"Slam dunk" – NBA star exploits media deals from athlete endorsements
Fledgling athlete signs first endorsement deal with sponsor. Money changes hands (via the athlete's agent of course). Athlete fulfils contractual obligations, appears at a few events and mentions the brand on his or her social media account a few times. A generic contractual relationship. Need it be? I think not.
Indeed, sophisticated athletes are finding more innovative and diverse ways of extending the scope of a sponsorship arrangement for their personal benefit. This came to my attention having read a recent article by Digiday (please click here to read full article) which details the somewhat entrepreneurial way NBA star Kevin Durant has extended (exploded, even) his sponsorship deals with the likes of Nike and American Family Insurance into branded content deals for his own media company, Thirty Five Media. For example, Thirty Five Media have recently aired an episodic series called "Dream to Achieve" featuring American Family Insurance as the show’s presenting sponsor, rather than Durant pitching on the sponsor's behalf. Not only this but the content enabled Durant to promote other companies with whom he has a relationship - the first episode of "Dream to Achieve" featured the CEO of Forward, a health-care startup in which Durant is an investor.
For the athlete's media company, this should attract more sponsors to partner with it. Indeed, the ultimate goal for Thirty Five Media is to be considered an official media partner of Durant's sponsors. For Durant himself, the arrangement is far less burdensome in respect of time with his sponsors and becomes what is known in the trade as an "endorsement-by-association" arrangement. Durant's team has clearly taken inspiration from NBA legend LeBron James who has achieved a similar relationship with his endorsers Uber and JP Morgan Chase, and his media company Uninterrupted (a multimedia platform which provides cutting edge documentaries, web series, and podcasts about many top athletes). Younger athletes should take inspiration from Durant and James's initiative, despite understandably more limited resources.
As lawyers we have to look at the contractual implications of such arrangements for our young athlete clients. Were they even considered by the athlete's agent or the brand at the commencement of the relationship? Perhaps there was catch all language that contemplated a cross-media offering, but more likely this will technically fall outside the scope of the agreement. A particularly difficult sponsor may argue that the value of the deal is diluted because whilst their brand appears on content generated by the media company, the goodwill is being split between the athlete and the media company. Clearly, the basis of this argument will go beyond whether the athlete is or is not therefore fulfilling his or her obligations under the agreement.
Whilst we cannot advise as to specificities of how such an arrangement affects the value of the sponsorship deal from a monetary perspective, we would nonetheless recommend to an athlete that if he or she is signing a new deal or an existing one comes up for renewal, a provision be included that content produced by a specified media company which includes the sponsor's brand as the presenting sponsor (for example) will satisfy (at least in part) the athlete's endorsement obligations to the sponsor under the agreement, or try for additional consideration.
What is clear is that the opportunities for athletes augmenting sponsorship arrangements by collaborating with associated media companies are only going to increase. The question remains whether such model can be adopted by the rookie sportsmen and women of today, particularly in the UK market, but Durant and James certainly provide inspiration.