Contractual issues for Endorsement contract in modern Sports Marketing

Abstract

One means of capitalizing on the athlete's public recognition is to market the athlete through selectively acquired and carefully negotiated endorsement contracts. An endorsement contract is essentially an agreement pursuant to which an athlete licenses to another party the right to use the athlete's name and image in connection with the advertisement of products or services. The increase in quantity and severity of risks for the endorsement contracts is a product of various factors, namely the evolution of the athlete endorsement industry in terms of size and customer appeal. As a result of these changes, corporations are forced to place greater emphasis on hedging such risks through tougher negotiation and enforcement of long‐dormant contractual provisions. Several agreements illustrate the practical roles of corporate protections once an athlete has acted in a manner inapposite to the company's will. The changes occurring in the athlete endorsement arena and the associated risks have led to one inevitable conclusion: tougher contractual provisions, notably a forceful morals clause, may be the supreme safeguard for corporate endorsees. In the future, morals clauses may help to prevent prolonged embarrassment or obligation to maintain a valueless asset such as an immoral, unmarketable athlete. Additionally, companies may select alternate endorsers and determinations of athlete value in their sports marketing campaigns. Companies will increasingly need to be aware of the potential detriment an endorsement deal gone bad can have on a brand.