harrison Collection by “piercing the corporate veil.”[42] Veil piercing involves going after the Harrison Collection LLC and recovering from Harrison Jr. in his personal capacity as owner of the LLC instead of only from the companies’ assets.
Promissory Estoppel
Fanatics also asserts a claim for promissory estoppel.[43] Promissory estoppel is “a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.”[44]
In the complaint, Fanatics alleges that they relied to their detriment on Harrison and the LLC to deliver the resources—game jerseys and more than 35,000 autographs[45]—to help fulfill Harrison’s end of the bargain.[46] Seemingly, this would hurt Fanatics’s business because the deal was supposed to be an exclusive licensing deal between Fanatics and Harrison Jr.. Also, the Harrison Collection website has been selling their own Harrison memorabilia, like signed game-worn jerseys and other autographed merchandise—with prices at $300 for a signed jersey. If anything, this could be in direct violation of the agreement that Harrison has allegedly signed. If their claims succeed, Fanatics could have whatever remedy to make them whole, perhaps specific performance.[47] On a different scale, other athletes could wait to see how this dispute plays out and employ a similar tactic that Harrison Jr. is, which could cost Fanatics even more than this situation.[48] Either way, we must wait until the answer is filed to see what defense the Harrison team will assert.
What this means for the future of NIL deals
In parting thoughts, there are a few things to note about this lawsuit. First, with all the athletes that Fanatics has worked with, Harrison Jr. is the first one that they are suing.[49] The Business of Sports Podcast host, Andrew Brandt, thinks that Fanatics may be making an example out of Harrison Jr.[50] Fanatics could be trying to stomp out this behavior, of holding hostile negotiations, so this behavior does not end up costing them now or in the future with potentially other star athletes who are disgruntled with their deals.[51] Either way, more information will come to light in the coming weeks as the legal process continues. It will be interesting to see how this type of situation, with a signed binding agreement, plays out for either side, especially with one of the biggest names in football history being attached to one end.
[1] Pete Nakos, What is NIL? Everything you need to know about this major chance in college sports, On3 (June 8, 2022), What is NIL? Everything you need to know about this major change in college athletics (on3.com).
[2] Name, Image, Likeness, NCAA, Name, Image, Likeness - NCAA.org.
[3] Nakos, supra note 1.
[4] Id.
[5] Id.
[6] See generally Thalia Beaty, Unintended consequences: How NIL in college sports has raised questions about nonprofits, AP (Jul. 29, 2024), Unintended consequences: How NIL in college sports has raised questions about nonprofits | The Associated Press (ap.org).
[7] Beaty, supra note 6.
[8] Josh Weinfuss & Adam Schefter, Fanatics files suit against Cardinals WR Marvin Harrison Jr., ESPN (May 18, 2024), Fanatics files suit against Cardinals WR Marvin Harrison Jr. - ESPN.
[9] About Fanatics, Fanatics, About Fanatics — Fanatics Inc.
[10] Josh Weinfuss, Cardinals’ Marvin Harrison was to earn $1.05M in Fanatics deal, ESPN (Jul. 10, 2024), Cardinals' Marvin Harrison was to earn $1.05M in Fanatics deal - ESPN.
[11] Id.
[12] Id.
[13] Id.
[14] Amended Complaint & Demand for Jury Trial, Fanatics Collectibles AC, INC., v. Marvin Harrison JR. et al, (No. 652540) (N.Y. Sup. Ct. 2024). ViewDocument (state.ny.us).
[15] Weinfuss & Schefter, supra note 8.
[16] NFL Draft Tracker, Spotrac, NFL Draft (spotrac.com).
[17] Madison Williams, Why Marvin Harrison Jr.’s Cardinals Jersey Isn’t for Sale Yet, Sports Illustrated (May 1, 2024), Why Marvin Harrison Jr.'s Cardinals Jersey Isn't for Sale Yet (si.com).
[18] Josh Weinfuss, What we Know about Cards rookie Harrison's licensing deals, ESPN (Jul. 10, 2024 4:05 P.M.), What we know about Cards rookie Harrison's licensing deals - ESPN.
[19] Weinfuss, supra note 18.
[20] Id.
[21] Id.
[22] Id.
[23] The Official Harrison Collection, THE OFFICIAL HARRISON COLLECTION – THE OFFICIAL HARRISON COLLECTION.
[24] Conduct Detrimental: The Sports Law Podcast, Dearica Hamby Sues WNBA, Hasson Reddick Demands, Marvin Harrison Jr. Responses, Jordan Chiles Bronze Battle, & CrossFit Tragedy, (Aug. 14, 2024), Dearica Hamby Sues WNBA, Haaso - Conduct Detrimental: THE Sports Law Podcast - Apple Podcasts.
[25] Id.
[26] See generally Michael Marot, Decisions made by Caleb Williams, Marvin Harrison Jr. could impact future of NFL combines, AP News (March 4, 2024 2:00 PM PDT) Decisions made by Caleb Williams, Marvin Harrison Jr. could impact future NFL combines | AP News.
[27] Marot, supra note 26.
[28] Business of Sports: NFL Business Podcast, Joe Pompliano: Marvin Harrison Jr.'s Fanatics Lawsuit & more!, (May 21. 2024), Joe Pompliano: Marvin Harrison - Business of Sports: NFL Business Podcast - Apple Podcasts.
[29] Id.
[30] Fanatics refiles lawsuit against Cardinals' Marvin Harrison Jr., adds father and fraud allegations, AP News (Aug. 25 2024, 9:32 PM PDT), Fanatics refiles lawsuit against Cardinals' Marvin Harrison Jr., adds father and fraud allegations | AP News.
[31] Amended Complaint, supra note 14.
[32] Amended Complaint, supra note 14.
[33] Id.
[34] Id.
[35] Id.
[36] Restatement (Second) of Contracts § 241 at 134-135 (explaining specific performance).
[37] Amended Complaint, supra note 14.
[38] Id.
[39] Restatement, supra note 36.
[40] Amended Complaint, supra note 10.
[41] Id.
[42] Id.
[43] Id.
[44] Restatement (Second) of Contracts § 90 at 70-71 (definition of promissory estoppel).
[45] Weinfuss, supra note 10.
[46] Amended Complaint, supra note 14.
[47] Restatement, supra note 36.
[48] Conduct Detrimental, supra note 24.
[49] Amended Complaint, supra note 14.
[50] Conduct Detrimental, supra note 28.
[51] Id.