In these times of multiple threats of league lockouts and increasing salary caps, many athletes are finding themselves searching for alternative revenue streams. Even pros whose sports continue to keep them working are steadily looking to supplement income, primarily through business deals based exclusively on name recognition. As a result, brand protection is of increasing and paramount importance. Once an athlete steps into the business sector, that athlete must remain cognizant of the public’s perception of his or her image. Thinking of oneself as a brand has been a widely covered topic of late. While many understand the need for brand protection theoretically from a PR perspective, many fail to see it practically from a legal perspective.
The general public, including prospective employers, get to know athletes by the personality traits captured on tape, manifested through commonly observed technical and social skill sets displayed on and off the court (or field as the case may be) – which goes to the heart of branding. While brand development typically starts in high school and travels with the athlete all the way through to post-professional play, it is the public’s perception that dictates the pervasiveness of athlete brand recognition. Ultimately, surviving in the business sector necessitates that when an athlete leaves competitive sports for the business world, the athlete must carry a strong brand along with a (different kind of) team eager to protect it.
High school-aged athletes are typically still learning their craft when audiences begin watching them and making decisions about the athlete’s likeability. During this time, most athletes do not have handlers, media trainers, lawyers and other consultants whose jobs are to create and cultivate what will one day become the athlete’s brand.
Athletes who go on to compete in college under NCAA guidelines assign to the association all rights to the commercial use of their names, pictures or likeness, while in college, and arguably in perpetuity. (See, Holmes, J. & Corley, K., “Defining Liability for Likeness of Athlete Avatars in Video Games,” Los Angeles Lawyer Magazine (May 2011).)
A slightly less extensive grant of rights is assigned by pro athletes who seek to compete in leagues, tournaments, circuits and tours. The major distinction here is that the pro maintains some rights to also license likeness, although such a contract cannot conflict with the primary agreement. As such, it is in this time frame, when an athlete turns pro, that the athlete is permitted to earn money from the commercial use of likeness.
These days athletes are lending their likenesses to the promotion of consumer goods and services such as clothing, shoes, and insurance; social events, including parties and charity tournaments; and even reality TV shows. What many do not understand is that the value of the athlete’s likeness to the company employing that athlete is usually multiplied by the athlete’s failure to negotiate greater protections for the use of the athlete’s brand, in conjunction with that of the employer’s.
Following the 2011 NBA Finals, there were rumblings that a multinational company might replace one athlete’s endorsement contract with another player. (This article will not speculate on the legality of such a move.) Evident from this notion of a seemingly unilateral decision by one contracting party to completely nullify an agreement is that the athlete might not have taken control of certain key terms when the agreement was initially negotiated. While it is typically the case that one party to an agreement will have slightly better bargaining power than another, he who holds the weaker position must fight for as much control in the negotiations as possible.
The Key Elements
Being asked to sponsor and/or endorse a consumer good or service is quite an accomplishment; it’s also a testament to the brand you and your team have created. However, don’t get caught up in the glitz and glam! Protect your brand by focusing on five key elements over which negotiation is both warranted and expected: scope, duration, territory, enforcement and price.
Take control over how your image will be used. Hiring companies typically have their advertising concepts created well in advance of reaching out. However, as the featured talent, you maintain the ability to negotiate how your image will be used to enhance the consumer good. By the time the company targets an athlete, it is based in large part on the public’s perception of the athlete. At the time of contact, there should be no question in the athlete’s mind about brand identification or public perception. Rather, the question to be asked is: How does the company intend to capitalize off of the athlete’s brand? As the featured talent, the athlete must maintain control over his or her brand by negotiating, and, if necessary, requesting changes in the company’s intended scope to ensure it comports with the athlete’s brand.
Set the exact length of time the company may use any captured images. The contracting parties should endeavor to determine the length of time they wish to commit to one another. Some may decide it should be for no longer than a matter of weeks or months. This term is dictated by the activity. If it’s a social gathering, the company might be given only the amount of time it takes to promote the event and issue a press release when it’s over. If a television commercial, the company may be given a number of months to allow it to run – of course, this may change if the athlete is being offered residuals. Nevertheless, know how long the company intends to market your image and be sure that the runtime does not conflict with any other contracts.
Identify and set controls over your viewing audience. Often times, high-profile people are offered extraordinary amounts of money in countries other than their own, so they can become the face of products without which the talent might not otherwise be associated. (The cost-benefit analysis that must be undertaken by the athlete as it relates to the impact on brand worth is a subject for another discussion.) Here, the talent must consider the viewing audience. Consider the terms of the agreement that dictate whether or not the contracting parties will have the power to sell the captured content to others who may air the content, perhaps in perpetuity, throughout the world or certain segments. This term can become increasingly problematic for those from a country generally known to abhor the politics of another. It might not be a prudent business decision to allow brand association with a perceived enemy. You have the power to control this term and, as such, must make that clear in the agreement.
With all of these controls in place, license agreements must make clear that the failure to adhere to bargained-for terms will result in negative and potentially harmful financial consequences. Aside from a simple provision that sets forth an exact monetary amount for certain breach (a term that may be deemed ineffective if challenged in court), arbitration clauses demanding strict confidentiality are also generally regarded as reasonable and necessary terms. In this world of brand protection, gone are the days where any publicity is good publicity. Today, good business is dictated by getting good press; bad press could be career death… depending on your brand, of course.
Be mindful of the value of your brand. In negotiating the price point of an agreement find out what others have been paid. (Note: This information is usually confidential so don’t be surprised if such a request goes unanswered.) Investigate the terms of other similarly situated persons who have worked with companies of similar sizes and negotiate up. Investigate the marketing budget for the pitched project. Determine what costs will be covered by the company and what costs you will bear – who pays for your hair and make-up; transportation for you and those who must accompany you; how much will your attorney charge to negotiate this deal; and, will your sports and theatrical management expect payment as well? It is essential to know the answers to these questions before landing on the price. You need to know the bottom line dollar value you must be paid in order to earn a profit. Once the issue of who pays for what is clear, determine the anticipated time commitment for the project. This information should serve as the starting point for a fairly negotiated contract price.
In today’s society, popularity and likeability play a major role in consumerism. Having a knowledgeable team of lawyers, agents, managers, accountants and/or press savvy individuals behind you – who will guide, investigate, compute and negotiate – will prove invaluable in your (the athlete's) quest to secure brand protection.