Sports Marketing Law. Sportslawyer 5/221 Queens St, Melbourne, VIC 3000 T: E:

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1 Sports Marketing Law By Paul Horvath Readers are directed to read this summary together with the Collective Bargaining Agreement (CBA) to ensure that all references to clauses in the CBA are current

2 Collective Bargaining and The Australian Football League: Has it taken away too many image rights from the player? promotional activities are directed to the promotion of Australian football, the AFL or the player s club, and may include promotion of the game, an AFL or AFL club protected sponsor. Copyright or other rights in relation to the promotional activity is assigned to the AFL. In Australia, the television rights for the Australian Football League ( AFL ) football were sold in 2006 for $A780 million for 5 years. The National Football League ( NFL ) television rights in America were sold for $US17.6billion in 1998 under an eight year contract. This equates to $US2.2billion per year (almost $A4billion). On any view, football is big business. Given that a player in the AFL will have a limited lifespan in the sport, it is essential that he maximise his income during that time. Contracts are negotiated between clubs and players with the help of agents, managers or parents. The income under the contract is but one aspect of the earnings a player can reap from being a football player. Other sponsorship and endorsements can be a very lucrative area for the player. Upon signing the Standard Playing Contract ( the contract ) which is prepared in agreement between the AFL and the Australian Football League Players Association ( AFLPA ) all AFL players are then bound by that contract which adopts and incorporates all of the terms of the Collective Bargaining Agreement (CBA) which currently exists. The CBA came into operation in 1992, the first for any sport in Australia. The document provides a number of basic salary conditions for all players, and governs and regulates other aspects of the player s engagement as a player in the AFL. A player can use his image for promotional or marketing purposes provided that this use does not conflict with an AFL protected sponsor or his AFL club protected sponsors. AFL property, such as uniform or intellectual property may only be used with the permission of the AFL. The use of the image must not be prejudicial to Australian Football. Players are obliged to make themselves available for up to fifteen events per year for their AFL club and up to six events per year for the AFL. An automatic license for the use of the player s image is given to the AFL or the club for these promotional purposes. These The AFL may also use a player s image for AFL licensing activities if it has first obtained the consent of the player. Once again, copyright or other rights relating to such licensing activities are automatically assigned to the AFL and the consent of the player shall not be unreasonably withheld. A player can object to being involved in an AFL licensing activity where it conflicts with a personal sponsor of that player, or if the activity relates to tobacco, drugs, alcohol, race or religious purposes. These are deemed to be instances of reasonable withholding of consent. What is reasonable and what is unreasonable has been very limited by the definition contained in the CBA. These clauses are often contained in contracts for sports and media personnel, but the reasonable withholding of consent has elsewhere been more broadly defined. For example, consent could be reasonably withheld if the proposed use of the image would seriously hurt the player s reputation. Automatic consent is deemed to be given to the AFL for the use of the player s image in relation to trading cards, stickers, posters, greeting cards, badges, mugs, videos and computer games. Otherwise, the AFL re-

3 For example, consent could be reasonably withheld if the proposed use of the image would seriously hurt the player s reputation. quests consent of a player and the consent is deemed as being given to the AFL unless an objection to the request is received by the AFL within seven days. It appears that the CBA is weighted in favour of the AFL s use of a player s image given that consent is automatic in respect of some uses of the player image, and is presumed unless the player objects within a given timeframe. A particular problem area seems to be in relation to the many sponsors who a player must not offend or compete against. This may significantly limit the sponsors who a player may promote on an individual basis and therefore the marketing ability they have for their image outside what is required for the AFL and the AFL club. Players are permitted to use their own image for personal promotional activities so long as there is no conflict with AFL protected sponsors or AFL club protected sponsors or certain AFL licensees if AFL property is being used. AFL consent is not required for personal promotional activities where AFL property or AFL intellectual property is not used. Where a player does seek the consent of the AFL to use either AFL property or intellectual property for personal promotional activities, a written request must be forwarded to the AFL. Fees are then negotiated between the player and the AFL, but most importantly the AFL reserves the right to reject the request and the right to reject materials submitted. This provides the AFL with very broad and unfettered power to refuse consent to the player for the use of AFL property or intellectual property. There is also a clause in the CBA relating to player footwear. Provided that a club does not have an existing contract or agreement for a player to wear particular footwear, the player may use the footwear of his choice. Future contracts entered in to by the AFL or the AFL club cannot restrict the player s ability to wear footwear of his own choice. This change was implemented as a number of players were unable to wear the boots that emanated from his club footwear sponsor. Some players needed customised boots to suit their feet. Others had clashes with personal sponsorships. Whilst a number of players have sponsorships which include clothing and footwear, a number of less recognizable players still have to pay for their own boots. It is promotional or marketing activities that can enhance the income that can be generated by any AFL player, let alone any sports person. Endorsement revenue may provide an athlete with income greater than the income received directly through a sport. Andre Agassi and Shane Warne are reported to earn most of their money in this way. Greg Norman earned $A13.1 million in 1992 and it could be safely assumed that a great proportion was not for his participation in the game of golf. Under Victorian and Australian law, an AFL player does not own any rights to his personality, name, image or likeness. Those things are usually protected under the law of intellectual property, rather than things that can be protected by themselves. AFL players and other athletes can obtain legal protection under the Trade Practices Act. Players have a right to take action against any corporation which misleads or deceives (or engages inconduct which is likely to mislead or deceive) the public into believing that they have an affiliation with, or that their goods or services are endorsed or approved by a player when thisis in fact not the case. The tort of passing off can also be used. To succeed in a passing off action it must be shown that the athlete or player was used

4 without permission to promote a product or service. However one limitation to the use of this action is that the athlete or player must show that they carry on a business and that they therefore have a business reputation. This will limit the action to more high profile players or athletes as they can be shown to have a sporting personality which operates as a separate business to their sporting prowess on the field. Less well known players would have difficulty showing they are in the business of marketing their personality. The second difficulty is that there must be a misrepresentation to the public and the athlete would need to show that they are well known and recognisable in the broader community rather than simply being well known within their own sporting community. A player may also seek to protect his personality via the law of defamation. If a publication causes people to think less of the player, and they are put in a bad light, then an action may lie for defamation. Copyright law is available to a player in relation to regulating the reproductions of his name and image and written works, for example, articles, books, drawings, photographs or biographies. The Trademarks Act can also be used to protect aspects of a player s image and personality. The difference between copyright and trademark laws is the need for registration of a trademark. Copyright protection is automatic and need not be registered. Trademark protection is not contingent upon registration but, once registered, a trademark becomes personal property and is capable of being asigned, for example, to a company to exploit the marketing opportunities relating to the trademark. In terms of a player s common law rights, a common law action for breach of contract could be commenced if the terms of the contract (and by extension the CBA) were breached. If, for example, the AFL breached any of the conditions that relate to the player s intellectual property rights, an action for a breach of contract might be successful. Restraint of Trade issues are important. An example of a restraint at common law could be the prevention of a player from maximizing his income by preventing him from commenting on or criticizing a sporting league or association to magazines or newspapers during their membership or for a time after ceasing membership. Large transfer fees or the prevention of a player from playing for another club for a period after leaving the first club could also be a restraint of trade. The test applied in the courts is whether the restraint acts to the benefit of the league or association without having too wide an effect or disadvantaging too many people. An example of a reasonable restraint of trade provision is banning a player for using performance enhancing drugs. In conclusion, there are a number of areas in which the player image and marketing rights need clarification. The CBA for the AFL appears to be weighted in favour of the AFL and needs to be more balanced. There are clearly competing interests for the marketing and image rights of players. The AFL interest is in the preservation and promotion of the game, whilst at the same time it is a not for profit organisation. If it achieves its objectives, ever increasing revenues are generated which are returned to the clubs and to the players. The players and the AFL Players Association seek to maximise the financial returns for the player in the limited lifespan he enjoys at the elite level. In reality it is the elite players whose sponsorship opportunities are most curtailed under the CBA. We have recently seen a very good illustration of sponsorship impact in the AFL arena. Royce Vardy drove his car with a blood alcohol level of The Transport Accident Commission paid an estimated $750,000 to the Richmond Football Club per year and were badly embarrassed by the incident. They considered terminating the sponsorship, but ulti- mately settled for a

5 $50, fine for Richmond. The player came close to being sacked, but instead was fined $5, (the maximum), suspended from training with his team, prohibited from taking part in the pre-season competition, and placed on community service for the season. A clear contrast can be drawn between the treatment of Vardy and Ronnie Burns of Geelong who was caught drink driving a few weeks later. The latter was not punished at all by his club for a similar indiscretion to Vardy. That is the nature of sports sponsorship. When a sponsor s interests are at stake, the sponsorship beneficiaries in this case the club must act to protect its revenue source. If sponsorship interests are too protected, we may see players bringing actions based on restraint of trade, as may be argued in relation to AFL and AFL club protected sponsors. SportsLawyer offers expert advice for anyone within the sports industry. Our services range from commerical contracts and arrangements through to advice on event and venue management including leases, club facilities and property development. Contact us today and see how we can help you.