A Brief Introduction About the Athlete Endorsement Contract
An athlete endorsement contract is an agreement between the sponsor and an athlete by allowing the sponsor to use the athlete’s name, image, or likeness for promoting the sponsor’s company products and services. In most professional sports, the leagues are not allowing the individual players to use alcoholic beverages and tobacco products. Some of the sports authorities are not even allowing the players to use certain nutritional supplements.
A sponsor also focuses on these legal terms and conditions and set the same rules for an athlete in an athlete endorsement agreement. When the sponsor feels good about the co-ordination of the athlete, then there will be a greater chance of earning money by the company. Many companies started to develop by making endorsements, and one such example is Nike endorsements for sponsoring athletes like Mo Farah.
Who Takes the Athlete Endorsement Contract?
The athlete endorsement contract is between the sponsor or company and an athlete, thereby allowing the company to use the athlete’s name, image, voice, etc. to promote the company’s products. This contract also includes an appearance contract that includes the terms and conditions to be followed by an athlete for appearing at a public event, sports camp, etc. The contract mentions the name of the parties, along with the effective date of starting the contract and the address of the parties.
Purpose of the Athlete Endorsement Contract
The main purpose of the athlete endorsement contract is to develop the reputation of the sponsor’s company by earning a lot of money through promoting the products and services with the help of famous athletes. So you may doubt whether it doesn’t benefit athletes? Yes, of course, athletes make great endorsement deals with the sponsors. Through endorsement contracts, many athletes are earning enough money.
But the sponsor makes brilliant decisions in choosing the right athlete to familiarize his/her company’s brand. Some of the multi-national companies choose only the highest-earning athletes for promoting their products and services by thinking that it will make a great reach. Thus, this contract provides an equal benefit to both the company and the athlete.
Contents of the Athlete Endorsement Contract
Athlete Endorsement Contract includes various terms such as a term of the agreement, compensation, duties of athlete, exclusivity clauses, intellectual property, warranties, termination terms, etc. The contract starts with the term of the agreement to be either short-term or long-term contracts. Then, the agreement focuses on certain things that the sponsor is going to use for the promotion of the company’s products by explaining the grant terms to the athlete. The next thing includes the payment or compensation provided to an athlete, and they are paid much.
Here you will get a doubt why they are paid much. This is like a strategy followed by the sponsor for boosting athletes to work their best in promoting the products, and sometimes the sponsor also checks which athlete makes the most money for choosing him/her. Once the terms, purpose, and compensation have been mentioned, then the next thing is to mention the rights, duties, and responsibilities of each party. For sponsors, it is significant to define the Athlete’s services in detail.
How to Draft the Athlete Endorsement Contract?
A Sponsor should check whether he/she has given the right contract terms such as contract year, competitor’s name, licensed products, and marketing materials to be used by the athlete, compensation such as fixed fee or royalties, and other terms and conditions. Also, the contract includes termination rights and exclusivity obligations. Both the parties should take care of these terms and conditions before signing the contract.
Negotiation Strategy
As already said, an athlete can negotiate the payment terms with the help of a legal attorney. Sometimes, the sponsor checks how much do professional athletes make? Based on it, they will ask for a lesser amount than the actual amount. However, they know that you will negotiate some more from the given compensation plan.
Sometimes, the sponsor will prepare a list of top sports and choose the one based on which professional sport pays the most. The Sponsor selects such a famous sport from which the famous player makes the endorsement deals with him/her. So, an athlete should make proper negotiations before signing the contract.
[Also Read: Athlete Sponsorship Contract ]
Benefits & Drawbacks of the Athlete Endorsement Contract
Benefits:
- The contract helps to increase the reputation of the sponsor’s company
- Many athletes can able to earn better through endorsement deals. So, why are athletes paid so much for endorsement deals? As they act as a part of developing the company’s profit or reputation through advertisements acted by such highly paid athletes
- To open up your brand new markets, choosing the athletes will sure benefit the company
- To differentiate your brand from competitors, celebrity athletes serve as the best option. So the contract makes your brand stand out from competitors
Drawbacks:
- Choosing the big athletes to promote your brand may result in overshadowing your brand. This means the people might start to focus much on the celebrity athlete rather than the brand. This will cut out the brand recognition in the minds of the people.
- Endorsements are expensive, especially when the term of the contract is very lengthy. Browse the biggest sports contracts for knowing the compensations that they are paying much for athletes.
What Happens in Case of Violation?
When any one of the parties breaches the contract, then the other party has the right to get contractual remedies. The company has the right to terminate within a certain period when the athlete fails to perform the duties or engage in illegal activity or a criminal act(1), etc. Similarly, an athlete has the right to terminate the company when they fail to make payments to an athlete.
Thus, this contract provides benefits to both the sponsor or company and the athlete. The agreement should include legal terms and conditions and should be written formally by an experienced attorney to avoid disputes between the parties(2). Therefore, this contract should be written in such a way, which will help the parties understand easily about the terms and conditions.