By Weston Anson and Lacy J. Lodes, Esq.
What is an athlete worth? $1 million. $5 million. $10 million. As with celebrities, some athletes are worth more than others by being an “A-list” athlete. You have your A-listers who are worth more, such as LeBron James, Peyton Manning, Phil Mickelson, Kobe Bryant, Dale Earnhardt Jr., and Tiger Woods (who led as the 2011 top earning American athlete making $60 million in endorsements).
We only need to look at this past summer’s Olympic Games to know that Gabby Douglas’s endorsement value significantly increased the moment she performed in London and stole America’s heart. P&G’s last minute contract with the gymnast went into effect as soon as she won Gold, putting her on Kellogg’s cereal boxes before she returned home.
And lets not forget about the world’s fastest man, Usain Bolt and his Olympic showing. According to Forbes, Bolt made $20 million in endorsements during the period from July 2011 to June 2012 and $300,000 in winnings, before the Opening Ceremonies even took place.
Rights of Publicity: Knowing an Athlete’s Value
When negotiating endorsement or licensing agreements, establishing an athlete’s potential worth, you need to take into account that person’s Rights of Publicity (ROP). And why is ROP important? You need to protect your client’s intellectual asset — their persona. An athlete has two great financial values: their skill as an athlete and their persona. An athlete has worked hard to get to this point, and they are their own brand. In recent days, an athlete’s impact on the game can come from both avenues. These values may overlap, and just like the athlete’s trainer protects the longevity of their physical abilities, keeping them in the game, their attorney should be protecting and/or maximizing the value of the athlete’s ROP. As with corporations, and other celebrities, the athlete brand has value, and anything of value needs to be protected.
Licensing and Endorsements
Endorsements and licensing can quickly become a very slippery slope, because licensees are investing in a public image of a very real person which can lose value after a single negative public event. Clearly this is not a new problem. One can reach back to examples such as Tiger Woods and Kobe Bryant. More importantly, in today’s world, pictures and videos of athletes behaving badly can be captured from any stranger’s mobile phone and uploaded to You Tube for all the world to see.
Another important underlying theme of this area of practice is the overlap between trademark law and rights of publicity. The right of publicity, which varies by state, protects a person’s image, likeness, name, voice, or signature. In addition to rights of publicity, personalities often have registered trademarks, and thus the two sets of law overlap. While trademark law distinguishes the source of goods of one party or company or person from those of others in order to prevent consumer confusion; the right of publicity protects a celebrity’s name and likeness in a similar way that trademark law protects a business’ registered names and brands.
If litigation is necessary, a damages valuation of the misuse of an athlete’s ROP may include the following:
Unjust enrichment,
Prevention of future licensing opportunities,
Loss of future earnings, and
Possibly, corrective advertising.
The Value of Athletes as Celebrities, and Their Rights of Publicity
CONSOR has worked on a number of ROP matters, a number of which involve famous former athletes. We discuss two which illustrates distinctly different sets of conditions — one, a very unwilling and reluctant participant, and the other an active and willing participant — in allowing their images and rights of publicity to be exploited.
One case involved Yogi Berra, the case was clearly about false endorsement on a massive scale. The endorsement was in connection with the television show, Sex in the City; and, its launch in syndication in major markets across the United States — and most importantly, references to Mr. Berra in a promotional campaign to hype the new syndication efforts. Mr. Berra would never have approved such an endorsement as it runs counter to his long held beliefs, his well-earned image, and his personal tastes and ethical considerations. As a result of the expert’s work, value of his ROP in this case were estimated at $2.75 million or greater. The case was subsequently settled in a conference prior to trial.
Another case was that of the famous wrestler, Jesse the Body Ventura, who sued Titan Sports/World Wrestling Federation in federal court. The case was particularly interesting because it combined celebrity rights of publicity and the creation of new intellectual property rights in the form of trademark licensing and merchandising rights. The issue was argued and then taken to the Federal Circuit Court of Appeals — and upheld there. CONSOR’s role in the Ventura case was critical to establish the form and value of damages.
In reviewing all of the WWF merchandising and licensing activity, it was found that Mr. Ventura’s likeness was being used on dozens of products ranging from action figures, T-shirts and videos, to cards, toys, paper goods, footwear and other accessories and consumer products. The expert established the range of appropriate royalty rates that WWF was almost certainly charging (since WWF was reluctant to reveal documentation). Finally, the expert estimated the value (and the damages) for Jesse Ventura’s video fees, and for other merchandising and licensing fees. The Federal Circuit Court upheld the judgment for Mr. Ventura and affirmed an award in the low seven figures.
The Future
More than in most areas of intellectual property law and litigation, celebrity and entertainment licensing is difficult to predict. There will of course be changes, but what will those changes include? It is our belief that we will see the following:
More celebrity/athlete litigation in general.
More emphasis on and a clearer understanding of rights of publicity.
The impact of merging and converging media on rights of publicity and rights of privacy.
Identifying the ownership and rights to individual celebrity/athlete images will be more complex.
Similarly, the rights to entertainment properties will also become far more complex with photographers, directors, stars, distributors, and owners of magazines, movies, or other visual media all holding stake in these rights.
There will be a blurring of the difference between trademarks and rights of publicity as many individuals employ both forms of protection for their imagery.
Even now, we have seen an increase in the number of athletes bringing forth ROP cases, especially against sports organizations such as the NFL and the NCAA. The NFL Retired Players Association has brought forth a suit against the NFL for use of former player images without compensation in products like video games. And former collegiate players have sued the NCAA for profiting off the likenesses without compensation, again in video game products. Whether you believe college players should be compensated or not, we see more types of these actions primarily due to the innovative ways images can be used and manipulated.
Don’t forget to prepare for post-mortem rights. As with celebrities, post-mortem rights of publicity can be very valuable to sports figures. We have seen many deceased celebrities who have passed away, yet live on — Babe Ruth, Mickey Mantle, Walter Payton, John Wooden all have value post-mortem.
In short, the whole area of entertainment and sports licensing, merchandising, rights of publicity — and the resulting litigation — will become more exciting, interesting and complex with each passing year.
Anson, Chairman of CONSOR (www.consor.com), is a seasoned licensing valuation and marketing professional with a long history of successful programs at firms such as Booz-Allen & Hamilton, Playboy Enterprises and Hang Ten International. He holds a Master’s degree in Business Administration (honors) from Harvard University and is active in all of the major international trademark and intellectual property associations as a speaker and an officer. Wes is a prolific author on the subject of licensing and intellectual property and has published over 150 articles in the United States and overseas. Since founding CONSOR in San Diego over twenty years ago, Wes has constructed and implemented numerous licensing programs for major corporations and has performed valuations of hundreds of intellectual property components.
Lacy J Lodes, the licensing director of CONSOR, is an attorney, who has had extensive experience in Intellectual Property related services, ranging from managing a voluminous IP portfolio, implementing strategies for proper global IP protection, and coordinating IP license agreements.
