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ENDORSEMENT DEALS: CONSIDERATIONS FOR ATHLETES

When offered an endorsement deal, it is important for athletes to fully consider both the terms and the practical implications of the contract. Endorsement deals for athletes will usually provide kit, a base payment, and bonuses, in return for that athlete using and promoting a brand’s products. Before the athlete signs the contract, both them and their agent should consider any points for consideration.
General clauses

The duration (term) of the contract should be reviewed, for example, if the brand is offering a contract which will last for a few years, it may give certainty and security. However, if the athlete expects their performance to significantly improve in the next season, they may wish for the term to be shorter so that they can renegotiate a better deal sooner.

Governing Law and Jurisdiction is one factor to consider. For example, an English athlete may want any disputes to be heard in the Courts of England and Wales under English and Welsh Law.

The endorsing brand is likely to wish to limit their liability to athletes, and where this is the case, it is important to ensure that these limitations on liability are reasonable and in accordance with the law.

It may also be the wish of these brands that the athletes they endorse provide an indemnity for any losses caused by the athlete to third parties. Again, the athlete may wish to negotiate these to ensure they are reasonable.

Right of First Refusal
Brands will usually include a clause in their contracts which states when the athlete may approach third party competitors, with the intent of ending the current contract to enter a new endorsement deal with the third-party competitor. This is often a few months prior to the existing contract coming to an end.

Additionally, most contracts will include a clause whereby the existing sponsor is offered a right of first refusal when the athlete wants to terminate the partnership with their existing sponsor. Where this is applicable, and the existing brand is able to match/better the proposed contract of the third-party competitor, the athlete must continue the partnership.

Base compensation, bonuses, and payment terms
Contracts may provide a base compensation and performance-based bonuses.

Before entering into a contract, it is important to check:

  • whether there are any caps on bonuses;
  • how any base compensation will be paid (up front or installments); and
  • when invoices are due and when payment will be made.
In terms of bonuses, athletes should seek to include achievable performance bonuses as well as performances which may be considered a ‘bit of a stretch’, which accommodate for any exceptional performances made by that athlete.

Obligations
The athlete’s payments may be reduced, or their contract may be terminated if they do not act in accordance with the contract. Kit endorsement contracts often require that athletes:
  • exclusively wear and use the kit provided under the contract when in public or where they may be photographed (i.e. competition, training and interviews). For national competitions where an athlete will be representing their country e.g. the Olympics, athletes will be allowed to wear the national team kit even if they are a competitor of the brand that the athlete is contracted with. Athletes are generally allowed to wear the shoes of their sponsors in national competitions.
  • do not wear competitor brands during the duration of the contract. The brand will often include a schedule which lists examples of competitor brands. If this is not included, it may be worth requesting a list to provide clarity as athletes may wish to limit the scope to direct competitors i.e. sportswear brands only.
  • attend an agreed number of personal appearances to promote the brand and/or publish promotional posts on their social media.
  • do not act in a way that brings themselves into disrepute and/or damages the reputation of the sponsor.
Before entering into an endorsement deal, there is a lot to consider; both from a commercial and legal perspective. Brandsmiths can help to put you in the best possible position when entering into an endorsement deal.

If you wish to discuss endorsement deals in more detail, please contact imani@brandsmiths.co.uk or follow her LinkedIn account.

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