Australia: Intellectual property: Personal brand and sponsorship arrangements

There may be no 'I' in team...but there's an 'I' in sponsorship

This article explores how tensions arise when in the exploitation of intellectual property rights between the promotion of personal brand and the exploitation of individual image rights, and the brands of and sponsorship rights granted by sporting bodies and organisations. It also provides practical measures and legal tools that you can use to navigate these tensions.

For sporting giants like the Yankees, Manchester United Football Club and F.C. Barcelona (all of which frequently feature in the Forbes top 10 most valuable sports teams in the world) and institutions such as the Summer and Winter Olympics, multi-million dollar sponsorship deals are not just routine but expected. Alongside the team or event rights, however, individual athletes hold valuable individual image rights that they understandably want to exploit.

In some instances the individual's interests in exploiting their own image rights will not align with those of your clients, their team or sporting body, not least because endorsement of the individual may divert revenue and consumer attention away from that team or association.

Winning brands

Roger Federer is possibly the most valuable individual sports "brand" in the world at present. In 2017 Forbes estimated his personal brand value at US$37.2 million. Alongside traditional third party endorsement deals, Federer has created and successfully commercialised his own "RF" brand and now uses that brand to generate revenue, including through the sale of branded merchandise and to promote his own charitable foundation.

In 2017, Usain Bolt's personal brand was valued at US$27 million. You would be hard pressed to find someone who isn't aware of Usain Bolt's famous lightning pose. Bolt's self-made personal brand has been re-used with great success in significant endorsement deals with Virgin Media, Gatorade and Optus Mobile, to name a few. The value of these endorsement deals far exceeds Bolt's athletics winnings and they continue to generate revenue well after his retirement from athletics.

In 2017, NBA basketballer LeBron James's personal brand was valued at US$20 million. Unlike Bolt, James has to balance his personal endorsement deals, which include Nike's first lifetime sponsorship deal and multi-million dollar agreements with global brand heavyweights Coca-Cola, McDonalds, Verizon and Intel, with the partnerships of the Cleveland Cavaliers.

Personal brand – valuable asset

Individual athlete brands are clearly valuable and readily exploitable assets. The examples above are at the top end of the spectrum of success, but are no doubt what young ambitious athletes aspire to achieve. Athletes are painfully aware of the limited lifespan of their competitive careers and understand the importance of maximising opportunities to generate revenue, including through the exploitation of their personal brand, during their competition years.

This awareness of the personal value of exploiting individual athlete image rights was evident in the recent Australian cricketer pay fall out. Australian cricketers threatened to establish their own intellectual property company for the exploitation of individual image rights (of course the value of these rights may have since diminished – another story).1

Influencers – opportunity and risk

With the growth of social media and the explosion of "influencers" as a core marketing model it is easier than ever for individual athletes at all levels to develop and exploit a personal brand. A global athlete such as LeBron, who operates in a heavily marketing focused environment known for its sophisticated and fast-paced endorsement industry, is likely to be cognisant of the relevant risks and limitations; he may also have more bargaining power than his club, given his personal value!

Less experienced athletes however, who are benefiting from endorsement opportunities for the first time will be less familiar with the complexities of individual versus team sponsorship arrangements.

For clubs and teams the expanded opportunities for individuals to obtain endorsement deals can be an opportunity for further marketing, but the exploitation of individual brands may expose clubs and teams to additional risk.

These risks include breaches of club sponsorship arrangements, brand damage resulting from individual marketing campaigns or individual use of social media, inconsistent consumer messaging about what the club represents and, importantly, loss of revenue if marketers choose to invest in athletes (over whom they may expect to have more control) instead of organisations.

When team and individual sponsorship rights collide

In some circumstances sponsorship of a team and individual athlete will be aligned – the adidas sponsorship of Dan Carter as an individual complemented their team sponsorship of the All Blacks and probably helped rather than hindered in extracting maximum value from that sponsorship.

adidas' sponsorship of Team GB during the London 2012 Olympics, however, created tensions with the endorsement deals already entered into by athletes. The Team GB exclusive rights granted to adidas (reputedly for £100 million) required athletes to wear adidas tracksuits and footwear for podium presentations, which prevented individual athletes such as Mo Farah from complying with their own personal endorsement arrangements.2

When this tension came to light, not only did representatives for the British Olympic Association rely on the exclusive contractual rights granted to adidas under their sponsorship agreement but reference was also made to the BOA's: "sole and exclusive authority to prescribe and determine the clothing and uniforms to be worn, and the equipment to be used, by members of their delegations on the occasion of the Olympic Games and in connection with all sports competitions and ceremonies related thereto" under the Olympic Charter. Many athletes would have had neither obligation in mind when pursuing and negotiating their own individual endorsement deals.

Individual endorsements and ambush marketing

Individual endorsement deals may in some circumstances amount to ambush marketing. If Team GB athletes had gone on to wear their own footwear for podium presentations during the Games, perhaps adidas may have looked to ambush marketing laws to bolster their sponsorship rights?

Athlete endorsements may even amount to ambush marketing when the ambush marketer's products are in an entirely different sector to those of the official sponsors. The Dr Dre Beats campaigns during the Rugby World Cup 2015 featuring individual players Richie McCaw, Chris Robshaw and Wesley Fofana was named by some as amongst the best advertising campaigns of the competition 3 - an accolade that is no doubt frustrating for official sponsors such as Heineken who paid £20 million for their official rights.

Coaching corner: practical tips to manage individual endorsements

What can your clients do to manage these risks? How can the expectation and understandable desire of athletes to monetise their personal brand be reconciled with the complex and lucrative sponsorship arrangements that sporting teams and organisations enter into?

A combination of practical and coherent legal frameworks alongside pragmatic and complementary processes can help to navigate the tension that exists between a club's monetisation of its brand and an individual athlete's desire to develop and exploit their own personal image rights.

  • Defined parameters. Sporting bodies/organisations and their athletes should be clear about the scope of the athlete's freedom to engage in their own marketing activities, and the process and parameters for doing so. Create written processes that are straight-forward to implement and are tied with obligations in athletes' contracts.
  • Disclosure. Include disclosure obligations in athletes' contracts for personal endorsement deals. This will create an open environment for athletes and their team or organisation to try and resolve conflicts between endorsements amicably during contract negotiation, rather than after parties have invested time, money and effort in launching an advertising campaign.
  • Due diligence. Develop a due diligence culture, in which athletes are encouraged to make diligent enquiries about potential conflicts up front at any early stage of discussions.
  • Player guidelines. Provide clear and unequivocal guidance to athletes about their responsibilities to their team and its sponsors, to enable the athlete to assess whether their own sponsorship might put the club into hot water with its sponsors (many of whom will have paid millions for their rights).
  • Education and accessibility. Education is key – many agreements and rules will already cover issues such as the order of precedence of different rules and agreements in the event of a conflict and disclosure and consent requirements for individual marketing activities. Make these available and accessible to athletes and ensure that they are routinely followed by clubs and sporting bodies so as to become normal practice.
  • Social media policies. Implement social media policies, clearly defining what constitutes acceptable content for an athlete to publish. This policy has a dual purpose – not only should it regulate athletes' social media based influencer and endorsement arrangements, but it should also protect the team brand. Athletes have the power to materially damage team brands within a matter of seconds through their personal social media use. To protect their own brand, teams may have to take a stand against the athlete as the Hellenic Olympic Committee did when they condemned a racist tweet by Papachristou in the run up to the London 2012 Olympics as contrary to the values of the Olympics, and expelled her from the Greek team.4
  • Relief events in individual endorsements. Athletes should be encouraged to negotiate contractual relief in their personal sponsorship agreements if their team or sporting body commitments require the athlete to act inconsistently with the demands of their individual sponsor. Athletes should also be advised to include a relief event from liability for not complying with provisions that require them to act contrarily to their governing body's rules. Breach of these rules can be very serious and may result in disciplinary action or even suspension.

Footnotes

1 https://www.smh.com.au/sport/cricket/crickets-pay-fight-intensifies-as-players-establish-intellectual-property-company-20170524-gwbrd5.html

2 https://www.telegraph.co.uk/sport/olympics/9067763/London-2012-Olympics-GBs-medallists-may-be-barefooted-on-podium-after-BOA-take-tough-stance-over-sponsorship.html

3 For example: https://www.adforum.com/creative-work/best-of/10304/top-rugby-world-cup-2015-ads

4 http://www.bbc.com/news/world-europe-18987678

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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