Let the Games Begin: USOPC Releases Personal Sponsor Commitment

Advertising Law

As the 2020 Tokyo Olympics draw nearer, the U.S. Olympic & Paralympic Committee (USOPC) has released the much-anticipated Personal Sponsor Commitment (PSC). The document is a set of click-through terms that bind advertisers to comply with relevant guidance in order to permit Olympic participants to continue to work with non-Olympic sponsors during a restricted time period around the Olympics.

Thanks to a major change in Rule 40 of the Olympic Charter—which governs how athletes, coaches, trainers and officials handle sponsorships during the delineated days before, during and after the Olympics—advertisers are now able to take advantage of new marketing opportunities.

Historically, Rule 40 restricted athletes participating in the Olympic Games from using their name and likeness during the Rule 40 period, limiting their ability to leverage their athletic success for endorsement deals with brands that were not official sponsors of the Olympics.

But last summer, bylaw 3 to Rule 40 was amended to allow Olympic participants to use “their person, name, picture or sports performances” for advertising purposes in accordance with the principles set forth by the USOPC.

Guidance released in October (the Guidance) established a two-part process that athletes and personal sponsors must complete in order to engage in marketing during the Rule 40 period. For the Tokyo Olympics, that period begins July 14 and runs through August 11.

First, an athlete must visit a dedicated portal to register their personal sponsor(s), providing the name and contact information of the organization(s). Next, each personal sponsor identified by an athlete (referred to by the USOPC as an “athlete personal sponsor,” or APS) will receive a link to a click-through PSC, which is a binding contract between the USOPC and the APS. On January 14, the USOPC activated the portal, giving APSs access to the PSC.

The six-page document lays out the commitments of both the USOPC and the APS to each other. The affirmative obligations on each party are not particularly burdensome, and they largely track laws and guidelines that are already in place. However, requiring the APS to accept and agree to the PSC is novel and changes the dynamic between non-Olympic advertisers, the USOPC and the athletes in that (1) for the first time, the responsibility for complying with Rule 40 is shared between athletes and their sponsors, and (2) the USOPC has contractual recourse against any APSs that accept the PSC, including its breach remedies and indemnities.

The primary benefit of the PSC to the APS is express permission from the USOPC for the APS to carry out a campaign that features one or more Olympic athletes during the otherwise prohibited Rule 40 period. The PSC also includes an express commitment from the USOPC to provide a review of “athlete-focused” and “generic” advertising campaign materials for compliance with the Guidance upon the APS’s request. It is notable that the commitment does not include any particular time frame for conducting such an advance review, nor does it specify a process by which the APS may appeal a determination of noncompliance. The APS is not required to submit materials for review, so it remains to be seen whether APSs will take advantage of the opportunity to have their campaign materials reviewed by the USOPC.

The USOPC obligations also include supporting and implementing the Guidance in the United States, and providing educational opportunities for athletes and the APS to learn about the Guidance. These activities may well benefit APSs, but the USOPC would likely have sufficient incentive to undertake them even without entering into the PSC.

In exchange for the USOPC’s permission to carry out advertising campaigns containing the names or likenesses of athletes during the Rule 40 period, the APS must expressly commit to the USOPC that it will follow each and every rule in the Guidance. Some of these rules simply reinforce prohibitions on using Olympic-related intellectual property that already exist in the Ted Stevens Amateur Sports Act. Other rules, such as the restrictions on making negative, comparative claims and implying that any product or service enhanced an athlete’s performance at the Olympic Games, go much further.

In addition to the affirmative obligations described above, the PSC establishes contractual remedies for the USOPC in the case of any noncompliance with the Guidance or other breach of the PSC terms by the APS. One key remedy, as foreshadowed by the Guidance in October, is that any APS that breaches the PSC will lose any then-current Rule 40 permission and will not be eligible to seek Rule 40 permission for the next two Olympic Games (i.e., Olympic Winter Games Beijing 2022 and Olympic Games Paris 2024). Furthermore, if the USOPC terminates the PSC and revokes the Rule 40 permission, the APS is required to immediately cease using, take down, and remove any and all campaign materials that use the athlete’s name or likeness.

Other important provisions include indemnities and dispute resolution. The PSC establishes a mutual indemnification for breach, and more extensive indemnification obligations on the APS for its actions, omissions, campaigns and any noncompliance with applicable laws. The likelihood of a breach by the USOPC is relatively small in light of the fact that the organization’s responsibilities to the APS are limited to begin with. However, it seems remarkable that the USOPC voluntarily proposed to indemnify the APS at all.

The dispute resolution provision in the PSC is also significant, in that it specifies New York venue and jurisdiction, and requires the APS to make certain acknowledgments that would likely facilitate the USOPC’s ability to secure injunctive relief in an action against the APS in the future.

Why it matters: The changes to Rule 40 opened the door to greater marketing opportunities for advertisers that are not official sponsors of the Olympic Games or Team USA, allowing them flexibility to use current Team USA athletes in advertising during the Rule 40 period. In order to take advantage of that flexibility, non-Olympic sponsors must sign up to a direct contractual relationship with the USOPC via the PSC. The terms of the PSC were released on January 14, and any non-Olympic sponsor that wants to work with any Team USA athlete has no choice but to accept such terms in order to take advantage of its relationship with such athlete during the Rule 40 period.

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