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Introduction

There are several fundamental differences between team sport performers (“TSP”) and individual sport performers (‘ISP”). Representation of these athletes should reflect these differences.

This three-part series will provide you with some background as to how ISPs and TSPs differ and how those differences play a key role in their marketing decisions and overall compensation strategies. Part I of this series will explore many of the different legal and business considerations that exist between a TSP and an ISP and examine how these differences affect the representation of an ISP. Part II of this series will discuss sponsorship agreement negotiation techniques based upon the unique concerns of an ISP. Part III of the series will explore some of the key clauses of a sponsorship agreement and how such an agreement should be administered.

What is an Individual Sports Performer

Individual Sports Performers are athletes who participate in sports featuring individuals, not teams. Traditional individual sports include golf, singles tennis, bowling, swimming, boxing and many of the Olympic sports, like downhill skiing. More recently, there is been an exponential growth in non-traditional individual sports like x-game events such as boardercross, motocross, snowboarding, and skateboarding, as well as, more traditional individual sports like, auto racing, poker, triathlon, pool, cycling, running, and even darts. Many of these sports have seen unprecedented growth in the past decade and are even passing some of the more traditionally followed team sports, like baseball, in the way of television ratings.

How Do These Differences Affect the Representation of ISPs

ISPs Do Not Contract With A Team or A League, but Rather With Sponsors

Perhaps the most significant difference between ISPs and TSPs is that ISPs do not contract with a team or a league. Rather, ISPs are typically compensated by contracting with sponsors to use, endorse, and market the sponsor’s goods in return for compensation.

Because ISPs do not contract with a team or a league like TSPs, ISPs often do not have the protection and negotiating power of a union to negotiate a collective bargaining agreement on behalf of them and other athletes participating in the same sport. Further, ISPs are most often not viewed as employees, and therefore do not receive employee benefits such as worker’s compensation, pension plans, or health care. Further, they are not offered the benefits of a group licensing program, as are athletes in each of the four major sports.

While ISPs do not have these advantages, they do enjoy more freedom in contracting with sponsors. Their compensation, unlike most TSPs, is not limited by draft position, seniority, free agency regulations, or salary caps. Rather, they may negotiate for as much as the market will bear.

Another implication of being an ISP is that marketing opportunities are often responsible for as much or more of the athlete’s livelihood as is actual participation in a sport. Presenting an image with appeal, staying out of trouble, and performing on a high level, essentially enhancing their marketability is imperative to athletes who rely on compensation from sponsorships.

Moreover, injury prevention must be emphasized. Unlike team sports in which an athlete may get paid for an entire season regardless of injury, an ISP must stay injury free to preserve his rankings, make required appearances, and continue to make himself marketable to retain his sponsorships.

With these considerations in mind, a representative of ISPs should have a firm understanding of marketing principles and branding strategies. Further, indemnity clauses, narrowly drafted territory clauses, and provisions protecting the athlete’s intellectual property and publicity rights should be included in an ISP’s sponsorship agreement.

The Focus is Entirely On the Individual Athlete

Unlike many TSPs, ISPs must carry the entire burden of winning and losing on their shoulders. Further, injuries play a major part in many ISPs earning potential. Because much of an ISPs compensation is based on event participation, overall rankings in their sport, and media and marketing appearances, ISPs must stay healthy to perform consistently, hold their rankings, appear in and finish a requisite number of events, and provide the sponsor with adequate brand exposure.

Unlike in a team sport situation, in an individual participant sport, the entire focus is on the individual athlete. Individual participation results in much more audience attention and media exposure for the athlete. Additionally, while the athlete has to bear the full burden for a loss or unsuccessful season, the athlete may receive all of the praise if he has a very successful season.

Likewise, this increased attention may help or hurt an athlete’s marketing efforts.  Therefore, a representative should adjust his negotiating strategy accordingly. If the client appears to be an athlete who is just starting his career but who has a very bright future, the representative may want to draft escalating incentive provisions in the sponsorship agreement. The representative may also choose to negotiate a short-term contract, anticipating re-negotiation when the athlete has proven himself. On the other hand, if the client has been successful and is nearing the end of his career, the representative may want to ensure that the athlete receives compensation commensurate with his past successes for as long as possible. The representative in that case should also make efforts to capitalize on the brand loyalty and reputation the athlete has created over his athletic career.

Exposure to Many Different Markets

ISPs often participate in international events. This is a key marketing advantage.  Unlike the big four American team sport leagues, whose teams typically only perform in the United States, outside of a couple special events per year, golfers, tennis players, Olympians, swimmers, and triathletes regularly perform outside of the United States.  The increased exposure leads to many more marketing opportunities for the athletes and their respective sponsors.

As a result, representatives should include a narrowly drafted territory clause in the sponsorship agreement, specifically stating the intended territory for sponsorship purposes. Drafting a clause that is too broad, may preclude athletes from receiving other, more lucrative sponsorships. Drafting a clause that is too narrow, however, may reduce the athlete’s ability to take advantage of his international exposure.

Additionally, representatives should focus on the athlete’s branding goals and image. If part of the athlete’s brand is national or local appeal, a mixed message sent by marketing goods outside of his region may confuse consumers and tarnish his image.

ISPs Protect Their Own Rights

In the big four team sports, the player associations often establish marketing opportunities for the players and oversee the regulation of those opportunities through group licensing programs. Further, athletes in the big four sports often assign the exclusive right to license their name, signature, facsimile, voice, picture, photograph, likeness and biographical information to the players association for use in group licensing programs.

ISPs, however, are responsible for the care and protection of their own publicity and intellectual property rights. Therefore, they must develop an appreciation and understanding for the value of their intellectual property and publicity rights. These rights are the basis of their livelihood and, for the most part, the individual athlete is responsible for seeking marketing opportunities, not a union or players association.  Further, ISPs must constantly consider how their actions and performance will affect their sponsorships. Because their sponsors are their primary source of compensation, and because the burden of marketing the sponsor is solely on the ISP, the ISP must always be cognizant of his actions and performance.

ISPs do not assign their publicity rights or intellectual property rights to a league nor are they offered, for the most part, already established opportunities through group licensing programs, as are TSPs. Additionally, the most valuable assets an ISP possesses are his intellectual property and publicity rights. Licensing his name, likeness, photographs, images, and voice, via sponsorship agreements, is how many ISPs earn a living.

Therefore, the representative must protect these rights through various contract provisions. Additionally, the representative must ensure that the contractual provisions are properly administered. The representative must also fully educate his client on the importance of using trademarks correctly, the concepts of brand awareness, and the value of a brand. The representative should also ensure that the athlete adheres to the contractual provisions of the sponsorship agreement, including making appearances, competing in a sufficient number of events, and maintaining his image.

Conclusion

There are many key differences between ISPs and TSPs that should be considered by the athletes’ representatives. These differences play an important role when it comes time to negotiate an agreement on behalf of an athlete. Part II of this series will discuss how these key differences affect negotiating tactics and strategies.