Blog Sports Law

Introduction

In Part I and II of this three-part series, I reviewed the differences between individual sports performers and team sports performers and how those differences affect the strategies that an athlete representative employs in their representation of such athletes.  I also reviewed the key ingredients that make up a marketable athlete and how an athlete representative should assess his or her athlete’s marketability.

In Part III, I will review key clauses of a properly drafted sponsorship agreement.  Additionally, I will address how such an agreement should be carefully administered so that both parties receive their bargained-for-benefit from the deal.

Drafting A Sponsorship Agreement

In addition to the general provisions that one might see in an ordinary contract, sponsorship agreements, especially those for ISPs, should contain some provisions specifically applicable to the ISP.  Though a variety of clauses may be beneficial for a particular athlete or sponsor in a particular situation, the following clauses are often widely applicable and crucial to have in a sponsorship agreement.

Quality – It is imperative that the athlete be given the right of prior written consent of all marketing materials, including advertising and promotional materials, prior to their exposure to consumers.  The proposed advertisement could be in bad taste and tarnish the athlete’s image.  Further, it may cause the athlete to breach certain provisions of his sponsorship agreements.

Moreover, if the athlete is licensing any of his intellectual property or publicity rights, he will want to have audit rights to the use of that intellectual property or those publicity rights.  He does not want any of his trademarks or other works tarnished in any way as to affect future marketing opportunities.

Appearances –Appearances are very important to the sponsor, however, a representative also needs to be aware of his client’s strengths, weaknesses, likes and dislikes.  If the representative knows that the athlete does not plan to live up to a certain amount of appearances, it may be necessary to negotiate more realistically on this item.  The duration of each appearance should also be carefully negotiated.  Due to training and media schedules of premier athletes, each of these appearances will probably be wedged into an already full schedule.

Endorsed Products – Be very precise with the language stating what the athlete will endorse.  Language, which is too broad, may obligate the athlete to endorse products he had not otherwise anticipated endorsing.  For example, a triathlete who is to endorse a wetsuit would not want to use the term “triathlon products” in this clause.  The effect may also preclude the athlete from signing other endorsement agreements for related products.

Logo Placement – Many sponsors, especially the primary sponsor, will want key placement areas for their logo.  If it is the primary sponsor, it will typically, depending on the sport, want the front center or back center of a shirt with type size larger than other sponsors.  This is where flexibility and knowledge of the sport matter.  A sponsor of a swimmer would most likely want the logo placement on the swim cap.  The sponsor of a triathlete would most likely want placement on the back of the athlete’s triathlon jersey, as the athlete’s chest is facing down on the longest portion of the race, the bike ride.  Other considerations, such as patch size and placement restrictions by the respective sport’s governing body must also be considered.

Right of Publicity – It is important to have the company participate in the protection of the athlete’s name and rights of publicity.  The clause might indicate that the company has the right to use the athlete’s name, likeness, drawings, photographs and any other likeness, quotes, remarks, signatures, or other intangible assets associated with the endorsement, promotion, marketing, advertising and sale of the sponsor’s products.  Unless the sponsor is willing to pay the athlete more than the athlete would ever demand, this license should be non-exclusive, allowing the athlete to obtain more sponsorships and receive greater compensation.  Even if one sponsor is willing to pay an unimaginable sum of money, an athlete should try to diversify his sponsorships.  The athlete does not want to lose all of his sponsor related compensation due to the termination of one agreement.

Administering the Contract

Administering the contract is one of the most crucial steps in the process.  This is especially true when representing athletes who may not have the same kind of business background that many ordinary business clients do.  The representative will be responsible for approving advertising materials, scheduling personal appearances, ensuring timely and accurate quantities of product are delivered to the athlete, and that payments are invoiced and received properly.  The representative must also protect the athlete’s intellectual property and publicity rights under the contract.

The representative will also want to ensure that the athlete does not inadvertently run afoul of his contractual obligations.  If an athlete’s sponsor is a competitor with an event sponsor, chances are the sponsor will not want its athlete to appear in photos with the event sponsor’s name and logo in the background, or even worse, in the foreground, for example, on a trophy or a prize.

For example, many may remember that Michael Jordan, when playing for the 1992 Dream Team, experienced a situation in which he was forced to think quickly to protect his sponsor.  As Jordan took the medal stand to accept his gold medal, he realized that his uniform, made by Reebok, clearly showed the Reebok trademark.  Rather than cause harm to his relationship with Nike, Jordan draped an American flag over his shoulder and hid the Reebok mark.

It is essential that the representative remind his athletes to keep a good relationship with the sponsor.  Not only is it good business, but also it may lead to future deals and longer team agreements with the sponsor.  Athletes should not compete while using other products than his sponsor’s or even wear competitor’s clothing when in public.

Conclusion

An athlete representative must be careful in his or her drafting of a sponsorship agreement, carefully tailoring it to his or her athlete’s needs. A properly drafted agreement will be beneficial to both parties involved, and will pave the way for a strong sponsor-athlete relationship.  Once the agreement is executed, it should be administered carefully to ensure that both parties to the agreement receive their bargained-for-benefit.  This will lead to a strong relationship between the parties and potentially future sponsorships and endorsements for the athlete.