The 49th Annual SLA Conference included a panel discussion titled “Fashion Forward: Legal Perspectives on Sports Apparel and Trends,” moderated by Yasi Sahely, Business Affairs Executive at WME. The panel featured Hoyt (CJ) Davis III, Deputy General Counsel and Head of Sports Business and Legal Affairs at PUMA; Alanna Hernandez, Executive Vice President of Business Affairs and Operations for Team Sports at Wasserman; and Kelly Jones, Sports and Entertainment Senior Counsel for Marketing at Under Armour.[1]
The panelists explored the evolving intersection of fashion and sports, noting how these previously distinct fields have converged through trends such as athlete tunnel walks, Met Gala appearances, and athleisure fashion shows. Some of the legal nuances they presented include:
Shoe Collaborations
They discussed the strategic significance of high-profile collaborations, such as Puma’s partnership with LaMelo Ball and Under Armour’s Curry Brand capsule collection. These initiatives are not just about product lines but are deeply rooted in storytelling and brand alignment. The discussion also covered the time-intensive nature of launching such signature lines, which typically requires 12 to 18 months of planning. The panel emphasized the importance of strategic foresight and market alignment saying that they constantly look for “right time” circumstances and try to bring something new and different to the overly saturated market.
They discussed the complexities involved in marketing sports apparel collaborations, particularly regarding intellectual property ownership. Key questions include whether the athlete’s agency or in-house marketing controls the IP and the outputs. Brands must balance maintaining strong relationships with athletes and protecting their products to ensure effective campaigns. If an athlete departs, they should not be allowed to take their branded shoes with them.
Choosing Marketable Athletes
On the agency side, there is a strong emphasis on delivering high-quality outputs, leveraging existing relationships within the agency, and accommodating the athlete’s preferences. However, brands must ensure they align with their own objectives and not merely cater to all of the athlete’s demands. The relationship should be mutually beneficial, balancing the needs of both parties. Compensation remains a critical issue for agents, who may seek alternative promotional methods—such as special events—over traditional large-scale campaigns to maintain high pricing. Exploring these alternative marketing options can be crucial for building a successful, long-term business partnership.
When brands make their selection, they focus on whether the athlete will be a good fit and how well the athlete aligns with the story they want to tell. They consider the potential for a psychological connection with customers and assess whether the athlete’s personal brand enhances their marketing efforts. For some brands, geographical factors also play a crucial role. For instance, Under Armour, which has a strong presence on the East Coast, targets athletes who resonate with that regional identity. Ultimately, these brands aim to connect with consumers not only through athletic performance but also by leveraging the athlete’s personal brand.
Brand affiliation plays a crucial role in these relationships and often begins early. Under Armour’s “UA Next” initiative exemplifies this approach through grassroots name, image, and likeness campaigns aimed at fostering community engagement with the UA brand. They actively participate in high school and middle school sporting events, camps, and games, seeking to connect with young athletes who will grow up using their gear. This initiative emphasizes the company’s long-term investment in fostering athlete relationships.
As such, these brands possess significant leverage in their selection process. Historically, there was a misconception that women did not belong in this market, leading to the practice of “shrink it and pink it,” which involved simply making clothes tighter and adding feminine colors. However, the industry has evolved to become more inclusive, recognizing the marketability of women. Alanna Hernandez from Wasserman highlighted that women now require more visibility and engagement to drive revenue, and the data clearly supports that women are marketable if we give them the opportunity.
Drafting the Contract
When sponsoring athletes, it is essential to balance brand exclusivity with the freedom to explore other personal branding opportunities. For instance, many athletes are now invited high-profile events like the Met Gala. So, sponsorship contracts should be carefully worded to clarify that athletes may engage in other deals like attending these fashion shows beyond just representing their primary sports brand.
For instance, Puma might include broad language in their contracts to secure “athletic” exclusivity. However, this may not cover all product categories. An athlete could wear Puma sneakers but choose Oakley sunglasses. To avoid conflicts and ensure clear expectations, the contract must precisely define the scope of exclusivity.
Making overly broad language in agreements are problematic and unlikely to be accepted by athletes. Realistically, many brands can be seen as competitors. Negotiating exclusivity becomes complex due to the wide range of potential competitors. But where is the line? While major brands like Nike and Adidas are clear competitors, there can also be overlap with other brands like Lululemon or Gymshark. Yet, department stores often focus on different market segments compared to performance-oriented brands but share the same market space. Brands generally aim for broad agreements that limit endorsements to categories such as athletic wear or certain price points. In contrast, agencies prefer precise terms, specifying the endorsement’s primary purpose, campaigns, or explicit product categories. It would likely be impossible to list all potential competitors in a contract, so it is crucial to clearly define the scope of exclusivity to prevent conflicts and protect the interests of both parties.
While brands aim to build a long-term, mutually beneficial relationship with athletes, it is also essential to include fallback provisions in contracts. A common example is the infamous morality clause, which allows a brand to address conduct that might negatively impact its reputation. This clause grants one party the right to suspend or terminate the contract if the other party engages in behavior that contradicts the brand’s vision or damages its image.
A morality clause provides a means for a brand to act if an athlete’s behavior undermines its brand reputation. This provision is crucial in endorsement deals, helping to manage the risks associated with an athlete’s conduct. A notable instance is the case of golfer Tiger Woods, who lost sponsorships from AT&T after a car crash and revelations of extramarital affairs.[2] Also, U.S. Olympic swimmer Ryan Lochte lost all four of his major sponsors, including Speedo USA and Ralph Lauren, after his exaggerated account of being robbed at gunpoint at the Rio Games.[3] These terminations were likely permissible due to the terms of morality clauses in their contracts. Understanding and negotiating these provisions at the outset of a contract is essential to manage potential risks and ensure that the agreement aligns with both parties’ expectations.
Competitor Coexistence
The recent high-profile lawsuit involving Thom Browne and Adidas highlights the risks of allowing athletes too much freedom to explore other lifestyle brands. While an athlete might wear Adidas sneakers, but choose a Thom Browne suit for their walkout, such freedom can dilute a brand’s market presence. In this case, the court found that Thom Browne and Adidas occupied distinct market niches: Thom Browne was positioned as a luxury brand, while Adidas was seen as mainstream.[4] This separation in product proximity and market positioning meant they were not direct competitors. Buyers showed sophistication in choosing Thom Browne over Adidas, despite Adidas’s aspirations to enter the luxury market.
However, Jones at Under Armour argued that different brands can coexist due to varying price points, product contexts, and how athletes use the products. If an athlete’s choices encroach or infringe on Under Armour’s market space, Jones noted that the brand might be less inclined to dish out large payments. Less exclusivity would result in lower payment. Agencies sometimes face, or even encourage, situations where athletes act first and seek permission later to collaborate with other brands. For example, while Under Armour sells underwear, their contract does not grant exclusive rights for underwear sponsorship with an athlete. Although the brand might include a right of first refusal in the agreement, athletes may still opt to collaborate with fashion-focused underwear brands like Skims or Calvin Klein. These carve-out options provide flexibility for both parties, allowing Under Armour to be the first to offer or match any other offers before the athlete pursues alternatives.
Conclusion
In conclusion, the “Fashion Forward: Legal Perspectives on Sports Apparel and Trends” panel provided a detailed look at how sports and fashion are increasingly intertwined. Brands and agencies face a complex landscape of strategic collaborations, marketing nuances, and contractual issues to build successful partnerships. The discussion highlighted the strategic importance of high-profile athlete collaborations, noting their significant impact on brand storytelling and market presence.
Effective negotiation is crucial for these deals. A key takeaway was the need for clear and precise contract language, particularly regarding product exclusivity, intellectual property rights, and morality clauses. The issue of competitor coexistence further illustrated the necessity for precise contract terms to manage brand positioning and avoid market dilution. The panel also compared perspectives from agencies and brands. As the sports and fashion sectors continue to evolve, the insights from the SLA Conference offer valuable guidance for navigating these partnerships and protecting interests in this dynamic field.
Katelyn Kohler is a rising 3L at Suffolk University in Boston, specializing in Sports & Entertainment, Labor & Employment, and Intellectual Property Law.
[1] Agenda, 2024 Annual Conference: Where Sports & Culture Collide, SLA, (May 10, 2024), https://www.sportslaw.org/conferences/2024conf/agenda/index.cfm.
[2] See Defne Gunay, Morals Clauses: Tiger Woods and the Death of His Sponsorships, Fordham Intellectual Property, Media & Entertainment Law Journal, (Mar. 4, 2010), http://www.fordhamiplj.org/2010/03/04/morals-clauses-tiger-woods-and-the-death-of-his-sponsorships/.
[3] See Subrat Patnaik & Liana B. Baker,Ryan Lochte Loses All His Major Sponsors After Rio Incident, Apology, Reuters, (Aug. 23, 2016, 4:22 AM EDT), https://www.reuters.com/article/sports/ryan-lochte-loses-all-his-major-sponsors-after-rio-incident-apology.
[4] See adidas Am., Inc. v. Thom Browne, Inc., No. 23-166 (2d Cir. May 3, 2024) (holding district court judgment affirmed).
