{"id":74,"date":"2018-07-10T15:00:00","date_gmt":"2018-07-10T14:00:00","guid":{"rendered":"https:\/\/hub.findingsimple.com\/au\/individual-endorsement-and-team-sponsorship\/"},"modified":"2022-08-03T16:04:04","modified_gmt":"2022-08-03T05:04:04","slug":"individual-endorsement-and-team-sponsorship","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.com.au\/legal\/posts\/individual-endorsement-and-team-sponsorship","title":{"rendered":"Striking the Balance Between Individual Endorsement and Team Sponsorship"},"content":{"rendered":"

For sporting giants like the Yankees, Manchester United F.C. 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 team sponsorship deals aren\u2019t just routine but expected. Alongside the team or event rights, however, individual athletes hold valuable individual image rights that they understandably want to exploit.<\/p>\n

In some instances, the individual\u2019s interests in exploiting their own image rights won\u2019t 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.<\/p>\n

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 and your clients can use to navigate these tensions.<\/p>\n

Winning brands<\/strong><\/span><\/p>\n

Roger Federer is possibly the most valuable individual sports \u201cbrand\u201d 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 \u201cRF\u201d brand and now uses that brand to generate revenue, including through the sale of branded merchandise and to promote his own charitable foundation.<\/p>\n

In 2017, Usain Bolt\u2019s personal brand was valued at US$27 million. You would be hard pressed to find someone who isn\u2019t aware of Usain Bolt\u2019s famous lightning pose. Bolt\u2019s 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\u2019s athletics winnings and they continue to generate revenue well after his retirement from athletics.<\/p>\n

In 2017, NBA basketballer LeBron James\u2019s personal brand was valued at US$20 million. Unlike Bolt, James has to balance his personal endorsement deals, which include Nike\u2019s 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.<\/p>\n

Personal brand \u2013 valuable asset<\/span><\/strong><\/p>\n

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.<\/p>\n

This awareness of the personal value of exploiting individual athlete image rights was evident in the recent Australian cricketer pay fall out<\/a>. 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 \u2013 another story).<\/p>\n

Influencers \u2013 opportunity and risk<\/strong><\/span><\/p>\n

With the growth of social media and the explosion of \u201cinfluencers\u201d as a core marketing model, it\u2019s 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!<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

When team and individual sponsorship rights collide<\/strong><\/span><\/p>\n

In some circumstances, sponsorship of a team and individual athlete will be aligned \u2013 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.<\/p>\n

adidas\u2019 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 \u00a3100 million) required athletes to wear adidas tracksuits and footwear for podium presentations<\/a>, which prevented individual athletes such as Mo Farah from complying with their own personal endorsement arrangements.<\/p>\n

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\u2019s: \u201csole 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\u201d under the Olympic Charter. Many athletes would\u2019ve had neither obligation in mind when pursuing and negotiating their own individual endorsement deals.<\/p>\n

Individual endorsements and ambush marketing<\/span><\/strong><\/p>\n

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?<\/p>\n

Athlete endorsements may even amount to ambush marketing when the ambush marketer\u2019s 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<\/a>  – an accolade that is no doubt frustrating for official sponsors such as Heineken who paid \u00a320 million for their official rights.<\/p>\n

Coaching corner: practical tips to manage individual endorsements<\/strong><\/span><\/p>\n

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?<\/p>\n

A combination of practical and coherent legal frameworks alongside pragmatic and complementary processes can help to navigate the tension that exists between a club\u2019s monetisation of its brand and an individual athlete\u2019s desire to develop and exploit their own personal image rights.<\/p>\n