This week, the U.S. Supreme Court issued a landmark decision authorizing the states to decide whether sports betting should be legal within their borders. In its decision, the Court struck down certain provisions of the federal Professional and Amateur Sports Protection Act of 1992 (“PASPA”) that previously provided a general ban on legalized sports betting outside of Nevada. Below are key things every league, team, conference, and school should know about the Court’s decision to prepare for a future where sports gambling is commonplace.

Why The Court Found PASPA To Be Unconstitutional

As a key message in its opinion, the Court conveyed that PASPA was not unconstitutional because individuals enjoy a federally-protected right to participate in legalized sports betting. Rather, the Court struck down PASPA because of the specific manner in which the statute prohibited sports betting. More precisely, the Court held that PASPA’s prohibition on states from authorizing legalized sports betting “unequivocally dictates what a state legislature may and may not do” in violation of the anti-commandeering rule reflected in the Tenth Amendment of the U.S. Constitution.

Hold Your Bets, At Least For Now

Another key takeaway from the decision is that legalized sports betting still faces significant threats, even after the Court’s ruling. For instance, each state must undertake the potentially lengthy process of enacting new legislation to legalize sports betting within its borders. And even after a state completes that process, its new sports betting laws will likely face vigorous challenges from opponents and robust scrutiny by the courts because, as the Court noted in its opinion, “the legalization of sports gambling is a controversial subject” about which “Americans have never been of one mind.” Additionally, the Court’s decision also leaves the door open to future federal bans on sports betting, noting that “Congress can regulate sports gambling directly” if it chooses to do so.

So What Should You Do Now

In the wake of the Court’s decision, there are several actions that leagues, teams, conferences, and schools should take to prepare for a world where state-sanctioned sports betting is commonplace. Of course, the foremost priority across the sports industry is preserving the integrity of the game, and all stakeholders should work closely with state governments to develop appropriate laws and regulations in furtherance of that goal. Beyond that rather obvious imperative, leagues, teams, conferences, and schools should also consider:

  • Tightening restrictions on athletes’ affiliations with entities or investors in gambling enterprises;
  • Enacting new rules to regulate on-site sports gambling at sports venues;
  • Analyzing applicable bylaws, policies, and practices to identify any limitations on sports gambling activities;
  • Exploring appropriate “sports betting right and integrity fees” that might be collected from sports betting enterprises;
  • Creating robust internal controls to monitor compliance with applicable laws, league/conference rules, and team/school policies related to sports betting; and
  • Developing a framework to address sports gambling issues in collective bargaining agreements, player contracts, and scholarship offers.

The above list is far from exhaustive, as the prospect of legalized sports betting creates countless issues for all stakeholders in the sports industry. Still, leagues, teams, conferences, and schools should take immediate action to prepare for future laws legalizing sports gambling. Because with an increasing number of states introducing and enacting sports betting laws, the future may be upon us sooner than we think.

You don’t think of sports website FanGraphs as a go-to source for legal analysis. But in a provocative April 30th post by Nathaniel Grow, https://www.fangraphs.com/blogs/the-supreme-court-might-reconsider-mlbs-antitrust-exemption/, it was suggested that maybe—just maybe—the Supreme Court might be winding up to reexamine baseball’s anomalous antitrust exemption.

Baseball’s judicially-created antitrust exemption is now nearly 100 years ago. Federal Baseball Club v. National League, 259 U.S. 200 (1922). Justice Holmes’ opinion has stood the test of time. The Court held that baseball is not engaged in a business in interstate commerce—it’s the national pastime. Justice Blackmun’s opening section, delineating all the baseball greats, in the 1972 opinion Flood v. Kuhn, 407 U.S. 258 (1972) upholding the exemption, could be envisioned read aloud by James Earl Jones in “Field Of Dreams.”

Since 1972, litigants have looked for loopholes or limiting factors in the exemption—or even asked for it to be overturned. All have failed, and the Supreme Court has declined in the last four decades to take another baseball antitrust case.

So what is different this year? The FanGraphs post noticed what potentially could be a straw in the wind. Or maybe it will be nothing.

There are two petitions for certiorari pending at the Supreme Court. In one, Wyckoff v. Office of the Commissioner, No. 17-1079 two former scouts allege that baseball and its teams have colluded to depress the market for scouts. In the second, Right Field Rooftops v. Chicago Cubs, No. 17-1074, the plaintiffs assert that the Cubs have unlawfully attempted to monopolize the market for watching their games in-person by purchasing a number of the formerly competing rooftop businesses operating across the street from Wrigley Field and also blocking the view of some of the remaining rooftops by installing new, expanded scoreboards.

Neither petition asks the Supreme Court to overturn the exemption in its entirety. Both argue that consistent with the general rule that antitrust exemptions should be narrowly construed, the baseball exemption should not applied to their cases.

There is a potential straw in the wind noted by Professor Grow. As had been done previously, the respondents in the cases waived their right to file an opposition brief to the petition for certiorari. However, unlike the previous cases, after the cases were first circulated for conference, the Supreme Court entered an order directing that opposition briefs be filed. They have now done so arguing that the exemption covers “the business of baseball” and that both cases fit within the business of baseball.

At the end of the day, the straw will likely float to the ground, and certiorari will be denied. The cases have again been distributed for the May 17th Conference.

 

In July 2016, four players on the Minnesota Lynx WNBA team wore black shirts in support of the Black Lives Matter social justice movement. The WNBA fined the players, but later rescinded the fines. In August 2016, San Francisco 49ers quarterback Colin Kaepernick refused to stand during the national anthem protesting social injustice and police brutality. The NFL responded that “players are encouraged but not required to stand during the playing of the national anthem.” The teams’ and professional leagues’ responses to these acts of social activism reflects a level of uncertainty about the right response.

There are any number of reasons why a team or league may want to respond to an athlete’s social activism, including to maintain image or reputation, enforcing team or league norms, values, and expectations for players; or maintain good relations with other constituents, partners, or sponsors. Professional athletes’ exercise of their rights to speech, expression, and social activism are not new, either on or off the field. But teams and leagues are increasingly facing scrutiny by the media and the public to respond quickly and decisively to such acts.

How a team or league responds is not just a matter of form. Responding to a professional athlete’s social activism on the field carries a number of significant legal implications of which a league or team should be aware before it takes any responsive action, whether through a public statement, disciplinary decision, or termination. Below is an analysis of potential legal issues in responding to player social activism, and a guide for how to address acts of on-field social activism to avoid costly disputes or litigation based on the response.

First Amendment Rights of Players

The U.S. Constitution prohibits “state actors” from abridging freedom of speech. The NBA, NFL, MLB, NHL, NCAA, United States Olympic Committee, and other professional sports leagues and their member teams are private organizations, and therefore are not subject to the First Amendment claims from players generally. In rare circumstances, these entities can be deemed state actors if they are performing quintessentially public, governmental functions, but receipt of services or financial incentives from host cities is generally not enough to change a league or team’s status.

In contrast, public colleges and universities, high schools, stadiums that receive public funding and some high school athletic associations are bound by the Constitution, and must be particularly careful when their conduct may infringe upon a player’s First Amendment rights to freedom of speech and expression.

Limitations on a League or Team’s Response to a Player’s Conduct on the Field

Most professional sports leagues have their own constitutions and collective bargaining agreements (CBAs) that set the parameters for player conduct. Leagues exercise a significant amount of control over athletes’ actions, and can punish both players and, in some instances, teams for players’ conduct. Courts generally will review a league’s determination for abuse of discretion or to determine if the determination was reached without regard to the league’s stated process.

The MLB, NBA, NFL, and NHL all vest their commissioners with broad discretion to discipline professional athletes in the “best interests” of the sport. However, this discretion is guided by more specific policies.

League policies on the national anthem demonstrate different approaches to directing players’ conduct in a scenario that inherently invites expressive activity by players:

  • The NFL requires that the national anthem be played prior to every game, and that during the anthem, “players on the field and bench area should stand at attention, face the flag, hold helmets in their left hand, and refrain from talking.” The policy further provides that non-compliance with the anthem policy may result in discipline.
  • The NBA and WNBA anthem policies require that “players, coaches and trainers are to stand and line up in a dignified posture along the sidelines or on the foul line during the playing of the national anthem,” but NBA Commissioner Silver has said that standing is an expectation, not a requirement.
  • The NHL requires that the national anthem be played before games, but does not direct players’ conduct during the anthem.
  • MLB and NASCAR have no official anthem policy.

These policies guide, and in some cases limit, whether a league or team can discipline a player for particular conduct during the playing of the national anthem at a game

How Should a League or Team Assess Its Response to a Player’s Conduct?

Before a league or team evaluates action relating to an athlete for social activism, it is critical that it take the following steps:

Assess where and when the act occurred. If the act occurred at a public educational institution or publicly funded stadium, there may be First Amendment implications for any disciplinary action. Courts have rarely found private professional sports leagues or teams to be “state actors”, and when they have, it has typically been with respect to policies or practices affecting the general public, not a particular athlete. Nonetheless, leagues and teams should be aware of and prepared for an enterprising argument that their relationship with state and local government is so significant that the First Amendment applies.

Consult the terms of the applicable CBA and any league rules, policies, or procedures incorporated therein, as well as the player contract.

    • The CBA defines the relationship between the league and players, and guides the league commissioner’s power to discipline players. The CBA often incorporates the league’s constitution, by-laws, and any other league rules. These documents along with applicable stipulations in the player contract provide the rules of the road.
    • What conduct is prohibited? Generally, league rules permit the commissioner to discipline players for conduct that is detrimental to the integrity of or harms public confidence in the sport. This provides the commissioner with very broad, discretionary authority. Do any other agreements modify the CBA or applicable league rules? Has laxity in league practices waived the prohibited conduct at issue? Are these other agreements enforceable?
    • What disciplinary process and standards must be followed? Do the league rules set forth a particular process that must be followed before disciplining a player? Who must be involved in this process? Does anything in the CBA modify this process, or impose additional requirements? Leagues and teams must ensure that they follow the applicable procedures carefully to be successful in inevitable and subsequent appeals, arbitration, or lawsuits for breach of contract.

After consulting all applicable agreements, determine the appropriate action and public messaging, if any, taking into account the potential consequences of disciplinary action. The suspension, fine, or termination of a player contract for activism may be permitted, as long as it is done consistently with applicable rules governing player conduct and is not targeted to prohibit certain forms of protected speech. However, teams and leagues should be aware of the ancillary effects of discipline, including termination:

    • Under some player contracts, the player will be owed money if the employment relationship ends before the contract term expires. Examination of financial implications must be part of the prospective thinking.
    • Failure to follow applicable rules and process—including the standards and procedures for imposing discipline—could lead to arbitration or a potential lawsuit, which could be costly and bring negative publicity. Know the rules of the road for disciplining a player.
    • Other players’ voluntary departures, angry fans, and defamation lawsuits are all possible consequences following the discipline of a player. Teams and leagues should anticipate these potential responses, and consult counsel on a comprehensive legal strategy, which should inform the messaging strategy.

More than ever before, biometric data, a term often used broadly to refer to metrics related to human characteristics, is being collected at a faster pace. Devices of all kinds are now able to able to track and store data such as fingerprints, heartrate, and other potentially sensitive data. This tracking can be accomplished through a variety of mechanisms including smartphones, watches, and fitness tracking bands of all kinds. Because of the nature of information which can be collected, it is of particular interest in sports.

While the general consumer issues of such data collection are certainly daunting, tracking of biometric data for athletes can present special issues. At the college level, student-athletes may have concerns that the data being collected could be used to make player management decisions that could affect playing time, positions or even scholarship opportunities. At the professional level, athletes may share similar concerns and are worried that the collected data could be used against them come contract negotiation time.

Understanding the Three Part Relationship Is Essential

In most situations where athlete biometric data is being collected there will be three main participants in the data collection scenario: (1) the athlete whose data is being collected; (2) an institution or entity which wishes to use the data, typically a school or professional organization; and (3) the vendor that provides the biometric equipment and incident services. Understanding which entities have what rights and responsibilities regarding biometric data collected will require recognizing where each entity fits in the three part relationship, as well as whether any special circumstances exist that would influence these rights and responsibilities.

In the United States, biometric data collection falls under a patchwork of regulations, at both the federal and state level. The applicable rules are based primarily on the characteristics of the athlete data subject and the institution or entity that wishes to collect the biometric data, the relevant jurisdictions, the specific types of biometric data being collected, as well as any contractual commitments between the parties. Further, there may be contractual rights at play, particularly at the professional level.

Relevant Characteristics Which Determine Applicable Laws

I.  Specific Considerations For Student Data Subjects

In most situations the analysis begins with the athlete data subject to collection. Is the athlete a student? If so, consider whether the athlete is a K-12 student which would likely be most relevant in the context of high school athletics. As noted in our firm’s privacy blog, Cal. Ed. Code § 49073.1, requires that local education agencies (county offices of education, school districts, and charter schools) that contract with third parties for systems or services that manage, access, or use pupil records, to include specific provisions regarding the use, ownership and control of pupil records, which could include biometric data.

Further on the private side, the Student Online Personal Information Privacy Act (SOPIPA), requires education technology to comply with baseline privacy and security protections. Former California Attorney General Kamala Harris provided guidance for those providing education technology for K-12 students, which would likely implicate sensitive biometric tied to individual students. Delaware has enacted a similar law. Individuals operating in this space would be wise to check any applicable whether there are any applicable state laws in their situation.

At the federal level, the Family Educational Rights and Privacy Act (FERPA) (20 U.S.C. § 1232g; 34 CFR Part 99) could also be implicated. As a reminder, FERPA applies to all schools that receive funds under an applicable program of the U.S. Department of Education. Under FERPA generally, schools must have written permission from the parent or eligible student in order to release any information from a student’s education record. It also grants parents certain rights which transfer to the student once the student turns 18. The definition of “personally identifiable information” in § 99.3 includes “biometric record” as part of the list that constitute personally identifiable information.

II.  Specific Considerations For Biometric Collection Vendors

Vendors that collect biometric athlete data, as well as the business that contract with these vendors should be aware of the Illinois Biometric Information Privacy Act (“BIPA”), on which additional background can be found here. The Act is being actively litigated, and applies to “any ‘private entity’ — including employers — collecting, storing, or using the biometric information of any individual in Illinois – no matter how it is collected, stored or used, or for what reason.” Certainly, professional sports entities as well as the companies they work with in this space should consider their obligations under BIPA.

III.  Professional Sports Organizations, Players Associations and Contractual Issues

Certain professional sports leagues and associated player organizations may have their own rules regarding collection and use of biometric data. For example, the National Football League Players Association (NFLPA) via its newly formed athlete-driven accelerator, the OneTeam Collective, has a partnership that makes WHOOP the Officially Licensed Recovery Wearable of the NFLPA.

As part of the agreement between OneTeam Collective and WHOOP:

  • NFL players will own and control their individual data collected with the WHOOP Strap 2.0.
  • NFL players will design custom licensed bands for the WHOOP Strap for personal use and commercial sale.
  • The NFLPA and WHOOP will study the effects of travel, sleep, scheduling, injuries, etc. on recovery and generate reports to advance player safety and maximize athletic performance.
  • NFL players will have the ability to commercialize their WHOOP data through the NFLPA’s group licensing program.

The National Basketball Association’s collective bargaining agreement (CBA) limits how teams may use data collected from wearables. Under the restriction, “data may not be considered, used, discussed or referenced for any other purpose such as in negotiations regarding a future Player Contract or other Player Contract transaction (e.g., a trade or waiver) involving the player,” which allows for an arbitrator to impose a fine of up to $250,000 to any team that violates the provision.

The collection of biometric data on athletes is likely to an active area of regulatory interest for years to come. If you have any questions, please contact a member of the Mintz Levin Sports Law Practice Group.

The vetting and hiring of a new coach is one of the most critical responsibilities athletic directors face. Athletic directors work to identify coaching candidates that will give the university’s teams an opportunity to win games. At the same time, they must also identify coaching candidates that will satisfy concerns of the various university stakeholders. The University of Tennessee’s recent coaching search demonstrates what happens when an athletic director fails to do the latter. The fallout at Tennessee serves as a cautionary tale for all athletic directors, and offers critical lessons that every athletic director must learn before embarking on a new coaching search.

The #SchiaNO Movement and Its Effect on Tennessee’s Coaching Search

In the early morning of November 26, 2017, the University of Tennessee’s then-Athletic Director, John Currie, boarded a plane destined for Columbus, Ohio. At the time, Currie intended for that trip to result in him hiring Ohio State’s Defensive Coordinator, Greg Schiano, as Tennessee’s next head football coach. Currie nearly succeeded in executing that plan, as he successfully procured Schiano’s signature on a memorandum of understanding and had a plane lined up to transport Schiano to Knoxville to be introduced as Tennessee’s coach later that evening. That announcement, however, never happened.

In the few hours it took Currie to travel to Columbus and meet with Schiano, Tennessee football supporters caught wind of Schiano’s imminent hire and united in a public backlash. Government officials, fans, students, alumni, national and local media, and even the White House Press Secretary spoke with a shared voice in opposition to Currie’s decision to hire Schiano, and they banded together around the catchy Twitter hashtag “#SchiaNO.”

In its core, the #SchiaNO movement was a reaction to deposition testimony of a Penn State whistleblower indicating that Schiano knew of Jerry Sandusky’s sexual misconduct but failed to properly report it to authorities while Schiano was employed as an assistant coach at Penn State in the 1990s. As the #SchiaNO movement grew, further reports detailing Schiano’s controversial tenure as head coach of the Tampa Bay Buccaneers added additional fuel to the fire.

With unprecedented speed, the #SchiaNO movement brought an end to Schiano’s candidacy and to Currie’s tenure as Tennessee’s athletic director. Within hours of its creation, the #SchiaNO movement caused Tennessee to back out of its memorandum of understanding with Schiano and transition the search to other candidates. In the following week, Tennessee removed John Currie from his position as Athletic Director and replaced him with former Tennessee head coach Phil Fulmer.

These events should serve as a cautionary tale for athletic directors across the country. Indeed, all athletics directors should be vigilant on the following issues before embarking on a new coaching search because there is a very real possibility their career will hang in the balance.

Vet Coaching Candidates the Way the Public Will Vet Them

In the immediate aftermath of the #SchiaNO movement, John Currie released a statement indicating that he “carefully interviewed and vetted” Schiano before he met with him in Columbus on November 26, 2017. According to his statement, Currie’s vetting process included a review of Louis Freeh’s 2012 investigation report detailing the findings of Freeh’s investigation into the Penn State/Sandusky scandal. Currie’s vetting process also included inquiries to The Ohio State University to confirm that Schiano was never called upon to testify as part of the investigation. Those steps were, of course, necessary for Currie to properly vet Schiano, but they were not sufficient. Absent from Currie’s statement was any indication of detailed investigation and consideration on Schiano’s tenure at Penn State.

Any consideration of Schiano should have included information likely available to Tennessee football supporters who would vet Schiano by searching Google, Twitter, and other online resources to find information published about Schiano’s coaching history. Even a cursory on-line search would have located the July 2016 Washington Post article entitled “Greg Schiano, Tom Bradley knew of Jerry Sandusky abuse at Penn State, documents show” that mobilized supporters behind the #SchiaNO movement. This would be an issue that would alert the need to conduct further investigation and to proactively explain a hiring decision despite such information.

Athletic directors must recognize their fan bases now have immediate access to extensive information regarding coaching candidates. Relatedly, athletic directors must not underestimate fans’ willingness and ability to unearth anything and everything ever published about a new coach. Failure to adequately consider and prepare for the results of public vetting may result in an embarrassing, and potentially damaging, outcome.

Use of a Robust Morals Clause in Coaching MOUs

When fully executed, a MOU between a coaching candidate and a university can serve as legally enforceable document that defines the parties’ rights and obligations before they enter a formal employment agreement. Accordingly, athletic directors must recognize the exposure for themselves and their employers to potential litigation the moment they put pen to paper and sign a MOU. In the Schiano saga, this threat of litigation is somewhat complicated by a partially-executed MOU.

Athletic directors can, however, take steps to mitigate such risks by including a morals clause within legal documents pertaining to athletic employment, including MOUs. Morals clauses have become standard provisions in endorsement contracts for sponsors that engage popular athletes to promote their brand and allow sponsors to terminate the agreement if the athlete engages in conduct that contrasts with community standards of honesty or good morals.

Tennessee’s coaching search is instructive as to the importance of morals clauses in MOUs with coaching candidates. If the Schiano/Tennessee MOU had a robust morals clause that provided Tennessee an exit option upon information implicating Schiano’s morals (particularly with respect to the course of prior athletic employment), the litigation threat from Schiano would be diminished.

Appropriate Standard of Review When Evaluating Coaches with a Tainted Past

A common refrain by those criticizing the #SchiaNO movement is that the deposition testimony connecting Schiano to the Penn State scandal constitutes double-hearsay that would be inadmissible in court. While that might technically be true (one Penn State assistant testified regarding what another assistant had told him about Schiano’s purported statements), that is not the determinative standard of review for athletic directors when evaluating a coaches with a tainted past.

The ultimate arbiters of an athletic director’s coaching decision are the various stakeholders of the university’s athletics programs, such as the board of trustees, administrative leadership, students, parents, boosters, and fans, not to mention the media. None of these stakeholders are constrained by the Rules of Evidence or bound by the standards of proof used by a court of law. For this reason, athletic directors must use a standard of review that accounts for this reality when evaluating coaching candidates with a tainted past. More specifically, athletic directors should adopt a standard of review that measures, at a minimum, the following three factors:

  • Severity of the Coach’s Suspected Bad Conduct: The #SchiaNO movement gained steam in significant part because Schiano’s suspected bad conduct was so severely reprehensible. But not all scandals are created equal. Athletic directors must identify where a coach’s suspected conduct falls on the severity spectrum and exercise increased caution when such conduct lies at a higher level of severity.
  • Reliability of Evidence Connecting the Coach to Suspected Bad Conduct: The evidence connecting Schiano to the Penn State/Sandusky scandal consisted of sworn deposition testimony from a non-party witness that held no direct financial interest in the outcome of the investigation. Though this testimony was based upon double-hearsay, it is still more reliable than the more speculative evidence connecting coaches to other well-known scandals. Athletic directors must gauge the reliability of evidence connecting a coach to suspected bad conduct and factor that reliability with other information into their decisions regarding that coach’s candidacy.
  • Coach’s Appeal in the Absence of Suspected Bad Conduct: Schiano has a career record of 68-67 as a collegiate head coach. His NFL head coaching record was even worse, as the Tampa Bay Buccaneers went 11-21 during his tenure and received criticism on Schiano’s locker room management. Recognizing this, athletic directors must consider a candidate’s appeal to a University’s stakeholders in the absence of any suspected bad conduct. That is certainly a key factor that stakeholders will consider when passing judgment on the athletic director’s hiring decisions.

The Schiano story provides an extreme example of how important these proactive actions are during a coaching search, and how swiftly an athletic director can be terminated for failing to follow them. The consequences may not always be as immediate and severe as they were for John Currie. However, make no mistake: athletic directors run the risk of damaging their careers and reputations every time they ignore these lessons during a coaching search, even if nobody creates a catchy Twitter hashtag to commemorate their mistake.

A celebrity should maximize the value of their brand by strategically monetizing every aspect of it.  For example, one who becomes famous through the recording industry would consider a career in front of and behind a television camera, through endorsement opportunities that are equity-based, along with employment and other business ventures. This is precisely the path taken by recording artists such as Will Smith and Queen Latifah.  Others, such as Michael Strahan, have taken a different path.  Strahan, a former pro football player, intelligently leveraged the NFL’s platform to build a successful on-camera television career, a television production company and numerous endorsement opportunities. This blog covers key considerations for a celebrity that seeks to avail herself or himself of ancillary revenue streams and how to go about protecting and preserving that brand.

BUILDING A BRAND – DNA MATCHING

For any celebrity, monetizing a successful brand requires that you develop, enhance and market your organic DNA and match it with brands with a substantially similar DNA. In many respects, you are who you are. A product is what it is. For the DNAs to work together, they have to match.

If you are uncharacteristically big, strong and powerful like LeBron James, Ezekiel Elliot or Kristaps Porzingis, you should be purposeful in pursuing opportunities that are consistent with those personal characteristics. Examples of those opportunities may be a Porsche, BMW or Dodge’s RAM Truck. Those brands symbolize strength and power and, therefore, share the same DNA as the aforementioned celebrities.

If you are strikingly beautiful and graceful like Beyoncé, Jennifer Lopez or Skylar Diggins, you should pursue opportunities that match that DNA.  Examples of matching DNA may be found in clothing lines, makeup and fragrances.

The first steps for a celebrity that desires to monetize their brand is to assess their organic DNA, be purposeful about enhancing that DNA and marketing it to companies that sell products or services that share the same DNA.

WHAT ARE YOU ENDORSING?

Once the celebrity matches their DNA with that of a company, the objective is to maximize the brand. Because celebrities will be paid more for endorsing multiple products instead of just one, they should consider narrowing the scope of an endorsement obligation. For example, if an athlete intends to endorse only “sneakers,” the endorsement agreement should not say the athlete is endorsing “footwear.” An athlete who has unknowingly signed an endorsement agreement for footwear could find himself or herself obligated to endorse everything one wears on their feet: sneakers, shoes, boots, flip flops, etc. Unintentionally including these additional categories foreclose the athlete’s opportunity to be paid an endorsement fee for endorsing, by way of example, shoes in addition to sneakers.

The same applies to actors and musicians.  An actress that expects to endorse “makeup” should not allow the endorsement agreement to be so broad that it includes all products considered to be in the “glamour category”.  The “glamour category” arguably includes hair products and is beyond what is intended by the term “makeup”.  While this might not be problematic for the athlete, additional compensation is warranted for the additional products. Simply put, there is an opportunity cost associated with every micro-product or service that a celebrity endorses and celebrities should seek to be compensated for each area.

A company may tell a celebrity that although the product category in an endorsement agreement precludes them from endorsing a broad range of products, their practice has been to grant a waiver to allow the celebrity to endorse pretty much whatever they want. In the end however, the agreement says what it means and means what it says. Don’t expect the endorsement agreement to be enforced any differently than what is written.

REVERSE MORALS CLAUSES

Companies that ask celebrities to serve as pitchperson typically require morals clauses in contracts, which give them the right to terminate an agreement in the event an athlete engages in conduct that contrasts with community standards of honesty or good morals (for example, convictions for DUI or use of banned substances).  It is understandable that a company would not want to continue its affiliation with a celebrity whose poor conduct has diminished the value of their brand. Similarly, celebrities must protect their brands against wrongdoing on the part of the companies (or their executives) they have agreed to endorse. For instance, if a celebrity is endorsing a product that has unintended health consequences, the celebrity may want to cease supporting the company. Including reverse morals clauses in an endorsement contract empowers a celebrity to terminate his or her agreement with a company in the same manner in which a company may disengage.

PROTECTING THE BRAND FROM ATTACK

Very often, unscrupulous individuals seek to attack celebrity brands. This may include everything from late night telephone calls threatening prosecution for a false sexual assault allegation to a claim that the celebrity figure allegedly offered to pay the claimant to abort an unborn child. There is simply no limit to the way in which individuals may seek to attack and, in some circumstances, extort the brand. An assessment has to be made on the validity of the claim.  At the same time, there is a critical step that must be taken as soon as the brand comes under attack.  Every reasonable step must be taken to make the brand unassailable.  The best way to achieve that is to quickly determine instances in which the claimant has been dishonest or misleading in matters relating to the celebrity. Armed with that information, the celebrity must swiftly utilize that information in court, in the media or such other strategically determined intended audience.

 

Notwithstanding the glitz and glamour of multi-millionaire race drivers and champagne, Formula One is all about data. Analytics are fundamental to understanding Formula One races. Teams are fueled by data, and around every corner you’ll find a car fitted with over 150 sensors monitoring car and driver behavior. These sensors track vital stats such as brake wear, tire life and driver biometrics. In one lap, they can transmit 2GB of data; over the course of a full race, 3TB of data.

NBA teams too are now using a form of technology, called “Player Tracking,” that evaluates the efficiency of a team by an analysis of player movement. According to the SportVu software website, teams in the NBA are now using six cameras installed in the catwalks of arenas to track the movements of every player on the court and the basketball 25 times per second. The data collected provides a plethora of innovative statistics based on speed, distance, player separation and ball possession. Examples include stats on how fast a player moves, how far he travels during a game, how many times he touches the ball, how many passes he makes, how many rebounding opportunities he has, and much more. The information is available to fans on NBA.com and NBA TV. Data analytics are also common in the MLB, NFL, MLS and other professional and collegiate sports, where statistics have become vital in analyzing games and players.

But gathering data in the volume and depth that is necessary to make accurate predictions comes with risks. What if the data falls into the wrong hands? How valuable would detailed statistics be? Of course, teams have traditionally monitored their opponents by sending scouts to games, or watching hours of video re-runs, while meticulously making notes on individuals’ performances; but access to the “fire hose” of data collected during training would provide a huge shortcut.

For example, in Formula One, a data or system loss, or even a malware infection, and the race is lost.  Formula One teams have data centers on the side of the track, processing every nanosecond of the race.  If any of that data fell into the wrong hands it could be disastrous, which is why Formula One teams take data security extremely seriously.

Interestingly, tools needed to make sure data can be collected safely and kept only in the hands of those who it’s intended for are already available. The problem is that outside of a few highly data-driven sports, such as Formula One, most clubs and teams just aren’t aware enough of the dangers to have implemented them. Like businesses gathering data, sports teams too should have a full understanding of any and all obligations and requirements under relevant data protection legislation.

Communication is also critically important, i.e., appropriate disclosure of what data is being collected and how it is stored. It’s also important to learn about and put in place the appropriate security measures to guard data, and to implement the necessary policies on deleting data a sports team no longer needs. The digital revolution engulfing sports has many challenges to overcome, but the point is that whether in sports or business, when data becomes an important asset that drives important decisions and competitiveness, it needs to be protected like any other important asset.