Skip to content

Lessons to be Learned in Fashion and Apparel from 2022

January 5, 2023

Name, Image, and Likeness Deals Are on the Rise

Name, Image, and Likeness (“NIL”) agreements, which allow an individuals’ name, image, and likeness to be used to market and sell branded apparel, footwear, and other consumer goods are on the rise. On July 1, 2021, in response to the famous NCAA v. Alston case (where the United States Supreme Court ruled that the NCAA could not limit education-related payments to student-athletes), the NCAA changed its long-standing rule that forbids college athletes from benefitting from their name, image, and likeness. Since such time, NIL deals have made their way to the forefront of the sport and apparel world as many companies have invested substantial money in amateur level athletes.

NIL agreements come in all forms and fashions and are typically dictated by the terms of the parties’ agreement and the state legislation governing such deals. For example, an NIL affiliate can agree to an exclusive deal for all of a company’s products, or a non-exclusive NIL deal for limited social media sponsorship posts advertising specific goods or services. The terms of the party’s agreements dictate the parties’ obligations. School policies also help dictate what type of NIL deals are permissible for collegiate athletes.  For example, the University of Michigan’s NIL Policy dictates that student-athletes are precluded from entering into agreements that would “harm the reputation” of the school, such as those concerning gambling, tobacco, or adult entertainment.

With over a full calendar year in the books since the NCAA rule changed, apparel companies have substantially increased their investment into the NIL movement. Nike has been reported to have directly compensated amateur athletes over $140 million in the past year, whereas Adidas has reportedly invested approximately $90 million. Expect this number to only increase over 2023.

Expect Licensors to Demand Broader Termination Options on Affiliate/Licensing Deals

One of the most notable business divorces also occurred in 2022, when Adidas dropped Kanye West as a brand partner for his antisemitic hate speech. The company advised they were immediately stopping production of its line of Yeezy products and stopping payments to Kanye and his companies. Adidas further said it was expected to take a hit of up to $246 million to its net income this year from the move.

The termination is sure to have long-lasting impact heading into 2023, as many brands are likely are going to consider what lessons can be learned from the story. For example, what can a brand do to protect its image, when a partner or affiliate engages in acts that harm their reputation. Generally speaking, when a contractual party engages in highly offensive conduct unrelated to the product or partnership, it is not a basis for termination of the contract. However, that is not always the case as specific termination provisions can be adopted whereby one party can terminate such an agreement if the brand representative or partner takes actions they deem as “detrimental” to the brand. Expect deals and litigation resulting from such provisions to increase in 2023.

Expect High Inventories and Big Discounts to Continue

One should also expect the discount wave to continue into 2023 when it comes to fashion and apparel. Throughout 2022, one of the biggest stories in the fashion and apparel industry was that a perfect storm occurred in 2022, whereby low inventories (caused by COVID-19’s detrimental impact on the international supply chain), rising interest rates, and fears of recessions led many retailers to stockpile inventory to avoid shortages. This occurred to such a considerable extent though, that when the economy started to rapidly decline, and consumer demand precipitously decreased, many companies were left with a substantial overabundance of inventory, and no warehouse space.  For example, Nike announced in its latest quarterly earnings report that its North American inventories increased 65 percent compared to a year ago.

As a result, retailers and wholesalers can expect to be forced to offload this inventory at great discounts throughout 2023. This in turn will also likely lead to retailers seeking to terminate 2023 orders with wholesalers. Party contracts and invoice terms matter now more than ever.

For more information on the Clark Hill retail and hospitality team, please click here.

For more information on the Clark Hill food and beverage team, please click here.

If you have an interest in being added to any of the Clark Hill mailing lists, please click here.

The views and opinions expressed in the article represent the view of the author and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.

Subscribe for the latest

Subscribe

Related

Event

2025 California Labor and Employment Law Symposium

Join Clark Hill for a full-day symposium exploring the most pressing legal issues facing California employers today. Our California Labor & Employment attorneys, along with colleagues from our Immigration and Cybersecurity/Data Privacy groups, will provide practical insights, legal updates, and strategic guidance across a range of workplace topics. Whether your role is in-house counsel, HR leadership, or company executive, this event is designed to equip you with the tools to help navigate California’s ever-evolving employment landscape.

Explore more
Event

Webinar: End of Year Privacy Check-In: What’s Changed, What Hasn’t and What’s Happening in 2026

Attendees will gain insights specific insight into the definition of ADMT under the new rules, common in-scope use cases and requirements, risk assessment and cybersecurity audit obligations and expectations for regulatory focus in 2026. You’ll walk away with a “check-list” of compliance priorities for 2026.

The session will provide practical guidance for legal, compliance, and business teams preparing for compliance deadlines and navigating emerging privacy risks.

Explore more
Event

2025 Illinois Labor & Employment Law Symposium

Join us for a complimentary half-day seminar designed for legal, HR, and business professionals navigating today’s rapidly changing work environment. Our experienced attorneys will share timely insights, practical strategies, and legal updates to help you stay compliant, mitigate risk, and lead with confidence.

Explore more