Recently, strong allegations have surfaced that eSports is suffering from a performance enhancing drug ("PED") use problem. These PEDs are not the steroids and human growth hormones of other sports, but are instead neuroenhancers.
These kinds of drugs (Adderall, Ritalin, Selegiline, etc.) are known as "smart drugs" due to their abilities to enhance focus, calmness, and act as stimulants, which debatably enhance performance in professional gaming. Although there appears to be much confusion as to whether such neuroenhancers are banned from professional gaming (a quick Google search reveals many questions on the topic and few actual answers), if it is banned, there appears to be little enforcement as noted in the link above.
Irrespective of neuroenhancers' status as potentially banned substances in professional gaming, utilizing such substances can have an impact upon a player's/team's existing sponsorship agreements.
As I noted previously, sponsorship agreements generally contain morals clauses. A morals clause allows a sponsor the opportunity to cancel a sponsorship should the athlete or team act in a way that is harmful or damaging to the sponsoring brand. In other words, morals clauses allow sponsors a means of exiting a sponsorship agreement with an athlete engaged in a scandal or otherwise illegal activity.
The use of neuroenhancers in pro-gaming, regardless of whether the substance is banned, can trigger a sponsorship's morals clause in several ways:
Any of the above reasons, which certainly is not an exhaustive list, could also be the cause of a scandal within the sport. Although scandals could be sufficient to independently trigger a morals clause, when combined with any of the above points, a scandal makes it much more likely.
Similarly, a team sponsorship may be impacted by a team member's use of neuroenhancers. Depending on how the morals clause is written, a single team member's actions may be sufficient to trigger the morals clause and permit the sponsor to cancel the sponsorship agreement.
As the eSports industry determines methods for curbing its PED problem, teams should keep in mind that any PED use can impact the sponsorships that they have worked hard to obtain. No team would want to lose its sponsor because a morals clause was triggered in an effort to perhaps gain a competitive advantage. Even worse, future sponsors may be hesitant to sponsor a player and/or their team due to past PED use.
Earlier this week, the New York Post reported that the Union Street Guest House, a hotel in Hudson, New York, had a unique method of controlling negative reviews online. According to the New York Post, the hotel's website stated that “If you have booked the inn for a wedding or other type of event . . . and given us a deposit of any kind . . . there will be a $500 fine that will be deducted from your deposit for every negative review . . . placed on any internet site by anyone in your party.” However, the money would be refunded if the negative review is removed.
Effectively, this policy means that if a wedding guest posted a negative review of the hotel on the internet, then the couple whose wedding took place at the hotel would be fined $500.
Although the hotel's owner stated that the company policy was a joke, a Yelp review from November 12, 2013 (notably several months before the New York Post article) states that the reviewer received an email threatening to enforce the policy.
Businesses are always seeking to protect their reputations, especially online. However, this hotel's policy is not legally sound.
Challenging the hotel's policy
Should the hotel have enforced this policy, it could have been successfully challenged in court as the policy is an unconscionable contract. New York courts have defined an unconscionable contract as being "so grossly unreasonable...in light of the mores and business practices of the time and place as to be unenforcible [sic] according to its general terms" (Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10, 537 N.Y.S.2d 787, 791 ).
In order to determine whether a contract is unconscionable, New York courts utilize the following two-part test:
Essentially this means there must be a showing of an absence of meaningful choice with contract terms that are unreasonably favorable to one party. The substantive element allows a court to analyze whether the contract unreasonably favors the Defendant.
Should the Union Street Guest House's policy be challenged in court, it would fail the above test. Procedurally, it does not appear as if a complaining party would have had any choice to enter into the contract if they wished to hold a wedding at the hotel. Nothing has been reported as to the negotiability of this policy, and placing the policy on the hotel's website creates the impression that it is a standard policy of the hotel.
However, analysis of the substantive element provides much stronger evidence for the policy to be found unconscionable. First and foremost, it is unclear whether any couple holding a wedding at the hotel was made aware of the policy. If the policy truly was a joke as the hotel owner stated, then it likely would not have been found on, or annexed to, any of the other contracts the couple would have signed. Additionally, should the policy have only been located on the website, it can be argued that the hotel was deliberately hiding the policy from couples seeking to hold their weddings at the hotel.
The terms of the policy, as written, are unreasonably favorable to the hotel. The policy has the effect of limiting the speech of third parties to the contract, which is odd, unexpected, and a violation of society's mores and business practices. On public policy grounds, the court would likely find the policy unenforceable because society wants to encourage speech about businesses to empower consumers.
Potential recourse for Union Street Guest House's negative viral publicity
Shortly after the New York Post article was published, news of the hotel's policy went viral on the internet. As a result of this negative viral publicity, internet users quickly took to websites such as Yelp to post one star reviews citing the hotel's policy for negative reviews as the reason.
Although approximately 5 pages of such reviews on Yelp have been removed in the past few hours, there are negative reviews that have been posted subsequent to the hotel's viral publicity that discuss previous stays at the hotel. Should these reviewers be lying in their negative posts, the hotel could potentially have recourse against them. As previously discussed here, businesses can sue reviewers for false, negative reviews on defamation grounds.
If some of the recently posted negative reviews are based on lies, it would be difficult for the hotel to succeed. One of the elements of a defamation claim is proof of damages that resulted from the false statement. Given the fact that the hotel has experienced a great deal of negative publicity in the past few days, it would be extremely difficult to prove that any false reviews caused damage to its business. Nonetheless, the hotel should continue to monitor its reviews, especially as time distances the hotel from its viral notoriety.
It is difficult for businesses to protect their online reputations, but they should employ legally sound measures to do so. Instead of threatening $500 fines, the Union Street Guest House should have engaged its negative reviewers in a positive manner. If the hotel received negative reviews that contained lies, it could have then proceeded with a defamation suit against those reviewers. Hopefully, the Union Street Guest House's policy to limit negative reviews, and the viral notoriety it spawned, serves as a cautionary tale to other business owners.
Last week, the NCAA eliminated a controversial provision of the contracts it requires DIvision 1 athletes to sign. That is, the organization removed the provision that allows the NCAA, or an assigned third party, to use the name and likeness of the athlete to promote NCAA events without compensation.
Currently, the NCAA is awaiting the decision of a Federal Judge in the O'Bannon v. NCAA trial, which is a class action lawsuit brought by former, and current, Division 1 athletes principally challenging the NCAA's use of the athletes' names and likenesses in television broadcasts, rebroadcasts, and video games without compensation. The NCAA's elimination of the name and likeness provision appears to be an effort to distance the organization from the practices which resulted in the O'Bannon lawsuit.
Name and likeness rights, also known as publicity rights, are the personal rights to control the use of one's name, image, or likeness for commercial use. These rights continue to exist after death and are freely assignable. Publicity rights are State specific.
Publicity rights are an important issue for collegiate athletes because intercollegiate athletics, particularly Division 1 football and basketball, is a multi-billion dollar industry where the athletes do not get paid to play, nor for the use of their names and likenesses. Meanwhile, some NCAA conferences and schools have been making millions on media deals and broadcast rights for their sporting events which rely on the use of the athletes' names and likenesses. Additionally, the NCAA had been licensing the use of these athletes' likenesses, at a profit, for video games. In some cases, athletes' likenesses were used years after their college career had ended, capitalizing on players' success and popularity as a professional. Not only were the athletes unpaid for their on-field performance, but they were also unpaid for the use of their likeness, seemingly in perpetuity prior to the O'Bannon lawsuit.
Although there has yet to be a decision by the Federal Judge in the O'Bannon case, it is telling that the NCAA is removing its name and likeness provision from its athlete contracts. However, some individual colleges and conferences still require athletes to sign name and likeness releases. It will be interesting to see how the Court rules on the O'Bannon case, as it has the potential to reshape the business of intercollegiate athletics.
The ongoing saga of Donald Sterling's attempts to regain, or retain, ownership of the Los Angeles Clippers continues. Last night, Donald filed a lawsuit against Shelly Sterling (his estranged wife), the Los Angeles Clippers, the NBA, and NBA Commissioner Adam Silver. This lawsuit alleges 12 causes of action, including:
This lawsuit is the third that Donald has filed in his attempt to regain, or retain, ownership of the Clippers. His original two lawsuits focused on the propriety of the NBA's sanctions against him and the propriety of Donald being declared mentally incompetent, resulting in his supposed loss of ownership of the team to Shelly.
Legal issues in this new case aside, what this does entail is that the ownership of the Clippers will not be a settled matter (according to the courts) for some time. Attorneys for Sterling have stated that this case may take several years to resolve. But what does that mean to the Clippers organization?
Dick Parsons, the interim CEO of the Clippers, testified in court yesterday that he fears if Donald were to remain owner of the team, it would plunge the organization into a "death spiral." He indicated that in the event Donald remains owner, Doc Rivers would not want to continue as head coach of the team. Further, Parsons testified that he has spoken with many of the team's players and sponsors who do not wish to remain with the Clippers should Donald remain Owner. Specifically, Parsons testified that sponsors who have yet to commit to the team for next year have indicated "We're in so long as Donald Sterling is out."
Sponsors generally have the ability to cancel their sponsorship agreements through the use of morals clauses in their contracts. Players don't have that option, although they can request to be released and/or traded.
Parsons testimony echoed the scenario that began when the Sterling audio tape was first released in April. In a few short weeks, sponsors canceled or paused their sponsorship agreements with the team. Further, rumors of a team-wide, and league-wide, boycott surfaced prior to Commissioner Silver banning Donald for life.
Parsons statements should not be taken lightly, as they are illustrative of the reality the Clippers will find itself in should Donald remain Owner. Unfortunately, Donald Sterling's three lawsuits can result substantial harm to the clippers. If the litigation is not voluntarily dismissed before the season commences, or if Donald manages to prevail in his litigation, then Parsons' "death spiral" comment will be realized. That is, unless the NBA takes action.
The NBA has yet to commence its formal proceeding to remove Donald Sterling as Owner from the Clippers and force the sale of the team. Pursuant to Article 13 of the NBA's Constitution and Bylaws, an Owner can be removed by a vote of three-fourths of the Board of Governors (made up of other team Owners) if an Owner commits any of the following:
Donald disputes in his first lawsuit against the NBA that he has not violated any of these provisions, although he has likely violated provisions numbered 1, 3 and 4 noted above. In particular, he has at least violated provision 4 by refusing to pay the $2.5 million fine. (Note: For a full analysis of the propriety of Sterling's sanctions, see my upcoming publication Not So Sterling: Assessing Donald Sterling's Breach of Contract Claims Against the NBA [Forthcoming Summer 2015])
The NBA had planned to have the Board of Governors vote to remove Donald's ownership of the Clippers on July 15, 2014. This date was set to be following the conclusion of the trial between Donald and Shelly Sterling about Donald's mental capacity. However, the trial has run long. The NBA intends to have Donald removed as owner prior to the start of next season, and has set a deadline of September 15 for any transfer of ownership through sale. Presumably, the NBA fears the "death spiral" that Parsons testified would occur should Donald remain Owner. However, if September 15, 2014, comes to pass and the team is not sold, the NBA will seek to remove ownership from Sterling and auction the team.
Although Donald Sterling's latest lawsuit delays the court's determination of ownership of the team, the NBA could move forward and remove Donald's ownership interest, even if the lawsuit about Donald's mental capacity is not resolved. Once the team is sold, the NBA could commence an action for interpleader, where Donald and Shelly can sort out who is entitled to the proceeds, or just await the determination of the suit between Donald and Shelly.
Donald Sterling's litigation tactics may be designed to delay the sale of the Clippers, but the NBA has the ability to initiate a proceeding to remove his ownership. Only time will tell if the NBA is able to accomplish its goal of removing Sterling prior to the start of next season. If the NBA fails to do so, we may see the "death spiral" of the Clippers that Parsons is warning about.
Now that Lebron James has announced his return to the Cleveland Cavaliers, the basketball world is awaiting Carmelo Anthony's decision on what team he will sign with. Phil Jackson, President of the New York Knicks, is optimistic Carmelo will re-sign, as the team is willing to use the Veteran Free Agent Exception to the salary cap in order to retain him.
Ordinarily, the aggregate salaries of an NBA team must remain under the salary cap provided for in the NBA's Collective Bargaining Agreement ("CBA".) However, the CBA provides for several exceptions, which are defined in Article VII, Section 6, where player salaries may total more than the salary cap.
One of the exceptions to the salary cap are the so-called "Larry Bird rights." In the CBA, this is officially known as the Veteran Free Agent Exception.
The Veteran Free Agent Exception allows players to re-sign with their team at an amount that cannot exceed a defined percentage of the salary cap or a defined percentage of the player's earnings in their last season, whichever is greater. The particular percentages are determined by the years of service time the player has been in the NBA.
For purposes of this exception, the CBA groups players by service time of less than seven seasons, between seven and ten seasons, and more than ten seasons. In determining the maximum contract amount under this exception, the percentage of the player's earnings in the last season is constant at 105% regardless of service time. However, the percentage that the contract may be of the salary cap increases with each service group from 25%, to 30%, and 35%. Carmelo is in the last service group, having played for eleven seasons.
However, the Veteran Free Agent Exception does not apply to all players entering free agency. In order to qualify, a player must have played the last three seasons with one team, have changed teams only by means of trade, or have signed with a prior team during the first of the three preceding seasons. Carmelo has played more than three seasons with the Knicks, and is therefore eligible for this exception.
Effectively, the Veteran Free Agent Exception operates as an incentive for players to resign with a team by offering them a salary that cannot be matched by other teams due to salary cap constraints. In turn, this allows the fan base to develop a greater bond with the player, which can then be leveraged by the team and player in marketing endeavors.
By utilizing the Veteran Free Agent Exception, it has been reported that the Knicks offered Carmelo a contract for $129 million for five years, or the maximum contract allowed. In contrast, other teams have only been able to offer him $96 million for four years. The difference between the two contracts is the Knicks are able to offer an additional year and an additional $33 million.
Hopefully, Carmelo, re-signs with the Knicks. As a result of the Veteran Free Agent Exception, he certainly has an additional thirty three million reasons to do so.
Yesterday, an article appeared in the New York Times which discussed the declining use of Non-Disclosure Agreements ("NDAs") among startup companies. The article centered on two main points:
The second point is particularly troubling for business owners. If the startup needs funding from VCs who refuse to sign an NDA, whats to stop them from sharing one business' idea or concept with another company they invest in? Simply put, nothing.
I was speaking with the founder of a startup last night who shared with me his uneasiness about VCs refusing to sign NDAs. He echoed a sentiment that I'm sure many other start-up owners feel "What can we do? We need the money." The unfortunate reality is that VCs refusing to sign NDAs only benefits the VCs. However, that does not mean that businesses should not request that an NDA be entered into with anyone that will be privy to proprietary information/materials.
So what does a non-disclosure agreement do? An NDA protects confidential information, materials or knowledge that is to be shared with another business or person (including employees.) The agreement establishes not only how the receiving party may use the confidential information, but also the remedies should a breach of the agreement occur. Of course the disclosing party is entitled to damages for a breach of the agreement, but the agreement can spell out how the damages are to be calculated or whether injunctive relief is appropriate.
NDAs also help establish the protection of a business' confidential information, which is a necessary element to any litigation challenging whether or not the confidential information qualifies as a trade secret. Simply put, a business must take steps to protect its proprietary information to qualify as a trade secret, and routinely entering into NDAs helps establish that. Even if a VC doesn't sign an NDA, it is in a business' best interests that they require other parties to enter into NDAs to help ensure trade secret protection.
In my discussion with the founder last night, he asked me "Even if the VC doesn't sign an NDA, aren't my ideas protected some other way, like by copyright?" The short answer to that question was no. Although this was already the subject of a blog post, copyright protects the expression of an idea, not an idea itself.
Upon learning that without an NDA, his business has no control over the proprietary information shared with a third party, the founder was rightly uncomfortable, but repeated "What can we do? We need the money." I told him what I would tell any business owner, that an NDA should at least be offered. Some VCs may sign it, some may not, but the few that do will at least give some piece of mind that the business' proprietary information is protected.
Although a business may make the decision that VC funding without an NDA is acceptable, NDAs should still be extended to all others with whom proprietary information is shared. No matter who a business is sharing proprietary information with, an NDA should be proposed.
(Photo used under Creative Commons License from Flazingo.com)
The most important contract to a sports agent is the contract between the player and agent, otherwise known as the Standard Representation Agreement. This contract establishes the terms of the agent's representation, including fees, scope of representation, term of representation, payment scheduling, and how disputes between the agent and player are to be handled.
Before diving in to the meat of the contract, it is important to establish at the very beginning who the parties to the contract are, namely, the player and the agent. It is also be worthwhile to include that the athlete will lose their "amateur" status and eligibility at the collegiate level by entering into this contract with the agent. This is particularly important to players who still have athletic eligibility in college.
NCAA Bylaw 18.104.22.168, known as the No-Agent Rule, declares that it is punishable offense for an athlete to allow an agent to conduct or attend the athlete's negotiations with a professional team. Violations of the rule could result in the loss of NCAA eligibility. By informing the player at the beginning of the contract that signing it would threaten his/her eligibility, the player is on notice of the potential penalties should they cancel the contract and attempt to play in college again.
Next, the contract should focus on the scope of the agent's representation, which delineates the services that the agent will provide. This is the most important clause of the agreement, as it not only establishes what the agent will be paid for, but any exclusive rights the agent may have. It is not uncommon for athletes to have multiple representatives in different earning spheres, such as an agent who works on the player-contract and an agent who handles marketing. These exclusivity rights must be established to avoid any confusion as to what responsibilities the agent has, and importantly what they should be paid for. Exclusivity should also be considered with respect to location. For instance, a baseball player from Japan may wish to have three agents: one to handle his player-contracts globally; one to handle his marketing in the US; and one to handle his marketing in Asia. A broad scope of representation clause that tightly defines the agent's exclusive rights is best for the agent.
Now that the agent's services are delineated, it is important to include how the agent is to be paid. Each of the major US professional sports has an industry standard or agent regulation delineating what the agent's fee can be for successfully negotiating a player-contract. This fee is a percentage of player-contract's value. Agent fees for secured sponsorships and endorsements are much higher, generally between 15% and 25%. In this clause, it is important to include that the agent will be paid on any contract that is substantially negotiated during the term of the agreement. This ensures that an agent is entitled to their fee even if they are fired prior to completion of the deal. Also, it is in the agent's best interest to define what constitutes income from sponsorships and how the agent is to receive a portion of this income as a fee. Athletes are increasingly paid in equity and other non-liquid measures, which creates a difficulty in determining an agent's fee if it is not specifically stated in the representation agreement.
The last large clause in the agreement relates to expenses. Specifically, whether the player, agent, or a combination of the two, are to pay for expenses such as equipment, service providers, and travel. Certain sports have agent regulations which cap the amount of money the agent is allowed to spend on equipment for a player in a year, such as in baseball, so the relevant agent regulations must be consulted when drafting this clause. The specifics of who is to pay for each expense type can be negotiated individually.
Lastly is a series of smaller, general clauses that apply to the entire representation agreement. Including:
Notably, I have not included any clauses that involve financial services such as loans and investments. Financial services is a broad enough topic that it warrants its own contract. Further, not all agents provide financial services as the risks faced by the agent are greater. Some leagues have separate requirements for financial advisors, such as the NFL. Due to the increased risk, special rules, and breadth of services that could comprise financial services, it is in the agent's best interest to draft a separate agreement regarding any financial services offered.
Many of the clauses I've described contain the ideal situations for agents, but players may wish to renegotiate specific terms. As in all contract negotiations, it is important to know the difference between the terms you need and the terms you would like to have. The relationship between a player and agent is built on trust, and no agent wants to start that relationship off poorly by engaging in a contentious negotiation over the terms of their representation agreement.
There has been an interesting trend in recent years of technology being developed for athletes. From simple pedometers, shoes that track your speed and distance, to equipment that monitors how you strike a ball, tech for athletes is becoming increasingly popular and mainstream.
Perhaps you've seen the new Apple commercial below which has been airing frequently during the World Cup:
What would a tech trend be without Apple's involvement? This video shows off several examples of how tech is integrating with athletes to help them hone their abilities. More importantly, the ad doesn't use any professional athletes, which highlights the wide reach of this tech trend.
I admit, I love my Nike Fuelband. It loosely keeps track of my movement throughout the day to lets me know if I've been sitting at my desk for too long and need to hit the heavybag. And although I like to box, I'm not training to be heavyweight champion of the world. That's why this story caught my eye.
A tennis racket has now been developed by Babolat which transfers to an app the strength of the racket's impact on the ball, the spin, and also counts the number of forehands, backhands, serves and overhands. More importantly, this racket was recently used by Julia Gorges during the French Open.
The tennis player, currently ranked 107th in the world, stated in the article that she is using the new racket because "sometimes you are in the emotions...and you sometimes lose the vision [to see] things." She is hopeful that her new tech will allow her to analyze and improve her game, and ultimately, her ranking.
This kind of tech is exciting, as its entire purpose is to develop its users' abilities. It is easy to see that widespread accessibility to this 'athletic development' tech can potentially increase the level of competition in a sport. Athletes are continuously looking for an edge over their competition, and similar tech can help them achieve that. On the developer side, tech for athletes can be utilized by a large market, and opens up the possibility of high-profile endorsement with multiple methods of activation. Athlete tech is here to stay, and some of the companies involved in its development could find the area particularly lucrative.
Companies developing tech for athletes could engage professional athletes for endorsement opportunities, as Babolat has with Gorges. Such endorsement frequently occurs with products manufactured for athletes' use. For example, Major League Baseball players generally have endorsement agreements with their bat manufacturers. These professional athlete endorsements can have a marketing trickle-down effect to the athletes' fans.
Athlete tech can allow professional athletes to engage with consumers in new ways. For instance, Babolat's app that works in conjunction with the smart-racket could have a leaderboard for hardest swing or most revolutions on a ball. Or, even a way for people to send challenges or encouragement to one another, utilizing the racket's measurables.
However, the more professional athlete involvement with the tech desired, the tighter the contract must be. Some things to consider include:
Of course, any time a company utilizes athlete endorsements, the contract should also have a broad morals clause for all the reasons outlined here.
There have been many exciting developments in tech for athletes, and I expect the trend to continue. Businesses in this niche industry could find professional athlete endorsements lucrative, but they must be specific in drafting such agreements.
Being a sports agent is a tough, cutthroat, profession, where agents must be mindful of their clients' professional and personal endeavors, of other agents poaching their clients, and of recruiting new clients. All of this is supposed to be done in accordance with the rules governing agents that are established by each professional sport's players' unions.
Unfortunately, too often are there reports of some agents flouting these rules. Disputes between players and their agents are generally handled in arbitration, away from the prying eyes of the media and the public. However, one recent player has decided to sue his agent in court, alleging that the arbitration process is biased towards agents after he was ordered to repay a loan that he argues was not a loan. By that player taking his agent to court, the proceedings are now public record, and have drawn attention to the practices of a well known NFL agent and perhaps the industry at large.
One of the rules that NFL agents must abide by is that agents cannot provide money, or anything of value, to induce a player to sign with them. However, agents are allowed to provide loans under certain circumstances. Here lay the critical question in this case: Does money given to a player immediately after signing a representation agreement with an agent qualify as an inducement, or a loan?
Rosenhaus met DeSean Jackson at midnight, the time he was free from his former contract, beside a highway to sign a representation agreement. Rosenhaus then gave Jackson a large sum of money in a Luis Vuitton bag. Subsequently, a loan agreement was signed. After several years, Jackson fired Rosenhaus, and Rosenhaus is now attempting to collect the outstanding balance on the alleged loan.
Although the money was qualified as a loan, the Court may view the money as an inducement for representation. If that's the case, then Jackson may not have to repay any of the money. Only time will tell what the result of this lawsuit will be.
As a result of this litigation, the NFL Players Association (NFLPA) has strengthened its sanctions against agents who violate its rules. Now, an agent who violates the agent rules three times can have their certification revoked, effectively ending their career as an NFL agent.
So what can agents do to ensure that a loan to a player is actually deemed a loan in any potential arbitration or lawsuit? Simple. Create a paper trail. If a player requests a loan, have them do it in writing. If an agent raises the possibility of a loan, they should also put the loan proposal to the player in writing. Simply put, do not rely on a loan agreement contract to be the sole evidence that a loan exists. By creating a paper trail surrounding the contract, an agent has now created additional evidence in their favor should the player ever attempt to have the loan invalidated.
Certainly, the timing of the loan does not assist Rosenhaus' claim that the money was in fact a loan. If a player immediately signs with an agent, under what circumstances would that agent know that the player needs a loan and be prepared to give a specific sum? Hypothetically speaking, if the agent was aware that the player needed a loan for a specified amount prior to signing with him, then the agent may have broken other rules such as impermissible contact with represented players. Before issuing a loan to a player, agents should be sure that a reasonable amount of time has passed to become fully aware of the player's need.
No agent should put their careers at risk by creating the perception that they have broken the rules governing their profession.
Lance Armstrong won the Tour de France seven times and an Olympic bronze medal during his career. This success brought him fame and substantial sponsorships. However, as evidence mounted that Armstrong used illicit substances to better his performance, sponsors quickly disassociated themselves by likely utilizing a morals clause in the sponsorship contract.
As in the case of Lance Armstrong, morals clauses allow a brand or business the ability to cancel a sponsorship with the athlete/celebrity should they act in a way that damages their own brand substantially enough to hurt the sponsoring business or brand's reputation.
Importantly, morals clauses are not reserved for the elite sponsors. Morals clauses can also be found in TV show contracts, teachers' contracts, and appearance contracts.
Oftentimes, sports businesses schedule athlete appearances to boost their brands and bring in consumers. Regardless of the size of the sports business, a morals clause should not be overlooked in the appearance contract. In today's hyper-connected society, all it takes to start a controversy is a singe Tweet, which probably takes less than a minute to create and send. No business, especially a small business, wants to be stuck with an appearance by a controversial athlete amidst a scandal for fear that the business would be associated with the athlete.
Quiles Law is an esports and sports law firm based in New York City.
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Attorney Advertising. The information presented in this site should not be construed to be formal legal advice nor is it intended to form any attorney/client relationship. Our attorneys, collectively, are licensed to practice law in the States of New York, New Jersey, and Pennsylvania. Copyright Roger R. Quiles, Esq., 2017. All rights reserved.