Increased Commercialization of Athletics Requires Sophisticated Athlete Agreements

Published September 30, 2006

From an international sport perspective, the Vancouver 2010 Winter Olympic Games are just around the corner. These imminent Games will have an enormous policy, sport funding and commercial impact on the Canadian sport system. Some might say that the commercial aspect of an Olympics now rivals the athletic spectacle of the event. This increasing commercialism of the Games is critical for athletes and sport organizations alike.

As of January 1, 2005, VANOC (the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games) was granted all Olympic marketing rights for the 2010 Games by the Canadian Olympic Committee (COC). These rights will revert back to the COC after the conclusion of the Games. The goal of VANOC is to leverage as many assets as it can to the greatest extent that it can. This same goal is also being vigorously pursued at each level of the sport hierarchy from international federations and national federations to the athletes and coaches who will be at the Games. The result is a complex minefield of intellectual property, commercial and sponsorship issues.

The athlete is an increasingly important asset at each level of the sport hierarchy, but is probably one of the most ill-defined of all the assets that form the Olympic commercial mix. The value of an athlete is in his or her image over which, as a starting point, each athlete has complete ownership. How are sport organizations attempting to leverage this asset to their own benefit?

The main vehicle for establishing relations between athletes and their National Sport Organizations (NSOs) has been the Athlete Agreement. These agreements originated over two decades ago as a way to formalize the terms and conditions of the government-funded Athlete Assistance Program (AAP), which provided modest stipends to athletes to offset training costs. These agreements specified the respective obligations of the carded athlete and his or her sport organization and addressed details such as conduct, doping, promotional appearances and training commitments, and largely followed a standard template.

More recently, however, depending on the sport and its extent of commercial appeal, these standard agreements have begun to morph into full-fledged commercial contracts of 60 to 70 pages. Thus, added to the basic Athlete Agreement is now a commercial transaction between the athlete and the sport organization over the athlete’s image rights. In many cases, these agreements have called upon athletes to relinquish these rights to the sport organization, while in other cases the parties have achieved a delicate balance between the right of the athlete to exploit his or her image, and the right of the sport organization to derive its own commercial benefit to offset the costs it incurs providing programs for athletes.

Few amateur athletes have the ability to market their image commercially and those that do have a very small window of opportunity in which to take advantage of their sport success. In exchange for this “opportunity” athletes often delay education, career pursuits and their entry into the workforce.

Sport organizations provide direct and indirect support for athletes in the form of financial stipends, coaches, trainers, medical staff, athletic venues, equipment and entry into athletic events. These efforts are costly but allow the highly visible athlete and a host of anonymous athletes to compete.

Both sides – sport organization and athlete – need each other to survive and thrive, but splitting up the pie can be tricky. Athletes with leverage, who tend to be a handful of professionals and very elite amateurs, can exert significant influence over the commercial terms of their own contracts. To the extent the sport organization forgoes acquiring rights from certain athletes it, in turn, is significantly constrained in its own commercial negotiations with its sponsors.

Conversely, the majority of athletes have very little leverage. Athletes who want to compete in sanctioned sport and who wish to receive much-needed AAP financial support are compelled to sign Athlete Agreements, even where the commercial aspects of these agreements are very one-sided. Few athletes have the knowledge to negotiate a commercial contract, nor do they have the resources to obtain professional assistance with the job.  Many athletes thus find themselves unable to negotiate favourable commercial terms, and they end up ceding much or all of the control over the exploitation of their image to their sport organization.

In the past, commercial disputes between amateur athletes and their sport organizations were few and far between. Typically, the monetary worth of commercial deals did not warrant serious legal challenges, and the monopolistic nature of the sport system has made it possible for sport organizations to insist on standard commercial clauses in Athlete Agreements. For many ordinary athletes this remains the case. However, as the Canadian sport landscape takes a decidedly commercial turn, and as the opportunities for sponsorship and licensing become more numerous and also more complex, this will change.

Canada introduced a process for sport arbitration in 2002 that since its inception, has heard about 75 sport disputes. None of these disputes has been about commercial matters, so the extent to which arbitrators might have jurisdiction and authority to order damages in a commercial dispute between athlete and sport organization remains unknown. What is known, however, is that amateur sport is becoming increasingly commercial and as we move headlong into the 2010 Olympics we may see a marked change in how athletes and sport organizations manage their commercial relationships.

Originally published: The Lawyers Weekly, October 13, 2006