In the startup world, lawsuits from ousted co-founders are commonplace. So perhaps it was inevitable that shortly after Beats Electronics (better known as Beats by Dre) inked a deal to sell to Apple for $3 billion, a lawsuit would come along. Last week, cable-maker Monster Inc. and its founder Noel Lee, an early partner of Beats, filed suit against Beats alleging that Dr. Dre (real name: Andre Young) and Interscope chairman Jimmy Iovine duped Lee out of his 5 percent stake in the company.
It was the kind of press that Dre, Iovine, Beats and Apple (AAPL) certainly don’t want. And another apparent bump in the road for Beats came in October when the National Football League signed a new deal to make Bose the exclusive headset provider of the league. That meant that Beats by Dre headphones—endorsed in commercials by a number of football stars—are effectively banned from NFL games, locker rooms, press conferences, and official events.
But what may seem like bad news has proven to be the opposite for Beats. Getting “banned” has created added cool-factor and credibility for the product. (Iovine has said about the ban, “I can’t believe I’m this lucky.”) Those NFL players that advertise for Beats (including 49ers quarterback Colin Kaepernick, Seahawks cornerback Richard Sherman, and Cowboys wide receiver Dez Bryant) have continued to wear the headphones, despite risk of the $10,000 league fine for non-approved apparel. (The NFL slapped Kaepernick with the fine in mid-October.) Even players who are not official endorsers of the company have defied the rule: Tom Brady wore Beats earbuds on the field during his warmups before an October game against the Bills. (He was not fined, perhaps because it isn’t as flagrant as wearing them at a postgame press conference, as Kaepernick did.)
It is also likely that when a player is fined, Beats reimburses him. When asked if this happened in his case, Kaepernick replied, “We’ll let that be unanswered.” Regardless, it’s clear that being “banned” by the league has not damaged the brand, and in fact may have even strengthened it.
Similar to the situation with Beats, a number of other prominent apparel or beverage brands have been effectively banned by the NFL because a competitor brand has an exclusive deal. Here are some of the biggest.
It's fitting that Beats is a no-no on NFL sidelines, because so are tablets made by its new corporate parent, Apple. In 2013, Microsoft (MSFT) paid a reported $400 million to be the exclusive provider, for the next five years, of tablets for coaches and players to use on the sidelines. (You may have seen the many television ads running currently that show stars like Russell Wilson reviewing plays on the Microsoft Surface.) Microsoft's deal means that Apple iPads are forbidden during games and at press conferences.
Adidas Group apparel
In 2010, Nike made news by usurping Reebok (which is owned by Adidas Group) as the official apparel provider of the NFL. In a deal that reportedly cost $1.1 billion (making it one of the league's three most expensive sponsorships), Nike (NKE) is the sole provider of on-field uniforms and apparel for players and staff. (There is one exception: Adidas-endorsed players are permitted to wear Adidas cleats and gloves, thanks to a new deal.) Under Armour, meanwhile, is the exclusive apparel provider for the NFL Combine. In 2012, quarterback Robert Griffin III (better known as RGIII) got the $10,000 fine for wearing an Adidas sweatsuit—bearing a big, old-school Adidas trefoil logo on his shirt—to a postgame press conference. Look for an interesting bidding war to develop soon when Nike's five-year deal expires.
Non-New Era hats
In 2013, New Era signed a deal that made it the "exclusive on-field hat provider" of the NFL. What exactly does that mean, in a sport where the players wear... helmets? It means that everyone on the sidelines of a game—from players, to coaches, to trainers—may only wear hats made by New Era. And indeed, those on the sidelines do often wear hats, including the players, when they're on the bench. (Tom Brady, of the New England Patriots, is especially quick to switch from helmet to stocking cap when he comes off for the defense.) When it isn't cold, many of the coaches wear flat-brimmed caps—again, those now must be made by New Era. It means no Mitchell & Ness hats, it means no Under Armour hats. And as with the adornment of Beats or other non-Bose headphones, players who sport an unauthorized cap will get the slap. In 2011, Wes Welker, then with the Patriots, got the $10,000 fine for wearing a hat promoting energy-bar company Bonk Breakers in a postgame interview.
The NFL has quite a few "official" providers. Just like Bose being the official headset provider, and New Era the official hat, Gatorade is the "official sports drink" of the league, thanks to the NFL's exclusive deal with PepsiCo (PEP). (You might recall CEO Indra Nooyi's concerned public statement last fall during the much-scrutinized crisis over domestic violence.) On the field, and at events, players may not be seen guzzling, say, Red Bull, or Powerade, or Vitamin Water (which is owned by Coca-Cola). In 2007, Chicago Bears linebacker Brian Urlacher learned the hard way that this extends to apparel bearing the name of a Gatorade competitor. He wore a Vitamin Water cap to Super Bowl Media Day and was fined $100,000, because the fine is (much) higher during the Super Bowl.