This article was initially published by Law360 on September 26,2018.
Whether it's today's hyper political society, the ability to engage and connect fans and/or consumers on substantive issues, the prevalence and reach of social media, or a combination of the above, athletes and brands are increasingly vocal on social issues.
Prominent athletes have taken public positions on issues such as gun control, diversity and inclusion, sexual harassment, social injustice and police brutality. Big brands have also made their positions public on similar issues. Dick’s Sporting Goods banned the sale assault weapons after the Parkland, Florida, shooting. Apple Inc., Google Inc. and Facebook Inc. were extremely vocal against President Donald Trump’s travel ban targeting certain Muslim-majority countries.
Brands and athletes are also working together on social issues. Despite the controversy surrounding Colin Kaepernick's national anthem protest, Nike Inc. tapped the former San Francisco 49ers quarterback as a face of the 30th anniversary commemoration of Nike's iconic "Just Do It" campaign. In July 2018, swimwear brand TYR Sport Inc. announced a sponsorship deal with Olympic and world champion swimmer Simone Manuel that incorporated an "inclusion rider," a provision that allows Manuel to ensure that her partners extend meaningful opportunities to traditionally underrepresented groups and that diversity be reflected in the creative efforts she pursues with TYR. LeBron James is producing a three-part documentary series on Showtime titled "Shut Up and Dribble," which looks at the changing role of athletes in the current political and cultural climate.
The increased social activism by both athletes and brands creates an opportunity for athletes to partner with brands that are committed to supporting issues and initiatives an athlete is passionate about. Certain athletes, typically big-name stars in each sport, may have increased leverage to demand broader support, particularly if the brand is significantly reliant on the athlete in a particular sport or industry. Take Steph Curry and Under Armour or Roger Federer and Uniqlo Co. Ltd., as possible examples. But many athletes across the spectrum will have the ability to have some form of commitment from their partners.
In order to get the proper commitment from a partner, athletes must address their issues and initiatives of concern with they begin negotiating agreements with their commercial partners.
Athletes, like Simone Manuel, who want to ensure that meaningful opportunities are extended to traditionally underrepresented groups and that projects with a partner reflect real demographics, including a proportionate number of women, minorities, LGBTQ individuals and people with disabilities, can negotiate for an inclusion rider, or a variation thereof, that is applicable to his or her sport or commercial relationship. If in athlete wants to request that a percentage of sales associated with products an athletes promotes are directed to a particular charity, then again the parties need to work that into the terms of the deal.
The main concern here is to ensure that the commercial partner is contractually obligated to perform in the manner requested and that those commitments are clear and precise so that the parties know what they are committed to do. If a partner fails to take such actions, the agreement should provide for appropriate remedies and the ability for an athlete to walk away from the deal altogether and find a more suitable partner.
Alternatively, athletes can negotiate for a reciprocal "morals clause." A morals clause gives a party to an agreement the right to terminate a contract if actions by the other party would damage the terminating party’s reputation or image if it were to remain in the agreement. Morals clauses are common in endorsement deals but are typically unilateral in favor of the brand, allowing it to terminate the contract if the athlete's actions would reflect unfavorably on the brand. The conduct typically covered in these clauses can range from criminal conduct to activities that are deemed outrageous or offensive by general public standards. In recent years, these clauses were invoked to terminate the endorsement deals of Michael Vick, Kobe Bryant, Lance Armstrong and Tiger Woods.
Given today's socially aware environment, athletes should negotiate to protect their personal brands from the negative reputational impacts resulting from actions by their commercial partners as well. Athletes should negotiate for a "reciprocal" or "reverse" morals clause that allows the athlete the ability to terminate a deal if actions by a brand partner or its executives and related parties could damage the athlete's brand. For example, what if an athlete is under contract with a financial institution that is charged with fraud, or if the CEO of a brand partner is caught on video making racist statements or is charged with sexually harassing employees? The athlete should be able to terminate the deal immediately. In some instances, athletes have arguably more to lose than the brand. There's no CEO to fire or board member to replace. It's just the athlete and his or her personal brand. Moreover, if an athlete is particularly thoughtful and vocal on certain social issues, he or she does not want to indirectly get caught on the wrong side of that issue.
The more significant the value that an athlete brings to a partnership, the more leverage the athlete will have in negotiating these types of arrangements. However, it's important for all athletes to think about what they hope to achieve with brand partners, beyond compensation and the personal brand building elements. If certain social issues are important, then an athlete should attempt to find a partner that is supportive and ensure that what goes into the agreement with that partner addresses the issues and initiatives adequately.