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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.
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: