When Sponsors Collide: The Delicate Balance Between Athlete and Federation Sponsors

Three-time Olympic gold medallist Nafi Thiam withdrew from the heptathlon at this year’s World Athletics Championships in Tokyo, following a disappointing performance in the long jump. Thiam later revealed that she had arrived at the competition with a “black cloud” hanging over her after a dispute with Belgian Athletics (BA). The dispute revolved around her obligation to sign Belgian Athletics’ code of conduct, given that doing so would restrict her sponsorship activities around the Championships. The code of conduct reportedly would also leave her in conflict with her personal sponsors; her apparel sponsor, Nike, is a competitor of BA’s sponsor Asics. Thiam is also sponsored by Axa, a rival to BA’s sponsor Allianz.

Disputes between federations and an athletes’ personal sponsors are not uncommon. Before London 2012, it was reported that several Nike-sponsored British athletes were reluctant to sign the British Olympic Association’s Team Members’ Agreement, which required them to wear Adidas apparel around the Olympic Village and on the medal podium.

The Conflict

• Sponsors: It is a fundamental obligation in a personal sponsorship agreement for a sponsored athlete to exclusively represent the sponsor’s brand in their product category. Sponsors pay for clear association with an athlete, particularly at career defining moments, such as winning Olympic or World Championship medals. A rival brand appearing in that pinnacle moment undermines the partnership.

• Federations: In varying degrees, national sports federations may rely on team kit sponsorship deals as a revenue stream to assist with their investments in the sport (e.g. aiding the development of grassroots athletes/ supporting elite athletes by providing coaching and medical care). Of course, elite athletes may have benefitted from such funding throughout their careers, so there is a careful balance to be struck between the federation being able to generate funding to support athletes in the early stages of their career, and elite athletes being able to access the pecuniary advantages of personal sponsorship deals.

Having said this, it is not uncommon to see athletes from team sports (such as football and rugby), wear and promote competing sports apparel brands on a personal, club and international basis, where sporting reality means that competing sponsors permit their interests to co-exist.

In athletics, however, the fees payable by the athlete’s sports apparel sponsor is often, and in some cases by some margin, the athlete’s main source of income. The athlete’s greatest achievements will most likely be at the World Championships or at the Olympics, and the images captured of the victorious athlete wearing a rival brand’s kit will usually be those that live long in the memory. Naturally, this could severely undermine the investment in the athlete by the brand. Whilst there is no way out of having to wear the national team kit, it is not surprising that disputes or conflicts may arise from obligations to grant the use of the athlete’s image rights to, and to carry out promotional activities for, the Federation’s sponsor, or from the attempt to impose additional restrictions on the athlete’s activities with their personal sponsors outside of the competition rules.

Nevertheless, the commercial reality is that this issue generally only affects star athletes like Thiam, who have reached a financial level where they are no longer relying on funding from their national federation, in which case the federation has far less justification in seeking to impose promotional obligations on the athlete that might put them in breach of their lucrative personal sponsorship arrangements.

Reducing the Risk of Dispute

From a legal perspective, for those athletes this issue does affect, clauses can be drafted into sponsorship agreements that will help manage all parties’ expectations from the outset, whilst focusing on maximising the commercial value of the partnership:

• Clearly defining and distinguishing between “Personal Capacity” and “Team Capacity”: Inserting into the agreement a definition that sets out when the athlete is acting in a “Team Capacity”, provides a carve out from exclusivity in the athlete’s contract with their personal apparel sponsor. This addresses moments where the athlete is representing their national or sporting team upfront. Equally, by a federation excluding athletes’ activities in a “Personal Capacity” from sponsorship agreements they are party to, this helps to sets out the parameters of use for the federation’s sponsors. To assist in differentiating “Team Capacity” from “Personal Capacity”, it could be ascertained in the agreement that an athlete must appear alongside a set number of other team members for them to be considered as being depicted as part of the team. Wording could also be added to state that images of star athletes cannot be used disproportionately (in size and/or frequency as compared to other athletes in the team) in promotional materials of team sponsors.

• Ensure compliance with the rules of the sport: Typically, sponsorship agreements include obligations on both sides for the parties to comply with “Applicable Laws”. Either by ensuring that the rules and regulations of the applicable sport are captured as part of the definition of “Applicable Laws”, or by virtue of a definition that directly addresses the relevant laws of the sport in question, it is crucial to make sure that the agreement contains a provision by which the sponsor acknowledges, and agrees to comply with, the relevant sports’ regulations when exercising the rights it has been granted under the agreement. For example, a warranty could be inserted as follows: “Sponsor warrants and represents that it shall exercise its rights granted hereunder in accordance with all Applicable Laws, including, for the avoidance of doubt, any applicable Rugby Regulations.” This would give the athlete some protection if a dispute were to arise, as the sponsor has acknowledged that sporting regulations may be applicable and will take precedence.

• Consider timing of deliverables: From the sponsor’s perspective, they can ensure that they obtain the greatest possible commercial value from pinnacle sporting moments by carefully considering the timing of key deliverables set out in the agreement (such as athlete appearances and social media activations). By stating that a certain number of the deliverables must take place within an ascertained number of days before or after named major championships (subject to any relevant ‘black-out’ periods), they can secure exposure when public interest in the athlete is at its highest.

Ultimately, sponsors, federations and the athlete themselves benefit the most when the athlete is performing at their best. Federations’ objectives are typically twofold: participation, and performance. Sponsors, on the other hand, will gain heightened commercial value in the exposure brought by the athlete following any major sporting success.

Thiam’s experience emphasises how a collaborative approach between stakeholders is essential to ensure that focus remains on what all stakeholders (federation, team, athlete, personal sponsors and team sponsors alike) should be prioritising: the athlete’s performance.