The BackPage Weekly | Athletes & Brands: Key Trends When Negotiating Commercial Deals
By Jonny Madill & Alex Harvey
We’ve been fortunate in the SHERIDANS | SPORT team this past year to have negotiated an array of brand and commercial deals for some of the world’s biggest athletes – not just in football (both in the men’s and women’s game) but across rugby union, cycling, horse racing, boxing and other sporting contexts. These range from ambassador and endorsement deals, football boot deals and club image rights agreements, to more strategic long-term brand partnerships and athlete investments.
We thought we’d jot down some key trends from our experience of negotiating and working on recent deals – both from an industry perspective and through the lens of how these deals are structured and negotiated. Having not written an article in a while, it was also nice to sit down and write a piece for our BackPage Weekly, as well as get the thoughts of a few industry leaders in the world of athlete management and representation.
Thanks to Juliet Aldersley of B-Engaged, Alex Wilde of Status-Creative, and Rebecca Evans of VOS Sport, for the insights.
📈 Key industry trends
Purpose-first partnerships
Whilst difficult to distil into a short article, there are a few thoughts that spring to mind. First, the shift towards athletes being purpose-led in their off-field activities and seeking to ensure the brands they choose to partner with align with their values and beliefs is definitely continuing. The rise of the athlete activist is not a new phenomenon, but increasingly we’re seeing athletes combining a desire to use their platform to promote causes and speak out about personal interests and passions - with their commercial brand strategy, as explained by Juliet Aldersley, Senior Partnerships Manager at B-Engaged and who works with a host of footballers, including Héctor Bellerín, Serge Gnabry and Kai Havertz:
It’s been quite rare to work with athletes who are committed to truly stand for something. It requires the individual athlete to educate themselves and be willing to be bold enough to stand out from the crowd without simply following the pound signs.
It’s also about taking a longer-term view – turning down lucrative commercial opportunities where a brand doesn’t align with an athlete’s values (e.g. sustainability) can reap a longer term benefit – the athlete’s audience will recognise the human behind the athlete and the authenticity, and this is what can make an athlete so exciting and appealing to brands.
Bukayo Saka, for example, recently partnered with Fiverr, a brand committed to levelling the playing field and creating opportunities for entrepreneurs from all walks of life, whilst Man City’s Kyle Walker teamed up with Puma and EA Sports to support the mental health charity CALM by designing a home and away kit which FIFA 22 players can unlock in the game.
On the women’s side, Leah Williamson’s book “You Have the Power”, and “Three Lionesses” by Ella Toone, Georgia Stanway and Nikita Parris, will have far more long-lasting impact than simply a successful book publishing deal – it’s about inspiring and empowering younger generations.
Alex Wilde, Founder and Managing Director of Status-Creative, the creative studio working with footballers including Declan Rice, Trent Alexander Arnold and Missy-Bo Kearns on their commercial strategy, sees it as part of a wider move towards athletes wanting to leave a legacy off the pitch too:
We’re increasingly seeing athletes wanting to leave a legacy, not just on the field (which hopefully they will after a successful career) but off the pitch – take Trent [Alexander-Arnold] for example with The After Academy. This is something which could be in place for decades and decades supporting boys and girls in the right way; that's the sort of thing that will transcend his sport and will help him, after football is done, have a purpose. You almost leave football with a sustainable project already underway.
In terms of other ‘sector’ trends, there is no doubt that crypto has become generally a no-go sector for athletes, given the obvious financial, regulatory and reputational risks. Gambling also remains a high-risk sector, particularly in light of the ASA’s tough approach to advertising which appeals to minors (see our previous BackPage piece on this topic) and the UK government’s recent White Paper on gambling reform which included a set of recommendations for reforming gambling legislation – some of which may impact athlete partnerships with betting brands (so is an area to keep tabs on).
The world of AI remains relatively untapped from an athlete brand partnership perspective (see Sam Kerr’s recent deal with Meta), so is definitely one to keep an eye on.
The athlete investor
The rise of the athlete investor model remains a fascinating trend. The traditional sponsorship/ambassador model is increasingly being complemented by athletes being offered equity – a model seen in the US for many years. As Rebecca Evans, Managing Director of VOS Sport (who represent athletes such as Nathan Collins, Rachael Blackmore and Thomas Carty) points out, the commercial/strategic rationale for the athlete is often the opportunity to generate a longer-term return on the partnership to future proof their career, whilst for the brand – it’s often about making it a more credible and authentic partnership:
The athlete investor model opens up partnership opportunities with high growth start-ups and challenger brands who traditionally haven’t been able to access top level talent. It enables us to continue to create authentic partnerships that athletes are genuinely passionate about, with the added incentive for them of delivering value and visibility as the greater the partnership, the greater the return. With the necessary due-diligence, an appropriate valuation and the correct structure, the return for both parties can be far greater than a traditional cash for endorsement structured sponsorship.
Notable examples of late include the co-investment in a stake in the Alpine F1 team by the likes of Rory McIlroy, Trent Alexander-Arnold, Anthony Joshua, Alexander Zverev and other global athletes (as part of a syndicate created by the Otro Capital group which includes Ryan Reynolds, Rob McElhenney and Michael Jordan).
The Players Fund recently launched as the UK’s first ‘athlete first’ venture capital firm, intended to empower and consolidate the athlete community as investors (its founder investors include Ben Stokes, Stuart Broad, Héctor Bellerín and Serge Gnabry). Investment in disruptive sports is becoming more common, with the likes of Andy Murray and Virgil Van Dijk recently investing in padel, the world’s fastest growing sport. We’re also increasingly seeing investments whereby the strategic expertise and network value being offered by an athlete is as beneficial as the more traditional ambassadorial services.
The key in our experience is getting the structure right – both from a legal perspective and also in light of the many tax implications too; and also ensuring the interrelationship between the shareholding/investment piece and the ambassadorial element has been clearly thought through.
Football boot deals
In football, boot deals continue to be an important part of a player’s portfolio of commercial agreements, especially at the very top tier of the game. Deals with the likes of Adidas, Nike, Puma, New Balance etc. are typically far broader than simply a requirement for a player to wear the brand’s boots in training and matches - and are for all intents and purposes fully blown endorsement and ambassadorial agreements (with a suite of other promotional deliverables expected of the player, from social media deliverables to personal appearances to video shoots etc.).
A key consideration for athletes (and their representatives) is whether entering into a boot deal makes commercial sense, particularly given the scope of the exclusivity restrictions these brands often insist on. These brands view themselves as 360° sports and lifestyle brands – so athletes need to weigh up the benefits of doing the deal vs. retaining the flexibility to explore other commercial opportunities in sectors such as fashion, athleisure, wearables, smart watches and headphones etc. This is particularly the case for players at the top of the women’s game (which is becoming more sophisticated commercially, but where the financials may not necessarily add up).
Another point which is easily overlooked is ensuring a player is happy with the quality of boot and ensuring there is a mechanism for feedback and/or consultation. This is a particularly important consideration in the women’s game – a recent study found that 82% of women players across Europe experienced regular discomfort as a result of their boots.
🖊️ Key points of negotiation in athlete brand deals
Approvals and control
High-profile athletes rightly view themselves as valuable commercial assets, so maintaining control over the use of their image is often a fundamental consideration, as Alex Wilde explains:
I think we’re seeing a growing desire from athletes to take control of how they're portrayed and how they're used by brands in the creative space. That is also becoming visible in club licensing, where players are increasingly wanting to take more control in the decision-making around how their brand and image are being used. Top players are increasingly having their own individual representatives at club shoots – for good reason and to ensure the player is comfortable with the output. It’s something we’re trying to do at Status-Creative; integrating and collaborating with the clubs’ commercial teams to ensure we’re all working together to get the best for the player.
Having a right of approval will go a long way towards alleviating these concerns; whether that be in the context of approving the final content/deliverables for a campaign, or having the right to approve the brands with which they are going to be associated. Take club image rights deals for example. One of the key components of a club image rights agreement is the club having the right to use the player’s image (in an individual capacity) in connection with the promotion of the club’s own commercial partners. However, as many clubs have a vast portfolio of commercial partners, players should insist on having a right of approval over exactly which of the club partners they are going to be associated with. If the club has a brand partner in a higher-risk category, like crypto for example, that might be a no-go sector for the player.
Scope of rights
As part of any commercial partnership, the athlete will grant the brand the right to use their name, image and likeness in connection with the endorsement. From an athlete’s perspective, it is important to ensure the scope of those rights are clearly defined, particularly as it relates to things like post-term/campaign use, use within a group company structure, and use in connection with third-party brands, products or partners. Whenever brands are looking to activate in new media (think web 3.0 and the metaverse etc.), ensuring the necessary protections are in place becomes even more crucial.
Morality clauses
Athletes should be alive to brands taking an onerous approach to morality provisions: e.g. wanting automatic termination rights in the event that they believe to have suffered some sort of reputational damage because of its association with an athlete. Ideally the scope of these provisions should be sufficiently narrow so as to prevent situations outside the control of the athlete triggering the brand’s right to terminate (for example, a poor run of results or performances; or unverified stories being leaked on social media). On the contrary, an athlete should have the ability to get out of the agreement should a brand partner engage in some form of negative behaviour (what constitutes ‘negative behaviour’ should be clearly defined).
Letters of inducement / guarantee
When an athlete uses an image rights company as the vehicle to enter into a brand deal (which is very common), a letter of inducement or guarantee is a standard way of ensuring that the brand has a direct contractual relationship with the individual athlete. The overriding purpose of this letter of inducement is for the athlete to personally guarantee that he or she will step into the shoes of his or her company if it fails to deliver the services or grant the rights under the main agreement. However, this guarantee shouldn’t go further than is necessary to achieve this. This is important not just from a contractual liability perspective but also from a tax point of view.
Other legal issues
There are a raft of other key legal provisions which are often the topic of negotiation and go to the heart of the allocation of risk between athlete and brand. These include liability and indemnity provisions, termination and IP rights. As a general rule of thumb, the greater the deal value and longer the term, the higher the risk profile from an athlete perspective (and in turn the importance of making sure he or she is properly protected in any contract).