FindLaw KnowledgeBasePublished: 2012-10-30
One potential benefit of being a successful professional athlete is a lucrative endorsement deal. Pro athletes now endorse just about any type of product like cars, fast food, fashion, fragrances and so on. And in the beverage industry, while a substantial number of athletes continue to be hired as sponsors for more traditional energy drinks and nutritional supplements, some athletes are now venturing into the arena of alcohol sponsorship.
Athletes should be cautious about what impact such potentially controversial endorsement deals might have on their images and other sponsorship options they may have.
Athletes and Alcohol Endorsements
Although endorsement deals with alcohol companies can pay a lot of money, they can be risky propositions for both the athletes and the companies since often the target marketing demographic of professional athletes skews younger, including those under the legal drinking age.
The alcoholic-beverage industry self-regulates its advertising standards in the context of underage audiences with oversight by the Federal Trade Commission. To comply with the voluntary advertising codes of the industry, companies should take care to see that their advertising is only placed in media where at least 70 percent of the audience is 21 or older and legally able to drink alcohol.
Considering that athletes should be cautious about giving the appearance of endorsing underage drinking and that from a long-term endorsement earnings perspective perhaps it’s more prudent to remain neutral, it may be more sensible for alcohol endorsement deals in sports to appeal to a more mature audience or for older or retired athletes to consider such deals. Athletes would also be smart to ensure that they have as much input and control as possible on the specifics of the advertising image and marketed products such as stickers, T-shirts and other swag.
Some alcohol brands and athletes get around the underage drinking issue by being less overt with their actions. Instead of advertising in prominent magazines or on TV, the alcohol companies negotiate deals with athletes to represent their alcohol brands locally by having the athletes bring product samples to public events or to bars, or wear T-shirts and other products in more limited, but at the same time more focused, settings.
Athletes considering alcohol endorsements also need to be careful that such deals do not hurt their chances of getting sponsorship contracts with other non-alcoholic product companies that might not want to risk being associated with alcohol.
Endorsement Contracts in General
The difficulty surrounding whether or not to endorse an alcoholic product is an example of the general complexity of endorsement contracts. Endorsement deals are detailed legal contracts that touch on and concern many different and competing interests.
Some endorsement-deal contract terms may include: the scope and extent of the athlete’s endorsement commitment; compensation specifics; exclusivity and its effect on deals with other companies; product licensing and preapprovals; extensions and rights of first refusal; appearance arrangements and travel compensation; testimonials and the attendant federal liability laws; termination conditions, including morals clauses; indemnification; and confidentiality obligations.
Both pro athletes and the companies pursuing them should be as knowledgeable as possible when negotiating product-endorsement contracts and both parties would be wise to enlist the aid of an experienced entertainment attorney to guide them through this complicated process.