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(ASSER International Sports Law Series) Ian S. Blackshaw (Auth.) - Sports Marketing Agreements - Legal, Fiscal and Practical Aspects-T.M.C. Asser Press (2012)
(ASSER International Sports Law Series) Ian S. Blackshaw (Auth.) - Sports Marketing Agreements - Legal, Fiscal and Practical Aspects-T.M.C. Asser Press (2012)
Sports Marketing
Agreements: Legal,
Fiscal and Practical
Aspects
123
Prof. Ian S. Blackshaw
80 rue Principale
62310 Sains-les-Fressin
France
e-mail: [email protected]
ISSN 1874-6926
ISBN 978-90-6704-792-0 e-ISBN 978-90-6704-793-7
DOI 10.1007/978-90-6704-793-7
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
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Foreword
vii
viii Foreword
merits for dealing with sports disputes that are bound to arise under a wide range
of sports marketing agreements due to the large amounts of money involved and
put at risk. Coupled with this focus on ADR, throughout the book he reinforces the
need to draft clear and unambiguous agreements as another method to avoid
disputes.
Overall, Professor Blackshaws book contains many useful insights and
important information regarding a variety of sports marketing agreements that will
be of interest to readers from every aspect of the sports industry, including; sports
administrators, rights holders, marketers, advertisers, broadcasters and their pro-
fessional advisers, and others who are involved in the organization, promotion and
commercialization of sports events and personalities. This book will also become a
useful resource for academics, researchers, scholars and students in sports mar-
keting and law.
Congratulations to Professor Blackshaw on this important and highly practical
book. I recommend this book to individuals involved in sports marketing and
sports law around the world. I look forward to relying on it in my own sports law
research and courses in the future.
Sport is now big businessworth more than 3% of world trade and 3.7% of the
combined GNP of the 27 Member States of the European Union with a population
of some 500 millionand a whole new body of law and practice has grown up in
the field of the commercialisation of sports events and the exploitation of the
image and personality rights of elite athletes, all of which is commonly referred
toin the jargonas Sports Marketing.
Indeed, without the considerable revenues derived from various forms of Sports
Marketing, especially Sponsorship and Sports Broadcasting and New Media
Rightsmany major sporting events, such as the Olympic Games and the FIFA
World Cup, could not be organised and staged; and likewise many athletes could
not afford to train and participate in themmuch to the disappointment of sports
fans around the world.
The aim of this book, therefore, is to provide sports administrators and their
professional advisers, especially their lawyers, marketers, media advisers, adver-
tising, PR and sports agents, sports law students and researchers, as well as others
involved in the commercialisation, marketing and promotion of major sporting
events and sports personalities, with an overview of the legal, fiscal and practical
aspects of drafting and enforcing a wide range of standard Sports Marketing
Agreements and also particular sports-specific clauses, including so-called
Morality Clauses in Sports Image Rights and Endorsement Agreements, partic-
ularly relevant to the recent fall from grace of Tiger Woods and, indeed, of other
sports personalities.
The book also includes many samples of these Agreements, whose structures
and contents are discussed, analysed and explained in the text of the relevant
chapters. This special feature of the book will be of particular interest to legal
practitioners, sports administrators, agents and managers.
The book includes
many samples of these Agreements, whose structures and contents are dis-
cussed, analysed and explained in the text of the relevant chapters. This special
ix
x Authors Preface
1
For example, the Arsenal Football Clubs new Emirates Stadium in London.
Acknowledgments
The author of this book wishes to thank Professor Robert Siekmann, the director
of the TMC Asser Instituut International Sports Law Centre, The Hague,
The Netherlands, and Dr. Janwillem Soek, the Centres senior researcher, for all
their interest, encouragement and support for this book and its final editing;
Mr. Philip van Tongeren, the director of TMC Asser Publishing, for publishing the
book in the Asser International Sports Law Series; and my good friend and learned
colleague, Keith McGarry, for locating several of the precedents included in the
book; and last, but, by no means least, my wife Christine for all her patience and
understanding whilst I was writing the book.
Of course, in the time-honoured phrase, the responsibility for the book as a
whole, including any errors that may have crept into the final text, rests with the
author alone.
xi
Contents
1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
xiii
xiv Contents
16 EU Aspects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
16.1 Introductory Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
16.2 EU Competition Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433
16.3 Collective Selling of Sports TV Rights . . . . . . . . . . . . . . . . . 434
16.4 Territorial Restrictions in Sports Merchandising
and Licensing Agreements. . . . . . . . . . . . . . . . .......... 436
16.5 Options to Renew and Rights of First Refusal
in Sports Marketing Agreements Generally . . . . .......... 438
16.6 Concluding Remarks. . . . . . . . . . . . . . . . . . . . .......... 439
16.7 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 441
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
Abbreviations
xix
xx Abbreviations
Sport is now big business accounting for more than 3% of world trade. In the
European Union, sport has developed into a discrete business worth more than 2%
of the combined GNP of the 27 Member States comprising some 500 million
citizens.
Indeed, according to Sepp Blatter, the President of FIFA, the World Governing
Body of Footballand the Author of this Book would entirely agree with himsport
is now a product in its own right, and there is much to play for not only on but also
off the field of play. Whether this is a good thing as far as the integrity and so-called
Corinthian Values of sport is concerned is, of course, another matterand, per-
haps, a subject for another Book!
For example, licensing and merchandising rights in relation to major sports
events, such as the FIFA World Cup and the Olympic Games, are hot properties,
commanding high returns for the rights owners (licensors) and concessionaires
(licensees) alike.1
Again, the commercial exploitation of the image rights of famous sports per-
sons, such as David Beckham and Tiger Woods, is also big business.2
Likewise, sports broadcasting and new media rights are also money-spinners.
For example, the English FA Premier League sold its broadcasting rights for the
20102013 seasons for another record sum of 1.782 billion!
The commercialisation and marketing of sport, sports events, sports teams and
sports personalities has developed over the last 30 years or so into a discrete sports
marketing industry with its own peculiarities and characteristics.
1
See Chaps. 10 and 11 by Ian Blackshaw in Sports Law by Gardiner et al., 2006, Third
Edition, Cavendish Publishing, London.
2
See Sports Image Rights in Europe, Ian S. Blackshaw & Robert C. R. Siekmann (Eds.), 2005
TMC Asser Press, The Hague, The Netherlands.
Much of the pioneering work in the field of sports marketing was done by the
late Horst Dassler of the sports goods and clothing manufacturer, ADIDAS,
through the Swiss-based sports marketing company, International Sport Leisure
and Culture (ISL), which he founded.3 He revolutionised the marketing of the
Olympic Games, by introducing a unified and global approach, and other major
international sporting events, including basketball, football and track and field,
through the development of sponsorship, merchandising and other commercial and
promotional techniques. Another pioneer in sports marketing was the late Mark
McCormack, who founded International Management Group (IMG), which is still
going strong today. His particular forte was the promotion and marketing of major
sports personalities, such as the legendary golfer, Arnold Palmer, who was his first
client; and IMG was also Tiger Woods first Agency.
3
In the summer of 2001, ISL was declared Bankrupt by a Swiss Court with debts of reputedly
350 million. The insolvency of ISL was largely due to ever increasing guarantees given by the
Company in connection with the marketing of major international sports events, which it could
not fulfil.
Chapter 2
Negotiating Drafting and Interpreting
Sports Marketing Agreements: Some
General Legal and Practical Points
and Considerations
It has been generally well said, that if a commercial deal makes business sense, it
also makes legal sense and it is relatively easy, therefore, to draw up the corre-
sponding legal agreementand, where necessary, enforce it. And this is certainly
true of Sports Marketing Agreements, which come in all shapes and sizes. All the
commercial and financial arrangements that have been negotiated need to be
covered by clearly drafted provisions to avoid any legal challenges to the validity
of the Sports Marketing Agreement concerned on the grounds of its uncertainty.
Otherwise, the parties may find themselves with a void Agreement, which they
cannot rely on or legally enforce. Clarity is the name of the game!
Before dealing with the subjects of drafting and interpreting Sports Marketing
Agreements, which, as will be seen, go hand in hand, a word or two on the general
principles of negotiating contracts generally would not be inappropriate.
Many Books and Articles have been written and many Seminars and Courses
are offered on the subject of Successful Negotiating, particularly on Negotiating
Strategies and Tactics. A general article on this important aspect of Negotiating,
intended to whet the appetite of the reader of this Book to investigate the sub-
ject of Negotiating in more detail, is reproduced in the first appendix of this
Chapter (2.5.1), for general information and interest purposes. Likewise, in the
second appendix of this Chapter (2.5.2), the reader will find some general tips on
How to Negotiate Successfully.
1
The Complete Plain Words by Sir Ernest Gowers, first published in 1954 and never out of
print since!
6 2 Negotiating Drafting and Interpreting Sports Marketing Agreements
2
E. L. Piesse & J. Gilchrist Smith, Stevens and Sons Ltd, London, 2nd edition 1954.
3
Often called the objective method of interpretation.
4
See Street v Mountfort [1985] AC 809. On the contrary, under Civil Law in Continental
Europe, it is much easier to introduce and rely on parol evidence to clarify and explain any
ambiguity in an Agreement. This approach is often called the subjective method of
interpretation. In other words, what did the parties intend to say?
5
(1886) 17 QBD 275, at p. 286, CA.
2.3 General Principles of Drafting and Interpreting Sports Marketing Agreements 7
the term concerned will be construed in favour of the party against whom it was
unilaterally included. In other words, there was no negotiationit was a take it or
leave it situation. Again, the rule only applies where a Court determines that the
term is ambiguous. This often forms the basis of a contractual dispute.6
The rationale for the rule is to encourage the person who drafted the contract to
be as clear and explicit as possible and to take into account as many foreseeable
situations as possible.
Again, the rule reflects the Courts inherent dislike of standard form take-it-or-
leave-it contracts, known as contracts of adhesionin other words, these are
terms and conditions of business, take them or leave them! The Courts take the
view that such contracts are the result of unequal or unfair bargaining positions of
the parties. To mitigate these effects, the doctrine of contra proferentem gives the
benefit of any doubt to the party upon whom the contract was imposed.
This rule applies in numerous States of the US. For example, 1654 of the
California Civil Code, enacted in 1872, provides as follows:
In cases of uncertainty the language of a contract should be interpreted most strongly
against the party who caused the uncertainty to exist.
The rule particularly applies to clauses in Agreements that impose on one party
restrictions that are not clearly drafted and are, therefore, ambiguous, where the
party claiming the restrictions contends that they apply in a particular situation,
which is not expressly covered by the wording of the clause, is met with the
counter argument that such party could have made the position clear by expressly
providing for that situation but has failed to do so.
Again, there is a need for clear and precise drafting of Agreements.
A further point in the interests of clarity: the draftsman should use a definition/
interpretation clause, especially to define terms of art; and also use Annexes/
Appendices for technical information, which is particularly useful in Sports
Licensing and Merchandising Agreements (e.g. to define and calculate complex
royalties arrangements).
Drafting and interpretation of Agreements should always go hand in hand; they
are two sides of the same coin!
Also, it is advisable to include a dispute resolution clause, especially if the
parties wish to refer any disputes arising under, out of, or in relation to their Sports
Marketing Agreement to the Court of Arbitration for Sport (CAS), based in
Lausanne, Switzerland, in relation to which there are standard clauses provided by
the CAS for such purposes (see Chap. 17).
Another point: use so-called boiler-plate clauses carefully and only where,
according to the particular circumstances of the case, they are appropriate and add
something to the meaning and effect of the agreement.
6
See the English Court of Appeal case of Peak Construction (Liverpool) Ltd v McKinney
Foundation Ltd [1970] 1 BLR 111 and, in particular, the following remarks of Lord Justice
Salmon in his judgement at p. 121: The liquidated damages and extension of time clauses in
printed forms of contract must be construed strictly contra proferentem.
8 2 Negotiating Drafting and Interpreting Sports Marketing Agreements
For example, the so-called Entire Agreement clause, which expressly excludes
from the agreement, inter alia, any and all representations or warranties (both oral
and written) given before the agreement was signed and which may have induced
one of the parties to enter into the agreement in the first place. In this connection,
the High Court decision in the case of White v. Bristol Rugby Club7 is instructive.
White, a professional rugby player, signed a three-year contract to move from his
previous club to Bristol. The contract expressly stipulated that it was subject to an
entire agreement clause, so that no oral representations made in the course of
negotiations applied in respect of its express terms and conditions. White subse-
quently decided not to join Bristol and asserted that he had been told during the
pre-contract negotiations that he could opt out of the contract on the repayment of
the advance made to him by Bristol. The Court held that the entire agreement
clause precluded White from relying on an oral opt-out term.8
Furthermore, take care of express warranties and conditionsdistinguishing
between the two of them for legal purposesespecially when acting for the
grantor of the rights being licensed. A warranty, if breached, gives rise to a claim
in damages only, whereas a condition goes to the root of the contractin other
words, is a fundamental term of the contractand, if breached, entitles the other
party to terminate the contract and also claim damages.9 Expect to find in a Sports
Licensing and Merchandising Agreement, the following mutual warranties:
both parties are free to enter into the Agreement and have all the necessary
rights and title to do so;
neither party has entered into any conflicting/competing arrangements;
neither party shall hold itself out as representing the other or binding the
other;
neither party will do or omit to do or allow anything to be done to impair the
rights; and
the use of the rights granted in accordance with the terms of the Agree-
ment shall not cause the infringement of any intellectual property rights of
any third party.
The so-called severance clause is particularly useful in the case of a Sports
Merchandising Agreement containing territorial restrictions on the exploitation of
the rights granted (especially when part of a wider geographical licensing
programme), in order to avoid the whole of the Agreement being held to be void
on National or European Competition Law grounds. The standard severance clause
runs as follows:
If any provision or term of this Agreement shall be become or be declared in conflict
with Law or Public Policy or otherwise illegal invalid or unenforceable for any reason
7
[2002] IRLR 204.
8
For further comment on this case, see Blackshaw, Ian (2002) 5(1) Sports Law Bulletin, p. 3.
9
See, respectively, the English cases of Bettini v Gye (1876) 1 QBD 183 and Poussard v Spiers
(1876) 1 QBD 410.
2.3 General Principles of Drafting and Interpreting Sports Marketing Agreements 9
whatsoever such term or provision shall be divisible from this Agreement and shall be
deemed to be deleted from this Agreement provide always that if such deletion sub-
stantially affects or alters the commercial basis of this Agreement the parties shall
negotiate in good faith to amend and modify the provisions and terms of this Agreement
as may be necessary or desirable in the circumstances and the validity of the remainder
shall not in any event be affected by any severance taking effect pursuant to the terms of
this clause.
These two clauses are discussed in more detail in Chap. 19 on Boiler Plate
Clauses.
Also, having drafted your Agreement, do not forget to read it through as a
whole to make sure that it makes sense and there are no contradictions, incon-
sistencies or conflicts in the document. In other words, that it all hangs together
and makes sense. Self-editing of legal documents is absolutely essential in all
cases. In any case, the basic canon of interpretation of contracts is that the
contract must be read and construed as a whole.10
The other canons of construction, which should always be borne in mind when
drafting Agreements, are as follows:
Secondly, a contract must be construed objectively, according to the standards of a
reasonable third party who is aware of the commercial context in which the contract occurs.
Thirdly, a commercial contract must be given a commercially sensible construction;
a construction which produces a sensible result should be preferred over one which does
not. This means that when a court is faced with competing constructions, it should consider
10
Per Lord Drummond Young in Emcor Drake and Scull v Edinburgh Royal Joint Venture 2005
SLT 1233, who set out seven canons of construction as follows:
[13] First, a contractual provision must be construed in the context of the contract in which it is
found. The contract is construed as a whole and, if possible, all the provisions of the contract
should be given effect.
2.3 General Principles of Drafting and Interpreting Sports Marketing Agreements 11
which meaning is more likely to have been intended by reasonable businessmen. Fourthly,
in construing a formal commercial contract, which lawyers have drafted on behalf of
each of the parties, the court would normally expect the parties to have chosen their words
with care and to have intended to convey the meaning which the words they chose would
convey to a reasonable person. Fifthly, the Court must be alive to the position of both
parties and to the possibilities (a) that the provision may represent a compromise and (b)
that one party may have made a bad bargain. Sixthly the parties must give effect to the
parties bargain and must not substitute a different bargain from that which the parties have
made. Seventhly, it is permissible to have regard to the circumstances in which the
contract came to be concluded for the purpose of discovering the facts to which the contract
refers and its commercial purposes, objectively considered.11
One final point: be careful when, as is often the case, of including a general clause
in Sports Marketing Agreements, usually insisted upon by Sports Governing Bodies,
especially in Sports Sponsorship and Sports Licensing and Merchandising
Agreements, making the Agreement subject to the general prohibition of not doing
anything which may bring the Sport of into disrepute. This is a difficult
provision to interpret and apply, in practice, as it is essentially subjective in nature.
It is rather like including a general provision on public policy, which has been
described by one English Judge, namely Mr. Justice Burrough, as: a very unruly
horse, and when once you get astride it you never know where it will carry you. It may
lead you from the sound law. It is never argued at all but when other points fail.12
11
Para [13] Ibid.
12
Richardson v Mellish (1824), 2 Bing. 229, 252, 130 Eng. Rep. 294, at p. 303.
12 2 Negotiating Drafting and Interpreting Sports Marketing Agreements
2.5 Appendices
2.5.1 Appendix 1
By Jan Potgieter*
One of the most overlooked negotiation skills is the skill of selecting the most
appropriate negotiation strategy for your negotiation.
Are you approaching all your commercial negotiations with a standard approach?
Should you only use a win/win approach to negotiations?
Traditionally, negotiated outcomes can be classified into one of the following
categories:
Lose/Lose (all parties lose)
Win/Lose (I win and you lose)
Lose/Win (I lose and you win)
Win/Win (we both wincould also be described as compromise)
Win More/Win More (we unlock synergiescould also be described as
being collaborative)
Whilst I agree with the notion that a win/win approach is the only sustainable
way to gain competitive advantage, it is well worth considering how you would
practically apply this approach in todays global marketplace.
It would be short sighted to conclude that all negotiations are made equally and
should therefore be approached in the same way. It would be similar to say that
one nations culture & beliefs are the appropriate culture and therefore the stan-
dards that apply to that culture should be applied in interacting with people across
the world, irrespective of their background.
There is another dimension within the context of commercial negotiations that
should be consideredthe old economic dilemma of guns or butter.
The guns or butter story illustrates that with limited resources, organisations
and individuals are forced to make choices. In order to have more butter, one must
sacrifice guns and vice versa. In a practical sense this means that resources can
only be allocated in relation to the relative strategic importance of the activity at
issue.
In the case of negotiations that are considered strategic in importance to the
organisation, we are more likely to pursue a collaborative or compromising
approach. Conversely, when we deem the outcome of certain negotiations to have
a limited impact or no impact at all on the achievement of strategic organisational
*
Jan Potgieter is the Founder & CEO of Business Negotiation Solutions Limited. Reproduced
with the kind permission of the author.
2.5 Appendices 13
The flip side of this example is that if you are selling commodity type products,
you have to realise that before you will be in a position to negotiate, you must
create for yourself a base to do this fromhence the move towards providing
solutions.
How then do we decide which negotiation strategy to follow? Within a com-
mercial context, the following negotiation strategy options are available to us:
1. Avoiding negotiation altogether.
2. Engaging in a competitive negotiation where we seek to achieve our goals
aggressively.
3. Engaging in an accommodating negotiation where we seek to satisfy only the
needs of our counterparty to the exclusion of our own needs.
4. Using a compromising approach where we seek to satisfy some of our needs
and interests and some of the needs and interests of our counterparty.
5. Deploying a collaborative negotiation approach where we seek to satisfy all
our needs and interests in addition to satisfying all the needs and interests of
our counterparty.
The negotiation strategy that is appropriate will be determined by your answers
to the following three questions:
1. How strong are my alternatives to this particular negotiation?
2. How important is a long term relationship in the context of this negotiation?
3. How much time do you have available for negotiation?
It follows that in many cases, buyers would be pursuing an approach where they
are avoiding negotiation or being competitive and sellers would like to be com-
promising or collaborative.
How then to deal with this situation?
A key part of the negotiation preparation process should be focused on trying to
understand your counterparties needs, interests and objectives. This will assist you
in identifying the likely negotiation strategy that they will be pursuing.
If your counterparty is avoiding a negotiation, you can be sure that your
organisation is not being viewed as a contributor of competitive advantage to your
counterpartys organisation. Your challenge would in the first instance be to
reconsider the way that your products and services are packaged.
The aim should be to add to the achievement of the strategic business objectives
of your counterparty by identifying the components of your offering that matches
their strategic needs. If you find yourself at the wrong end of a competitive
negotiation, it would serve you well to be familiar with the most often used
negotiation tactics as you will most certainly be confronted with a tactical
approach.
Unless you are well versed in negotiation tactics, it will be difficult for you to
maximise the value that you will be able to extract from the negotiation as there is
no sincere interest on the part of your counterparty to satisfy any of your needs or
interests.
2.5 Appendices 15
2.5.2 Appendix 2
*
January 22nd, 2007. Reproduced with permission of Sales Renaissance, www.Sales
Renaissance.com.
16 2 Negotiating Drafting and Interpreting Sports Marketing Agreements
11. Never accept the first offer. Often, the other party will make an offer that he or
she thinks you will refuse just to see how firm you are on key issues. Chances
are, if you dont have to fight a little for what you want, you wont get the best
deal.
12. Deal from strength if you can. If thats not possible, at least create the
appearance of strength. If the other party thinks you have no reason to
compromise in your demands, he or she is less likely to ask you to.
13. Find out what the other party wants. Concede slowly, and call a concession a
concession. Giving in too easily tells the other party that you will probably be
open to accepting even more concessions.
14. Be cooperative and friendly. Avoid being abrasive or combative, which often
breaks down negotiations.
15. Use the power of competition. Someone who thinks its necessary to compete
for your business may be willing to give away more than he or she originally
intended. Sometimes just the threat of competition is enough to encourage
concessions.
Chapter 3
The Importance of Intellectual Property
Rights in Sports Event Marketing
In this chapter, we will explain the important part played by Intellectual Property
Rights (IPRs) in Sports Events Marketing. Indeed, without IPRs, it would be
impossible to market sports events, sports persons and sports teams, because sports
bodies and individuals would have nothing to commercialise or sell. No one is
going to pay for the grant of any rights to be associated with sports events or to
sponsor sports personalities and teams without those rights being recognised by
law and, as such, being legally enforceable against others that I have not been
granted those rights andeven more importantlyhave not paid anything at all
for the privilege of exploiting them commercially.
Not only do IPRs play an important role in Sports Events Marketing, but their
creative use is also crucial for the protection and commercialisation of the valuable
Image Rights of Sports Personalities. This is an important and complex topic in its
own right and is, therefore, dealt with separately in Chap. 12 on Sports Image
Rights Agreements.
Sport is big business and has become an industry in its own right worth more
than 3% of world trade and 2% of the combined GNP of the 27 Member States of
the European Union. So, there is much to play for both on and off the field of play.
As mentioned above, we will now see just how important IPRs are, especially
trademarks and copyright,1 and in what ways they can be used creatively for the
successful commercial exploitation of sports events, especially international ones.
For a broader and more extensive treatment of the subject of IPRs and their
1
Other IPRs, such as Patents, for example, are of limited application and importance in sports
law, although they do figureto a certain extentfor example; in connection with the
commercialisation of sports equipment and so-called sports movements such as the
Fosbury flop.
The basic problem Sports Events Marketers face under English Law lies in the fact
that there is no legally recognised right in a sporting event per se. See Victoria
Park Racing and Recreation Grounds Co Ltd v Taylor and Others [1937] 58
CLR 479. In that case, Latham CJ held that:
A spectacle cannot be owned in any ordinary sense of that word.
In other words, a Sports Event as such is not a species of property that can be
protected in its own right. So, Sports Event Marketers need to rely on other rights
that are legally recognised and protected.
Firstly, we will consider trademark protection, and then copyright protection.
Perhaps the most distinctive and recognised sports event mark in the world are the
five interconnected rings in blue, yellow, black, green and red symbolising the
world-wide reach of the Olympic Movement and the Olympic Gamesoften
referred to as the greatest sporting show on Earth!.
The Olympic Rings enjoy special legal protection at the international and
national levels around the world. At the international level, they are protected by
the so-called Nairobi Agreementthe Agreement on the Protection of the
Olympic Symbol of 1981.
At the national level in the UK and in connection with the staging of the
Summer Olympic Games in London in 2012, the Ringsas a bid pre-condition
are protected under the provisions of the London Olympic Games and Paralympic
Games Act of 2006. This Act also protects the use of the Olympic Motto and the
use of such expressions as the Games, Olympians, and Olympiad, as well as strap
lines in advertisements, such as Come to London in 2012 and Watch the games
here this Summer. All these measures are designed to provide Olympic brand
protection and combat various forms of so-called Ambush Marketing for the
benefit of the Official Sponsors of the Games, who pay mega bucks for a package
of top line sponsorship rights, against those who, in the advertising and
2
Reproduced in The International Sports Law Journal, ISLJ 2008/3-4, at pp. 146150 (both
inclusive).
3.2 Sports Events Marketing 19
promotion of their products and services, falsely and unfairly claim an association
or affiliation with the Games. However, these statutory measures have been
described by the UK Advertising Industry as draconian and threatening the right
of free speech, which includes commercial speech, that is, advertising!
As regards trademark protection, which is probably, in practice, the most
important form of legal protection of sports events, sports bodies and organisations
and also sports persons (particularly in relation to their image rights), the UK
Trade Marks Act of 1994 defines a trademark in section 1(1) as:
any sign capable of being represented graphically which is capable of distinguishing
goods or services of one undertaking from those of other undertakings. A trade mark may,
in particular, consist of wordsincluding personal namesdesigns, letters, numerals or
the shape of goods or their packaging.
This is a wide definition3 and so a trade mark may be granted in respect of, for
example; distinctive sounds, as in the case of the Australian Football League,
which has registered the sound of a football siren for football and associated
services.4
Thus, provided the basic legal requirement of distinctiveness is satisfied, it is
possible to register the names and associated logos of sports events as trademarks.
However, the name Euro 2000 failed the distinctiveness requirement and could
not be registered as a trademark per se. But, prima facie, combined with a dis-
tinctive logo, this event name could be registrable as a trademark. Likewise, an
attempt in 1998 to register the name World Cup also failed through lack of
distinctiveness. Again, combined with a distinctive and original logo, such a mark
can be protected as a trademark and also enjoys copyright protection as an artistic
work.5 Under section 4 (1)(a) of the UK Copyright Designs and Patents Act of
1988, a graphic work, irrespective of artistic quality qualifies for legal
protection as an artistic work under the Act.
Sports event mascots may also qualify, in principle, for registration as
trademarks, again subject to their being distinctive. And also as registered designs.
Although not an event mark, it would perhaps be remiss not to mention the
ADIDAS three stripes trademark case, in which the long-awaited Preliminary
Ruling by the Court of First Instance of the European Court of Justice (ECJ)
(C-102/07) was rendered on 10 April, 2008. This case, which well illustrates the
need for trademark protection in the sporting arena generally, concerned the extent
of the legal protection under Trademark Law within the European Union afforded
3
Notice that the list of examples is illustrative and not exhaustive.
4
For further information on trademarks generally and, in particular, their territorial nature and,
therefore, the need, in the case of Sports Events that are going to be commercially exploited
internationally, to register them widely around the world and also in the relevant use classes
under the Nice Classification of Goods and Services for Trademarks, see Chap. 10 entitled,
Intellectual Property Rights and Sport, by Ian Blackshaw in Sports Law by Gardiner et al.,
Third Edition, 2006 Cavendish Publishing, London.
5
See later.
20 3 The Importance of Intellectual Property Rights
to the three vertical stripes on sports and leisure goods produced and sold by
Adidas. The facts of this case were as follows:
The Parent Company of the Adidas Group, Adidas AG, is the proprietor of a
figurative trademark composed of three vertical, parallel stripes of equal width that
feature on the sides of sports and leisure garments in a colour which contrasts with
the basic colour of those garments. Its Subsidiary Company, Adidas Benelux BV,
holds an exclusive licence, granted by Adidas AG, to use this mark on garments
marketed in the Benelux countries.
Marca Mode, C&A, H&M and Vendex are competitors of Adidas, who also
market sports garments featuring two parallel stripes, the colour of which contrasts
with the basic colour of those garments.
Adidas took the competitors to Court in The Netherlands claiming the right
to prohibit the use by any third party of an identical or similar sign which
would cause confusion in the market place. Marca Mode and the other
defendants to these proceedings, however, claimed that they are free to place
two stripes on their sports and leisure garments for decorative purposes. Their
defence was based on the so-called requirement of availability, namely that
stripes and simple stripe motifs are signs which must remain available to all
and, therefore, they did not need the consent of Adidas to use the two-stripe
motif on their garments.
Adidas won at first instance; were overruled on appeal; and the case finally
came, on a point of law, before The Supreme Court of The Netherlands
(Hoge Raad der Nederlanden), which sought clarification from the ECJ on the
main point at issue, namely, whether the requirement of availability is an
assessment criterion for the purposes of defining the scope of the exclusive rights
enjoyed by the owner of a particular trademark.
The ECJ ruled, first, that the requirement of availability of certain signs is not
one of the relevant factors to be taken into account in the assessment of the
likelihood of confusion. The answer to the question as to whether there is that
likelihood must be based on the publics perception of the goods covered by the
mark of the proprietor on the one hand and the goods covered by the sign used by
the third party on the other. The national court must determine whether the average
consumer may be mistaken as to the origin of sports and leisure garments featuring
stripe motifs in the same places and with the same characteristics as the stripes
motif of Adidas, except for the fact that the competitors motif consists of two
rather than three stripes.
Secondly, the ECJ turned its attention to the specific protection granted to
trademarks with a reputation. It noted that the implementation of that protection
does not require the existence of a likelihood of confusion between the sign and
the mark. The mere fact that the relevant section of the public establishes a link
between the two is sufficient. Since the requirement of availability is extraneous
both to the assessment of the degree of similarity between the mark with a
3.2 Sports Events Marketing 21
reputation and the sign used by the third party and to the link which may be made
by the relevant public between that mark and the sign, it cannot constitute a
relevant factor for determining whether the use of the sign takes unfair advantage.6
Protection of a registered trademark lasts for an initial period of 10 years and,
provided the mark is used commercially and the renewal fees are paid, the
registration can be renewed for further periods of 10 years ad infinitum.
It is advisable, for trademark protection reasons, to use the device R in a circle
() after the trademark wherever and whenever it is used; or the legend: X is
registered trademark of ABC.
The difference between trademark protection and copyright protection lies in the
fact that in order to obtain the former, it is necessary to register the trademark
concerned in a public registry, whereas in the case of copyright in a protected
work, no such registration is generally required: copyright exists by operation of
law once the work is created and published.
As mentioned above, copyright protection exists and can be claimed in respect
of a composite event mark, which combines the name of the event incorporated in
a distinctive and original logo by the use, for example, of distinctive lettering and
colours. Such a logo is regarded for copyright purposes as an artistic work
irrespective of artistic merit, pursuant to the provisions of section 4 (1)(a) of the
UK Copyright Designs and Patents Act of 1988. The work need not, for example,
be a Picasso!
Copyright in an artistic work lasts for the life of the author plus 70 years
(see section 12 of the 1988 Act).
Wherever and whenever the logo appears, it is advisable to claim copyright in it
by using the international copyright notice, consisting of a C in a circle (), the
name of the copyright owner and the year of publication. For those countries (and
there are not that many of them) in the world that are not members of the Berne
Convention for the Protection of Literary and Artistic Works, the words all rights
reserved should be added.
Another point to note: generally speaking, there is no copyright in a slogan, as a
literary work. See the decision in Exxon Corporation v. Exxon Insurance
Consultants International Ltd.7 However, a slogan is registrable as a Trademark.
One final point worth mentioning is that there is some legal protection that can
be afforded to a sports event by registering the name of that event as a domain
6
For the full text of the ECJ Preliminary Ruling in the ADIDAS three stripes trademark case,
see: http://www.curia.europa.eu/jurisp/cgibin/form.pl?lang=EN&Submit=rechercher&numaff=C-
102/07.
7
[1982] RPC 69.
22 3 The Importance of Intellectual Property Rights
To illustrate the legal importance and practical application of IPRs in sport as well
as the general principles explained above, let us consider the following hypo-
thetical case study.
The International Volleyball Federation wishes to introduce a new event into
their calendar of events, entitled: European Beach Volleyball Grand Prix Series.
As will be seen from the above summary of the legal requirements for obtaining
trademark protection, the mark concerned must be distinctive and not generic.
Clearly the words Beach Volleyball, Grand Prix and Series are descriptive and not
inherently distinctive. Likewise, the word European is geographical and also,
again, descriptive of the event. Descriptive and geographical marks are expressly
excluded from registration as trademarks according to the provisions of
section 3(1)(c) of the UK Trade Marks Act 1994. The legal position elsewhere is
the same. Trademark protection of the name per se is not, therefore, legally
possible.
So what can be done? There is, in fact, a way round these legal obstacles and
that is by incorporating the event name in a distinctive logo and thereby creating,
what is known in the jargon, as a composite mark. The logo may be rendered
distinctive by the use of distinctive lettering or script and also colours.
Also, as mentioned, the logo qualifies for copyright protection as an artistic
work under the provisions of section 4 (1)(a) of the UK Copyright Designs and
Patents Act, 1988.
Thus, by turning the event name into a distinctive and original logo, trademark
and copyright protection has been secured. Quod erat demonstrandum!
8
Cybersquatting is the abusive registration and bad faith use of an Internet domain name
(an Internet addressoften described as an electronic trademark).
9
www.wipo.int
10
By Ian S. Blackshaw, 2009, TMC Asser Press, The Hague, The Netherlands, at pp. 193235.
3.3 Hypothetical New Sports Event Case Study 23
It should be stressed that, without these specific legal protections, the event
name and the event itself cannot be commercialized as, for example, sponsors and
merchandisers cannot be granted any IPRs that they can use against infringers and
counterfeiters, including so-called Ambush Marketing. Major sports events are
very attractive to those companies and business organisations who wish to be
associated with them without having to pay the mega sums for the privilege of
doing so!
Of course, someone needs to design the event logo and this raises some
copyright issues too, depending upon whether the logo is created in-house or by an
outside graphic artist. Many International Sports Governing Bodies have their own
in-house dedicated marketing departments, which include creative staff who can
do this work. In that case, the copyright belongs to the Sports Body concerned.
Under the provisions of section 11(2) of the 1988 Copyright Act, where a
literary, dramatic, musical or artistic work, or, indeed a film is made by an
employee in the course of his/her employmentin other words, it is part of the
employees job description/specificationthe employee is the first owner of any
copyright in the work. It should be noted that, for this result to apply, it is not
sufficient that the work (or the film) is made by an employee; it must be made in
the course of that employees employment. Thus, if by agreement with the
employer, an employee produces the logo in his/her spare time and outside the
terms and scope of his/her employment, the first copyright owner of the work is
the employee. The legal distinction between an employee and an outside con-
tractor is that, in the former case, the employee is employed under the terms of a
contract of service and, in the latter, the person concerned is acting under a
contract for services. This is not a matter of semantics: it is a substantive matter
of fact in each case! It is, therefore, incumbent on the employer to make the
copyright position crystal clear in writing, to avoid any litigation. See the case of
Ray v. Classic FM [1998], unreported.
Thus, where the sports event logo is produced outside by an independent
contractora graphic artist or design studiosection 11(2) (above) does not
apply and the first copyright owner is the outside contractor.
Of course, in the latter case where the logo is commissioned, there not only
needs to be a Commissioning Agreement, but also a Copyright Assignment from
the outside party to the Sports Body concerned.
Let us now take a brief look at the legal requirements that need to be met where the
logo is commissioned from and produced by someone outside the Sports Body
concerned.
Clearly, in such a case, the copyright needs to be transferred to the Sports
Body from the outside body. Under the provisions of section 90(3) of the
Copyright Designs and Patents Act, 1988, the Assignment must be made in
24 3 The Importance of Intellectual Property Rights
writing in order to transfer the legal and beneficial title to the copyright in the
work concerned. However, the 1988 Act does not prescribe any other formal-
ities or any particular form of words. Thus, the document may be quite simple,
but, in order to be legally effective, a clear and express intention to assign/
transfer the copyright in the work concerned must be evidenced from the words
used in the Assignment.
Thus, a copyright licence or authorisation will not, generally, be implied purely
on the basis that, in the particular circumstances of the case, it may be reasonable
to do so: there must be a clear intention of the parties. See Blair v. Osborne &
Tomkins.11
In practice, a fairly detailed document needs to be drawn up along the lines of
the basic general precedent of a Copyright Assignment which is set out in the
Appendix to this article.
As will be seen, it is advisable, inter alia, to include in the Assignment some
warranties of title on the part of the Author who is assigning the copyright in
the sports event logo; to define the rights in the logo that are being assigned
(this is where a Definitions Clause comes in very useful) and also to include an
Indemnity Clause in relation to any breaches on the part of the Author of any
of the provisions of the Assignment Agreement, particularly obligations.
Precision in drafting, as mentioned above, is the name of the game, from a legal
point of view.
11
[1971] 2 WLR 503.
3.6 Appendix 25
3.6 Appendix
Copyright Assignment*
THIS ASSIGNMENT is made the .. day of . 20[.]
Between
(1) .............................................................................................................................
whose registered office is at
(Author)
(2) .............................................................................................................................
whose registered office is at
(Company)
Recitals
Operative Provisions
1. Definitions
1.1 The following definitions shall apply in this Agreement:
Act means the Copyright Designs and Patents Act 1988 as amended
from time to time
Fee means [ ]
Right means any and all vested, contingent and/or future copyrights,
any and all accrued rights of action and any and all other rights of
intellectual property including but not limited to database rights, design
rights, rights in respect of registered designs, rights in respect of trade
marks (including but not limited to make application for registration of
any of the same) and any other applicable rights of whatever nature in
and in relation to the Work whether now known or created in the future
to which the Author is entitled by virtue of any of the laws in force in any
part of the Territory for the entire duration of any such rights (including
any renewal or extension thereof)
Term means the full period of copyright in the Work including all
renewals, reversions and extensions of copyright in the Work arising
under the laws in force in each part of the Territory
*
By I.S. Blackshaw.
26 3 The Importance of Intellectual Property Rights
4.2 The Author irrevocably and unconditionally waives all rights in respect
of the Work to which he is now or may be entitled under the Copyright
Design and Patents Act 1988 ss77 and 78 and any similar rights in force
during the Term in any part of the Territory
5. Alterations to the Work
5.1 The Author irrevocably and unconditionally waives all moral rights in
the Work to which he is entitled under section 80 of the Act and any
similar rights to which he is entitled in any part of the Territory
5.2 The Company reserves the right to alter the Work as in its discretion it
sees fit and the Author consents to any and all such alterations
[Boilerplate Clauses]
[Execution Clauses]
Exhibit 1
Chapter 4
Letters of Intent, Heads of Agreement
and Preliminary Agreements
All these kinds of Preliminary Agreements, as far as their legal nature and validity
are concerned, are, of course, subject to the general principles of the Law of
Contract. One difficulty, under the English Common Law of Contract, is the
principle that an agreement to agree is not a legally binding contract1 and this
principle may catch Letters of Intent, especially clauses in them that provide that
the parties will agree something in the future. For example, clauses that require the
parties to negotiate and agree the detailed terms to be included in a formal Sports
Marketing Agreement governing and formalising their commercial and financial
arrangements may not be legally binding and, therefore, unenforceable.
Another problem under the English Law of Contract, is the requirement for the
terms and conditions of the parties agreement to be clear, unambiguous and
settled, particularly the main terms and conditions such as price. Such vague terms
may be held by a Court to be void for uncertainty and, therefore, unenforceable. It
is essential, therefore, in the case of Heads of Agreement that they will containat
the very leastdetails of the rights granted, whether they are exclusive or non-
exclusive, the term for which they and the territory in which they are granted, and,
of course, the price to be paid for them.
A further problem is the need, under the English Law of Contract, if an
agreement is to be legally valid and enforceable, for there to be a clear intention by
the parties to create legal relations between them. Did the parties wish and
manifest that wish for the obligations to be legally binding on them, or are we
dealing only with a simple wish list? This point is particularly relevant to Letters
of Intent. Clearly, any Letters of Intent which are expressly made subject to
contract will not be legally binding until the contemplated contract is entered into
by the parties. However, even without such a pre-condition, it may not be entirely
clear whether the Letter of Intent is legally binding or not. They are, generally
speaking, from this particular legal point of view, quite problematic in practice.
1
See R&D Construction Group Ltd v Hallam Land Management Ltd [2009] CSOH 128 and the
leading English cases on agreements to agree referred to therein. In para [34] of his judgement,
Lord Hodge expressed the matter thus: Where terms which the law treats as essential or which
the parties have agreed are essential for their bargain have not been agreed and cannot be
objectively ascertained, the contract is unenforceable.
See also the remarks of Millet LJ in the English case of Little v Courage Ltd [1994] 70 P&CR,
469, at p. 476:
An undertaking to use ones best endeavours to obtain planning permission or an export licence
is sufficiently certain and capable of being enforced: an undertaking to use ones best endeavours
to agree, however, is no different from an undertaking to agree, to try to agree, or to negotiate
with a view to reaching agreement; all are equally uncertain and incapable of giving rise to an
enforceable legal obligation.
4.2 Legal Nature and Validity 31
It has been well said judicially in the English High Court case of British Steel
Corporation v Cleveland Bridge and Engineering Co Ltd2 that:
. There can be no hard and fast answer to the question in whether a letter of intent is a
binding agreement: everything must depend upon the circumstances of the particular
case.
In other words, each case must be construed and judged on its own particular
facts and circumstances. In view of the importance of this decision, the full text of
the Judgement of Mr Justice Goff (as he then was) is set out in Appendix 1 (4.4.1)
to this Chapter.
Again, the intention to exclude legal relations must be clear and express if the
document is not to be legally binding on the parties and, therefore, unenforceable.
A so-called backhanded attempt to include wording in an agreement in order to
avoid legal relations being created will not succeed. See the English case of
Edwardss v Skyways Ltd.3 Again, in view of its importance, the text of the
Judgement of Mr Justice Megaw (as he then was) is set out in Appendix 2 (4.4.2)
to this Chapter.
A short form and a long form of a general precedent of a Letter of Intent is set
out, for illustrative purposes only, in Appendices 35 (4.4.34.4.5) to this Chapter.
Preliminary Agreements create their own particular legal problems. Whilst
there is usually a clear intention for the parties to create legal relations between
them, whether or not a Preliminary Agreement is otherwise legally enforceable
will depend upon the detailed terms and conditions included in them.
The legal situation elsewhere in Europe, under Civil Law principles of contract,
may well be different.
2
[1984] 1 All ER 504.
3
[1964]1 All ER 494.
32 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
except where the parties agree explicitly on such effect (which would make it a
regular contract regarding the issue of its legal binding nature).
Nevertheless, a Letter of Intent may lead to civil liability under the principle of
culpa in contrahendo4 if certain conditions are met. Such special circumstances
are, for example, if the negotiations on a future contract are initiated but the
initiator of the contract negotiations had, in fact, never the intention to conclude
such a contract. In general, the culpa in contrahendo liability covers all
the unlawful behaviour in connection with the contract negotiations.
Article 22 of CO sets forth the legal effects of Preliminary Agreements and the
legal requirements for such agreements. Under Swiss Law, such an Agreement
may be binding either for one or for all parties involved in the agreement and may
also be concluded in favour of a third party. Article 22 para 2 CO states that in
cases where the Law, for the protection of the contracting parties, requires a
certain form for the validity of the future contract, this form requirement also
applies to the preliminary contract. Apart from these special rules, the general
rules of Swiss Contract Law apply to preliminary agreements. Therefore, such
agreements may not be of an illegal or have an excessive binding nature.
Article 22 of CO provides (in English translation) as follows:
E. Contents of the contract
IV. Preliminary Contract
Art. 22
By contract, the parties may validly agree to conclude a contract in the future.
Where the law, for the protection of the contracting parties, requires a certain form
for the validity of the future contract, the form requirement also applies to the
preliminary contract.
Thus, in the case of Preliminary Agreements under Swiss Law, the parties must
negotiate in good faith and, if the Preliminary Agreement, lacks certain provisions
to make it complete, the parties can be required to continue and complete the
negotiationsagain, in good faithin order to finalise and conclude a legally
binding Agreement.
4
This Doctrine holds that damages should be recoverable against a party whose blameworthy
conduct during negotiations for a contract brought about its invalidity or prevented its perfection.
In other words, the party concerned did not negotiate in good faith with the intention of finalising
the contract.
4.3 Appendices 33
4.3 Appendices
In the Appendices of this Chapter, the reader will find the Judgements of two
important and relevant English Cases, as well as some General Precedents, for
comparative and illustrative purposes.
Irrespective of their legal validity and enforceability, all these kinds of preliminary
documents, therefore, may be useful and valuable as a kind of aide memoire to
guide any future negotiations and the drafting of what I might call the real
Agreementthat is, the one that will fully represent the deal that the parties have
made and, therefore, the one that will be legally binding on them. In other words,
Heads of Agreement, Letters of Intent and Preliminary Agreements will be binding
in honour only and, as one English Judge once reputedly remarked when faced
with moral arguments in a case: this is a Court of Law, not morals!
Against that strict legal background, under English Law at least, these kinds of
preliminary agreements do serve a practical and useful commercial purpose to a
certain extent, and, presumably, that is why they seem to be popular, especially in
connection with Sports Marketing Agreements of various kinds, and are entered
into by the parties in the first place.
34 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
4.4 Appendices
4.4.1 Appendix 1
Robert Goff J
The defendants successfully tendered for the fabrication of steel work in the con-
struction of a building. The design required steel beams to be joined to a steel frame
by means of steel nodes. The plaintiffs, who were iron and steel manufacturers,
were approached by the defendants to produce a variety of cast-steel nodes for the
project. The plaintiffs prepared an estimated price based on incomplete information
and sent it to the defendants by telex on 9 February 1979. After further discussions
as to the appropriate specifications and technical requirements the defendants sent a
letter of intent to the plaintiffs on 21 February which (i) recorded the defendants
intention to enter into a contract with the plaintiffs for the supply of cast-steel nodes
at the prices itemised in the telex of 9 February, (ii) proposed that the contract be on
the defendants standard form, which provided for unlimited liability on the part of
the plaintiffs in the event of consequential loss due to late delivery, and (iii)
requested the plaintiffs to commence work immediately pending the preparation
and issuing to you of the official form of sub-contract. The plaintiffs would not
have agreed to the defendants standard form of contract and intended to submit a
formal quotation once they had the requisite information. The plaintiffs did not
reply to the letter of intent since they expected a formal order to follow shortly and
instead they went ahead with the manufacture of the nodes. The defendants then
indicated for the first time that they required delivery in a particular sequence.
4.4 Appendices 35
There were further discussions as to the proper specifications to be met in the man-
ufacture but no final agreement was reached. The specifications were then changed
extensively by the defendants after the first castings proved to be unsatisfactory. On 16
May the plaintiffs sent the defendants a formal quotation on their standard form,
quoting a significantly higher price with delivery dates to be agreed. The defendants
rejected the quotation and again changed the specifications. The plaintiffs went ahead
with the manufacture and delivery of the nodes and eventually, at a meeting between
the parties on 1 August, the parties reached provisional agreement on the basis of the
quotation given on 16 May but they were unable to agree on other contract terms such
as progress payments and liability for loss arising from late delivery. By 28 December
all but one of the nodes had been delivered, delivery of the remaining node being held
up until 11 April 1980 due to an industrial dispute at the plaintiffs plant. The
defendants refused to make any interim or final payment for the nodes and instead sent
a written claim to the plaintiffs for damages for late delivery or delivery of the nodes
out of sequence. The amount claimed far exceeded the quoted price. The plaintiffs
thereupon sued for the value of the nodes on a quantum meruit, contending, inter alia,
that no binding contract had been entered into. The defendants counterclaimed for
damages for breach of contract for late delivery and delivery out of sequence and
claimed a right of set-off, contending, inter alia, that a binding contract had been
created by the various documents, especially the letter of intent, and by the plaintiffs
conduct in proceeding with the manufacture of the nodes.
HeldA contract could come into existence following a letter of intent, either by
the letter forming the basis of an ordinary executory contract under which each
party assumed reciprocal obligations to the other, or under a unilateral contract (i.e
an if contract) whereby the letter amounted to a standing offer which would result
in a binding contract if acted on by the offeree before it lapsed or was validly
withdrawn. On the facts, an executory contract had not been created by the
plaintiffs acceding to the defendants request in the letter of intent that they begin
work on the nodes pending the issue of a formal sub-contract, since at that stage
the parties were still negotiating over material contractual terms such as price and
delivery dates and it was therefore impossible to say what those terms were.
Furthermore, in all the circumstances an if contract had not been created by the
plaintiffs carrying out the work, since that work was at that stage being done
pending a formal sub-contract, the terms of which were still in a state of negoti-
ation, in particular with regard to the plaintiffs liability for consequential loss and
delay, so that it was impossible to determine the extent of the liability. Instead, the
parties had confidently expected a formal contract to be concluded and the letter of
intent had requested the plaintiffs to commence work, which they had done in
order to expedite performance under the anticipated contract. Since the parties had
ultimately been unable to reach final agreement on the price or other essential
terms, the contract was eventually not entered into and therefore the work per-
formed in anticipation of it was not referable to any contractual terms as to
payment or performance. In those circumstances, the defendants were obliged to
pay a reasonable sum for the work done pursuant to their request. In any event,
36 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
assuming an if contract had been concluded, the plaintiffs would not have been
under a contractual obligation to complete the contract work and a fortiori would
not have been under any obligation to complete within a reasonable time. More-
over, even if the plaintiffs had been under a contractual obligation to complete the
work within a reasonable time, on the facts, they would not have been in breach of
that obligation. Accordingly, the plaintiffs were entitled to succeed on their claim
and the defendants failed in their counterclaim and set-off (see p. 509 j to p. 510
f and j to p. 511 f and j to p. 512 a and e f, post).
Notes
For quantum meruit claims, see 9 Halsburys Laws (4th edn) paras 692696, and
for cases on the subject, see 12 Digest (Reissue) 145148, 836850.
For rights to set-off and counterclaim for breach of contract, see 9 Halsburys Laws
(4th edn) para 608.
For unilateral contracts, see ibid paras 206, 239, 248, 252.
Cases referred to in judgment
Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 All ER 716, [1975]
1 WLR 297.
Foley v Classique Coaches Ltd [1934] 2 KB 1, [1934] All ER Rep 88, CA.
Hillas (W N) & Co Ltd v Arcos Ltd (1932) 147 LT 503, [1932] All ER Rep 494, HL.
Lacey (William) (Hounslow) Ltd v Davis [1957] 2 All ER 712, [1957] 1 WLR 932.
May & Butcher Ltd v R (1929) [1934] 2 KB 17, [1929] All ER Rep 679, HL.
OTM Ltd v Hydranautics [1981] 2 Lloyds Rep 211.
Pantland Hick v Raymond & Reid [1893] AC 22, sub nom Hick v Raymond & Reid
[18914] All ER Rep 491, HL.
Sanders & Forster Ltd v A Monk & Co Ltd [1980] CA Transcript 35.
Turriff Construction Ltd v Regalia Knitting Mills Ltd (1971) 222 EG 169.
Action
By a writ issued on 11 July 1980 the plaintiffs, British Steel Corp (BSC), sued the
defendants, Cleveland Bridge and Engineering Co Ltd (CBE) for 229,8324370
being the total price outstanding for 137 cast steel nodes manufactured, sold and
delivered to CBE between 12 July 1979 and 11 April 1980. By their points of defence
and counterclaim, CBE admitted liability in the sum of 200,853 but claimed a right
of set-off in respect of the sum of 867,735.68 which they counterclaimed against
BSC as damages for breach of contract. The facts are set out in the judgment.
Philip Naughton and John Grace for BSC.
Richard Seymour for CBE.
Cur adv vult
4.4 Appendices 37
existence, was to deliver the goods in the requested sequence and within a rea-
sonable time.
The first issue is concerned therefore with an analysis of the legal relationship
between the parties. The second issue is whether, if CBE are right in their sub-
mission that there was a binding contract as alleged by them, BSC were in breach
of that contract in delivering the goods late and out of sequence. This latter issue is
concerned primarily with consideration of the various events and difficulties which
occurred in production of the nodes by BSC, and deciding whether, in the light of
these events, BSC failed to deliver the goods within a reasonable time as alleged
by CBE.
It is right that I should record at this stage that, on the arguments as finally
developed before me, BSC abandoned an argument that a binding contract was
concluded between the parties, on BSCs standard terms, at a meeting held on 1
August 1979 and also that CBE did not press an argument that there was a contract
contained in or evidenced by certain documents. I have no doubt that both parties
were right in deciding not to pursue these respective arguments.
Having outlined the issues before the court, I shall now proceed to set out the
background facts of the case.
The plaintiffs are, as I have said, BSC; but in this case I am concerned with a
profit-making division of BSC, the Forges, Foundries and Engineering Group
(FFE). The head office of FFE is at their River Don works at Sheffield; in or near
Sheffield they have not only offices, but also a large foundry and a laboratory.
Another medium-sized foundry within FFE is at their Craigneuk works at
Motherwell, in Scotland; it is with this foundry that I am chiefly concerned in this
case. Craigneuk (as I shall call it), although forming part of FFE, has its own
general manager and sales manager, and enters into contracts without reference to
the head office of the group in Sheffield.
CBE are a company concerned with steel fabrication. Their works are at
Darlington and at Port Clarence on Teesside. They form part of the Trafalgar
House group of companies.
A company associated with CBE, Cementation (Saudi Arabia) Ltd, in which
Trafalgar House hold a substantial shareholding, was concerned in the construction
of a bank (known as the Sama Bank) at Dammam in Saudi Arabia. It was intended
that CBE should be subcontractors for the fabrication of steel work for the bank.
The bank was to be of an unusual construction. The main body of the building was
to be suspended from four columns, and was to have a steel lattice-work frame.
There was a requirement for nodes for use at the centres of the lattice work,
providing the points at which diagonal steel beams would join the lattice work on
the surface of the building.
[His Lordship then made the following findings of fact. CBE discovered that
BSC had been working on the development of cast steel nodes and accordingly
contacted BSC. Thereafter discussions took place between the parties with a view
to a contract being entered into for the manufacture of the cast steel nodes for CBE
by BSC. BSC prepared an estimated price based on the incomplete information
4.4 Appendices 39
which was then available to it and on 9 February 1979 sent the following telex to
CBE:
STEEL CASTINGS FOR NODES NODE PLATE DRG 773/73 1225 EACH NODES
DRG 773/41 941 EACH PROPOSED PRICE FOR REMAINING ITEMS 1300 PER
TONNE. PRICES WOULD REMAIN FIXED FOR DURATION OF CONTRACT.
CONTRACT WILL BE SUPPLIED IN UNMACHINED CONDITION FINISHED TO
NORMAL FOUNDRY STANDARDS. MATERIAL, HEAT TREATMENT AND
INSPECTION WOULD BE IN ACCORDANCE WITH INFORMATION CONTAINED
IN OUR TELEX DATED 29 JAN 79. PATTERN COSTS 6500 LUMP SUM DELIV-
ERY: COMMENCE DELIVERY IN 10 WEEKS FROM RECEIPT OF ORDER AND
FINAL DRAWINGS AT A RATE TO BE AGREED.
further discussions and negotiations between the parties over the specifications to
be met in the manufacture of the nodes and, because little had been agreed, Mr
Kain, BSCs works manager, sent the following telex to CBE on 4 April:
THERE ARE FAR TOO MANY UNRESOLVED QUERIES WE ARE VERY
CONCERNED THAT THIS COULD RESULT IN INCREASED COST AND DELAYS
AT LATER STAGES DURING MANUFACTURE. WE ARE THEREFORE NOT
PREPARED TO PROCEED WITH THIS CONTRACT UNTIL WE HAVE AN
AGREED SPECIFICATION COVERING ALL THESE POINTS WHICH HAS BEEN
RATIFIED BY CLEVELAND BRIDGE.
Thereafter there were further discussions between the parties and although a
number of matters remained unresolved it was agreed that BSC should go ahead
with the manufacture of the first cast. The first experimental nodes cast were not
satisfactory and CBE required extensive alterations to the patterns and specifica-
tions. The parties met on 15 May and apparently agreed on a further revision of the
draft specifications. On 16 May BSC sent CBE a formal quotation on their stan-
dard form, quoting a price of 212,100 with the date of delivery to be agreed. This
was a substantial increase in the prices quoted in BSCs telex of 9 February and
CBE decided that the increased price was unacceptable. As a result BSC offered to
reduce the price by 9%. Meanwhile BSC did all it could to make up production
time lost by the rejection of the first cast, and to expedite delivery of the nodes.
CBE continued to query the reasons for the price increase and again raised
questions over the specifications (which had been revised by CBE on a further
occasion since 15 May). Further problems were experienced by BSC in the pro-
duction of suitable nodes but these were eventually overcome. On 6 July at a
heated meeting between the parties BSC urged CBE to accept the quotation of 16
May and to place a formal order with them. CBE responded by tabling a contract
on its standard form based on the prices contained in BSCs telex of 9 February.
This contract was rejected by BSC. Despite the failure to agree on a price or other
contract conditions BSC went ahead with the casting and delivery of nodes in
stages in an effort to comply with CBEs requirements for delivery. At a meeting
between the parties on 1 August 1979 provisional agreement was reached on the
price contained in BSCs quotation of 16 May but the parties were unable to agree
at that stage on the other contract conditions, especially those relating to conse-
quential damages and a proposed performance bond.
BSC agreed to submit a revised delivery schedule and to attempt to speed up
delivery of the completed nodes. Further disruption was caused to production by an
industrial dispute and by further technical difficulties. Eventually both of these
difficulties were overcome. Deliveries continued despite a failure to agree the
contract terms, especially the mode of payment, and despite CBEs failure to make
any interim payment. By 28 December BSC had delivered all but one of the 137
nodes, the last node being held back by BSC to ensure that payment would be made
by CBE. A steelworkers dispute began on 1 January 1980 which lasted several
weeks with the result that the last node was not delivered to CBE until 11 April
1980. In the meantime CBE refused to make any payment to BSC until the nodes
4.4 Appendices 41
were on site in Saudi Arabia, on the basis that CBE would not be paid by the main
contractors until that time. That was inconsistent with CBEs earlier assurances
about progress payments. After a stormy meeting between the parties on 6 Feb-
ruary, BSC heard nothing more from CBE about payment, apart from a self-
exculpatory letter from CBE two days later, until in April 1980 CBE submitted a
written claim to BSC for damages for late delivery, which claim far surpassed
BSCs claim for the price of the goods delivered. CBEs written claim for damages
precipitated BSCs own action for damages commenced by writ on 11 July 1980 in
which CBE counterclaimed and claimed a right of set-off. His Lordship continued:]
Such are the facts of the case. I now turn to the first issue in the case, which is
concerned with the legal basis for BSCs claim for payment, and in particular
whether there was any binding contract between BSC and CBE and, if so, what
were its terms. As I have already indicated, it is the contention of CBE that there
was such a contract; whereas BSC contends that they are entitled to payment in
quasi contract.
As I indicated at the beginning of this judgment, CBE alleged two alternative
contracts in their points of defence and counterclaim; but the first of these alter-
natives was not pursued. Their remaining submission was that the agreement
between the parties was comprised in the request by CBE to BSC, in their letter
dated 21 February 1979, that BSC proceed to manufacture the nodes (viz the
request contained in CBEs letter of intent), the notification by CBE to BSC in
their telex dated 27 February 1979 as to the sequence in which delivery of the
nodes was required, and the conduct of BSC in proceeding with the manufacture of
the nodes. As I have also indicated, although BSC allege in their pleadings that an
agreement was reached between the parties, on BSCs standard conditions, at the
meeting of 1 August 1979, the allegation was rightly abandoned by BSC in the
course of the hearing, and they advanced their claim for payment simply on
the basis of quasi contract.
Now the question whether in a case such as the present any contract has come
into existence must depend on a true construction of the relevant communications
which have passed between the parties and the effect (if any) of their actions
pursuant to those communications. There can be no hard and fast answer to the
question whether a letter of intent will give rise to a binding agreement: everything
must depend on the circumstances of the particular case. In most cases, where
work is done pursuant to a request contained in a letter of intent, it will not matter
whether a contract did or did not come into existence, because, if the party who has
acted on the request is simply claiming payment, his claim will usually be based
on a quantum meruit, and it will make no difference whether that claim is con-
tractual or quasi-contractual. Of course, a quantum meruit claim (like the old
actions for money had and received and for money paid) straddles the boundaries
of what we now call contract and restitution, so the mere framing of a claim as a
quantum meruit claim, or a claim for a reasonable sum, does not assist in clas-
sifying the claim as contractual or quasi contractual. But where, as here, one party
is seeking to claim damages for breach of contract, the question whether any
contract came into existence is of crucial importance.
42 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
As a matter of analysis the contract (if any) which may come into existence
following a letter of intent may take one of two forms: either there may be an
ordinary executory contract, under which each party assumes reciprocal obliga-
tions to the other; or there may be what is sometimes called an if contract, i.e.
a contract under which A requests B to carry out a certain performance and
promises B that, if he does so, he will receive a certain performance in return,
usually remuneration for his performance. The latter transaction is really no more
than a standing offer which, if acted on before it lapses or is lawfully withdrawn,
will result in a binding contract.
The former type of contract was held to exist by Mr Edgar Fay QC, the official
Referee, in Turriff Construction Ltd v Regalia Knitting Mills Ltd (1971) 202 EG
169; and it is the type of contract for which counsel for CBE contended in the
present case. Of course, as I have already said, everything must depend on the facts
of the particular case; but certainly, on the facts of the present case (and, as I
imagine, on the facts of most cases), this must be a very difficult submission to
maintain. It is only necessary to look at the terms of CBEs letter of intent in the
present case to appreciate the difficulties. In that letter, the request to BSC to
proceed immediately with the work was stated to be pending the preparation and
issuing to you of the official form of sub-contract, being a sub-contract which was
plainly in a state of negotiation, not least on the issues of price, delivery dates, and
the applicable terms and conditions. In these circumstances, it is very difficult to
see how BSC, by starting work, bound themselves to any contractual performance.
No doubt it was envisaged by CBE at the time they sent the letter that negotiations
had reached an advanced stage, and that a formal contract would soon be signed;
but, since the parties were still in a state of negotiation, it is impossible to say with
any degree of certainty what the material terms of that contract would be. I find
myself quite unable to conclude that, by starting work in these circumstances, BSC
bound themselves to complete the work. In the course of argument, I put to
counsel for CBE the question whether BSC were free at any time, after starting
work, to cease work. His submission was that they were not free to do so, even if
negotiations on the terms of the formal contract broke down completely. I find this
submission to be so repugnant to common sense and the commercial realities that I
am unable to accept it. It is perhaps revealing that, on 4 April 1979, BSC did
indeed state that they were not prepared to proceed with the contract until they had
an agreed specification, a reaction which, in my judgment, reflected not only the
commercial, but also the legal, realities of the situation.
I therefore reject CBEs submission that a binding executory contract came into
existence in this case. There remains the question whether, by reason of BSC
carrying out work pursuant to the request contained in CBEs letter of intent, there
came into existence a contract by virtue of which BSC were entitled to claim
reasonable remuneration; i.e. whether there was an if contract of the kind I have
described. In the course of argument, I was attracted by this alternative (really on
the basis that, not only was it analytically possible, but also that it could provide a
vehicle for certain contractual obligations of BSC concerning their performance,
e.g. implied terms as to the quality of goods supplied by them). But the more I
4.4 Appendices 43
have considered the case, the less attractive I have found this alternative. The real
difficulty is to be found in the factual matrix of the transaction, and in particular
the fact that the work was being done pending a formal sub-contract the terms of
which were still in a state of negotiation. It is, of course, a notorious fact that, when
a contract is made for the supply of goods on a scale and in circumstances such as
the present, it will in all probability be subject to standard terms, usually the
standard terms of the supplier. Such standard terms will frequently legislate, not
only for the liability of the seller for defects, but also for the damages (if any) for
which the seller will be liable in the event not only of defects in the goods but also
of late delivery. It is a commonplace that a seller of goods may exclude liability for
consequential loss, and may agree liquidated damages for delay. In the present
case, an unresolved dispute broke out between the parties on the question whether
CBEs or BSCs standard terms were to apply, the former providing no limit to the
sellers liability for delay and the latter excluding such liability altogether.
Accordingly, when, in a case such as the present, the parties are still in a state of
negotiation, it is impossible to predicate what liability (if any) will be assumed by
the seller for, e.g. defective goods or late delivery, if a formal contract should be
entered into. In these circumstances, if the buyer asks the seller to commence work
pending the parties entering into a formal contract, it is difficult to infer from the
buyer acting on that request that he is assuming any responsibility for his per-
formance, except such responsibility as will rest on him under the terms of the
contract which both parties confidently anticipate they will shortly enter into.
It would be an extraordinary result if, by acting on such a request in such cir-
cumstances, the buyer were to assume an unlimited liability for his contractual
performance, when he would never assume such liability under any contract which
he entered into.
For these reasons, I reject the solution of the if contract. In my judgment, the
true analysis of the situation is simply this. Both parties confidently expected a
formal contract to eventuate. In these circumstances, to expedite performance
under that anticipated contract, one requested the other to commence the contract
work, and the other complied with that request. If thereafter, as anticipated,
a contract was entered into, the work done as requested will be treated as having
been performed under that contract; if, contrary to their expectation, no contract
was entered into, then the performance of the work is not referable to any contract
the terms of which can be ascertained, and the law simply imposes an obligation
on the party who made the request to pay a reasonable sum for such work as has
been done pursuant to that request, such an obligation sounding in quasi contract
or, as we now say, in restitution. Consistently with that solution, the party making
the request may find himself liable to pay for work which he would not have had to
pay for as such if the anticipated contract had come into existence, e.g. preparatory
work which will, if the contract is made, be allowed for in the price of the finished
work (cf William Lacey (Hounslow) Ltd v Davis [1957] 2 All ER 712, [1957] 1
WLR 932). This solution moreover accords with authority: see the decision in
Lacey v Davis, the decision of the Court of Appeal in Sanders & Forster Ltd v A
Monk & Co Ltd [1980] CA Transcript 35, though that decision rested in part on a
44 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
concession, and the crisp dictum of Parker J in OTM Ltd v Hydranautics [1981] 2
Lloyds Rep 211 at 214, when he said of a letter of intent that its only effect would
be to enable the defendants to recover on a quantum meruit for work done pursuant
to the direction contained in the letter. I only wish to add to this part of my
judgment the footnote that, even if I had concluded that in the circumstances of the
present case there was a contract between the parties and that that contract was of
the kind I have described as an if contract, then I would still have concluded that
there was no obligation under that contract on the part of BSC to continue with or
complete the contract work, and therefore no obligation on their part to complete
the work within a reasonable time. However, my conclusion in the present case is
that the parties never entered into any contract at all.
In the course of his argument counsel for BSC submitted that, in a contract of
this kind, the price is always an essential term in the sense that, if it is not agreed,
no contract can come into existence. In support of his contention counsel relied on
a dictum of Lord Denning MR in Courtney & Fairbairn Ltd v Tolaini Bros
(Hotels) Ltd [1975] 1 All ER 716 at 719, [1975] 1 WLR 297 at 301 to the effect
that the price in a building contract is of fundamental importance. I do not however
read Lord Denning MRs dictum as stating that in every building contract the price
is invariably an essential term, particularly as he expressly referred to the sub-
stantial size of the contract then before the court. No doubt in the vast majority of
business transactions, particularly those of substantial size, the price will indeed be
an essential term, but in the final analysis it must be a question of construction of
the particular transaction whether it is so. This is plain from the familiar trilogy of
cases which show that no hard and fast rule can be laid down but that the question
in each case is whether, on a true construction of the relevant transaction, it was
consistent with the intention of the parties that even though no price had been
agreed a reasonable price should be paid (May & Butcher Ltd v R (1929) [1934] 2
KB 17, [1929] All ER Rep 679, W N Hillas & Co Ltd v Arcos Ltd (1932) 147 LT
503, [1932] All ER Rep 494 and Foley v Classique Coaches Ltd [1934] 2 KB 1,
[1934] All ER Rep 88). In the present case, however, I have no doubt what-
soever that, consistently with the view expressed by Lord Denning MR in
Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd, the price was indeed an
essential term, on which (among other essential terms) no final agreement was ever
reached.
It follows that BSC are entitled to succeed on their claim and that CBEs set-off
and counterclaim must fail. But, in case this matter should go further, I propose,
having heard the evidence and the submissions of the parties, to express my
opinion on the question whether, if BSC were under any obligation to deliver the
goods in a reasonable time, they were in breach of that obligation. In this part of
my judgment, I do not propose to consider any question of delivery out of
sequence; an obligation to deliver in a certain sequence could only have arisen
from an express term in a contract between the parties, and I am satisfied that no
such express term can possibly be said to have been agreed in the present case; and
if any court should hereafter form a different view, the difference between the
actual and contractual order of delivery can be ascertained without difficulty.
4.4 Appendices 45
Solicitors: Lovell White & King (for BSC); A Paul Powell, Darlington (for CBE).
4.4.2 Appendix 2
HeldWhere, as here, there was agreement and the subject of agreement related
to business affairs, the onus of establishing that the agreement was not intended to
create legal relations, which was on the perty setting up that defence, was a heavy
onus (see p. 500, letter a, post); and the defendant company had failed to discharge
it for the following reasons
(i) the words ex gratia were used simply to indicate that the party agreeing
did not admit any pre-existing liability on the defendant companys part, and
the more use of the phrase ex gratia as part of a promise to pay (even if
prompted by the purpose of avoiding the incidence of income tax) did not
show that the promise, when accepted, should have no binding effect in law
(see p. 500, letters d and f, and p. 501, letter d, post), and
(ii) the use of the words approximating to on behalf of the defendant company
did not render the terms of the agreement too vague to be enforceable, for at
most the phrase would connote on the evidence a rounding off of a few
pounds downwards to a round figure (see p. 501, letter f, post).
Observations of Scrutton LJ and Atkin LJ in Rose and Frank Co v J R Crompton &
Bros Ltd. ([1924] All ER Rep at pp. 240, 252) considered.
Notes
As to the negativing of the intention of the parties to enter into legal relations, see
8 Halsburys Laws (3rd Edn) 54, para 90, note (a) and p. 69, para 118, note (h); as
to uncertainty in the terms of an agreement, see ibid, pp. 83, 84, para 144; and for
cases on the subject, see 12 Digest (Repl) 2123, 312.
Action
In this action the plaintiff Peter John Edwards, an aircraft pilot, formerly
employed by the defendant company, Skyways Ltd claimed payment of a
sum equal to the total of the defendant companys contributions on his
behalf to the aircrew superannuation fund of which he had been a
48 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
Megaw J
read the following judgment. The plaintiff, Captain Peter John Edwards, was
employed as an aircraft pilot by the defendant company, Skyways from June,
1955, until 31 March 1962, with the rank of first officer for the first few months,
and thereafter as captain. His terms of employment provided for three months
notice of termination. On 26 January 1962, the defendant company, being in
financial difficulty and not having sufficient work to continue to employ all its
staff, wrote a letter to the plaintiff, at the same time sending similar letters to other
persons. The plaintiff was told that it would be necessary to declare a redundancy
of approximately 15% of our pilot strength, and he was given three months
notice. He was offered alternative employment either as a captain based at Lympne
Airport with a subsidiary company (which would have involved him in moving his
home) or as a first officer on the defendant companys four engined fleet (which
would have involved reduction of pay and status).
4.4 Appendices 49
The question of the threatened redundancy was taken up with the defendant
company by the British Air Line Pilots Association, to which the plaintiff
belonged. The association took the view that certain procedure which had been
agreed in 1948 in the National Joint Council with regard to redundancies had not
been observed by the defendant company. A meeting took place between repre-
sentatives of the association and representatives of the defendant company on 8
February 1962. It is not in dispute that the representatives of the association were
the duly authorised agents of the plaintiff, and that the representatives of the
defendant company had full authority from that company in respect of all that was
done and agreed at that meeting affecting the plaintiff. Two days before the
meeting, on 6 February at a meeting of the board of directors of the defendant
company, a resolution had been passed in these terms:
The board approved that the secretary be empowered in his discussions with the British
Air Line Pilots Association to agree should circumstances require to the payment to
redundant aircrew members of ex gratia amount approximating to the companys con-
tributions for each member of the Pension and Superannuation Fund.
It appears that the defendant company realised that the association would be
seeking to secure some form of compensation for its members who were being
declared redundant and that it was accordingly authorising the secretary, in
advance, to deal with the question when it arose. The secretary of the defendant
company, Mr David John Davies, himself drafted the resolution. It was based on
what had been done at the time of an earlier redundancy in the defendant company
in 1959, when, after discussions with the association, the defendant company had
paid sums to redudant aircrew staff, the sums being at any rate closely related in
amount to the total superannuation contributions made by the company in respect
of the particular redundant employee.
At the meeting on 8 February 1962, the defendant companys representatives
included, amongst others, Mr Davies, the secretary, and Mr Lees, the personnel
officer. The associations representatives included, amongst others, Mr Follows,
who was then the secretary, and Captain Clink, the chairman of the associations
local committee with the defendant company, who was also an employee of the
defendant company. The plaintiff himself was not present. As to what happened at
the meeting, so far as is relevant to the issues in this action, there is no real dispute
on any matter of substance. Each of the witnesses who gave evidence before me
was truthful and fair in giving his recollection. Such minor differences as there
were in their accounts of the conversations are not on matters of any real signif-
icance. I need not recount much of what took place at the meeting. The substance
of it is accurately summarised in a document headed Notes, which was prepared
the next morning by Mr Follows with the assistance of Captain Clink, on the basis
of manuscript notes made during the meeting. There is no doubt that everyone
present at the meeting thought that all major difficulties had been resolved and that
various matters of principle had been agreed. I need mention only one of the
matters discussed and agreed.
50 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
The plaintiff (and there were other pilots in a similar position) would have been
entitled under his terms of service, if he left his employment with the defendant
company for any reason other than dismissal for misconduct, to take a paid-up
pension; that is, a pension which would, without further contribution to be made by
anyone, become payable when he reached the normal retiring age stated in the
pension scheme. It would be calculated by reference to the total contributions paid,
up to date, by himself and by the defendant company on his account. Alternatively,
the plaintiff would be entitled to withdraw his own contributions in cash.
Mr Follows had in mind what had happened in the 1959 redundancy when the
company had agreed to pay, and had paid, redundant pilots sums of money
equivalent, at least broadly, to the companys pension contributions in respect of
them, in addition to the pilots own contributions which they were contractually
entitled to withdraw. He, therefore, at the meeting, asked that similar financial
compensation should be paid by the defendant company, on this occasion. Mr
Davies, on behalf of the defendant company, having already in anticipation
received his boards authority, quickly and readily agreed.
This agreement is recorded as follows in notes to which I have referred:
The following general principles were then accepted in relation to the redundancy and
consequential matters;
The pilots affected were informed of the various decisions and agreements in a
publication called Newsletter, addressed by the association to its members on 9
February 1962. The agreement as to the defendant companys contributions is
there recorded as follows:
After considerable discussion, the following points were agreed between the company
and the association: 4. To those pilots who are finally declared redundant, the company
will make an ex-gratia payment equivalent to their (the companys) own contributions to
the Provident or Pension Scheme.
There is reason to believe that Mr Davies, the secretary, saw this Newsletter,
and did not challenge the accuracy of what was there recorded. Mr Davies own
account of what he said on the point at the meeting is as follows:
Having the boards authority, I said we would make ex gratia payments approximating to
the companys contributions for those pilots who chose to take their contributions rather
than paid-up pension policies.
interpretation of what he said. Mr Lees agreed that everyone left the meeting with
a clear impression that the defendant company would pay an amount equal to the
defendant companys contribution. I am satisfied that that is the substance of what
was understood and agreed when the meeting ended.
The issue in this action is whether, as a result of what was agreed at the
meeting, the plaintiff when he decided not to accept any of the offered alternatives
but to leave the companys service and withdraw his own pension contributions,
acquired a legal right, to be paid by the defendant company a sum equal to the
contributions which they had paid to the pension fund on his behalf. The plaintiff
says that there was a legally binding contractual right. The defendant company say
that, while there may have been a moral right, or an obligation binding in honour,
there was not a legally enforceable right. Before considering the issue, I should
complete my outline of the history of the matter.
The plaintiff, not desiring to accept the defendant companys offer of continuing
employment with the various disadvantages involved, sought and obtained other
employment to begin on 1 April 1962, and the defendant company agreed that the
plaintiff should leave their service on 31 March before the full three months
notice had run. On 15 April 1962, the plaintiff wrote to Mr Roberts, the assistant
secretary of the defendant company, asking for information to enable him to make
up his mind about the option between, on the one hand, his undoubted legal right
to take the paid-up pension, and, on the other hand, the right which it had been
agreed (whether or not as an obligation binding in law) that he should have, to
withdraw his own contributions and receive what he described (no doubt following
the wording of the Newsletter which he had seen) as, the amount of the ex
gratia payment which the company proposes to make in the event of my taking the
cash refund. Mr Roberts replied on 17 April giving him approximate figures:
a paid-up policy of about 180 per annum at the age of 50; his own contributions
of approximately 630, less tax of approximately 60; and The ex gratia payment
will be approximately half as much again as your own contributions, but as this is
purely ex gratia there is no question of tax. The following day the plaintiff wrote
to Mr Roberts telling him how he had decided to exercise what he believed to be
his option: I have decided to take the cash refund of my contributions, with the
companys ex gratia payment. The plaintiff, with the complete frankness which
was characteristic of his evidence, said that he could not now be sure whether he
would have exercised the option the same way, if he had not though that the
defendant company were going to pay him that which they had agreed to pay in
respect of their own contributions. He would certainly have thought much more
deeply about it. He might still have decided to take the immediate cash provided
by the refund of his own contributions.
On 1 May 1962, the defendant company sent the plaintiff a cheque for 609 1s,
in respect of his own contributions. On 2 May 1962, the very day after that
payment had been made to, and accepted by, the plaintiff in the belief that a further
sum was to followbecause the defendant company had so promisedthe board
of directors of the defendant company met and passed another resolution. It was in
these terms:
52 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
It was resolved that the companys previous decision to make ex gratia payments to
redundant aircrew be rescinded because of the large number of staff involved and in view
of the position that the companys contributions to the scheme which were returnable to
the trustees could not, under the rules of the scheme, be utilised directly by the company.
Mr Ryland and Mr Davies would draft a letter to the staff concerned explaining the
position and Mr Davies would arrange with the insurance company for an extension of the
option period to be made for all aircrew members who had already opted for cash so that
they could reconsider their decision.
is that the parties do not intend that their agreement shall give rise to legal relations. This
intention may be implied from the subject-matter of the agreement, but it may also be
expressed by the parties. In social and family relations such an intention is readily implied,
while in business matters the opposite result would ordinarily follow. But I can see no
reason why, even in business matters, the parties should not intend to rely on each others
good faith and honour, and to exclude all idea of settling disputes by any outside inter-
vention with the accompanying necessity of expressing themselves so precisely that
outsiders may have no difficulty in understanding what they mean. If they clearly express
such an intention I can see no reason in public policy why effect should not be given to
their intention.
In the same case, Atkin LJ said ([1924] All ER Rep at p. 252; [1923] 2 KB
at p. 293):
To create a contract there must be a common intention of the parties to enter into legal
obligations, mutually communicated expressly or impliedly. Such an intention ordinarily
wii be inferred when parties enter into an agreement which in other respects conforms to
the rule of law as to the formation of contracts. It may be negatived impliedly by the
nature of the agreed promise or promises, as in the case of offer and acceptance of
hospitality, or of some agreements made in the course of family life between members of a
family as in Balfour v. Balfour. If the intention may be negatived impliedly it may be
negatived expressly.
In the present case, the subject-matter of the agreement is business relations, not
social or domestic matters. There was a meeting of mindsan intention to agree.
There was, admittedly, consideration for the defendant companys promise.
I accept the propositions of counsel for the plaintiff that in a case of this nature the
onus is on the party who assets that no legal effect was intended, and the onus in a
heavy one. Counsel for the plaintiff also submitted, with the support of the well-
known textbooks on the law of contract, (Anson, and Cheshire And Fifoot), that
the test of intention to create or not to create legal relations is objective. I am not
sure that I know what that means in this context. I do, however, think that there are
grave difficulties in trying to apply a test as to the actual intention or understanding
or knowledge of the parties; especially where the alleged agreement is arrived at
between a limited liability company and a trade association; and especially where
it is arrived at a meeting attended by five or six representatives on each side.
Whose knowledge, understanding or intention is relevant? But if it be the
objective test of the reasonable man, what background knowledge is to be
imputed to the reasonable man, when the background knowledge of the 10 or 12
persons who took part in arriving at the decision no doubt varied greatly between
one another? However that may be, the defendant company say, first, as I
understand it, that the mere use of the phrase ex gratia by itself, as a part of the
promise to pay, shows that the parties contemplated that the promise, when
accepted, should have no binding force in law. They say, secondly, that even if
their first proposition is not correct as a general proposition, nevertheless here
there was certain background knowledge, present in the minds of everyone, which
gave unambiguous significance to ex gratia as excluding legal relationship.
As to the first proposition, the words ex gratia do not, in my judgment, carry
a necessary, or even a probable, implication that the agreement is to be without
54 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
legal effect. It is, I think, common experience amongst practitioners of the law that
litigation or threatened litigation is frequently compromised on the terms that one
party shall make to the other a payment described in express terms as ex gratia
or without admission of liability. The two phrases are, I think, synonymous.
No one would imagine that a settlement, so made, is unenforceable at law. The
words ex gratia or without admission of liability are used simply to indicate-
it may be as a matter of amour propre, or it may be to avoid a precedent in
subsequent cases-that the party agreeing to pay does not admit any pre-existing
liability on his part; but he is certainly not seeking to preclude the legal
enforceability of the settlement itself by describing the contemplated payment as
ex gratia. So here, there are obvious reasons why the phrase might have been
used by the defendant company in just such a way. They might have desired to
avoid conceding that any such payment was due under the employers contract of
service. They might have wished-perhaps ironically in the event-to show, by using
the phrase, their generosity in making a payment beyond what was required by the
contract of service. I see nothing in the mere use of the words ex gratia, unless
in the circumstances some very special meaning has to be given to them, to
warrant the conclusion that this promise, duly made and accepted, for valid con-
sideration, was not intended by the parties to be enforceable in law.
The defendant companys second proposition seeks to show that in the cir-
cumstances here the words ex gratia had a special meaning. What is said is this:
When a payment such as this is made by an employer to a dismissed employee the
question whether it is subject to income tax in the hands of the recipient is
important; it was understood by the defendant company and by the association,
and by all their respective representatives at the meeting, that if the companys
payment were made as the result of a legally binding obligation, it would be
taxable in the hands of the recipient; whereas, if it were to be made without legal
obligation on the part of the company, it would not be taxable. (It was not argued
before me whether this assertion is right or wrong in law. It was said by the
defendant company that that was quite immaterial; what was material was that the
parties so believed.) Thus, it is said, the phrase ex gratia was used, and was
understood by all present to be used, deliberately and advisedly as a formula to
achieve that there would be no binding legal obligation on the company to pay,
and hence to save the recipient from a tax liability. It is said that the offer was
accepted by the association with full knowledge and understanding of these
matters. Hence, it is said, the agreement by tacit consent, a consent evidenced by
the use of the words ex gratia against this background of common under-
standing, was an agreement from which legal sanction and consequences were
excluded. In my judgment, that submission also fails because the evidence falls far
short of showing that this supposed background of avoidance of tax liability was
present as an important element in the minds of all, or indeed any, of the persons
who attended the meeting of 8 February 1962, or, if this be something different, in
the minds of the defendant company or of the association; or that they all, or any of
them, directed their minds to the significance of the words ex gratia which is
now suggested on behalf of the defendant company. The question of tax liability,
4.4 Appendices 55
and the possible influence thereon of the use of the words ex gratia, may indeed
have been present in some degree, and as one element, in the minds of some of the
persons present at the meeting. That, however, is far from sufficient to establish
that the partiesboth of themaffirmatively intended not to enter into legal
relations in respect of the defendant companys promise to pay.
Lastly, the defendant company say that, even if the agreement were otherwise
in all respects a binding agreement, it is not enforceable because its terms are too
vague. This is founded on the submission that the precise words used by Mr Davies
at the meeting were approximating to; that these precise words are a part of the
agreement; that they leave a discretion to the defendant company; that therefore
there is no enforceable agreement, and they can refuse to pay anything. I have
already indicated my conclusion on the evidence as to what was indeed agreed at
the end of the meeting. If this be right, there is nothing in this point. Even if it were
wrong, I do not think that English law provides that in such circumstances the
plaintiff would be entitled to nothing. At most approximating to, if that were the
contractual terms, would on the evidence connote a rounding off of a few pounds
downwards to a round figure. If a contract for the sale of goods is valid and binding
when it provides for about 1,000 tons in sellers option, or 1,000 tons, up to ten
per cent more or less in buyers option, it would seem hard to justify treating such
a contract as this as a nullity, and I do not think that the law so requires.
I do not have to consider a further issue of alleged failure to mitigate damages,
as this was expressly abandoned by the defendant company at the hearing. I shall
hear submissions as to the precise form which the order of the court should take.
Solicitors: Evan Davies & Co (for the plaintiff); McKenna & Co (for the defendant
company).
4.4.3 Appendix 3
71.3
Letter of intent: simple form*
(date)
(address)
Dear Sirs,
Letter of Intent
I refer to the discussions which have been taking place between (name) of (name of
company) (Company A) and (name) of (name of company) (Company B)
relating to a proposed strategic alliance between Company A and Company B, and
in particular to the document entitled (title) and dated (date) and prepared by
(name) (the Proposal).
I am pleased to confirm that it is our intention to negotiate the terms of an
agreement between Company A and Company B under which, among other
matters:
1 Company A would sponsor a [three year] programme of research to be con-
ducted by Company B as outlined in the Proposal [and based on the costs set
out in the Proposal]; and
2 Company A would own, and have the exclusive right of commercialisation of,
any compounds discovered or developed in the programme of research [on
terms to be agreed].
It is our intention to negotiate and execute such an agreement no later than
(number) months from the date of this letter. If this is also Company Bs intention,
please would you arrange for the enclosed copy of this letter to be signed by an
authorised representative of Company B and returned to us at the above address.
I hope this letter gives you the assurances you need, but please note that this letter
should not be construed as creating any legal obligations.
Yours faithfully
(signature)
For and on behalf of Company A Limited
Acknowledged and agreed for and on behalf of Company B through its authorised
signatory:
(signature)
*
Source: Lexis Nexis; reproduced with permission.
58 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
4.4.4 Appendix 4
71.4*
Letter of intent: longer form
Subject To Contract
(date)
From:
To:
Dear (name)
Re: (specify)
This Letter of Intent for the above referenced matter is intended to outline the
general terms which are being discussed between (name of company) (Company
A) and (name of company) (Company B) in relation to those services which are
attached hereto as Tables 1 and 2. [These tables are extracted from the (name)
Plan Proposal for (insert details) which was presented to Company B in (insert
details)]. At the present time, Company A and Company B are engaged in dis-
cussions and negotiations regarding timelines, budget, management services and
contract terms, Company As initial proposal for which was contained in the
aforementioned development plan, with a view to reaching a final agreement
between the parties.
It is agreed that the confidentiality of Company B proprietary information
regarding the above referenced matter that may be disclosed to Company A during
these negotiations will be maintained in accordance with the confidentiality
agreement signed between Company B and Company A and subsequently in
accordance with the master study agreement when signed. Should Company B and
Company A not reach an agreement the documents will be returned and the terms
of the aforementioned confidentiality agreement will be honoured. Notwith-
standing this confidentiality as part of this letter of intent, the proposed agreement
between the parties will contain a detailed section addressing this subject which
will include a provision that the ownership of the data generated in this study will
remain with Company B.
Company B and Company A will continue discussions and negotiations in good
faith to execute an agreement within [90 days] of the execution of this letter of
intent. [Company B and Company A recognise that this letter of intent is necessary
to expedite this matter due to the desired project timelines. Company B and
Company A agree and recognise that a signed agreement is necessary to proceed
with the study beyond the initial [90-day] period set forth above.]
Upon execution of this letter of intent, Company B will advance money to
Company A in the amount of [(plus VAT)2] on account of any and all charges
Company A shall reasonably determine appropriate and necessary, in consultation
with Company B [and in accordance with the schedule of activities (Table 3)
*
Source: Lexis Nexis; reproduced with permission.
4.4 Appendices 59
We thank you for the confidence you have placed in Company A and we look
forward to working with you. Except as provided above, Company B shall not
have any financial obligations to Company A or any third party under or in
connection with this letter of intent. Either party may terminate this letter of intent
60 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
and/or their negotiations at any time without liability except as described under
heads 1 and 2 above.
IN WITNESS of which the parties to this letter of intent have signed below
through their authorised representatives.
1 This is an example of a letter of intent in which some terms are binding, and
some of the envisaged services are to be provided while negotiations are
continuing and before a final binding agreement is made.
2 Where an advance payment is made it will normally create a tax point for
VAT purposes where it is envisaged that the advance will form part of the
total payment: see Customs and Excise Comrs v Richmond Theatre Man-
agement Ltd [1995] STC 257.
3 Where VAT has been paid on the advance and repayment is due, an amount
equal to the VAT charged must be repaid to Company B and a VAT credit
note should be issued to Company B. The amount of the VAT credited
should not be reduced by virtue of the expenses or administration fee
deducted from the advance.
4.4 Appendices 61
4.4.5 Appendix 5
Letter of IntentSponsorship*
Dear Sirs,
This letter sets out on the basis referred to at clause 10 the principal terms upon
which [ ] (the Company) makes its offer to
[ ] (you/your/yourself and corporate expressions) in
relation to your proposed sponsorship of the Tournament.
1. Consideration
1.1 We propose to offer you the various sponsorship rights set out in clause
2 of this letter (the Rights) in relation to your proposed sponsorship
of the Tournament due to take place during the period commencing on
[ ] and concluding on [ ] (the
Term) for a fee of [ ] (the Fees) exclusive of
VAT which will be paid as follows:
Payment Date Amount
2. Rights
During each season of the Term, subject to payment of the Fees, the
Company is prepared to offer the sponsorship and ancillary rights in
relation to the Tournament set out below.
2.1 Designations
2.1.1 The exclusive right for you to describe yourself as Official
Sponsor of the Tournament;
2.1.2 The non-exclusive right for you to describe yourself as Official
Partner of the Company; and such other designations as may be
agreed;
2.1.3 The exclusive right for you to describe the [service/product]
(the Product) the Official [Service/Product] of the Tourna-
ment and/or the Official [Service/Product] of the Company;
2.1.4 The exclusive right for you to describe yourself as the Official
Supplier of [Service/Product] to the Tournament and/or the
Official Supplier of [Services/Product] to the Company
*
Source: Lexis Nexis; reproduced with permission.
62 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
7. Confidentiality
7.1 In consideration of the mutual agreement of the parties to the proposed
transaction, by countersigning and returning the enclosed copies of this
letter, it is agreed that neither party or any of their respective directors,
officers, employees or professional advisers shall disclose the contents
of this letter or any discussions between the Company and you (and for
the fact that this letter or such discussions have taken or are taking
place) to any third party apart from their own professional advisers who
will be under the same obligation to keep all aspects of the proposed
transaction confidential or as required by law or the provisions of any
relevant stock exchange.
8. Exclusivity
8.1 The Company understands that you will incur substantial costs and
expenses in proceeding with due diligence investigations and
instructing advisers to draft and negotiate documents, which it would
not do if it did not have exclusive negotiating rights for a reasonable
period of time. Accordingly, in consideration for such costs and
expenses to be incurred by you, the Company agrees by countersig-
nature of this letter:
8.1.1 not to enter into, directly or indirectly, or continue discussions or
negotiations or enter into any agreement or arrangement with any
person other than you regarding the grant of the rights referred to
at clause 2.1.1 and not to invite or solicit any such discussions
agreement or arrangement;
8.1.2 not to withdraw from negotiations with you in respect of the
subject matter of this letter save where the Company has proper
commercial reason for so doing. For the purpose of clarification
an without prejudice to the generality of the foregoing the
Company shall be deemed to have proper commercial reasons
where you have indicated that any of the terms set out herein is
no longer acceptable to you or have sought materially to add to
the rights to be granted to you pursuant to the Sponsorship over
and above the terms referred to herein or by way of substitution
for terms set out herein; in each case for a period of
[ days] from the date of this letter (the Exclusivity
Period) unless the Company and you agree in writing to the
contrary. The Company agrees to supply to you such information
as it reasonable requests in connection with the subject matter of
this letter.
9. Costs
9.1 Subject to paragraph 9.2, each party will pay the costs and expenses
incurred by it in connection with the negotiation, entering into and
66 4 Letters of Intent, Heads of Agreement and Preliminary Agreements
Yours faithfully
.
For and on behalf of
Read and agreed.
.
For and on behalf of
Chapter 5
Confidentiality and Non-Disclosure
Agreements
5.5 Appendix
1
By I.S. Blackshaw.
5.5 Appendix 71
Having organised a sporting event, including having appointed the host country
and entered into a corresponding agreement with the Local Organising Committee,
it is necessary to manage and stage the sporting event in such a way that the event
organisers, managers, sponsors, merchandisers and all other stakeholders associ-
ated with it commercially and financially reap the maximum returns from their
involvement and investment in it. It can be said, therefore, without contradiction,
that, without good management, the sports event concerned will not be able to
deliver these benefits. The more successful the event is from a sporting point of
view, the more successful it is from a business and financial point of view.
Normally, rather than managing the sporting event itself, the event organiser
appoints someone else, usually on an exclusive basis and in a defined geographical
territory, to carry out, under its close supervision and direction, the actual man-
agement and staging of the event. This is usually a Sports Marketing/Management
Agency, with the required expertise and experience, especially in relation to major
international sporting events, such as International Management Group (IMG), the
pioneering Sports Marketing Agency founded by Mark McCormack, the godfa-
ther of sports marketing.
As will be seen from the above account, the management of a major sporting event
is a complex affair and operation, which requires a great deal of planning and
detailed arrangements in order to ensure the success of the event for all the
stakeholders concerned.
All these arrangements need to be faithfully and fully reflected in the provisions
of the corresponding Sports Event Management Agreement and great care should,
therefore, be taken in drafting the Agreement.
As always in Sports Marketing Agreements, attention to detail and precision are
the name of the game!
76 6 Sports Event Management Agreements
6.4 Appendix
Services for the Event. If the Event Manager does receive or hold such
monies it must immediately inform the Rights Holder hold such monies to
the Rights Holders order as bare trustee for the benefit of the Rights
Holder and immediately forward such monies to the Rights Holder in
accordance with the Rights Holders instructions
4.6 The Event Manager shall not contract with or invoice for the services of any
associated company of the Event Manager (within the meaning of the
Income and Corporation Taxes Act 1988 Sections 416 and 417) except as
expressly provided in the Budget or otherwise in this Agreement
4.7 The parties shall agree the most practicable method of payment for
expenses and costs incurred during the Event
5. Budget And Accounting
5.1 The Rights Holder may (in consultation with the Event Manager) vary the
Budget the allocation of funds from the categories specified within
the Budget and vary the Budget for items of expenditure not anticipated by
the Budget. Any such variation may be made by the Rights Holder and may
also be made at the reasonable request of and in consultation
with the Event Manager but is subject to the final decision of the Rights
Holder
5.2 The Event Manager shall remain responsible for the Budget and shall not
incur any expenditure in excess of the itemised amount anticipated in the
Budget unless the Budget is varied in accordance with clause 5.1
5.3 If the Budget exceeds the total costs actually incurred for the Event then
the amount of underspend on any item of the Budget may (in the absolute
discretion of the Rights Holder) be utilised for other items in the Budget in
accordance with clause 5.1
5.4 The Event Manager shall during the Term submit to the Rights Holder such
information regarding the progress of Event organisation an analysis of
expenditure to date estimates of any likely variation to the Budget as well
as copies of contracts correspondence invoices receipts and any other
documentation relating to the Services and/or the Event as the Rights
Holder may reasonably request
5.5 The Event Manager shall maintain full accurate and proper records and
books of account relating to the Event with all invoices vouchers and other
records evidencing all receipts expenses charges and taxes incurred in
providing the Services for the Event
5.6 The Rights Holder may inspect audit and take copies of all books and
records relating to the Event the Event Manager shall produce all such
material to the Rights Holder with reasonable notice of such request
provided that the Rights Holder is not entitled to computer programmes
and materials relating to systems and controls independently created and
wholly owned by the Event Manager
6.4 Appendix 79
12. Confidentiality
12.1 Confidentiality
12.1.1 Subject to sub-clauses 12.2 and 12.3 each party
12.1.1.1 shall treat as strictly confidential and use solely for the
purposes contemplated by this Agreement all documents
materials and other information whether technical or
commercial obtained or received by it as a result of
entering into or performing its obligations under this
Agreement and relating to the negotiations relating to or
the provisions or subject matter of this Agreement
(confidential information) and
12.1.1.2 shall not except with the prior written consent of the
party from whom the confidential information was
obtained publish or otherwise disclose to any person
any confidential information
12.2 Permitted Disclosures
12.2.1 Each party may disclose confidential information which would
otherwise be subject to sub-clause 12.1.1 if but only to the extent
that it can demonstrate that
12.2.1.1 such disclosure is required by law or by any securities
exchange or regulatory or governmental body having
jurisdiction over it wherever situated (and including
without limitation the London Stock Exchange the
Panel on Takeovers and Mergers and the Serious Fraud
Office) and whether or not the requirement has the force
of law
12.2.1.2 the confidential information was lawfully in its pos-
session prior to its disclosure by the other party
(as evidenced by written records) and had not been
obtained from the other party
12.2.1.3 the confidential information has come into the public
domain other than through its fault or the fault of any
person to whom the confidential information has been
disclosed in accordance with sub-clause 12.3
12.2.1.4 information required by the Governing Body provided
that any such disclosure shall not be made without prior
notice to the party from whom the confidential infor-
mation was obtained
12.3 Persistence of restrictions
12.3.1 The restrictions contained in this clause shall survive the
termination of this Agreement
6.4 Appendix 83
13. Termination
13.1 The Rights Holder may terminate this Agreement in any year during
the Term by giving [ ] days notice of such termination to the Event
Manager. Upon termination the Event Manager shall send the Rights
Holder a final account of all commitments of whatever nature up to the date
of receipt of such notice along with all papers relating to the Event and the
Rights Holder in its possession custody or power and the provisions of
clauses 13.3 and 13.4 shall apply. The Rights Holder shall not be liable to
the Event Manager for any further payments or any claims whatsoever
13.2 Either party may terminate this Agreement forthwith upon notice in the
event that the other
13.2.1 commits a material breach of any obligation under this Agree-
ment which breach is incapable of remedy or cannot be remedied
in time for the Event
13.2.2 commits a material breach of any obligation under this Agree-
ment and if such breach is capable of remedy fails to so remedy
such breach within 28 days of receiving notice from the other
requiring remedy
13.2.3 enters into a composition or arrangement with its creditors has a
receiver or administrator or administrative receiver appointed or
becomes insolvent or unable to pay its debts when they fall due
13.3 Consequences of termination
13.3.1 Upon termination in accordance with clause 13
13.3.1.1 the rights and obligations of the parties under this Agree-
ment shall terminate and be of no future effect except that
clause 11 and 12 shall remain in full force and effect
13.3.1.2 any rights or obligations to which any of the parties to
this Agreement may be entitled or be subject before
such termination shall remain in full force and effect
13.3.1.3 termination shall not affect or prejudice any right to
damages or other remedy which the terminating party
may have in respect of the circumstances which gave
rise to the termination or any other right to damages or
other remedy which any party may have in respect of
any breach of
this Agreement which existed at or before the date of
termination
13.4 Upon termination in accordance with clause 16 and upon expiry of the
Term the Event Manager shall (at the request of the Rights Holder) return all
items (including but not limited to) signage materials premises promotional
84 6 Sports Event Management Agreements
16.2.1 For the purpose of this clause force majeure means any cir-
cumstances not foreseeable at the date of this Agreement and not
within the reasonable control of the party in question including
without limitation
SCHEDULE 2
The Trade Marks
(.)
Chapter 7
Sports Corporate Hospitality Agreements
As with all Sports Marketing Agreements, one of the most important provisions is
the grant of rights clause.
This defines the extent of the rights granted by the event organiser to the
provided of the hospitality and any restrictions on the exercise of those rights. For
example, there will be a requirement that the party providing the hospitality must
use event-sponsored products, such as drinks and snacks (popular sponsorship
product categories), and not those of competitors. Thus, if Coca-Cola is the Title
Sponsor of the Sports Event concerned, the hospitality provider will not be
allowed to serve Pepsi! Again, there need to be restrictions on give-aways
(premiums), which themselves need to be defined in the Agreement, so that there
is no conflict between these items and those of the event sponsors.
To secure the financial performance of the corporate hospitality providers
obligations, Bank Guarantees and Bonds may be required. Indeed, it has been
proposed, following some spectacular bankruptcies in the hospitality and leisure
sectors,1 that corporate hospitality companies should be part of a bonding scheme,
rather like ABTA scheme covering travel agents, who organise and sell package
holidays.
Also, it could be advisable for the event organiser and the corporate hospitality
provider to enter into a joint venture company to deliver the corporate hospitality.
Such an arrangement would give both parties better legal control over infringers of
their respective rights.
The Corporate Hospitality Agreement will also need to contain appropriate
warranties: for example, from the sports event organiser that it owns the rights
being granted and that the event will be held; and, from the corporate hospitality
provider, that the event marks and the official designations will be properly used.
The Agreement will also need to include appropriate force majeure provisions
to cover the legal, financial and practical consequences/effects of the hospitality
not being provided, as a result of the corresponding sporting event having to be
cancelled or postponed for some unforeseen cause or other. In this connection,
claims from suppliers for cancelled contracts and claims for disappointment form
invited guests need to be considered and factored into the Agreement. Suitable
insurance arrangements also need to be put in place to cover such contingencies
and appropriate endorsements of interests on the Policy concerned need to be
expressly made. Detailed clauses are needed in the Agreement to cover these
arrangements. For example, the amount of insurance; the risks covered; who is
responsible for taking out the Policy concerned; and, importantly, who is liable to
pay the premiums.
Again, the Agreement will need to contain express provisions regarding the
applicable law and the settlement of disputes, especially where foreign elements
1
See some recent examples quoted in Hospitality and leisure insolvency by Emma Widdowson
at www.insolvencylawforum.co.uk/index.php?hospitality.
7.2 Corporate Hospitality Agreements 91
2
Corporate hospitality could fall foul of new Bribery Act. Website: www.bondpearce.com.
92 7 Sports Corporate Hospitality Agreements
In both cases, these documents are provided for general guidance and illus-
trative purposes only.
7.5 Appendices
7.5.1 Appendix 1
[]
(hereinafter referred to as the Lessor)
2. Lease Period
2.1 Commencement date :
2.2 Expiry date :
2.3 Lease duration
2.4 The Lessee shall have the right to renew this Lease subject to the provisions of
Clause 3, Annexure A.
3. Rental
The Lessee shall pay to the Lessor in respect of the Premises the following rental:
Reproduced with the permission of Prof. S.J. Cornelius, University of Pretoria, in consultation with Van Gaalen
Attorneys, South Africa.
94 7 Sports Corporate Hospitality Agreements
Or:
Option 2 (A single payment for the Rental period)*
4 Services
The Lessee shall pay the Lessor in respect of the Premises the following service levy,
inclusive of water and electricity:
The service levy is subject to a reasonable annual increase taking into account the
Consumer Price Index and any increases in rates and tariffs by the relevant local
authorities.
6. Deposits
The following deposits will be payable by the Lessee to the Lessor prior to the Lessee
taking occupation of the Premises, which is subject to clause 5 of the Standard Terms
of Lease.
6.1 Rental:R
6.2 Key :R
7. Place of Payment
Payment of amounts due by the Lessee shall be made to the Lessor as follows:
7.1 at the Lessors domicilium address; or
7.2 electronically into the bank account of the Lessor, wherefore the Lessee must
fax confirmation of the deposit to the Lessor. The Banking details:
[] BANK
[]
8. Lessors Domicilium
The Lessors domicilium citandi et executandi for all purposes hereunder, arising from
and applicable to the Lease Agreement, is:
[]
7.5 Appendices 95
or such other address as the Lessee may from time to time appoint in writing.
Tel:
Fax:
Cell:
Person Name:
12. Costs
The costs of:
11.1 the administration fee for the drafting and completion of this Lease Agreement
to the amount of R [] (VAT inclusive), and;
11.2 the stamp duties;
shall be paid by the Lessee to the Lessor upon demand.
As Witnesses:
1.
For the Lessee
2.
Full names Who warrants
that he/she is duly authorized hereto.
Designation
As Witnesses:
1.
For the Lessor
2.
Full names
Designation
96 7 Sports Corporate Hospitality Agreements
Annexure A
Standard Terms of Lease*
1. Definitions
In this Lease Agreement, unless the context indicates otherwise:
1.1 Main Agreement means the Lease Agreement, to which these
Standard Terms of Lease is attached.
1.2 Premises means the Premises indicated in clause 1 of the Main
Agreement and all the Lessors fixtures, fittings, appliances, equipment
and electrical and sanitary installations thereon and pertaining thereto,
which is subject to clause 1 of the Main Agreement.
1.3 Property means all the buildings and other structures and all facilities
erected on the erven on which the Stadium is.
1.4 Event means any promotional entertainment, sporting, cultural event
or any other event, staged under the auspices of or sanctioned by []
and/or [], at the Stadium.
1.5 Event days means any day or days on which an event takes place.
1.6 Event Security Services means the security services involved in the
event security at any sports or other organised events which falls under
the direct control of [] and/or [], which includes, but are not limited
to the following institutions:
The South African Police Service;
Johannesburg Metropolitan Police Service;
Knights Event Management;
Court Security; and
Diligence Security.
1.7 []
1.8 []
1.9 the Stadium means the Ellis Park Stadium.
2. Interpretation
2.1 Words in the singular include the plural and vice versa.
2.2 Words referring to the male gender shall include the female gender and
vice versa.
2.3 The impersonal pronoun shall include the masculine and feminine
pronouns.
2.4 Words referring to persons shall include firms, associations, companies,
partnerships and corporate bodies, juristic persons and vice versa.
*
Reproduced with the permission of Prof. S.J. Cornelius, University of Pretoria, in consultation
with Van Gaalen Attorneys, South Africa
7.5 Appendices 97
For the duration of the Lease Agreement all furniture, fittings and fixtures,
equipment, stock, etc. brought onto the Premises shall be subject to the Lessors
hypothec and shall serve as collateral security for the proper fulfillment by the
Lessee of all his obligations in terms of the Lease Agreement. The Lessee may
not pledge or otherwise encumber or dispose of the aforementioned assets or
remove them from the Premises, except in the ordinary course of business.
7.5 Appendices 101
injury incurred in/around the leased premises and/or the stadium out-
side of the said period stipulated in clause 12.6.
12.8 The Lessee shall not use or occupy the leased premises or cause or
allow it to be used or occupied in contravention of any law or in any
manner which may impair the good reputation of the Lessor.
13. Defects
Should the Lessee on taking occupation of the Premises find any of the keys,
locks, doors, windows, washbasins, taps, sanitary conveniences, drains or
down pipes, electrical or other equipment of the Premises in disrepair, the
Lessee shall notify the Lessor in writing of all defects within 7 (seven) days
of taking occupation and the Lessor shall take all reasonable steps to repair
such defects as soon as possible. Should the Lessee fail to give such notice to
the Lessor, the Lessee shall be deemed to have acknowledged that on taking
occupation of the Premises the aforesaid items were received in good order
and condition.
14. Maintenance
14.1 The Lessee shall keep the interior of the Premises in good order and
condition and hereby acknowledges, subject to the provisions of
clause 13 that, on taking occupation, he received the Premises in a
good, clean and satisfactory condition. The Lessee undertakes to leave
the Premises in the same good order and condition, fair wear and tear
excepted, on expiration or prior termination of this Lease Agreement.
14.2 The Lessee shall not, without the prior written consent of the Lessor,
mark, paint, drill or drive nails, screws or fasteners of any nature into
or in any way deface the walls, doors, floors, ceilings or partitions of
the Premises.
14.3 The Lessee shall at all times during the lease period keep and maintain
in proper order and condition all wiring, switches, lamps and fittings
for electrical light and power, as well as all pipes and fittings for the
supply of water to the Premises.
14.4 For the duration of the Lease Agreement, the Lessor shall not be liable
for, whether wholly or in part, the replacement of or repairs to the
floor covering in the Premises. The Lessee shall be liable for the costs
of replacement of or repairs to the floor covering, power and telephone
outlets, defective fluorescent tubes, electric bulbs, starters and choking
coils and any other item supplied by the Lessor in or on the Premises.
14.5 The Lessee shall not without the prior written consent of the Lessor,
effect any repairs or permit repairs to be effected to the Premises and/
or replace any equipment for which he is liable in terms of this clause.
The Lessor shall decide whether the Lessor or the Lessee or any other
party shall affect the repairs or replacement and shall determine the
conditions, which shall apply to the repair work and/or replacements.
104 7 Sports Corporate Hospitality Agreements
The Lessee may not erect, affix or paint any advertising or other signs on the
Premises, without the prior written consent of the Lessor.
The Lessor may at any time during the Lease Period install electric wiring,
air conditioning equipment, water pipes, telephone cables or any other
equipment or wiring through the Premises, should it be necessary for the
supply of electricity, air conditioning, water of any other service to any other
part of the Building and/or the Property. The Lessor shall endeavour to
ensure that as little inconvenience as possible is caused to the Lessee. The
Lessee may not reduce the rental, withhold or defer payment of rental or any
other amounts, or terminate this Lease Agreement as a result of any such
inconvenience or disruption of his business activities.
106 7 Sports Corporate Hospitality Agreements
No duplicate keys of any lock on the Premises or any other lock on the
Property shall be made nor shall any additional or replacement lock be fixed
to any door of the Premises without the prior written consent of the Lessor.
On vacating the Premises, the Lessee shall deliver all keys and duplicate
keys in good order to the Lessor. The Lessee shall be liable for any loss of or
damage to the keys and locks of the Premises and shall, at the request of the
Lessor, either replace the keys and locks or have the lock mechanisms and
lock combinations changed and provide new keys.
If there is a dispute between the Lessor and the Lessee as to whether the
Lessor has unreasonably withheld its consent or approval in any case where
this lease precludes the Lessor from withholding its consent or approval
unreasonably, then the onus shall be on the Lessee to prove the Lessor has
withheld its consent or approval unreasonably
25.1 The Lessee and its invitees and employees may, together with the
other lessees, invitees and employees on the Property, use the toilets
and any other convenience allocated by the Lessor for communal use.
25.2 The Lessee shall comply with any rules laid down from time to time
by the Lessor for the use of the aforementioned conveniences. Should
there be an interruption in any of the communal services or facilities
or should any such services and conveniences or equipment become
unusable, the Lessee may not reduce the rental, withhold or defer
payment of rental, or terminate the Lease Agreement.
25.3 Communal conveniences and facilities are used at the Lessees risk
and the Lessor shall not be liable for any injury, damage or loss,
however caused, which the Lessee or his invitees, employees or agents
may suffer as the result of the use as aforesaid.
The Lessee and his invitees, agents, and/or employees shall park their vehicles
on the parking spaces at his own risk and the Lessor, [],[] or their officers or
employees or agents shall not be liable for any loss or damage whatsoever,
108 7 Sports Corporate Hospitality Agreements
The Lessor may enter, inspect and have repairs effected to the Premises at all
reasonable times and when required to do so by any lawful authority.
The Lessee shall at all times ensure that no nuisance emanates from the
leased premises, and shall not cause any nuisance or disturbance on or about
the leased premises or cause or allow any interference of the use of any other
premises leased by other tenants in the Stadium or by spectators or other
persons in the Stadium, and the Lessee indemnifies the Lessor against any
claim made by any person against the Lessor by reason of such nuisance or
disturbance.The Lessee shall also be obliged, at his own expense, to comply
with the requirements of all regulations, laws, provisional ordinances and
local authority rules and regulations concerning nuisance.
All amounts due by the Lessee to the Lessor in terms of this Lease Agree-
ment are subject to the payment of value-added tax by the Lessee at the then
ruling rate.
32. Severance
33. Disclaimer
34. Insurance
The Lessee shall from the commencement date and throughout the currency
of this Lease, at the Lessees expense, procure that insurance cover to the
satisfaction of the Lessor is provided, so as to cover public liability and
damage and/or loss to the contents of the leased premises
35.1 The Lessee shall not, without the prior written consent of the Lessor,
transfer, cede or assign its rights or interest in this Lease Agreement or
sub-let the Premises or any portion thereof, or to part with possession
of, or suffer, permit or allow any other person the use of occupation of
the Premises or any portion thereof. The Lessor shall not however,
unreasonably withhold its consent.
35.2 In the event of the Lessor allowing the Lessee to cede his rights and
obligations to a third party, the Lessee shall sign as surety for the third
partys lease, binding himself jointly and severally in respect of moneys
owing to the Lessor and for the due fulfillment by such third party of all
his obligations under the Lease Agreement, or any cancellation thereof.
110 7 Sports Corporate Hospitality Agreements
If this Lease Agreement is signed for the Lessee by a person who professes to
act as agent or trustee on behalf of a company, close corporation or trust to be
formed, then:
36.1 this signatory in his personal capacity hereby warrants to the Lessor
that the entity for which he is acting will within 60 (sixty) days from
date of signature of the Lease Agreement by the Lessor:
36.1.1 be duly formed or incorporated; and
36.1.2 pass a resolution adopting this Lease Agreement without
modification;
36.2 until the entity is formed or incorporated and has adopted this Lease
Agreement, the signatory, in his personal capacity, shall be liable for
all the obligations imposed on the Lessee in terms of this Lease
Agreement;
36.3 if the entity is not formed or incorporated within the period pre-
scribed in 36.1, if having been so formed or incorporated, it does
not within the said period comply with the obligation in terms of
36.1.2, then the signatory in his personal capacity shall be deemed
to be the Lessee in terms of this Lease Agreement;
36.4 in the event of the entity being duly formed and incorporated and
adopting and ratifying this Lease Agreement in terms of this clause,
then the signatory by his signature to this Lease Agreement, hereby
binds himself jointly and severally in favour of the Lessor as surety
and principal co-debtor with the Lessee, under renunciation of the
benefits of excussion, division and cession of action, for all the
obligations of the Lease Agreement in terms of this Lease or any
cancellation thereof.
36. Sureties
36.1 In the event that the Lessee is a private company or a close corpo-
ration or a trust, each director, member or trustee of the Lessee, as the
case may be, shall sign the Lessors standard form of Surety.
36.2 In the event that the Lessee is a married person or a minor, the spouse
or guardian of the Lessee, as the case may be, shall sign the Lessors
standard form of Surety.
36.3 In the event that the Lessee is a partnership, each partner shall sign the
Lessors standard form of surety.
7.5 Appendices 111
Should the Lessor institute any action against the Lessee for payment of
moneys payable in terms of this Lease Agreement, or for any other breach of
the Lease Agreement, with or without cancellation of the Lease Agreement,
the Lessee shall also be liable to the Lessor for all legal costs, including
collection commission, on a scale as between attorney an own client, as well
as costs incurred to trace the Lessee.
38. Jurisdiction
39. Notice
40. Redevelopment
The Lessor may cancel this Lease Agreement without the payment of any com-
pensation to the Lessee with 6 (six) months written notice to the Lessee, if the
Lessor or the registered owner of the Property from time to time wishes to
demolish the Building or wishes to rebuild, redevelop, renovate or alter the
Building or any part of the Building or to incorporate the Building into any scheme
of building or redevelopment involving any adjoining building and/or properties.
112 7 Sports Corporate Hospitality Agreements
41. Relocation/Rebuilding
41.1 The Lessor reserves to itself the right to relocate the Lessee from the
Premises to another area within the Building. In such an event the
Lessor shall be obliged to give to the Lessee not less than 3 (three)
months written notice that it requires the Lessee to relocate to a new
location in the Building. Such written notice shall contain the fol-
lowing information:
41.1.1 a description of the new location specifying its approximate
size and placement in the Building;
41.1.2 the basic monthly rental for the purposes of and in the place
of that stipulated in clause 3 of the Main Agreement;
41.2 All the other terms and conditions of this Lease Agreement shall
remain unchanged and shall continue in full force and effect as fully
and as though the Premises had not been relocated.
41.3 The Lessor undertakes to use its best endeavours to perform all work
reasonably necessary to effect such relocation in a manner so as to
cause the least possible inconvenience to the Lessee. All reasonable
relocation expenses shall be for the Lessors account.
41.4 Should the Lessee neglect, fail or omit to consent to relocation within
30 (thirty) days after the notice referred to in clause 41.1, the Lessor
shall be entitled to terminate this Lease Agreement and the Lessee
shall have no recourse or other relief against the Lessor by reason of
termination of this Lease Agreement;
41.5 Notwithstanding any provision in this Lease Agreement, it is agreed
that in the event of the Lessor or the registered owner of the Property
from time to time, deciding to embark on a rebuilding scheme
involving the Premises, the Lessor shall be entitled to cancel this
Lease Agreement upon giving 6 (six) months written notice of ter-
mination to this effect. The Lessee shall vacate the Premises upon
expiry of the aforementioned notice period and shall have no recourse
or other relief against the Lessor. Without derogating in any way from
the generality of the aforegoing, it is specifically agreed that reno-
vations, alterations, extensions, additions or replacement may con-
stitute a rebuilding scheme for the purposes of this clause.
42. Lessees General Obligations
42.1 The Lessee shall not:
42.1.1 contravene or permit a contravention of
42.1.1.1 any of the conditions of title of the property on
which the Stadium is situate or in terms of which
the Lessor occupies the Stadium or
7.5 Appendices 113
44. Variation
45. Relaxation
any obligation hereunder or the enforcement of any right arising from this
Agreement and no single or partial exercise of any right by any party shall
under any circumstances be construed to be an implied consent by such party
or operate as a waiver or a novation of, or otherwise affect any of that partys
rights in terms of or arising from this Agreement or estop such party from
enforcing, at any time and without notice, strict and punctual compliance
with each and every provision or term hereof.
7.5 Appendices 115
7.5.2 Appendix 2
*
Reproduced with the permission of Hospitality finder Ltd.
116 7 Sports Corporate Hospitality Agreements
due to the date of payment in full with such interest being applied on a
daily basis.
3.5 [x.co.uk] agrees to transfer payment to suppliers, as appropriate, for
Events and other parts of a Package, once payment has been received
from the Customer in accordance with the Conditions of this Agreement.
4. Additional Services
4.1 From time to time [x.co.uk] may provide additional goods and/or ser-
vices which do not form part of the Package and [x.co.uk] shall act as
agents of the Customer and only on the basis that no liability of any kind
shall attach to [x.co.uk] for the provision of such additional goods and/or
services.
4.2 [x.co.uk] shall issue a separate invoice for any additional goods and/or
services which shall be payable within 5 days of the date of the invoice
unless the order is placed within 12 weeks of the Event when payment is
due upon receipt of the invoice.
5. Alterations
5.1 Whilst [x.co.uk] will use all reasonable efforts to deliver the Package, it
reserves the rights to alter the Package in anyway and for any reason
which in its absolute discretion it considers necessary.
5.2 [x.co.uk] shall be entitled to increase the Price at any time and for any
reason which in its absolute discretion it considers necessary and pay-
ment of the additional sum shall be made by the Customer within 7 days
of the invoice.
5.3 The Customer shall be entitled to cancel the Package and (subject to
Clause 9.5) receive a refund if [x.co.uk] increase the Price, providing
written notice of Cancellation is given by the Customer within 4 days of
the date of the invoice notifying the Customer of the increase
5.4 The suppliers of any tickets and/or Events (which may make up part of
your Package) reserve the right to alter details of a booking, seat allo-
cations or make other changes to tickets and/or Events booked by
Hospitalifyfinder.co.uk on the Customers behalf, without notice.
[x.co.uk] will provide the Customer with notice of any changes or
variations tickets and/or Events that it may be notified of by a supplier,
although [x.co.uk] shall not be liable for any losses to the Customer if
notice is not provided to [x.co.uk] by the supplier of any changes or
variations to tickets and/or Events that have been purchased on behalf of
the Customer by [x.co.uk] under this Agreement.
6. Exclusive Facilities
6.1 Where a Customer requests an exclusive facility at venue where an
Event is being held, this will be subject to an additional exclusivity fee
plus VAT where applicable. Such exclusivity fee shall be confirmed to
the Customer in writing.
118 7 Sports Corporate Hospitality Agreements
6.2 [x.co.uk] shall issue a separate invoice for the exclusivity fee which shall
be payable within 7 days of the date of the invoice unless the request is
made within 12 weeks of the Event, when payment is due upon receipt
of the invoice
7. Ticketing and documentation
7.1 [x.co.uk] will despatch, where possible, car park and other passes and
information to the Customer prior to the Event date, providing the Price
and any additional charges have been paid in full and cleared funds.
When it is not possible to despatch all relevant documentation relating to
the Package to the Customer prior to the Event for any reason (for
example, the booking made by the Customer is too close to the Event
date for despatch to the Customer of the information), [x.co.uk] reserves
the right to make the tickets and all other relevant information available
for collection by the Customer at an agreed location on the Event date.
8. Warranties and Liability
8.1 [x.co.uk] cannot guarantee and does not warrant that the Event will take
place on the date of dates agreed or at all or the ability of its suppliers to
supply (all of which shall be treated as Force Majeure). In the circum-
stances of an event of Force Majeure, the Customer shall not be entitled
to any refund except to the extent that [x.co.uk] is able to obtain a refund
from relevant third parties.
8.2 [x.co.uk] shall not be liable for any consequential loss or damage
including (but not limited to) loss of business or profits, loss of goodwill
or loss of contracts sustained by the Customer in any circumstances.
8.3 Nothing in this Agreement shall exclude or limit the liability of [x.co.uk]
for its negligent acts or omissions which cause death or personal injury,
or for any fraudulent misrepresentation.
8.4 Except for claims under Clause 8.3, the liability of [x.co.uk] to the
Customer for breach of this Agreement or negligence or otherwise shall
be limited to a maximum of the Price paid by the Customer to [x.co.uk]
under this Agreement.
8.5 Tickets or other entry to events which may form part of the Package
booked for the Customer are subject to the ticket provider/supplier/
venue owners own terms and conditions and the Customer acknowl-
edges that they shall be bound by those terms and conditions to the ticket
provider/supplier/venue owner, in addition to its responsibilities under
this Agreement. The ticket provider/supplier/venue owner reserve the
right to remove people from a venue or event, at their discretion, and a
Customers entry to a venue or event will be subject to not only the
terms and conditions of the venue owner and rules and regulations of the
venue, but also the event organiser and Customers must ensure they read
their tickets and any other materials/literature forwarded to them by
[x.co.uk] and/or the venue owner/ticket provider/supplier when they
7.5 Appendices 119
Despite the recession and economic climate generally, sports sponsorship, which
may be described as the bed rock of all sports marketing arrangements, continues
to be a popular marketing tool for companies around the world as the following
examples demonstrate.
Usain Bolt, the 24-year old Jamaican triple Olympic gold and world record sprint
champion, signed in August 2010 what is believed to be the biggest sponsorship
deal in the history of Athletics with PUMA, the Swiss-based sports clothing and
shoes manufacturer, with whom he has been associated and financially supported
since he was 15 years old. He has extended his current sponsorship contract for three
years until 2013 for a sum reputed to be in the region of US$20 million and is due to
bring out a new clothing line with his own branding in December 2010!
Bolt, who is currently out of action due to a hamstring injury, wants to be a
legend in his sport and make his sporting brand as big as that of the legendary
former American professional basketball player Michael Jordan. Puma is reported
to have gained the equivalent in advertising exposure of US$105 million from the
publicity derived from its association with Bolt! This shows the value of sports
sponsorship to a company engaged in the manufacture, promotion and sale of
consumer products around the world. As they say in marketing circles: one good
brand deserves another and each feeds off each other!
According to Jochen Zeitz, chairman and chief executive of Puma, Bolt could
achieve a similar profile to David Beckham who, of course, is a well-established
and lucrative brand in his own right:
Hes the best paid athlete in history and also one of the best paid athletes overall. I would
say if you asked about the rareness of Usain Bolt hes up there with some of the best in any
sport. He connects to the fans in a unique way, and not just in a stadiumhe can connect
on the performance side as well as the lifestyle sideand I think thats the difference to
many other athletes who do great things but cannot really find that connection to the fans.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 121
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_8,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
122 8 Sports Sponsorship Agreements
And the author of this Book would add that is what successful sports spon-
sorship is all about: sporting prowess; lifestyle; and connecting with the fans! And,
that, incidentally, is where Tiger Woods came unstuck!
The new Usain Bolt sponsorship deal raises the question of how sports spon-
sorship generally has been faring due to the general economic slowdown, which
despite politicians claims that we are coming out of the global recession, is still
reverberating and having adverse economic effects on various business sectors
around the world.
On the other hand, it appears that the global sports industryworth more than
3% of world tradeis, in fact, faring very well under the present economic
circumstances, if current major football sponsorship deals, that have recently been
announced, are anything to go by!
Here are the top ten football sponsorship deals that have been reported to date
and are quite impressive:
(1) Manchester United and Nike302.9 million over 13 years
The biggest of all club-level football sponsorship deals was agreed in 2002
between Nike and Manchester United. Nike replaced Umbro as Uniteds kit
provider, agreeing to pay United a mind-blowing sum of 302.9 million!
(2) Juventus and Tamoil165 million over 10 years
At the time this sponsorship agreement was signed in 2005, the potential ten-
year shirt naming rights dealworth 75m over the first five years, and 90m if
renewed for the next fivebetween Juventus and the Libyan-owned oil com-
pany, Tamoil, was claimed to be the biggest in football history. However, just
over a year later, the football corruption scandal erupted in Italy and, not
surprisingly, the deal came to an abrupt end! Juventus only received 24 million
of the 165 million pledged.
(3) Barcelona and Nike130 million over five years
In 2006, Barcelona secured a sponsorship deal with their kit manufacturer,
Nike, worth over 26m per year.
(4) Chelsea and Adidas100 million over 10 years
Also, in 2006, Chelsea signed a 10 million per year sponsorship agreement
with Adidas for a term of 10 years.
(5) Arsenal and Fly Emirates100 million over 15 years
So far, the biggest naming rightsas opposed to kit manufacturerdeal has been
signed between Arsenal and the Dubai-owned airline Fly Emirates. It is worth
100 million, and includes naming rights on Arsenals shirts as well as their new
state-of-the-art stadium. The deal was signed in 2004 and is for a term of 15 years.
(6) Liverpool and Standard Chartered Bank81 million over four years
Starting with the 2010-2011 season, Standard Chartered Bank will pay Liver-
pool over 20 million a year for a 4-year term for pride of place of their name
on their jerseys.
8.1 Introductory Remarks 123
(7) Manchester United and Aon Corporation80 million over four years
Manchester United have secured a shirt sponsorship deal for 4 years starting
with the current 20102011 season worth 80 million with the American
Insurance Group Aon Corp.
(8) Bayern Munich and Deutsche Telekom72 million over three years
Bayern Munich have signed a shirts sponsorship deal with Deutsche Telekom
worth 24 million a year for 3 years starting from the 20102011 season.
(9) Real Madrid and Bwin54.9 million over three years
Real Madrid have extended their sponsorship deal with Austrian betting pro-
vider Bwin for 18.3 million per year until 2013.
(10) AC Milan and Fly Emirates52 million over five years
Fly Emirates, who, incidentally, are fast becoming the biggest name in football
sponsorship, has recently signed a new sponsorship deal with AC Milan, which
is worth at least 52 million over 5 years, plus performance-related bonuses.
According to football blogger Steve Chappell1:
Sponsorship, especially in the form of logos on jerseys, has become a part of football
culture. But football sponsorship, of course, offers much more than sentimental or aes-
thetic value. In an increasingly dicey financial era for football clubs, precious few can
claim to be safe from potential disaster ..Sponsorship deals are a crucial source of
income for football clubs, and the clubs that associate themselves with the highest bidders
will have a better chance of surviving a tumultuous time in a dangerous business. For
sponsors, football can be an extremely effective boost for brand recognition.
The value of football sponsorship, as mentioned above, is borne out by the fact
that in 2010, English FA Premier League Clubs have reportedly negotiated a world
record level of shirt sponsorships of some 100 million for the new season
(20102011).
The latest sponsorship deal involving an English FA Premier League Club was
announced on 26 November, 2010: a global sponsorship of Manchester United, the
worlds biggest football club with 333 million fans across the globe, by the well-
known Japanese Company Epson, who became, with immediate effect, Official
Office Equipment Partner to the Club for a two-season period for a reported
sponsorship fee of 3 million. The rationale for this particular sponsorshipand,
indeed, the value of sports sponsorship in generalwas well explained by Epsons
Global President, Minoru Usui, in the following terms:
The partnership with Manchester United aligns Epson with an exciting and globally
recognised brand, bringing us closer to our customers worldwide. Leading the way
through constant creativity and innovation both brands share a commitment to achieving
the highest standards. Our vision to excite and inspire customers is represented by
Manchester Uniteds success on the pitch and the unique printer and projector technolo-
gies for which Epson is renowned.2
1
www.blog.sport.co.uk/football
2
Epson Corporate News Release: www.global.epson.com/newsroom/2010/news_20101126.htm.
124 8 Sports Sponsorship Agreements
So, sports sponsorshipat least as far as the beautiful game and athletics are
concernedis very much alive and well despiteor, perhaps, according to some
economists who argue to spend your way out of recession, because ofthe world
economic recession!
In fact, according to Matt Cutler of SportBusiness International,3 citing The
World Sponsorship Monitor Annual Review, produced by IFM Sports Marketing
Surveys, sponsorship deals in the sports market rose by 15 per cent in 2009,
compared with 2008, whilst the number of withdrawals remained stable at 8
per cent.
Sport dominated the sponsorship sector with 88 per cent of all deals in both in
terms of number reported and value. According to Nigel Geach, director of IFM
Sports Marketing Surveys:
Sponsorship as a marketing discipline gives an excellent return on investment. Both
rights holders and sponsors are working together more to maximise this returnthe
figures in the TWSM annual review are very encouraging for the future.
However, the current economic climate was reflected in the fact that there were
fewer sports sponsorship deals over $10 million reported in 2009.
It will be interesting to see what the figures for 2010 reveal when they are
published and whether the present trends continue. Based on the above examples,
it is expected that they will indeed as sport is a very attractive marketing vehicle!
8.2.1 Generally
There are a variety of Sports Sponsorship Agreements that may be entered into by
Sponsors with the Sponsored party (Rights Holders). Where the Rights Holders are
individualssports personalitiesthe agreements they enter into are known as
Endorsement Agreements.
Sponsorship is perceived, in many business quarters, as an attractive alternative
to other forms of traditional advertising and promotion, particularly in terms of
cost-effectiveness, which always high on the corporate financial agenda. This is
particularly true in the field of sports sponsorship, in which an ever-increasing
range of prestigious national and international sports events are on offer for
commercial exploitation. What is sponsorship in general and sports sponsorship in
particular?
Sponsorship is a commercial arrangement whereby a sponsor pays a certain
sum of money (sponsorship fee) and/or provides certain products, services or other
facilities (value in kind (VIK)) to the Rights Holders, in return for which the
3
www.SportBusiness.com
8.2 Sports Sponsorship Agreements 125
sponsor is granted certain rights of association with the Rights Holders, through
which the sponsor can promote its image and sale of its products and/or services.
In the sporting context, the sponsors association is generally with the Rights
Holders sports event and usually with the emblems, logos and mascots (the event
marks), which identify and distinguish the particular sports body and its event. For
example, in the case of the Olympic Games, the Olympic Rings belonging to the
International Olympic Committee and particular distinctive emblems, incorpo-
rating the Rings, of the Organising Committee of the Host Nation and the National
Olympic Committees participating in the Olympic Games. Combined with the
sponsorship rights are usually designationsthe right of the sponsor to describe
itself as official sponsor of the XYZ eventin all advertising and promotional
literature and also on all product packaging, labeling and merchandising materials.
case of the 1991 World Rugby Football Cup, where Sony was perceived to be the
sponsor of the event, whereas, in fact, Sony was the sponsor of the television
coverage of the event, much to the discomfiture of Heinz, the sponsor of the event,
who had paid a substantially larger sum for the privilege! Rival companies have
deliberately used such confusion on subsequent occasions in relation to other
sporting events as a form of Ambush Marketing.
Likewise, title sponsorship of an event adds a further complicating dimension,
which needs careful handling, both commercially and legally, to avoid conflict
marketing and thereby diluting the value of the sponsorship rights granted. In
view of the wide range of sports events, as well as the variety of the rights
packages on offer, a sponsor needs to match very carefully the event, the kind of
association and the type of rights acquired with the image of the sponsor company
and that of its products/services.
For example, a particular brand of cigarettes may be successfully teamed with
an international global sailing event, whereas a particular brand of popular car may
sit more comfortably with a football competition. Incidentally, tobacco spon-
sorship of sporting events in Europe became illegal at the end of 2004 under
specific EU legislation. Positioning in marketing, in general, is very important and
this is equally true of sponsorship, in particular. Sports sponsorship, to use a
sporting metaphor, is, therefore, very much a matter of horses for courses.
Apart from the marketing aspects, attention also needs to be paid to the legal
aspects of sports sponsorship, especially the content and the drafting of the cor-
responding Agreement. The Sponsorship Agreement will need to cover, amongst
other things, the following matters;
the rights being granted
product and/or service category (where there are, as is usually the case, there
are multiple concurrent sponsorships)
territorial issues
warrantiesespecially by the event organiser regarding broadcast coverage
of the event
duration, options and renewals of the sponsorship rights
financial terms and conditions
obligations of the event organiser
obligations of the sponsor
public and product liability
insurance
indemnities
access to the venues and accreditations
8.2 Sports Sponsorship Agreements 127
4
For example, an elaborate and wide ranging scheme was put into action and successfully
implemented during the 2002 Salt Lake City Winter Olympics. Likewise, strict rules, having the
backing of statutory law, have been put into force by the Organising Committee (LOCOG) of the
London 2012 Summer Olympics. See the London 2012 official website at www.london2012.com,
which summarises the rules and explains the legal raison dtre for them.
The International Olympic Committee has introduced a Naming and Shaming procedure in
which offenders are exposed in a Press Conference! This seems to have been quite effective on
occasions, but must be handled discreetly to avoid any claims of Defamation (Trade Libel/
Injurious Falsehood).
For further information on this important topic of Ambush Marketing generally, see Chapter 11
by Ian Blackshaw in Sports Law by Gardiner et al., 2006 third edition, Cavendish Publishing,
London.
5
See The International Sports Law Journal, ISLJ 2006/1-2, at pp. 100102.
8.2 Sports Sponsorship Agreements 129
extent of the Sponsors obligations to provide the value in kind concerned need to
be spelled out in the Sponsorship Agreement. For example, in an official office
equipment sponsorship category, the number and type of computers, photo-
copiers and other specified items of office equipment to be supplied to the event
organizers and their officials and the terms of their maintenance, if appropriate,
need to be stated.
Often Sponsors require an option to renew or extend the Sponsorship Agree-
ment on its expiration or a right of first refusal. Such clauses need to be carefully
drafted too. In the first case, care must be taken not to use loose wording, which, in
effect, grants an option to renew or extend in perpetuity. For example, to avoid this
result, the following wording should be used:
The Sponsor shall have the right to extend this Agreement for a further period of.
[state the length of time in words and figures] on the same terms and conditions of this
Agreement with the exception of this present clause. [emphasis added].
Without these qualifying words, the Agreement may be extendable for, say, one
year periods for ever.
As for rights of first refusal, these are usually accompanied by a matching
option, which also needs to be carefully worded. Also, depending upon the par-
ticular circumstances, such a matching option, also known as the English clause,
may raise competition law issues, if the effect is to exclude competitors of the
Sponsor being able to bid for the Sponsorship rights (see Chap. 16).
In view of the international nature of Sports Sponsorship, particular attention
also needs to be paid to the legal system which will govern the relationship
between the parties, as well as the method and place for resolving any disputes.
Alternative Forms of Dispute Resolution, such as Mediation by the Court of
Arbitration for Sport, rather than traditional ones through the Courts or Arbitration
Tribunals, such as the International Chamber of Commerce in Paris, France or the
American Arbitration Association in New York, USA, are proving popular and
cost-effective in practice (see Chap. 18).
Another form of sports sponsorship, which originated in the United States and is
proving popular around the world, is Corporate Naming Rights of Stadia and
Arenas. See, for example, the deal between Arsenal Football Club and Fly
Emirates Airline mentioned above.
In view of its importance and cost-effectiveness compared with traditional
forms of corporate advertising, we will devote a separate chapter to the subject of
Sports Stadia Naming Rights Agreements. See Chap. 9.
130 8 Sports Sponsorship Agreements
The reader will find general Precedents of these Agreements in Appendix 2 (8.5.2)
and Appendix 3 (8.5.3) respectively of this chapter. Again, for general information
purposes.
Sports Sponsorship is the bed rock of Sports Marketing and, in its varied forms, is
a significant revenue earner for Sports Bodies and Rights Holders. It is a complex
subject and those responsible for designing a Sponsorship Programme, with its
hierarchy of rights; negotiating the corresponding Sports Sponsorship deals; and
drafting the required Agreements certainly need to have their wits about them
not least, in recognising and dealing with actual and potential so-called Conflict
Marketing situations, which, if not handled properly and in a timely manner, can
undermine the whole Sponsorship Programme and its profitability.
8.5 Appendices 131
8.5 Appendices
8.5.1 Appendix 1
Introductory Remarks
Sport is now a global industry worth more than 3% of world trade and almost 2%
of the combined GNP of the enlarged European Union comprising 25 Member
Sates with a total population of 450 million.6 It is not surprising, therefore, that the
worlds major consumer corporations are falling over one another in their rush to
sign up sports personalities, like the Beckhams of this world, to promote and
endorse their products and services.
As Anne M. Wall has pointed out:
Athletes can be ambassadors for the products and services they use. Their endorsement
and positive publicity can lift consumer brand awareness, enhance brand image and
stimulate sales volume. Upon introduction, licensed products that carry a celebritys name
can establish instant credibility for the brand in the market place.7
Indeed, many such personalities are in demand to endorse and promote, through
their fame and notoriety in the sporting world, a range of products marketed by a
variety of companies.8
This is fine and dandy as long as the corporations and their products are not in
competition with one another. Exclusive deals are the order of the day. So
branding conflicts are not an uncommon phenomenon in sport and need to be
resolved.
*
This is an abridged version of a Paper presented by Ian Blackshaw to a Conference on Co-
Branding Issues in Various Industries organised by the Benelux Chapter of the Licensing
Executives Society International and held in Rotterdam, The Netherlands, in May 2005.
Previously published in The International Sports Law Journal (2006), pp. 100101. Reproduced
with permission of the author and the ISLJ.
6
Branding has played a significant role in making sport such big business. This process is often
referred to as the commodification of sport. For more on this subject, see Sports Law by
Simon Gardiner, Mark James, John OLeary, Roger Welch, Ian Blackshaw, Simon Boyes and
Andrew Caiger Third Edition August 2005 Cavendish Publishing London.
7
See Sports marketing and the law: protecting proprietary interests in sports entertainment
events Marquette Sports Law Journal 1996 at p. 154.
8
Sports stars like David Beckham, Venus and Serena Williams and Tiger Woods earn more off
than on the field of play through lucrative sponsorship and endorsement deals.
132 8 Sports Sponsorship Agreements
9
The full text of clause 4 of the standard FA Premier League Players Contract is set out on
pp. 341343 of the Book Sports Image Rights in Europe by Ian S. Blackshaw and Robert
C.R.Siekmann (Eds.) 2005 TMC Asser Press, The Hague, The Netherlands.
8.5 Appendices 133
Furthermore, the players general freedom to conclude other image rights and
promotional/public relations deals outside the FAPL contract is specifically pro-
vided for in clause 4.5, which reads as follows:
Except to the extent specifically herein provided or otherwise specifically agreed with the
Player nothing in this contract shall prevent the Player from undertaking promotional
activities or from exploiting the Payers Image so long as:
4.5.1 the said promotional activities or exploitation do not interfere or conflict with the
Players obligations under this contract; and
4.5.2 the Player gives reasonable advance notice to the Club of any intended promo-
tional activities or exploitation.
Also, clause 4 of the FAPL contract is negotiable under the terms of clause
4.11, which provides (in part) as follows:
Nothing in this clause 4 shall prevent the Club from entering into other arrangements
additional or supplemental hereto or in variance hereof in relation to advertising marketing
and/or promotional services with the Player or with or for all or some of the Clubs players
(including the Player) from time to time.
France
In France, the matter is governed by article 511 of the Charter of Professional
Football. When signing the contract of employment, each player agrees in a
specific addendum to grant to his club the right to exploit his image and/or name,
collectively or individually, provided at least five players image and/or names are
exploited in the same way.
A collective exploitation of those rights can be entrusted, partially or entirely, to
the French Football League, to centralise exploitation and control.
Since 1 July, 1998, players are free to use boots and gloves bearing brands or
logos of their own choosing.
Germany
In Germany, the matter is generally governed by contract and the applicable legal
rules.
Thus, in clothing sponsorship contracts, an individual sports person can only
assign rights that have not yet been granted to someone else. So, if a footballer
agrees in the employment contract with his club to use a specific strip, he cannot
sign an outfitter contract for himself with some other manufacturer. He can only
exploit any rights that have not been exhausted in his club contract of
employment.
134 8 Sports Sponsorship Agreements
However, as such rights are generally granted to the club on an exclusive basis,
it is clear that the individual players room for manoeuvre is very restrictedif not
non-existent.
The Netherlands
In the Netherlands, such conflicts are often settled through the Courts.
For example, in the case of Notten cum suis and KNVB (Royal Netherlands
Football Association),10 after it had been customary for several years for players in
the Dutch football team to enter into their own football boots contracts, the KNVB
changed over to a contract with Adidas, under which the Dutch team players were
obliged to wear Adidas boots. The Utrecht District Court found against the KNVB,
because there had been no consultations with the players in advance about the
change to the normal procedure and the monies arising from the Adidas spon-
sorship contract were enjoyed only by the KNVB. So, the principle of prior
contractual rights applied.
This same principle was also applied by the Breda District Court in the case of
Ajax-Umbro and Brian Roy-Borsumij, involving a contract entered into by the
player, Brian Roy, with a clothing supplier, Borsumij, prior to his joining Ajax,
who had a deal with Umbro but were aware of the players existing contract.
Under the provisions of section 46, Book 2, of the Dutch Civil Code, sports
bodies can, in certain circumstances, impose legally binding obligations on their
members in relation to third parties regarding sponsorship and other rights. This
statutory provision reads (in translation) as follows:
To the extent that the contrary does not follow from the articles, the association may
stipulate rights for and on behalf of its members and, in so far as this has been explicitly
provided by the articles, enter into obligations for the same and on their behalf. It may take
legal action for and on behalf of the members to enforce such stipulated rights, including
the right to claim damages.
In this context, the case of KNVB and Feyenoord11 is the leading authority.
It was held that, in order to impose obligations on members, the statutes of the
sports body must be clear and that it is not sufficient for the sports body to use
general and vague language. In this case, the Royal Netherlands Football Asso-
ciation (KNVB) wished to bind all the Dutch Clubs in the Premier Division to
certain arrangements made with a third party regarding the right to televise home
games. The Amsterdam Court of Appeal held that the statutes were not concrete
enough and too generally worded for the claimant Feyenoord to be bound by the
obligations owed to the third party concerned. For someone to be legally bound by
a stipulation of this kind, the nature of the obligation concerned must be clearly set
out in the statutes. Otherwise, the effect of general wording would be tantamount
to the Clubs having given the KNVB full discretionary powers, which was not,
in fact, the position.
10
Utrecht District Court, 23 February, 1976.
11
Amsterdam Court of Appeal, 8 November, 1996.
8.5 Appendices 135
Norway
In Norway, the Norwegian Football Federation (Norges Fotballforbund) (NFF) in
their agreements with players provide that the players can enter into up to three
personal sponsorship agreements, provided that they do not conflict with the
federations sponsorship programme. And, furthermore, that one of the three
individual sponsorship agreements must be for charitable purposes!
The rationale of the NFF restrictions is purely a commercial one to protect the
value of the exclusive rights of sponsorship sold by the NFF to their own
sponsor(s).
Under the arrangements, the NFF must accept the personal sponsor prior to the
individual player concluding the corresponding agreement. In practice, the NFF
co-signs the agreement. Either way, potential conflicts can be identified and nipped
in the bud. And, thus, expensive and lengthy law suits avoided.
Concluding Remarks
The problem of sports branding conflicts involving sports personalities and teams/
clubs and how to resolve them is a thorny and commonplace one. This is largely
the result of the popularity of sports branding in its different forms and the
demands made by sponsors for product/service category exclusivity in their sports
marketing arrangements.
In some cases, these conflicts are not only foreseen by sports bodies, but are
also provided for in their Regulations and/or their standard forms of player con-
tracts. In other cases, the parties may have to rely on legal solutions through the
Courtslargely based on the application of general principles of contract law.
Because of the need, in many cases, for such conflicts to be resolved quickly,
mediation may provide an effective alternative dispute resolution method.
In the majority of cases, potential conflicts are often solved, in practice, by
creative marketing solutions and other pragmatic ad hoc arrangements, particu-
larly in relation to award ceremonies and the press conferences that inevitably
follow them. It has not been unknown for some sports persons to wrap themselves
in their national flags, not as a sign of patriotism, but as a means of covering up a
conflicting brand or logo on their sports clothing!
One thing, however, is clear, as sports personality branding continues to grow
in importancenot least in financial termsthere is much work for sports law-
yers, especially in those cases where amicable and pragmatic solutions cannot be
achieved in a conflicting situation.
136 8 Sports Sponsorship Agreements
8.5.2 Appendix 2
*
This precedent provides for the sponsorship of a series of events, in this case road running
events. It illustrates the rights granted in relation to such events and the obligations which might
be entered into by the parties. Source Lexis Nexis; reproduced with permission.
Where VAT is payable under this Agreement the following clause should be inserted:
All fees, disbursements and expenses payable under this Agreement are subject to the addition of
VAT.
8.5 Appendices 137
Intellectual Property Rights any and all intellectual property rights including
(without limitation) patents, trade marks and
designs (whether registered or unregistered)
including any applications for the foregoing,
copyrights, database rights and rights in
performances;
Product Group the goods and services falling within the catego-
ries of business specified in Schedule 3;
Sponsors Group the Sponsor and its subsidiary and associated
companies as each such term is defined in the
Companies Act 1985 as amended by the Compa-
nies Act 1989;
Sponsors Group Products (insert product group);
Sponsors Logos such of the Sponsors Groups logos and trade and
service marks which the Federation is permitted
by the Sponsor to use pursuant to this Agreement;
Sponsorship Fees the fees payable by the Company pursuant to
clause 4 of this Agreement for the Sponsorship
Rights;
Sponsorship Rights the rights set out in Schedule 2;
Subsidiary Sponsor other non-title sponsors and proposed sponsors of
the Events or any part thereof;
Television Company the organisation(s) televising some or all of the
Events by terrestrial and/or satellite broadcast;
Term the period set out in clause 2 of this Agreement;
Territory means [the United Kingdom];
Venues the venues as set out in Schedule 1 or such other
venues as may be agreed at which the Events shall
be held; and
Year a period commencing on (date) and expiring on
(date) in the following calendar year or the date
of termination of this Agreement, if sooner.
In this Agreement the singular includes the plural and vice versa and any gender
includes any other gender.
The clause headings do not form part of this Agreement and shall not be taken into
account in its construction or interpretation.
References to clause(s) and schedule(s) are references to clause(s) and schedule(s)
of and to this Agreement.
Term of Agreement
1.1 This Agreement shall commence on (date) and shall remain in force until and
including (date) unless previously determined as provided in this Agreement.
138 8 Sports Sponsorship Agreements
1.2 The Sponsor shall have the option to extend the period of this Agreement for
a further Year, such option to be exercised by giving written notice to the
Federation on or before (date) of its desire to do so. If the option is exercised
by the Sponsor the provisions of this Agreement shall apply during such
extended period but excluding any provision for further extension of
the Term.
Grant of rights
2.1 Subject to the terms of this Agreement:
2.2 the Sponsor agrees to sponsor the Events which shall be known and referred
to by the names set out in Schedule 1 or such other name as may be agreed
between the parties to this Agreement; and
2.3 the Federation grants to the Sponsor the Sponsorship Rights.
Consideration
In consideration of the due and proper performance by the Federation of its
obligations under this Agreement and the grant to the Sponsor by the Federation of
the Sponsorship Rights the Sponsor shall pay to the Federation during the Term the
following amounts:
3.1 in the first Year of this Agreement the sum of ; and
3.2 in any subsequent Year (including for the avoidance of doubt any extended
period) such sum as shall be equal to the Sponsorship Fee payable in the
immediately preceding Year increased by the Retail Prices Index.
3.3 If in any Year the whole or a substantial part of any Event does not take place
in accordance with this Agreement the Sponsorship Fees in respect of such
Year shall be reduced by [%] per cancelled Event.
3.4 The Sponsorship Fees payable by the Sponsor in each Year of this Agree-
ment shall be paid by the Sponsor to the Federation in four equal instalments
together with the VAT thereon on receipt of a valid invoice from the
Federation as follows:
in respect of the first Year of the Term on 1 April (or such later date as
shall be agreed by the Sponsor and the Federation), 1 June, 1 August and 1
November; and
in respect of any subsequent Year on each of 2 March, 1 June, 1 August
and 1 November in such Year.
3.5 The Federation shall provide the Sponsor with VAT invoices one week prior
to the due date for each of the instalments referred to in clause 3.4 above.
Responsibility for organisation
4.1 The Sponsors Group shall have no responsibility for the organisation or
operation of the Events and the Federation shall indemnify the Sponsor and
each member of the Sponsors Group in accordance with clause 7.
8.5 Appendices 139
6.2.12 obtain and secure compliance with all necessary consents, licences
and approvals of all relevant governmental, local or other competent
authorities in connection with the organisation and operation of each
of the Events;
6.2.13 require (and take all reasonable steps to ensure that) all competitors
in the Events do not promote any competitor of the Sponsor or any
product other than Sponsors Group Products whilst competing in the
Event or in any associated activities;
6.2.14 use its best endeavours to contract or otherwise arrange or procure for
the participation in the Events of leading athletes;
6.2.15 provide competent announcers of good reputation and standing for
the Events;
6.2.16 use its best endeavours to help host the VIP guests of the Sponsors
Group and to provide the opportunity for executives of the Sponsors
Group or their spouses to present prizes and to participate at the
Events;
6.2.17 ensure that the Sponsors Group receives a sponsors credit on all
promotional materials used at or in relation to the Events;
6.2.18 not do or omit to do anything which is prejudicial to the good image
of the Sponsors Group;
6.2.19 provide Venues which shall in all respects be suitable and safe for the
staging of Events;
6.2.20 in the event of any circumstances occurring in respect of any or all of
the Events which seriously damage or are likely to seriously damage
the image and good standing of the Sponsor take such steps as may be
reasonably required by the Sponsor including, but not limited to,
ceasing to use and removing all reference to the Sponsors Logos in
conjunction with the Events;
6.2.21 and/or liaise and fully co-operate with the Sponsors Group in the
handling of all publicity arising out of such circumstances so as to
minimise the likelihood of any damage arising to the image and good
standing of the Sponsors Group;
6.2.22 appoint the Federation Liaison Officer to liaise with the Companys
Liaison Officer to facilitate the operation of the Sponsors sponsor-
ship of the Events under this Agreement;
6.2.23 ensure that any promotions carried out by Subsidiary Sponsors in
relation to any or all of the Events carry the Event logo;
6.2.24 compile and make available to the Sponsors Group free of charge at
such times and in such manner as the Sponsors Group requires the
Federations Database;
6.2.25 promote and publicise on a regional and national basis the Events
by all reasonable means and in consultation with the Sponsors
Group; and
6.2.26 without prejudice and in addition to any other provision of this
Agreement fulfil the further obligations set out in schedule 5.
8.5 Appendices 141
8.3 Any termination of this Agreement shall be without prejudice to any accrued
rights and remedies of the parties at the date of termination. Further, without
prejudice to any claim for damages which may be maintained by the Sponsor
in relation to any breach of this Agreement by the Federation upon any
termination of this Agreement by the Sponsor pursuant to clauses 8.1 or 8.2
above the Sponsor shall immediately be released from any further or
continuing obligation to pay any Sponsorship Fees and the Federation shall
promptly repay to the Sponsor such amount of the total Sponsorship Fees due
in respect of the Year during which such termination occurs as shall have
been paid to the Federation after deduction by the Federation of the rea-
sonable costs and expenses properly incurred by the Federation in the per-
formance of its obligations arising under this Agreement up to the date of
such termination.
Rights of third parties
9.1 A person who is not a party to this Agreement may not rely upon or enforce
any rights pursuant to the Contracts (Rights of Third Parties) Act 1999.
AS WITNESS etc.
SCHEDULE 1
The Events
(list events and venues)
The Events will take place at dates to be arranged after consultation between
the parties as provided for in the body of this Agreement which will take into
account the calendar and the scheduling requirements of the Television
Company.
SCHEDULE 2
The right for the Sponsors Group to have a colour back page advertisement (for
which all artwork and colour separation costs will be borne by the Sponsors Group) and
one full prominent inside page for editorial (supplied by the Sponsor and agreed in
advance with the Federation) in the official brochure and each official Event programme.
SCHEDULE 3
SCHEDULE 5
Further obligations of the Federation
In respect of each Event the Federation shall at its own cost secure or cause to be
secured the following services and facilities:
a mailing address;
all necessary administrative support including but not limited to office
equipment (to include computer equipment) and accommodation;
the staffing of and carrying out of all necessary administrative functions to
include mail outs, information and the processing of entry forms, fees,
numbering and results monitoring;
all necessary manpower for the conduct of the Event including officials,
marshals, stewards, persons to erect gantries, route barriers, boards and route
markers, dispensers of refreshments, race numbers (and T-shirts, medals,
certificates) and collectors of results data;
the provision of accommodation for competitors and other personnel con-
nected with each Event;
adequate security arrangements for all aspects of each Event;
all necessary approvals and consents to the planning of routes;
power generation and use of lighting;
use of route barriers;
adequate toilet facilities (as per the recommendation of environmental health
officers);
all necessary public address systems;
use of local transport facilities;
8.5 Appendices 145
[race] permits;
use of finishing funnels and recording systems including videos;
adequate medical facilities including first aid equipment;
organisation of communications and protocol;
VIP seating area[s] at the Venues; and
clean up operations immediately after the Event.
In respect of each Event the Federation shall further be responsible for and
organise at its sole cost as many of each of the following items as is specified or
otherwise as shall be required:
tickets;
advertising and mail outs;
leaflets;
banners and perimeter advertising boards;
directional signage;
public relations materials;
identification badges;
photographers bibs and officials uniforms (at least one per photographer/
official);
[the lead car] at each Event;
the winners podium;
the start and finish gantries relating to the Event; and
the marquee (including catering, such catering to be paid for by the Sponsor
to be located at the finish of each Event for guests invited by the Sponsors
Group, VIPs [and leading middle distance athletes].
In respect of each Event the Federation shall keep the Sponsors Group properly
advised of all appropriate and/or desirable advertising opportunities including, but
not limited to, those in regional television broadcasting, specialist magazines,
newspapers and radio (in each case both national and local) and shall liaise with
the Sponsors Group and its agent with regard to maximising and taking full
advantage of such opportunities, provided that the decision whether or not to
advertise and the responsibility (and the cost) of placing any such advertisement
shall be that of the Sponsors Group.
8.5.3 Appendix 3
Whereas:
The Governing Body is the governing body for the sport of (specify) in the
Territory and (inter alia) organises and administers the Event.
The Company manufactures (insert details) and wishes to sponsor the Event.
The Governing Body is the owner of all commercial rights in and has agreed to
grant to the Company various rights in connection with the Event on the terms
of this Agreement.
It Is Agreed as follows:
*
Source: Lexis Nexis; reproduced with permission.
8.5 Appendices 147
3.4 The Governing Body shall ensure that the Sponsored Title and/or the
Sponsored Logo appears on all official Governing Body publications and
printed material (including tickets to each Match) produced by or for the
Governing Body and/or the Club and on such press releases and stationery as
is provided by the Company concerning the Event, the front cover of the
programme for each Match as well as the backdrop during press conferences
organised by the Governing Body regarding the Event and (where practi-
cable) the Sponsored Title and/or the Sponsored Logo shall appear on the
backdrop for any studio discussion or interview regarding the Event trans-
mitted by a Broadcaster. The Governing Body shall further ensure that all
material relating to the Event produced by the Commercial Partners and the
Clubs incorporates the Sponsored Title and/or the Sponsored Logo.
Television coverage5
5.1 In each Season during the Term the Governing Body shall procure that on
terrestrial television at least (number) Matches are Broadcast either live,
as live, or as highlights. The Governing Body shall use its reasonable
endeavours to ensure that all Matches are Broadcast (whether on cable,
satellite or terrestrial television) as often as is reasonably practicable.
5.2 In relation to all Broadcast coverage of the Event by any Broadcaster the
Governing Body shall procure that each Broadcaster and any other person
with whom the Governing Body enters into an arrangement for Broadcast of
the Event shall ensure that:
5.2.1 the Sponsored Logo and Sponsored Title appear with appropriate
prominence in the opening and closing titles of all Broadcasts of
Matches, in all trailers, previews and other promotional material or on
any screen clock or official timer, and (in the case of commercial
broadcasters only) in all pre-advertising breaks which are Broadcast
by a Broadcaster in any part of the Territory;
150 8 Sports Sponsorship Agreements
5.8.1 The Broadcaster shall grant to the Company the right of first and
exclusive negotiation with respect to the purchase of any broadcast
sponsorship opportunity in relation to its Broadcasts of the Matches
on an exclusive basis. In this clause, first and exclusive negotiation
means that, before offering any broadcast sponsorship to any third
party the Broadcaster shall:
5.8.1.1 first propose to the Company in writing the terms and
conditions of acquisition thereof; and
5.8.1.2 second, negotiate exclusively with the Company (unless
and until the Company agrees to purchase such broadcast
sponsorship) in good faith from the date such proposal is
received for 30 days;
whereupon if the Company and Broadcaster fail to reach an
agreement by the end of the period specified above the
Broadcaster shall be free following (insert details) to con-
tract with any third party whose product categories do not
conflict with the product categories pertaining to the
Company or who is not a competitor of the Company.
5.8.2 In addition, the Governing Body shall ensure that each Broadcaster
grants to the Company the right of first negotiation with respect to the
purchase of commercial airtime. For the purposes of this clause, first
negotiation means that, before offering any commercial airtime to
any third party in the Companys product category or to any com-
petitor of the Company the Broadcaster shall:
5.8.2.1 first propose to the Company in writing the terms and
conditions of acquisition thereof; and
5.8.2.2 second negotiate exclusively with the Company (unless and
until the Company agrees to purchase all such commercial
airtime) in good faith from the date such proposal is
received for a period of 10 days; whereupon if the Company
and the Broadcaster fail to reach an agreement by the end of
the period specified above the Broadcaster shall be free to
contract with any third parties with respect to such com-
mercial airtime offered to the Company.
Designations
6.1 The Company may use the following designations or such other designation
(or designations) as the Company notifies to the Governing Body, to asso-
ciate the Company Products with the Event, as follows:
6.1.1 Official Sponsor of (governing body);
6.1.2 Official Supplier of (governing body); and
6.1.3 (subject to the actual supply of Company Products to the Governing
Body) Official (name of product) of (governing body).
152 8 Sports Sponsorship Agreements
6.2 The Company undertakes that it shall not in exercising the Rights use any
designations referring to the Event other than the Designations or the
Sponsored Title.
6.3 The Company may use the Designations on the packaging of Company
Products, in printed promotional and publicity materials, on merchandise
and/or all advertising media (including without limitation television and
radio commercials) for the Company or Company Products which may be
issued or produced by or on behalf of the Company and in exercising any of
the Rights.
6.4 Notwithstanding the foregoing terms of this clause the Company is not
obliged to use the Designations when exploiting the Rights under this
Agreement.
Exclusivity
7.1 Subject to the provisions of this clause 7 the Governing Body shall:
7.1.1 not grant to any third party the right during the Term to use any of the
Designations, to use any designations which are substantially similar
to the Designations, to use the Sponsored Title, to use any title similar
to the Sponsored Title or any part thereof (except in so far as is
necessary to comply with its obligations under this Agreement) or to
describe itself as the title sponsor of any of the Events;
7.1.2 not appoint any person that manufactures Products to be a sponsor of
the Event or otherwise to be associated with the Event during the
Term;
7.1.3 not appoint any Competitor or renew any agreement with a Com-
mercial Partner who is a Competitor to the Company;
7.1.4 procure that no Competitor has access to advertising on Perimeter
Boards at any of the Matches; and
7.1.5 procure that no Competitor is allowed to advertise or distribute
promotional material in any way at the Grounds and Venues of any of
the Matches.
7.2 Notwithstanding the provisions of clause 7.1 the Company acknowledges
and agrees that the Governing Body is not able to prevent Clubs from
entering into contracts with Competitors in general and the Governing Body
will use its reasonable endeavours to ensure that no such rights the same as or
similar to the Rights are granted by any Club to a Competitor and the Club
will not by any act or omission or arrangement with their own commercial
partners (whether a Competitor or not) devalue or derogate from the Rights.
7.3 The Governing Body shall not during the Term or any renewal thereof enter
into any arrangement in connection with any competition or tournament
or otherwise under the auspices of the Governing Body where another party
to such an arrangement is a Competitor.
8.5 Appendices 153
Fees
8.1 In consideration of the grant of the Rights made to it by the Governing Body
under this Agreement the Company shall pay the Governing Body the
following amounts:
8.1.1 in respect of the Season;
8.1.2 in respect of the Season;
8.1.3 in respect of the Season;
8.1.4 in respect of the Season; and
8.1.5 in respect of the Season.
8.2 Each payment in clause 8.1 above includes in respect of the cost of
admission tickets which the Company has a right to receive under para 8 of
Schedule 1 to this Agreement.
8.3 The Company shall pay the amounts due under clause 8.1 not later than
30 days following receipt by the Company of correct invoices from the
Governing Body provided that the Governing Body shall not invoice the
Company prior to (date) in any Season during the Term.
8.4 The Fees are exclusive of any VAT which may be or become payable and the
Company shall pay any such VAT to the Governing Body upon receipt of an
appropriate VAT invoice.
Mutual warranties and indemnities
Each party warrants to the other that:
9.1 it is free and entitled to enter into this Agreement and to perform the obli-
gations undertaken by it under this Agreement and that it has not entered into
and will not enter into any agreement with any third party which might
conflict with the terms of this Agreement;
9.2 it will not disclose to any third party other than to its professional advisers
or as required by law or (in the case of the Governing Body) to the
Clubs or as agreed between the parties any information relating to the
business or affairs of the other nor any of the contents or provisions of this
Agreement; and
9.3 it will indemnify and keep indemnified the other against all actions,
proceedings, claims, costs and expenses (including without limitation legal
fees) and any other damage or liability suffered by the other as a direct or
reasonably foreseeable result of a breach of any of the warranties,
undertakings or agreements on its part contained or made in this
Agreement.
154 8 Sports Sponsorship Agreements
12.2 If at any time during the Term or in the Season immediately after the
termination of this Agreement by effluxion of time the Governing Body
proposes to enter into any agreements with a third party in relation to some
or all of the Rights the following terms apply:
12.2.1 the Governing Body shall notify the Company in writing of the
terms of any proposed agreement with a third party which terms
shall include but shall not be limited to rights to be granted to and
by the Governing Body (the Proposed Sponsorship Terms). Such
notice must contain full disclosure of the Proposed Sponsorship
Terms and include any change made in the Proposed Sponsorship
Terms during the option period in clause 12.2.2;
12.2.2 the Governing Body shall grant the Company an option to enter an
agreement with the Governing Body on terms equivalent to or
better than the Proposed Sponsorship Terms, such option to be
valid for 30 days from the date of notice to the Company of the
Proposed Sponsorship Terms;
12.2.3 it is agreed that the Company shall be deemed to have matched the
Proposed Sponsorship Terms if the financial terms of the deal
proposed by the Company are the same as or better than the Pro-
posed Sponsorship Terms.
Termination
13.1 Either party may terminate this Agreement immediately upon notice in the
event that the other:
13.1.1 commits a material breach of any obligation under this Agreement
which breach is incapable of remedy or cannot be remedied in time
for the Event;
13.1.2 commits a material breach of any obligation under this Agreement
and, if such breach is capable of remedy, fails to so remedy such
breach within 28 days of receiving notice from the other requiring
remedy; or
13.1.3 enters into a composition or arrangement with its creditors, has a
receiver or administrator or administrative receiver appointed or
becomes insolvent or unable to pay its debts when they fall due.
13.2 In addition to its rights of termination under clause 13.1 the Company may
terminate this Agreement forthwith by giving written notice to the Gov-
erning Body if:
13.2.1 the constitution or organisation of the Governing Body has
undergone any change which could have a material adverse effect
on the value of the Rights to the Company;
13.2.2 the Governing Body breaches its obligations under clause 5;
13.2.3 (specify sport) is brought into disrepute through the actions of the
Governing Body or the Clubs or any of them; or
156 8 Sports Sponsorship Agreements
13.2.4 the Broadcast coverage of the Event in any Season falls below the
level of coverage achieved for the Event in the (insert details)
Season.
Effect of termination
14.1 Subject to clause 14.2 upon termination in accordance with clause 13:
14.1.1 the rights and obligations of the parties under this Agreement shall
terminate and be of no future effect except that clauses 9.2, 9.3 and
15 shall remain in full force and effect;
14.1.2 any rights or obligations to which any of the parties to this
Agreement may be entitled or be subject before such termination
shall remain in full force and effect;
14.1.3 such termination shall not affect or prejudice any right to damages
or other remedy which the terminating party may have in respect of
the circumstances which gave rise to the termination or any other
right to damages or other remedy which any party may have in
respect of any breach of this Agreement which existed at or before
the date of termination.
14.2 Notwithstanding clause 14.1, if this Agreement is terminated by either party
or expires due to effluxion of time the Company may sell off or cause to be
sold off Company Products and any merchandise or Premiums bearing the
Sponsored Title and/or the Sponsored Logo provided that such rights do not
extend beyond 180 days after the date of any such termination.
Limitation of liability
15.1 Notwithstanding anything to the contrary in this Agreement neither the
Governing Body nor the Company shall be liable in any circumstances for
any indirect or consequential loss (which expression shall include but not be
limited to loss of anticipated profits, loss of anticipated savings and all other
economic loss) resulting from any breach of this Agreement.
Intellectual property
16.1 Each party shall promptly and fully notify the other of any actual, threa-
tened or suspected infringement in the Territory of any IPR of the other
party which comes to the others notice and of any claim by any third party
coming to its notice. Each party shall, at the request and expense of the
other, do all such things as may be reasonably required to assist in taking or
resisting any proceedings in relation to any such infringement or claim.
16.2 Unless otherwise set out in this Agreement nothing in this Agreement shall
give either party any rights in respect of any IPR used by the other or of the
goodwill associated therewith and the parties acknowledge that, except as
expressly provided in this Agreement, neither party shall acquire any such
rights and that all such rights and goodwill are and shall remain vested in
the other.
8.5 Appendices 157
16.3 The Company shall not use any trade marks or trade names so resembling
the Governing Body Marks or trade names of the Governing Body as to be
likely to cause confusion or deception.
16.4 The Governing Body shall not authorise any third party to use the Company
Marks or any IPR of the Company. If any third party requires the use of the
Company Marks or any other IPR of the Company then the Governing
Body shall inform the Company of such requirement. The Company may
(in its absolute discretion) grant such third party the right or licence
required.
16.5 Each party shall, at the request and expense of the other, take all such steps
as the requesting party may reasonably require to assist it in maintaining the
validity and enforceability of the IPR of the other during the Term.
16.6 Neither party shall do or authorise any third party to do any act which
would or might invalidate or be inconsistent with the IPR of the other and
shall not omit or authorise any third party to omit to do any act which by its
omission would have that effect or character.
Assignment
17. Neither party may assign any of its rights or obligations under this Agree-
ment without the previous written consent of the other. The Company may
appoint agents or sub-licensees to exploit the Rights or manufacture Com-
pany Products and undertake obligations on its behalf as it sees fit, provided
that the Company remains liable to the Governing Body in respect of such
appointments.
Entire agreement
18. This Agreement (including the Schedules) constitutes the entire agreement
between the parties with regard to the Event and may only be amended in
writing signed by the duly authorised representatives of both parties.
Waiver
19. No waiver by either party of any breach by the other party of any of the terms
of the Agreement shall be deemed to be a waiver of any preceding or
succeeding breach of this Agreement.
Notices
20. Any notice to be served under this Agreement shall be in writing and served
upon the recipient at its address set out above (or such other address as may
be notified for this purpose) either by hand, by first class mail, or by facsimile
or comparable means of communication and shall be deemed served 72
hours after if sent by mail, on delivery if delivered by hand, and on confir-
mation of transmission if sent by facsimile or comparable means of com-
munication. All facsimile or comparable means of communication will be
followed by postal copies.
158 8 Sports Sponsorship Agreements
Governing law
21. This Agreement shall be governed by and construed in all respects in
accordance with the laws of England and each party hereby submits to the
exclusive jurisdiction of the English courts.
No partnership or joint venture
22. Nothing in this Agreement shall constitute or be construed as constituting a
partnership or joint venture between the Governing Body and the Company
or shall authorise one party to enter into contractual relationships or incur
obligations on behalf of the other party.
Rights of third parties
23. A person who is not a party to this Agreement may not rely upon or enforce
any rights pursuant to the Contracts (Rights of Third Parties) Act 1999.
Competition law
24. The parties shall co-operate fully in the preparation and submission of any
necessary application/notification to the Commission of the European
Communities and/or the relevant United Kingdom competition authorities in
respect of this Agreement with a view to securing any negative clearance or
exemption as may be required. Each party shall bear its own costs of pre-
paring and submitting such application/notification. The parties agree to
effect such application/notification if necessary as soon as may be reasonably
practicable after commencement of the Term.
Execution of further documents
25. At any time after the date of this Agreement each of the parties shall at the
request and cost of the other party execute or procure the execution of such
documents and do or procure the doing of such acts and things as the party so
requiring may reasonably require for the purpose of giving to the party so
requiring the full benefit of all the provisions of this Agreement.
Force majeure
26.1 Neither party to this Agreement shall be deemed to be in breach of this
Agreement or otherwise liable to the other as a result of any delay or failure
in the performance of its obligations under this Agreement if and to the
extent that such delay or failure is caused by force majeure (as defined in
clause 26.2) and the time for performance of the relevant obligation(s) shall
be extended accordingly.
26.2 For the purpose of this clause force majeure means any circumstances
(other than those specifically dealt with in clause 13) not foreseeable at the
date of this Agreement and not within the reasonable control of the party in
question including without limitation:
26.2.1 any strike, lockout or other industrial action or any shortage of or
difficulty in obtaining labour or raw materials;
8.5 Appendices 159
27.3 Each party to this Agreement shall pay its own costs of and incidental to the
negotiation, preparation, execution and carrying into effect of this
Agreement.
AS WITNESS etc.
SCHEDULE 1
3.3 The Company is entitled free of charge to [2] pages of advertising in the Club
programme for each Match.
3.4 The Company may purchase such programmes or publications from the
Governing Body or the relevant Club at cost price.
Advertising rights at each Ground
4.1 During each Season of the Term the Company will receive the following
advertising and promotional rights at each Match in each Ground:
4.1.1 subject to para 4.1.2 below the right to display [4] Perimeter Boards
at each Ground hosting a Match; and
4.1.2 in the case of each Match which is Broadcast at least [2] of such
Perimeter Boards as TV Perimeter Boards.
4.2 Subject to para 4.4 below the Governing Body shall ensure that all perimeter
advertising is in the form of fixed advertising Perimeter Boards.
4.3 If any of the Perimeter Boards are not in the form of fixed Perimeter Boards
the Governing Body shall ensure that the Company receives an equivalent
amount of exposure and of the total time available for such Perimeter Boards
as it would otherwise receive under para. 4.2 above.
4.4 All Perimeter Boards and other signage and advertising material to be used in
connection with Matches by the Company shall be manufactured, produced
and maintained by the Company at its own expense and the appearance of
each Perimeter Board shall be subject to the prevailing Governing Body,
television and other appropriate regulations.
4.5 All Company Perimeter Boards shall:
4.5.1 be of a size not less than (specify) up to a maximum permissible size
according to current regulations; and
4.5.2 so far as possible (and whether or not a Match is Broadcast) occupy a
prominent position and be in view of any television cameras present
at such Matches.
4.6 All Perimeter Boards shall remain the property of the Company.
4.7 The Governing Body shall ensure that during the Matches:
4.7.1 no Ground carries an amount of perimeter advertising from a single
person greater than that of the Company;
4.7.2 no single person is afforded greater promotional opportunities during
any Match at a Ground or Venue greater than that afforded to the
Company; and
4.7.3 no Competitor is allowed any TV Perimeter Boards.
4.8 The Governing Body shall ensure that during and in the period leading up to
the Matches the Perimeter Boards of the Company are not (whether in whole
or in part) obscured, altered or moved by any person.
162 8 Sports Sponsorship Agreements
Pitch activity
5. The Governing Body shall (so far as regulations allow) provide the Company
with the following exclusive rights to display or make reference to the
Sponsored Logo:
5.1 on Pitch corner flags;
5.2 on scoreboard messages at all Matches;
5.3 on pitch or field of play markings;
5.4 on player substitute boards at all Matches;
5.5 on dug outs at all Matches Broadcast;
5.6 on centre circle mats at all Matches Broadcast;
5.7 during tannoy or public address announcements at all Matches; and
5.8 at such other display or reference opportunities as may arise during
the Term.
Access
6. The Governing Body shall use its best endeavours to procure full access on an
all area basis (apart from dressing rooms, player tunnels and private functions)
for the Companys nominated representatives at all Matches, Grounds and
Venues in accordance with a procedure to be agreed with the Governing Body,
such agreement not to be unreasonably withheld or delayed.
Merchandising and promotional rights
7.1 The Governing Body shall procure that the Company may use the crest of
any Club competing in the Event in conjunction with the Sponsored Logo
and/or the Sponsored Title for promotional purposes only.
7.2 The Governing Body shall ensure that:
7.2.1 all official match balls used in the Event carry the Sponsored Logo;
and
7.2.2 all official replica match balls produced by the Governing Body or
any Commercial Partner carry the Sponsored Logo.
7.3 The Company has the exclusive right to exploit such other competition,
promotional activity and other sponsorship packages as relate to the Rights
that become available during the Term.
Tickets
The Governing Body shall procure that the Company receives the following:
8.1 (number) directors box seats at all Matches;
8.2 (number) complimentary tickets per Match; and
8.3 the right to purchase a further (number) tickets for each Match at cost price
for use by the Company, its staff and employees and for use as prizes in
promotions run by the Company as part of the exercise of its rights under this
Agreement but otherwise in accordance with the terms and conditions of
issue of such tickets and (in any event) not for sale or resale by the Company
or by any person receiving such tickets from the Company or any person on
8.5 Appendices 163
its behalf. In addition, the Company acknowledges and agrees that ownership
of all tickets remains with the Governing Body.
Awards
9.1 The Company has the exclusive right to make or create the following awards
in relation to the Rights:
9.1.1 a man of the match award at each Match;
9.1.2 a manager of the month award;
9.1.3 a player of the month award;
9.1.4 a Club of the month award;
9.1.5 a player of the Event award;
9.1.6 a manager of the Event award;
9.1.7 an outstanding achievement of the Event award; and
9.1.8 a score of the Event award.
9.2 The Company may make or create such additional awards as it sees fit,
provided always that it is under no obligation to exercise any of the awards
listed or which may be created under this para 9.
Hospitality
10. The Governing Body shall procure that (at the Companys expense) there are
sufficient hospitality facilities available for all of the Companys guests
holding tickets for the relevant Match.
Internet Rights
11. The Company has the exclusive right without payment of fees (other than as
provided for in this Agreement) to exercise the Internet Rights as it sees fit.
SCHEDULE 2
SCHEDULE 3
The Event
(insert details)
SCHEDULE 4
Company Marks
(insert details)
Notes
1 This Form provides for title sponsorship of a league or cup competition where the
sponsor is granted the right to be the title sponsor of the competition. Apart from
the other subsidiary sponsors, the member clubs and many of the players taking
part in the event are likely to have their own sponsors. In addition, the broadcast
of the competition may also be sponsored. As far as possible, the parties need to
consider carefully the various areas where conflict with the rights of the other
persons, or organisations involved in the competition, may occur, and frame the
grant of rights and the obligations of the parties accordingly.
2 As a long-established competition, there may be existing obligations which
need to be taken into account when defining the rights to be granted to the
sponsor. The sponsor will want to ensure that any existing rights which conflict
with the rights being offered are brought to an end as soon as possible.
3 The extent of the obligations on the part of the governing body to require
participants to use the sponsored title when referring to the competition, or to
ensure that the sponsored title is used in participants printed material, will
depend on the level of control that it has over the participants.
4 Where possible, it is desirable that any logo of the governing body is registered
as a trade mark to give better protection to the parties.
5 The obligations on the part of the governing body regarding television cov-
erage of the governing body should reflect the terms of the agreement with the
broadcaster. For broadcasting agreements see Form 76 [1617] et seq post.
6 The exclusivity provisions have to be considered carefully in the light of the
Competition Act 1998 (47 Halsburys Statutes (4th Edn) TRADE AND
INDUSTRY), and where appropriate, guidance should be sought from the
Office of Fair Trading.
7 The parties should consider whether the advertising boards rights should be
separated out to save VAT. Specialist tax advice should be sought.
Chapter 9
Sports Stadia Naming Rights Agreements
Originating in the States, Sports Sponsorship has spread across the world
and grown into a multi billion US$ global business, as companies and firms have
come to realise the value of associating themselves and their products and services
with prestigious sports events.
As the former leading International Sports Marketing Agency (ISL) once
observed in its Corporate Brochure:
sports sponsorship has evolved to form an integral part of brand marketing, mature
enough for even the most conservative companies to recognize it as a natural, indis-
pensable ingredient in their marketing mix.
In this chapter, we will take a look at the reasons for the rise in popularity of
attaching corporate names to stadia and arenas, and also at some of the contractual
legal and drafting issues that the granting and exploitation of the corresponding
corporate naming rights can give rise to in practice.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 165
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_9,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
166 9 Sports Stadia Naming Rights Agreements
As with any kind of Rights Agreement, perhaps the most important provision of all
is the grant of rights clause.
This defines the nature and scope of the rights granted, and needs to be drafted
very carefully and precisely, to avoid any ambiguities and uncertainties, which can
lead to misunderstandings and differences, which, in turn, can lead to disputes,
which can be time consuming and costly.
For example, are the rights exclusive or non-exclusive? And what is included in
the rights package?
As part of a growing trend, in addition to the naming rights granted, other
commercial opportunities are included as part of a sports marketing package.
These additional rights could include rights to boxes or suites for corporate
entertaining, franchise rights, including so-called pouring rights, particularly
important in the case where a soft drinks company is concerned, team sponsorship
rights, and even facility financing rights, where a bank or other financial institution
is involved.
168 9 Sports Stadia Naming Rights Agreements
Agreement, especially if the uplift is linked to some cost of living Index, which
itself needs to be clearly defined. The payment of interest for late payments, the
rate of interest and when it accrues also need to be covered in the Agreement.
The termination clause is also an key contractual provision. The grounds for
termination, who may terminate and the effects of termination need to be precisely
stated in the Agreement. A provision is often included, and it is sensible and
practical to do so, whereby non-material breaches can be remedied by the party in
default within a specified period of time, say, 15/30 days, failing which the other
party may terminate the Agreement. What is material and what is not material
needs to be defined and also whether days are natural days or working days.
On expiration of the Naming Rights Agreement, the naming rights automati-
cally come to an end by effluxion of time. So, what happens then? In theory, the
owner of the stadium or arena can grant the rights to someone else. But this may
prove costly to the owner, who would have to incur the expense of repainting or
replacing signs, reprinting tickets, producing new seat tags and other items, such as
plastic cups and paper napkins, and so on, depending upon the extent of the
branding. It is more likely that, in practice, the owner will seek to do a new deal
with the former holder of the Naming Rights.
From the point of view of the rights holder, it is prudent and advisable to
include in the Naming Rights Agreement an option to renew the Agreement, or, at
the very least, a right of first refusal to be granted to the Naming Rights. Any such
pre-emptive right should be accompanied by a matching option in favour of the
former holder of the naming rights. In other words, if the conditions for granting
the rights for a new term are refused by the former holder of them, because they
are financially unacceptable, then the rights owner cannot offer a third party better
terms than those refused by the former holder of the rights, without first offering
the same deal to the latter.
It will be appreciated that options to renew, rights of first refusal and matching
options need to be very carefully drafted. In particular, the periods of time and the
manner in which they are to be exercised need to be precisely defined. Options and
pre-emptive rights, especially matching options, can also raise Competition Law
issues. See further on this aspect in Chap. 16.
Another important contractual provision to include in a Naming Rights
Agreement is a confidentiality clause. For business reasons, the parties to the
Agreement will wish to keep the terms confidential, especially the financial ones.
They will also wish to control releases of information to the media, as well as the
holding and conduct of any Press Conferences. Any secrecy obligations will be
subject to any requirements imposed by Law to disclose any confidential material
to certain third parties, for example, in Court Proceedings. Furthermore, any
information of a confidential character that is already in or subsequently enters the
public domain, through no fault of the parties to the Agreement, is not subject to
the secrecy obligations undertaken by them. See further on confidentiality clauses
in Chap. 5.
Lastly, and by no means least, the parties to a Naming Rights Agreement need
to include a Dispute Resolution Clause. In other words, they need to decide,
170 9 Sports Stadia Naming Rights Agreements
in advance, how any dispute arising between them under out of or in relation to the
Agreement is to be resolved. Nowadays, there are a number of options for the
parties to choose from for settling their disputes. They can be traditional and go to
Court. They can be more adventurous and choose arbitration. Or they can be
thoroughly modern and opt for some alternative form of dispute resolution
(ADR). ADR comes in several different forms:
Conciliation;
Mediation;
Mini Trials;
Expert Determination;
Good Faith Determination.
ADR is flexible, informal, confidential, speedy and inexpensive; whereas, Court
and Arbitration Proceedings are, in comparison, generally complex, formal, slow
and expensive. See further on Dispute Resolution Clauses in Chap. 17.
Although Naming Rights of Stadia and Arenas, like other aspects of Sports
Marketing, originated in the United States probably in 1926, when William
Wrigley, the chewing gum magnate and owner of the Chicago Clubs named his
teams stadium Wrigley Field, as with many things, sports ideas and develop-
ments in the States have had a habit, in time, of spreading to the rest of the world
and not least to Europe. New sports stadiums and arenas, similar to the sports and
entertainment complexes, which have grown up and been developed in the States,
have also begun to be appear in Europe in the last 20 or 30 years or so.
For example, the Hartwall Areena in Helsinki, Finland, which was com-
pleted in 1997 and is named after its biggest sponsor, Hartwall, the beverage
company that is also based in Helsinki. This seats up to 14,000 people and features
78 suites. It is a multi-purpose facility, and has established itself as the countrys
top location for sport, music and corporate events. It incorporates many media
facilities, including state of the art broadcast production and editing suites.
In the UK, Bolton Wanderers Football Club play at the Reebok Stadium and
Stoke City Football Club play at the Britannia Stadium. And the famous Oval
cricket ground in London has been re-named The AMP Oval after the Australian
Financial Services
Company AMP, which paid 2 million for a five years exclusive naming
rights deal.
Incidentally, it should be noted that the use of such naming rights has an impact
on the traditional sports marketing model of a clean stadium from a branding and
promotional point of view.
Generally speaking, however, Europe tends to be soccer mad and tends to build
only soccer stadia. However, the promoters of new soccer stadiums being planned
9.5 The European Scene 171
and built are beginning to realise that, to rely only on gate receipts, is not enough.
These stadia need to generate revenues from other activities, such as the sale of
corporate naming rights. Another solution to this financial problem is to incor-
porate arenas into new stadia to attract other sports, such as track and field, and
other events, such as pop concerts.
As part of the funding process of providing new stadia, additional revenues can
also be generated, following the practice in the United States of granting naming
rights to lending institutions that finance private sports facilities. In these cases, the
bank or finance house arranging the finance acquires the naming rights to the new
facility and uses the naming rights fees to reduce the debt repayments on the loan.
It also acquires valuable promotional and marketing rights as part of the rights
package as well.
Furthermore, new and existing stadiums and arenas in Europe also need to learn
from the States who are wiring up their facilities to allow spectators to take full
advantage of the digital and interactive age directly from their seats! Such
developments also offer further marketing opportunities for creative sports
marketers.
A General Precedent of a US Corporate Naming Rights Agreement will be
found, for illustrative purposes and general guidance, in the Appendix to this
Chapter (9.7).
9.7 Appendix
Recitals
A. KCP owns and operates the Arena (as defined below). The Arena is currently
the venue for home games played by the St. Louis Blues and other sports and
entertainment events. Savvis is a publicly-traded company, which as of the
date of this Agreement specializes in providing business-to-business Internet
service, global data networking services and co-location/hosting provider
services.
B. Savvis desires to license from KCP the naming rights to the Arena, as well as
other ancillary benefits related thereto. KCP desires to license to Savvis
certain naming rights to the Arena, and provide other ancillary benefits related
thereto, subject to the terms and conditions set forth herein and subject to
certain rights to require Bridge to assume all rights, duties and obligations of
Savvis, as provided herein.
Now, Therefore, in consideration of the mutual promises, duties and obligations
set forth herein, the sufficiency of which is hereby acknowledged, the parties agree
as follows:
Agreement
1. Definitions.
a. Arena refers to the arena currently known as Kiel Center, including
those areas immediately surrounding the Arena which are owned by or
under the control of KCP, but specifically excludes the Kiel Opera House.
*
Reproduced with the permission of Kiel Center Partners, LP Saint Louis, Missouri, United
States of America.
9.7 Appendix 173
l. Naming Rights means the exclusive right and license during the Term
to name the Arena.
m. Naming Rights Effective Date means August 31, 2000.
n. Naming Rights Holder means the party which, pursuant to this
Agreement, has the right to exercise the Naming Rights. As of the
Naming Rights Effective Date (as defined herein) Savvis shall be
considered the Naming Rights Holder, subject at all times to the provi-
sions of Section 8 hereof.
o. Naming Rights Holder Advertising means any and all advertising,
promotions and/or sponsorships which are or are intended to advertise,
promote or otherwise publicize the name and/or identity and/or business
of the Naming Rights Holder as set forth on Exhibit A, together with all
substitutions, additions and enhancements thereto which may subse-
quently be agreed to by the parties.
p. Naming Rights Holder Amenities means all benefits and/or amenities
provided or to be approved for the use and/or benefit of the Naming
Rights Holder other than the Naming Rights Holder Advertising and the
Naming Rights Holder Inventory as set forth on Exhibit A, together with
all substitutions, additions and enhancements thereto which may subse-
quently be agreed to by the parties.
q. Naming Rights Holder Business means the business of being a
(i) business-to-business Internet service provider; (ii) a global data net-
working provider and/or (iii) a co-location/hosting provider, subject,
however, to the provisions of Sections 5 and 8 hereof.
r. Naming Rights Holder House Marks means the trademarks of the
Naming Rights Holder specifically identified in Exhibit B, subject to the
provisions of Sections 8 and 9.
s. Naming Rights Inventory means any and all manner of advertising,
promotions and/or sponsorships as set forth in Exhibit A hereto, together
with all substitutions, additions and enhancements thereto which may
subsequently be agreed to by the parties, which are or are intended to
incorporate or otherwise utilize the Arena Graphic Logo and/or the Arena
Mark.
t. NBA refers to the National Basketball Association, or its successor
league.
u. NHL refers to the National Hockey League, or its successor league.
v. St. Louis Blues refers to the St. Louis Blues NHL club or its successor.
w. Savvis Direct Competitor means (i) any person or entity which oper-
ates primarily as a (a) business-to-business Internet service provider, or
(b) global data networking provider, or (c) co-location/hosting provider;
or (ii) any person or entity, at least 50.1% of whose business, as deter-
mined based on gross revenues if such gross revenues are publicly and
readily available at no cost to Naming Rights Holder or, if not so avail-
able, then as determined by such other commercially reasonable methods,
consists of providing business-to-business Internet service, global data
9.7 Appendix 175
This provision shall not apply to, and KCP shall not be required to
terminate, agreements involving sponsorship rights which are in effect
as of the Naming Rights Effective Date during the existing term of
such agreements, the existing term being the term in effect as of the
Naming Rights Effective Date, provided that KCP agrees that the
requirement for termination set forth in this Section 5.c shall apply in
any future renewals or extensions of said existing sponsorship
agreements.
6. Naming Fees.
a. Fees. In consideration of the benefits provided pursuant to this Agreement,
Naming Rights Holder agrees to pay to KCP the following Naming Fees
(consisting of the items under both Section 6.a.i and 6.a.ii below):
i. Provided that this Agreement is not terminated pursuant to Sec-
tion 26.i, upon receipt by Savvis of notice from KCP that the SWB
Agreement has been terminated, Savvis shall issue to KCP an aggregate
of 750,000 shares of common stock in Savvis, $.01 par value. On such
date, Savvis shall deliver certificates representing such common stock
in such names and such designations as shall be requested by KCP in
writing not less than three business days prior to such delivery.
ii. For the fiscal period of [**], Savvis agrees to pay to KCP the sum of
[ **]. For each one year period thereafter, with each period beginning
August 1 and continuing through July 31 (the Fiscal Period),
Naming Rights Holder agrees to pay to KCP an amount equal to
105% of the amount paid during the previous Fiscal Period. Subject
to the potential increase set forth in Section 6.c, the Naming Fees due
shall be as follows:
b. Timing of Payments. For each Fiscal Period beginning with the period of
[ ** ], Naming Rights Holder shall pay an amount equal to one-fourth of
the amount due for that Fiscal Period on or before each of August 1,
November 1, February 1 and May 1;
c. Addition of NBA Franchise. Naming Rights Holder agrees that, in the event
that an NBA franchise agrees to play its home games in the Arena, then KCP
shall cause the Arena Advertising Inventory to include substantially those
items described in Exhibit D. The Naming Fees due for the year in which
such home games commence to be played shall increase by the escalating
NBA Sum, which shall be calculated as described below, unless an NBA
franchise agrees to begin playing its games in the Arena in the middle of the
NBA season, in which case the pro-rata portion of the NBA Sum shall be due
for that year. The NBA Sum shall be the sum of [**] for the first year covered
by this Agreement (Naming Rights Effective Date through July 31, 2001)
and shall increase by the sum of five percent (5%) cumulative for each year
thereafter. By way of example, if an NBA franchise decides to play its home
games in the Arena beginning in the fifth year of this Agreement (August 1,
2004 through July 31, 2005), then the Naming Fees for that year shall
increase by the sum of [**]. Naming Rights Holder acknowledges and agrees
that if an NBA franchise begins to play its home games in the Arena prior to
August 1, 2006, then the corresponding NBA Sum shall be due for that Fiscal
Period and all subsequent Fiscal Periods, in addition to the stock transfer
provided for in Section 6.a. Naming Rights Holder further acknowledges
and agrees that if an NBA franchise begins to play its home games in the
Arena on or after July 1, 2006, then the NBA Sum due for that Fiscal Period
and all subsequent Fiscal Periods shall be in addition to the Naming Fees due
under Section 6.a. The additional payments shall be made in equal install-
ments on the dates other payments are due as provided in Section 6.b. In the
event that the St. Louis NBA franchise or the St. Louis Blues play their home
games in a location other than the Arena (excluding exhibitions or one-time
appearances in other locations), then the Naming Fees shall decrease by the
then-current annual NBA Sum. In the event that both the St. Louis NBA
franchise and the St. Louis Blues play their home games in a location other
than the Arena, the Naming Rights Holder shall have those termination rights
set forth in Section 15.
d. Amounts Are in Addition to Current Sponsorship Fees. Naming Rights
Holder agrees that the amounts due hereunder are in addition to any and
all sponsorship and suite fees which may be due from Naming Rights
[**] Confidential treatment requested
Holder or Bridge under separate sponsorship and/or suite agreements in
effect as of Naming Rights Effective Date.
e. Production Expenses. KCP agrees that all expenses related to the initial
modification of the Arena and/or Arena Advertising Inventory and to the
printing, manufacturing and installation of the Arena Advertising Inven-
tory to reflect the change in the name of the Arena as provided for in this
9.7 Appendix 185
Provided that this Agreement has not otherwise been terminated, KCP agrees,
beginning on the date three (3) years prior to the expiration of this Agreement,
to negotiate exclusively and in good faith for a period of eighteen (18) months
with Naming Rights Holder regarding an extension or renewal of this
Agreement (the Exclusive Negotiating Period). Naming Rights Holder
agrees that, in the event no agreement is reached to renew or extend this
Agreement during the Exclusive Negotiating Period, KCP shall be free to
negotiate with other parties regarding the terms set forth in this Agreement
upon the expiration of the Exclusive Negotiating Period.
b. Limit of One Name Change. The parties hereto acknowledge and agree
that a total of only one name change shall be allowed during the Term.
9. Arena Mark and Arena Graphics Logo.
a. Development of Arena Mark and Arena Graphic Logo.
The parties agree that KCP shall develop, at KCPs expense, the Arena
Mark and the Arena Graphic Logo, provided that the final design of the
Arena Mark and Arena Graphic Logo shall be subject to the approval of
Naming Rights Holder, which approval shall not be unreasonably with-
held, delayed or conditioned. Naming Rights Holder agrees that KCP
shall own all right, title and interest, including without limitation the
copyright, in and to the Arena Mark and the Arena Graphic Logo, subject
to Naming Rights Holders ownership of all intellectual property rights in
and to the Naming Rights Holder House Marks. KCP shall license or
acquire from the creator of the Arena Graphic Logos artists design
sufficient rights, including but not limited to rights in any copyright, to
permit unrestricted use of the Arena Graphic Logo trademark.
b. License to Use Naming Rights Holder House Marks.
The Missouri Corporation (as defined in Section 17.a) hereby grants to
KCP a non-exclusive, royalty-free license to use Naming Rights Holder
House Marks during the Term of this Agreement for the purpose of
(i) using the Naming Rights Holder House Marks to advertise the Arena
and Arena Events subject to the conditions herein and (ii) for the purpose
of allowing KCP to create, use, and own the Arena Mark and Arena
Graphic Logo. Naming Rights Holder shall have prior approval rights
with respect to any form of advertising of the Naming Rights Holder
House Marks (excluding advertising containing Arena Mark or Arena
Graphic Logo), provided that (1) such approval will not be unreasonably
withheld or delayed, (2) the parties shall reasonably agree upon a mutu-
ally convenient process for such approvals to be requested and obtained,
and (3) KCP shall not be obligated to resubmit a request for approval for
proposed advertising similar to that which has already been approved.
KCP agrees that it will cause to appear on or within all advertising,
promotional or display material bearing the Naming Rights Holder House
Marks, below and to the right of said marks or logos, the identification
(R) or TM or SM as will be designated by Naming Rights Holder.
Each of Naming Rights Holder and the Missouri Corporation, if appli-
cable, agrees that it will not, during the Term of this Agreement, attack
the title or any rights of KCP in and to the Arena Mark or Arena Graphic
or attack the validity of the license granted under this Section 9(b).
KCP hereby agrees that its every use of Naming Rights Holder House
Marks shall inure to the benefit of Naming Rights Holder and that KCP
shall not at any time acquire any rights in Naming Rights Holder House
Marks by virtue of any use KCP may make of them. The non-exclusive
188 9 Sports Stadia Naming Rights Agreements
license to use the Naming Rights Holder House Marks shall not prevent
Naming Rights Holder or, if applicable, the Missouri Corporation, from
using the Naming Rights Holder House Marks in any manner whatsoever.
c. License to Use Arena Mark and Arena Graphic Logo.
KCP hereby grants Naming Rights Holder a non-exclusive, royalty-free
license during the Term of this Agreement to use the Arena Mark and the
Arena Graphic Logo in conjunction with the Naming Rights Inventory,
the Naming Rights Holder Amenities and Naming Rights Holders pro-
motions and advertising. KCP shall have prior approval rights with
respect to any form of advertising of the Arena Mark or the Arena Graphic
Logo, provided that (1) such approval will not be unreasonably withheld,
delayed or conditioned, (2) the parties shall reasonably agree upon a
mutually convenient process for such approvals to be requested and
obtained, and (3) Naming Rights Holder shall not be obligated to resubmit
a request for approval for proposed advertising similar to that which has
already been approved. Naming Rights Holder agrees that it will cause to
appear on or within all advertising, promotional or display material
bearing the Arena Mark or the Arena Graphic Logo, below and to the
right of said Arena Mark or Arena Graphic Logos, the identification (R)
or TM or SM as will be designated by KCP. KCP agrees that it will
not, during the Term of this Agreement or thereafter, attack the title or any
rights of Naming Rights Holder in and to Naming Rights Holder House
Marks or attack the validity of the license granted under this Section 9(c).
Naming Rights Holder hereby agrees that its every use of such Arena
Mark or Arena Graphic Logo shall inure to the benefit of KCP and that
Naming Rights Holder shall not, during the Term of this Agreement,
acquire any ownership rights in the Arena Mark or the Arena Graphic
Logo by virtue of any use Naming Rights Holder may make of them.
Upon the termination of this Agreement or expiration of the Term, KCP
agrees to cease any and all uses of the Naming Rights Holder House
Marks, and all parties agree to cease any and all uses of the Arena Mark
and the Arena Graphic Logo, provided that KCP shall have the right to
distribute any materials in its inventory bearing one or more of the
Naming Rights Holder House Marks, the Arena Mark or the Arena
Graphic Logo for a period of six months from the date of termination of
this Agreement or expiration of the Term. In the event that a substitution
of the Naming Rights Holder occurs during the Term of this Agreement,
the Naming Rights Holder House Marks of the substituted Naming Rights
Holder shall be licensed according to the provisions of this Section 9 and
the license to use the Naming Rights Holder House Marks of the Missouri
Corporation and/or the former Naming Rights Holder shall terminate,
subject to KCPs right to distribute materials in its inventory for a period
of six months from the effective date of such substitution.
9.7 Appendix 189
retains the right, at its sole expense, to take any such action as necessary
to protect the applicable Naming Rights Holder House Marks from
infringement and other unlawful use, including any infringement that
may be alleged in the field of goods and services that are now, and in the
future, customarily provided at or related to the Arena or Arena Events.
10. Warranties and Representations.
a. By KCP. KCP warrants and represents to Naming Rights Holder the
following as of the date this Agreement is entered into:
i. The execution, delivery and performance of this Agreement have
been authorized by all necessary corporate action and that it has
requisite right, power and authority to enter into and perform this
Agreement and to grant the rights and licenses granted to Naming
Rights Holder pursuant to this Agreement. KCP agrees to deliver
to Savvis, upon execution of this Agreement, certified copies of
all corporate resolutions authorizing the execution, delivery and
performance of this Agreement;
ii. KCP is a Missouri limited liability company duly organized under
the laws of the State of Missouri and is in good standing in the
State of Missouri;
iii. Subject to the consents required in Section 10.a.i above, no con-
sent of any other person or entity is required for execution by KCP
of this Agreement and/or performance under this Agreement;
iv. Neither KCP nor the St. Louis Blues nor any affiliate of either of
them has granted any rights pertaining to the subject matter of this
Agreement to any party in a manner which would cause KCP to
be in default under any such agreement or which prevents KCP
from granting the rights and licenses to Naming Rights Holder
under this Agreement;
v. There is no litigation pending nor is any litigation threatened
against KCP relative to any of the matters which are the subject of
this Agreement;
vi. KCP is the owner of the Arena and has a valid and existing
ground lease pursuant to that certain Amended and Restated
Sublease Agreement dated as of November 24, 1992, by and
between KCP and Kiel Center Redevelopment Corporation (a
copy of which has been delivered to Savvis) (the Lease), which
Lease is in full force and effect as of the Naming Rights Effective
Date and the term of which is scheduled to run throughout the
Term of this Agreement, provided that the Lease is not otherwise
terminated or otherwise cancelled;
9.7 Appendix 191
This Agreement will not constitute a lease or license of any part of the Arena;
rather, it will represent a contractual obligation of KCP to provide to Naming
Rights Holder certain advertising benefits.
the Term, and if the NBA players strike or if the NBA owners lockout
the players so that less than 41 regular season home games are played by
that NBA Franchise in the Arena during an NBA season, then the NBA
Sum due for the Fiscal Period covering that NBA season shall be
reduced by a percentage calculated using the number of regular season
games lost (calculated by subtracting the number of regular season
games played from 41) divided by the total number of events held during
the full year prior to the season in which the games were lost.
13. Use; Upkeep and Maintenance.
a. Maintenance. KCP agrees to cause the Arena to be maintained and
operated in a good, clean, tenantable and sale repair, order and condition
in a manner consistent with that generally applicable at other first-class
arenas constructed substantially concurrently with the construction of the
Arena.
b. Compliance. KCP shall manage and operate the Arena in compliance
with (i) all applicable and material federal, state and local laws, rules,
ordinances and regulations (including, without limitation, building and
fire codes); and (ii) any other material agreements or obligations
imposed by any state or governmental authority with respect to the
Arena, its operations, and/or Arena Events.
14. Indemnification and Reimbursement.
a. Indemnification By KCP. KCP hereby agrees to protect, defend and
indemnify Naming Rights Holder and its respective officers, directors,
shareholders, members, partners, agents and employees (Naming
Rights Indemnitees) harmless from and against (i) any and all claims,
demands, causes of action, suits and judgments by third parties against
the Naming Rights Indemnitees or any of them and (ii) losses, liabilities
costs or expenses of any nature whatsoever, including reasonable
attorneys fees and the costs of discovery and expert witness fees
incurred by Naming Rights Indemnitees or any of them, as a result of
damage, loss or liability suffered by a third party arising directly or
indirectly from or out of any acts or omissions by KCP, its officers,
directors, agents, partners, subcontractors or employees relating to or
arising out of the operation, maintenance and management of the Arena,
or acts, omission or any breach of this Agreement by KCP except to the
extent attributable to the negligence or willful misconduct of Naming
Rights Holder or its respective officers, directors, shareholders, partners,
members, agents and employees.
b. Indemnification by Naming Rights Holder. Naming Rights Holder
hereby agrees to protect, defend and indemnify KCP and its officers,
directors, shareholders, members, partners, agents and employees
(KCP Indemnitees) harmless from and against (i) any and all claims,
demands, causes of action, suits and judgments by third parties against
198 9 Sports Stadia Naming Rights Agreements
the KCP Indemnitees or any of them and (ii) losses, liabilities costs or
expenses of any nature whatsoever, including reasonable attorneys fees
and the costs of discovery and expert witness fees incurred by KCP
Indemnitees or any of them, as a result of damage, loss or liability
suffered by a third party arising directly or indirectly, from or out of any
acts or omissions by Naming Rights Holder, its respective officers,
directors, agents, partners, subcontractors or employees relating to the
breach by Naming Rights Holder of its obligations hereunder or exercise
or utilization by Naming Rights Holder of the rights granted hereunder,
except to the extent attributable to the negligence or willful misconduct
of KCP or its officers, directors, shareholders, partners, members, agents
or employees.
15. Termination/Remedies.
a. Failure of Naming Rights Holder to Pay Amounts Due. In the event
Naming Rights Holder fails to pay to KCP when due any sum required
by this Agreement to be paid and Naming Rights Holder shall fail, for a
period of fifteen (15) days following receipt of written notice from KCP
specifying such default, to cure such default by payment of the amount
due plus interest, compounded daily, at the annual rate of 15% or, if less,
the highest rate permitted by law from the date due, then KCP shall have
the right to (i) terminate this Agreement upon the expiration of the cure
period, (ii) remove immediately the Arena Mark and Arena Graphic
Logo from the Naming Rights Inventory, and (iii) assert any and all
other remedies which KCP may have pursuant to law or equity, not-
withstanding Naming Rights Holders option to avail itself of the Dis-
pute Resolution procedure set forth in Section 21. KCP acknowledges
and agrees that, in order to avoid termination, Naming Rights Holder
may notify KCP that it is paying any amounts due under protest, and
Naming Rights Holder shall not waive its right to use the Dispute
Resolution procedure in connection with the amounts paid.
b. Failure of NHL or NBA Franchise to Play Home Games in the Arena. In
the event that (i) the St. Louis Blues cease to play home games at the Arena
for any reason other than a player or officials strike or owner lockout, (ii)
no other NHL franchise plays its home games at the Arena, and (iii) no
NBA franchise plays its home games at the Arena, then, subject to KCPs
right to use the Dispute Resolution Process set forth in Section 21,
Naming Rights Holder shall have a period of thirty (30) days, beginning
on the date when the last remaining franchise plays its last home game in
the Arena or announces that it will no longer play its home games in the
Arena, whichever is later, in which to terminate this Agreement. Termi-
nation shall be effective upon delivery of notice of termination. If Naming
Rights Holder elects to terminate the Agreement pursuant to this Sec-
tion 15.b, neither party shall have further rights or remedies except for any
remedies for a default prior to the date of termination.
9.7 Appendix 199
This Agreement together with the Exhibits hereto constitutes the entire
agreement between the parties and shall become a binding and enforceable
Agreement among the parties hereto and their respective successors
(including successors and to transferees of the Arena) and permitted assigns
upon the Naming Rights Effective Date. No prior verbal or written agreement
shall survive the execution of this Agreement. In the event of an alteration of
this Agreement, the alteration shall be in writing and shall be signed by both
parties in order for the same to be binding upon the parties.
17. Assignments.
a. By Naming Rights Holder. Subject to Section 8, this Agreement and the
rights and obligations of Naming Rights Holder hereunder may not be
assigned without the prior written approval of KCP, which approval may
be withheld in the sole discretion of KCP; provided, however, that Savvis
may, without the prior written approval of KCP, assign all or any portion of
its rights and obligations hereunder to Savvis Communications Corpora-
tion, a Missouri corporation which is a wholly-owned subsidiary of Savvis
(the Missouri Corporation), provided that, in the event of such an
assignment, both Savvis and the Missouri Corporation shall be liable for all
duties and obligations of Savvis/Naming Rights Holder hereunder.
b. By KCP.
i. Sale of Arena. In the event KCP proposes to sell the Arena or any
interest therein, KCP shall give Naming Rights Holder notice of the
name, address phone and telefax numbers and e-mail address of the
proposed purchaser, and the proposed closing date reasonably prior
to the closing thereof but no less than sixty (60) days prior to the
closing date. KCP shall provide, as a condition to the consummation
of such sale, that the purchaser shall expressly assume all obliga-
tions of KCP under this Agreement; provided, however, such pur-
chaser shall be deemed to have acquired the Arena subject to this
Agreement and to have assumed the obligations of KCP hereunder,
provided that no prior approval of Naming Rights Holder or Bridge
9.7 Appendix 201
All notices and other communications hereunder will be in writing and will be
deemed given if delivered personally, telecopied (receipt of which is confirmed
by the person to whom sent) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as will be specified by like notice, or to a substitute party at
the address(es) for such substitute party as will be specified by a like notice):
a. If to KCP:
Mark Sauer
President and Chief Executive Officer
St. Louis Blues/Kiel Center
1401 Clark Avenue
St. Louis, Missouri 63103
This Agreement will be governed by the laws of the State of Missouri without
reference to principles of conflicts of laws. Where applicable, this Agreement
shall be governed by United States federal trademark and copyright laws.
20. Confidentiality.
Each party shall retain in confidence the existence and terms and conditions
of this Agreement. No public disclosure of the existence of this Agreement or
its terms and conditions shall be made unless such disclosure is approved in
advance by KCP and Naming Rights Holder, provided, however, that either
party shall have the right to disclose information about this Agreement if
required by law. Upon the Naming Rights Effective Date, KCP and Savvis
mutually agree that either party or both parties may publicly announce,
through press releases or otherwise, that the parties have agreed to rename
the Arena the Savvis Center; the terms and conditions of this Agreement
shall not be made at such an announcement unless specifically approved in
advance by KCP and Savvis.
9.7 Appendix 203
Naming Rights Holder acknowledges and agrees that neither KCP nor the
St. Louis Blues can make any representations or warranties as to the success
or competitive level of the St. Louis Blues or any other team which may play
9.7 Appendix 205
in the Arena during the Term. Therefore, Naming Rights Holder agrees that
the consideration paid pursuant to this Agreement shall in no way be based
on, or subject to, the performance of the St. Louis Blues or any other team
which may play in the Arena during the Term, nor shall the consideration be
based on, or subject to, the St. Louis Blues or any other team which may play
in the Arena signing or engaging of any player, coach or general manager, or
any other employee or independent contractor.
Subject to Naming Rights Holders rights under Sections 12.d and 15.b,
Naming Rights Holder acknowledges and agrees that KCP cannot make any
representations or warranties as to the specific number or nature of the Arena
Events during the Term, especially as such applies to touring events and
concerts. Therefore, Naming Rights Holder agrees that the consideration paid
pursuant to this Agreement shall in no way be based on, or subject to, the
number and/or nature of the events that may play at the Arena during
the Term.
25. Insurance.
a. By KCP. KCP shall maintain such insurance as is customarily main-
tained by owners of comparable facilities. Naming Rights Holder shall
be named as an additional insured on such policies, where appropriate.
b. By Naming Rights Holder. Naming Rights Holder agrees to maintain
insurance as it deems appropriate. KCP shall be named as an additional
insured on such policies, where appropriate.
26. Miscellaneous.
a. The term herein or hereunder mean and shall be deemed to mean
in this Agreement or under this Agreement, respectively.
b. No action other than a notice by one party to the other specifically
stating that such notice has the effect of waiver, shall constitute a waiver
of any particular breach or default of such other party. No such waiver
notice from either party shall waive the other partys failure to fully
comply with any other term, condition, or provision of this Agreement,
irrespective of any knowledge any KCP or Naming Rights Holder offi-
cer, employee, or agent may have of any breach or default of, or non-
compliance with, such other term, condition, or provision. No waiver of
full performance by either party shall be construed, or operate, as a
waiver of any subsequent default of any of the terms, covenants and
conditions of this Agreement. The payment or acceptance of fees or
charges for any period after a default shall not be deemed a waiver of
any right or acceptance of defective performance.
206 9 Sports Stadia Naming Rights Agreements
By:/s/Richard C. Thomas
-----------------
Name: Richard C. Thomas
Title: President and Manager
By:/s/Robert A. McCormick
-----------------
Name: Robert A. McCormick
Title: Chairman and CEO
For purposes of acknowledging any and all of its rights, obligations and agree-
ments under the foregoing Agreement:
By:/s/Thomas M. Wendel
-----------------
Name: Thomas M. Wendel
Title: CEO
For purposes of acknowledging any and all of its rights, obligations and agree-
ments under the foregoing Agreement:
By:/s/Steven M. Gallant
-----------------
Name: Steven M. Gallant
Title: Vice President and General Counsel
Chapter 10
Sports Stadia Concession Agreements
As usual, perhaps the most important clause is the grant of rights clause in which the
rights granted need to be clearly defined, including the products, the duration of the
rights granted (term) and whether the rights are exclusive or non-exclusive. Notice, in
particular, the provisions of the Exclusions Clause (4). This provision is designed to
deal with any instances of conflict marketing that may arise at the venue as a result
of the rights granted under the particular Agreement and under other Pourage and
Concession Agreements entered into by the sports club concerned.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 209
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_10,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
210 10 Sports Stadia Concession Agreements
Again, where the stadium or arena is used for various sportingand, indeed,
otherevents, the events for which the pourage rights are granted need to be clearly
stated in the Agreement. In those cases, where the stadium or arena is a multi-
purpose one and where pourage rights are granted to different parties, even
competitors of one another, for different events, each concessionaire will require a
so-called clean stadium or arena, that is, one that does not contain any competitors
advertising and signage when being used for the event in respect of which the
concessionaire concerned has been granted the pourage rights, which, as will be seen
from the Precedent, also include advertising and signage rights. In connection with
the advertising and signage rights granted, as usual, the Agreement will contain the
standard warranty that the signage will not be obscene blasphemous or defamatory
of any third party and shall not infringe their intellectual property rights of any kind.
This warranty clause is supplemented by an indemnity clause in which the con-
cessionaire undertakes to indemnify and keep indemnified the sports club concerned
against any and all breaches by the concessionaire of any and all of its warranties.
Of course, pourage rights are a form of sports sponsorship and, as such, care
needs to be taken in the drafting of the Pourage Agreements where multiple
pourage rights are involved, to avoid any and all possibilities of conflict
marketing so that all the concessionaires are kept happy! In other words, the
Agreements need to reflect the various sports marketing arrangements that have
been entered into by the sports club concerned in respect of the sports stadium or
arena and need to hang together and interconnect.
Notice, finally, that the Sports Pourage Agreement contains a right of first
refusal clause (called in the Precedent a Rights of First Negotiation clause) in
favour of the concessionaire to renew the Agreement on certain specified terms
and conditions. Notice also that the sports club will not enter into negotiations
with, make an offer to nor conclude any agreement with anyone else until the
expiration of the negotiation period as defined in the clause.
As far as the Concession Agreement is concerned, the example given in the
General Precedent grants rights at the sports stadium to supply takeaway meals
to the spectators and also includes the necessary rights of access to and egress
from the stadium, as well as the right to bring and maintain equipment into the
stadium for the purposes of exercising the rights granted by the Agreement. As a
result of these latter rights, corresponding obligations are also included in the
Agreement.
10.5 Appendices
10.5.1 Appendix 1
Recital
A. The Club is the operator of the Venue
B. The Advertiser wishes to supply to the Club the Advertisers Products at the
Venue upon the terms of this Agreement
Operative Provisions
1: Definitions
1.1 In this Agreement the following expressions shall have the following
meanings Advertisers Products [the products being promoted e.g.
Fizzy Diet Fizzy caffeine free Fizzy etc.]
Events [the Events in respect of which sponsorship rights are granted]
Products [the generic products e.g. soft drinks whether in canned or
bottled form or in the form of syrups or powders etc.]
Venue means the sports stadium known as [ ] at [ ]
2: Payments
2.1 In consideration of the rights and benefits granted to the Advertiser by the
Club as set out in this Agreement the Advertiser shall pay to the Club the
sum of [ ] plus VAT per annum for the duration of this agreement payable
upon presentation of an appropriate VAT invoice by the Club as follows
2.1.1 [ ] plus VAT on the date hereof and
2.1.2 [ ] plus VAT on the date one (1) calendar year following the date
hereof and
2.1.3 [ ] plus VAT on the date two (2) calendar years following the date
hereof
10.5 Appendices 213
3: Clubs Obligations
3.1 The Club
3.1.1 will purchase solely from the Advertiser such of the Advertisers
Products as the Club sees fit such that the Advertisers Products are
served (on a non-exclusive basis) in any and all food and beverage
locations from time to time situated by the Club at its absolute
discretion in and around the Venue where Events are held
3.1.2 grants to the Advertiser those pourage rights product marketing
(excluding sales) advertising and promotional rights at all Events set
out in and upon the terms of this Agreement
4: Exclusions
4.1 Nothing in this Agreement shall prevent or restrict the Club from
4.1.1 observing and complying with the rules and regulations of any of [ ]
and any other governing body of [the sport] having power to issue
regulations or directives with which the Club must comply for any
reason and/or abiding by the terms of entry and/or sponsorship of
any tournament league or competition in which the Club at any time
may participate whilst this Agreement is in force (a Club Com-
petition) and/or any contractual arrangements pursuant to which
the Venue is used by any person firm or company for any purpose
not being that of a Club Competition AND FOR THE AVOIDANCE
OF DOUBT in the event that any such condition or term of entry
and/or sponsorship and/or any such regulation or directive of any
governing body and/or any such contractual arrangements shall
conflict with any obligation arising hereunder then that condition or
term of sponsorship and/or regulation or directive and/or contractual
arrangements shall prevail over the conflicting obligation arising
hereunder and no failure by the Club to comply with such an obli-
gation arising hereunder shall be construed as or have the effect of
being any breach of this Agreement but rather the effect of the
conflicting obligation arising pursuant to this Agreement shall be
deemed to be suspended throughout any period for which such
conflict exists
4.1.2 from serving or offering for sale [any potentially rival product
having sponsorship rights granted by the Club or incumbent upon the
Club] or
4.1.3 from continuing the operation of any vending machines or other
equipment belonging to or operated by or on behalf of any other
Product manufacturer PROVIDED ALWAYS that advertising for
any other Product shall be displayed at the site of such vending
machine only
214 10 Sports Stadia Concession Agreements
5: Signage
5.1 The Advertiser shall be entitled to erect signage of a nature and quality
acceptable to the Club at its own expense (both of construction and
erection) such signs to be of a number to be mutually agreed from time to
time between the parties and to be displayed at each and all of those outlets
at which the Advertisers Products are exposed for sale from time to time
at the Venue
5.2 The Advertisers said signage shall not be physically or electronically
removed replaced or covered up by any means save where the Venue is
being used for functions or purposes other than the Events
5.3 In the event that the Club reasonably objects to the nature of any signage
erected by the Advertiser pursuant to its rights granted in this Agreement
the Advertiser shall forthwith at its own expense remove the said signage
and (if it so wishes) replace the same with such signage as is reasonably
acceptable to the Club
6: Display Of Products
6.1 The Advertisers Products shall be prominently displayed at each and all of
those outlets of the Venue at which the Advertisers Products are exposed
for sale from time to time in a manner and to an extent to be mutually
agreed from time to time between the parties
7: Maintenance
7.1 Those signs and panels advertising or promoting the Advertisers Products
at the Venue which are constructed in a manner enabling them to be
illuminated shall be illuminated at all Events. The Advertiser shall have the
right of access to the Venue at reasonable times by prior arrangement with
the Club to its permanent signage for the purpose of such replacement
modification or removal of such signage as may be mutually agreed from
time to time between the parties. The Advertiser will be solely responsible
for the insurance and general maintenance (in each case to the reasonable
satisfaction of the Club and in relation to insurance such insurance to
include insurance against all reasonable third party risks and consequential
damages as may prudently be insured against by any reasonable business)
of the said signs and panels throughout the duration of this Agreement. The
Club shall pay all electrical and other normal operation costs of the said
signs and panels throughout the duration of this Agreement save where
expressly agreed otherwise
8: Containers
8.1 All cups and containers dispensed at any outlets in the Venue at which the
Advertisers Products are exposed for sale from time to time which are to
be used to hold the Advertisers Products shall be trade mark cups and
containers approved by the Advertiser and which prominently bear the
10.5 Appendices 215
[Execution Clauses]
10.5 Appendices 217
10.5.2 Appendix 2
Between
(1) [ ] [ ] whose registered office is at
[ ] [the Club] and
(2) [ ] [ ] whose registered office is at
[ ] [the Licensee]
Recitals
A. The Club is the operator of the Venue of which the Licensed Area forms part
B. The Licensee wishes to sell hot takeaway foods from the Licensed Area upon
the terms of this Agreement
Operative Provisions
1: Definitions
1.1 In this Agreement the following expressions shall have the following
meanings
Access Ways means the entrance hall corridors lobbies staircases access
ways passages lifts and escalators of the Venue or over which the Venue
enjoys rights of access the use of which is necessary for obtaining access to
and egress from the Licensed Area or such of them as afford reasonable
access and egress both for goods and for personnel as above as the Club may
from time to time in its absolute discretion designate by the service of not less
than twenty-eight (28) days written notice to the Licensee
Designated Hours means [am] to [pm] on Mondays to Fridays [ am] to [
pm] on Saturdays inclusive (Bank or other Public Holidays excepted) or such
other hours including time on Sundays as the Club may from time to time in
its absolute discretion determine by service of not less than twenty-eight (28)
days written notice to the Licensee together with that period (if not included
in the above) commencing two (2) hours before the commencement of and
ending two (2) hours following the end of any and all Events
Equipment means those items of equipment set out at the Schedule
annexed hereto
Events means any and all competitive first team matches taking place at
the Venue (in any competition of whatever nature) in which the Club par-
ticipates throughout the duration of this Agreement
Licensed Area means the area shown for the purposes of identification
only edged and hatched yellow on the plan annexed or such other single
218 10 Sports Stadia Concession Agreements
continuous area of appropriate space for the Licensees Business of the same
or greater total area within the Venue as the Club may from time to time in its
absolute discretion designate by the service of not less than twenty-eight (28)
days written notice to the Licensee
Licence Fee means One pound per annum payable on the date hereof and
thereafter annually upon each anniversary of the date hereof
Office means that office area with secure locking door and cupboard space
for the purpose of identification only edged blue on the plan annexed hereto
Venue means the sports stadium known as [ ] at [ ]
2: Licence
2.1 Subject to clauses 3 and 5 and in consideration of the Licence Fee the Club
hereby grants to the Licensee the right (in common with the Club and all
others authorised by the Club so far as is not inconsistent with the rights
granted hereunder to the Licensee) to use for the duration of this Agree-
ment during the Designated Hours:
2.1.1 for the purpose of the sale to all invitees to the Venue of the
Licensees hot takeaway foods the Licensed Area
2.1.2 for the purpose of ordinary clerical and accounts work solely con-
nected with the Licensees business at the Venue the Office
2.1.3 for the purposes of access to and egress from the Licensed Area the
Access Ways
2.1.4 reasonable access in common with the employees of the Club to
such of the amenity and toilet areas provided at the Venue for the
employees of the Club as the Club may from time to time reasonably
designate by the service of not less than twenty-eight (28) days
written notice to the Licensee
2.2 The Licensee shall be entitled to erect signage of a nature and quality
acceptable to the Club at its own expense (both of construction and
erection) such signs to be of a number to be mutually agreed from time to
time between the parties and to be displayed at those places in the
Licensed Area as the parties may from time to time agree
2.3 Subject to the Clubs reasonable prior written approval the Licensee shall
have the right throughout the duration of this Agreement to conduct
consumer promotions related to the Licensees Goods at the Venue during
not more than ten (10) Events. All fees and expenses related to such
promotions shall be paid by the Licensee. The nature of such promotions
their duration content and scheduled dates and times for commencement
and conclusion shall be consistent with usual promotions permitted by the
Club and shall be agreed between the Licensee and the Club. The Club
shall extend its reasonable cooperation to the Licensee in the conduct and
staging of such promotions
10.5 Appendices 219
3: Licensees Undertakings
3.1 The Licensee agrees and undertakes
3.1.1 to pay to the Club:
3.1.1.1 the Licence Fee (together with any VAT) in advance at the
date provided therefor
3.1.1.2 a sum equal to [ ]% of the gross turnover in the Licensees
trading in the Licensed Area such payments to be made in
respect of each calendar months trading in the Licensed
Area within [ ] days of the end of the said calendar month
together with any VAT payable thereon
3.1.1.3 those sums required to be paid by the Licensee pursuant to
the provisions of clause 4
3.1.2 not to bring any furniture equipment goods or chattels into the
Venue without the consent of the Club save as may be strictly
necessary for the proper exercise of the rights given in clause 2 or in
order to carry out the Licensees obligations hereunder
3.1.3 to keep the Licensed Area and the Office clean and tidy and clear of
rubbish at all times and to leave the same in a clean and tidy con-
dition and in good serviceable and decorative repair and free of the
Licensees furniture equipment goods and chattels upon termination
of this Agreement for any reason
3.1.4 to maintain at the Licensed Area an attractive display of goods in
keeping with the standards maintained elsewhere in the Venue
3.1.5 not to obstruct the Access Ways or cause the same to become dirty
or untidy nor to leave any rubbish on them
3.1.6 not to display any signs notices or promotional materials at the
Licensed Area save those specifically authorised in this Agreement
without the prior consent of a properly authorised employee of the
Club and for the purposes of this clause the Catering Manager from
time to time of the Venue employed by the Club shall be deemed
properly authorised
3.1.7 not to use the Licensed Area the Office or Access Ways in such a
way as to cause a nuisance damage disturbance annoyance incon-
venience or interference of any nature (including but not limited to
noise and smell) to the Club or Venue or any other Licensee or
occupant or user of the Venue or adjoining or neighbouring property
or to the owners occupiers or users of such adjoining or neigh-
bouring property
3.1.8 to comply with any and all instructions given by the Club in relation
to hygiene and food safety and in any event to operate the highest
standards of cleanliness and hygiene at all times in the Licensed
Area
220 10 Sports Stadia Concession Agreements
3.1.9 not to commit any act omission matter or thing which would or
might constitute a breach of any statutory requirement affecting the
Licensed Area and/or the Office and/or the Venue or which would
or might vitiate in whole or in part any insurance effected in respect
of the Venue from time to time
3.1.10 to observe any and all reasonable rules and regulations as the Club
may make and of which the Club shall notify the Licensee from
time to time in writing governing the Licensees use of the Licensed
Area and/or the Office and/or the Access Ways
3.1.11 not to impede in any way the Club or its officers servants or agents
in the exercise of the Clubs rights of possession and control of the
Venue and every part of the Venue
3.1.12 to keep the Licensed Area fully and properly staffed during the
Designated Hours
3.1.13 to keep full and adequate records of all business conducted within
the Licensed Area and upon reasonable notice to afford the Club
suitable facilities and information (including but not limited to the
right to inspect the said records on reasonable notice) to assess the
Licensees turnover for the purpose of calculating the payment
referred to in clause 3.1.2 of this Agreement
3.1.14 to indemnify the Club and keep the Club fully and effectively
indemnified against any and all losses claims demands actions
proceedings damages costs or expenses or other liability arising in
any way from this Licence any breach of the Licensees under-
takings contained in this clause or the exercise or purported exercise
of any of the rights given in clause 2 by the Licensee and or invitee
or customer of the Licensee
3.1.15 to use the Equipment only for the purpose for which it is designed and in
accordance with any instructions issued by the Club from time to time
and to indemnify the Club against any loss or damage to the Equipment
4: Clubs Undertakings
4.1 The Club agrees and undertakes
4.1.1 to provide reasonable space at the Clubs discretion:
4.1.1.1 within the storeroom which forms part of the Venue for
storage of the Licensees goods and
4.1.1.2 at the entrance to the Venue for such of the Licensees
advertisements and signage as the Club may from time to
time agree with the Licensee
4.1.2 to provide all services of power reasonably required for the
Licensees business at the Licensed Area and fax and telephone
lines for use by the Licensee only at the Licensed Area always
provided that the Licensee shall be responsible for any and all
10.5 Appendices 221
SCHEDULE 1
Equipment: [list]
Chapter 11
Sports Licensing and Merchandising
Agreements
The terms and conditions of the licensing deal need to be well defined and
incorporated into a clear and unambiguous Licence Agreement. A back of the
envelope approach will not do! Even worse are oral agreements, which Sam
1
See Licence to thrill by I. Blackshaw in 5 Sports and Character Licensing 2000 at pp. 68.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 223
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_11,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
224 11 Sports Licensing and Merchandising Agreements
Goldwyn, of Metro Goldwyn Mayer fame, once said are not worth the paper they
are written on! Badly drafted Agreements lead to uncertainties and misunder-
standings, which, in turn, lead to disputes, which can and often do prove costly in
terms of time and money for all parties concerned.
The need for a well-drafted Agreement cannot be overstated and repays all the
effort, time and money involved in producing one.
So, let us take a look at the main provisions that need to be included in a Sports
Licensing and Merchandising Agreement.
Perhaps the most important one is the so-called grant of rights clause. This
clause defines the nature and the scope of the rights granted by the licensor to the
licensee in relation to the particular sports event. This clause will specify whether
the licence granted is an exclusive or non-exclusive one. It will also define the
licensed products to be included in the licence, as well as the distribution
channels through which they may be sold. We will return to this subject, which
has important commercial and financial consequences later.
The grant of rights clause will also specify the territories in which the
products may be sold, as well as the term during which the licence will operate. It
will often include other restrictions on the use of the licensed products, for
example, as premiums, give-aways or other sales promotional items. It should be
noted, en passant, that restrictive clauses, such as these and, indeed, any others,
could give rise to competition law issues, especially at the EU level under Articles
101 and 102 of the Treaty on the Functioning of the European Union (FEU). This
is a complex subject and needs a specific presentation, or even an entire Confer-
ence, to do justice to it. However, to underline its importance, suffice to say that
Licensing Agreements have received a great deal of attention from the EU
Competition Authorities over many years and that breaches of the EU Competition
Rules can result in substantial finesup to 10% of the world-wide group turnover
of the offending party!
In defining the rights to be granted by the licensor to the licensee, particular
attention needs to be paid to the legal nature and status of those rights. In other
words, what intellectual property rights are involved? Also, the Licence
Agreement needs to deal specifically with internet and other electronic rights
whether or not they are included. We will also return to both these important
matters later.
As the rights being granted relate to a particular sports event, there will also be
a specific prohibition against using or permitting the rights from being used in any
manner contrary to public morals, or which compromise or reflect unfavourably on
the good name, good will and reputation of the sports body concerned, its event or
its sport. Likewise, the grant or rights will be made subject to the rules of the sports
body concerned, for example, in the case of an Olympics Merchandising Pro-
gramme, the Olympic Charter. If the Licence Agreement is an exclusive onein
other words, only the licensee (not even the licensor) may exploit the licence
products in a particular geographical territory during the term of the Agreement
it is usual to impose a minimum annual sales performance on the licensee, in order
to maximise the financial returns from the licence. If the sales of the licensed
11.1 Introductory Remarks 225
products do not reach the specified minimum, it is open to the licensor to terminate
the Licence Agreement.
Combined with such a performance clause is an express undertaking by the
licensee to actively stimulate the demand for and promote the sale of the licensed
products within the territory during the term.
In settling the precise terms of the performance requirement, the licensor and
licensee should agree on realistic targets. Otherwise, there will be problems of
enforcement and viability of the Licence.
A performance clause also has intellectual property implications; likewise do
quality control provisions in the Agreement, both of which I shall go into in more
detail later. An equally important provision in any Licence Agreement is the
consideration clausethe financial quid pro quo for the licence. We will deal
with this particular matter in more detail later, as well as payment terms and
special financial considerations that need to be taken into account in the case of
cross-border Licence Agreements.
Sports Licensing and Merchandising Agreements, like other Licence Agree-
ments, are often entered into on a personal basisin the sense of the personal
characteristics, for example, technical competence and financial standing of the
licensee (a so-called contract intuitu personae). Accordingly, the Agreement
should be expressly stated to be a contract that can be terminated in the event that
such personal characteristics cease to exist. For example, this can occur on a
change of ownership or control of the licensee, rendering perhaps the new owner
of the licence unsuitable.
It is also usual not to allow any assignment or sub-licence of the licence outside
the licensees corporate group, which needs to be defined, without prior written
approval. In such cases, licensees will often require the inclusion of wording,
where not legally implied, to the effect that such consent is not to be unreasonably
withheld or delayed.
Furthermore, it is also usual to include a general clause to the effect that the
Agreement does not constitute or create a partnership, joint venture or franchise;
that no party is the agent, employee or servant of the other party; and that the
parties act towards one another at all times under and for all purposes of the
Agreement as independent contractors.
Termination provisions should also be included in the Sports Licensing
Agreement. The grounds for termination, by either party, and the practical con-
sequences should be clearly stated. It is usual to make a distinction between a
minor breach and a major one. In the case of the former, the party in breach is
usually given an opportunity of remedying the breach within a specified period of
time (e.g. 15 days); whereas, in the latter case, the Licence Agreement can be
terminated forthwith, that is, without notice. Where notice periods are specified in
days, the Agreement should define whether days are natural days or working
ones. Likewise, in the case of months, these should be defined as lunar or
calendar.
The legal and practical consequences of termination or expiration of the licence
should be particularly spelled out.in the Agreement in the case of Sports Licences.
226 11 Sports Licensing and Merchandising Agreements
Sports events are often cyclicalthe World Cup, for example, takes place every
four yearsand the circulation of out-of-date merchandise can cause commercial
confusion and loss of value. It is usual, therefore, to include a provision in the
Licence Agreement requiring the licensee to clear the market of licensed products
within, say, six months of termination/expiration, after which any remaining stocks
should be destroyed.
Related to termination and for other relevant purposes, the Agreement should
also include a Notice Clause, under which there is a requirement for all Notices to
be given in writing and, in this latter respect, whether Notices can be validly given
by fax and e-mail and, if so, when Notice is deemed to have been given and
received.
Rights of first refusal and option clauses are characteristically found in Sports
Marketing Agreements, including Sports Licensing and Merchandising Agree-
ments. Options to renew need to be drafted carefully, otherwise they could become
perpetual options, if worded loosely (for example: The Licensee may renew this
Agreement for a further period of [two years] on the same terms and condi-
tions.). To avoid this outcome, include the words: with the exception of this
present clause. Again, in Sports Marketing Agreements, options to renew are
often accompanied by so-called matching option clauses. Likewise these clauses
need to be precisely worded to avoid ambiguity and uncertainty rendering them
legally void. Also, options to renew and matching options may also raise National
and EU Competition Law issues, where they are granted for long periods of time
and restrict access of other possible licensees from entering the relevant market
for sports licensing and merchandising in relation to a particular sports event. See
further on this topic in Chap. 16.
Another important and sensitive area is confidentiality. Sports Bodies, as with
other kinds of organisations and businesses, like to control the dissemination of
confidential information relating to their activities, especially their financial and
commercial ones. Accordingly, it is usual to include appropriate provisions on
keeping the terms of the Licence Agreement strictly confidential, especially
financial details, and also controlling the issue and contents of press releases
concerning the licensing deal. See further on this topic in Chap. 5.
in particular, consist of words (including personal names), designs, letters, numerals or the
shape of goods or their packaging.
2
On the subject of trade mark registration and protection generally, see the article, entitled
Trademark protection issueswhy register? 1999 1 Sports and Character Licensing at p. 26.
As to the value of the goodwill in a trade mark, trade name or initials and the extent that it can be
legally protected, see the important case of the World Wide Fund for Nature v World Wrestling
Federation Entertainment Inc. involving the commercial use of the initials WWF decided by
Mr. Justice Jacob in the Chancery Division of the High Court on 10 See Form 88 note 13 [3715].
August, 2001. A summary and a comment on this case appears in the September/October 2001
issue of the Sports Law Bulletin vol 4 no 5 at page 5. Subsequently, the World Wrestling
Federation changed its name to World Wrestling Entertainment and now uses the intials WWE.
This, I think, tends to show that sport is clearly a branch of the world- wide entertainment
industry!
228 11 Sports Licensing and Merchandising Agreements
for which classes of goods they have been registered. For example, if the Licence
is to cover clothing, the sports logo will need to be registered in Class 25 of the
Nice Classification of Trademark Goods and Services, which covers clothing,
footwear and headgear. If the logo is to be used on sports bags, it will need to be
registered in Class 18. For the latest version of the Nice Classification (9th Edi-
tion), log on to www.wipo.int/classifications/nice/en/classifications.html
In certain jurisdictions, including the UK, the parties will need to enter into a
separate Registered User Agreement, which will need to be registered at the local
Trade Mark Office.
For trade mark protection purposes, as well as commercial reasons, the Licence
Agreement will need to contain quality control provisions. The licensor will need
to exercise control over the quality of the licensed products and over the adver-
tising and promotional material for them. Samples of the products will need to be
approved by the licensor before being put on the market. In this connection, the
Licence Agreement should include a provision requiring the licensee to mark the
licensed products and their packaging with trade mark and copyright legends, the
wording of which will need to be previously approved by the licensor.
In practice, to avoid bureaucratic delays in obtaining the necessary approvals,
which should always be provided in writing, provision is often made in the
Licence Agreement for approval to be deemed where, after a certain period of
time, there has been no express disapproval, merely silence. Provision should also
be made for approval in one format to be deemed to cover approval in a similar
format, provided the context remains essentially the same. Without any of these
approvals, the value of the sports logo may suffer.
Likewise, the validity of a registered Trade Mark in the UK and elsewhere
depends upon its commercial use. For this reason, as well as commercial ones,
minimum performance obligations are imposed on licensees, especially where
the Licence is an exclusive one.
It is also advisable to include a clause in the Licence Agreement that any use by
the licensee of the registered trade mark(s) shall enure for the benefit of the
licensor. This includes any additional goodwill created by the licensee in using
the mark. For legal protection reasons also, it is necessary to include appropriate
provisions in the Licence Agreement for protecting and defending intellectual
property rights against infringements by third parties. Counterfeiting is particu-
larly rife as far as consumer goods bearing prestigious sports logos, such as the
Olympic Rings, are concerned. The Far East is often the source of these illicit
products, but counterfeiting also occurs nearer home.
It is necessary, therefore, to include clear provisions in the Licence Agreement
for reporting and dealing with such infringements. These provisions will call for a
close liaison and collaboration between the licensor and licensee, particularly as to
who is responsible for taking what kind of action, including legal proceedings, and
within what time scale. There will also need to be indemnities covering legal costs
and other expenses where action is required to be taken by the licensee on behalf
of the licensor.
11.1 Introductory Remarks 229
Not only can sports events and products associated with them be branded with a
distinctive logo, but so also can sports leagues and players. For example, the
popular and highly successful UEFA Champions League has registered the name
and a distinctive logo as a composite trade mark.3
The same contractual and intellectual property law considerations mentioned
above apply in such cases.
Many famous sports persons have registered their names and nick names as
trade marks [e.g. Gazza (Paul Gascoigne)] and images (e.g. the eyes of Damon
Hill looking out from the visor of his racing helmet) and have entered into Licence
Agreements with Companies and Firms to promote their products and services.
These arrangements have proved to be lucrative for both parties.
In all licensing cases, the licensor also needs to control the distribution channels
through which the licensed products may be sold, for commercial and legal
reasons. See the judgement of Mr. Justice Pumfrey in the Chancery Division of the
High Court delivered on 24 July, 2001 in the case of South Core Inc v Besant and
Others (t/a Reef).4 In that case, the Judge held that, in assessing the likelihood of
public confusion between two trade marks, the Court has to consider both the
likely users of the goods concerned and the distribution channels through which
the goods are sold. Although the case concerned a Pop group (Reef) and the use
of their name on T- shirts, the decision has important ramifications for sports logo
licensing and sports personality merchandising.
The sales channels affect the publics perception of the product, its quality and
price. In marketing terms, it is a matter of positioning. For example, a product
sold through mail order has a lesser image, compared with one sold through a
luxury retail outlet, such as Harrods. It is in the interests of the licensor and the
licensee to project the best image for the licensed product and get the best financial
results from the licensing relationship.
The perception of the licensed product as a cheap or high quality item is
largely determined by its distribution channels and this affects the value of the
brand as an asset in the hands of the brand owner. Snob value helps to raise the
price and also the sales of the licensed products. Branding, including sports
brands, nowadays is very important and has been likened to a kind of new religion
by Peter York, the style guru, as follows:
The fastest-growing, most profitable, cleverest global corporations are organised around
a new philosophy, a new religion and a new way of working. For these companies their
brand is their central assetphysical products are secondaryand most of their quality
time is spent making and reworking the brandits meaning, attitude and social role, its
3
For an interesting article, entitled Being distinctivehe problem of creating composite logos,
on the registration and use of composite logos in connection with major sporting events, see the
January/February 2002 issue of the Sports Law Bulletin (vol 5 no 1) at p. 5.
4
The Times Law Report of 9 October, 2001.
230 11 Sports Licensing and Merchandising Agreements
valuesbecause its the brand that people buy, not the products. Products, so the thinking
goes, are generic, copyable, discountable, vulnerable, but brands are unique magic.5
This philosophy has been successfully transferred and applied by clever mar-
keters to sport, sports events and sports persons as products competing for con-
sumer attention.
Again, according to York:
Nike isnt a maker of high- ; priced trainers but a world voice for sport as an agency of
personal growth and achievement The Nike swoosh logo means precisely what the
crucifix meant to an earlier generation in ghettosit promises redemption, vindication and
a way out.6
5
Article entitled Branded, The Times, February 10 See Form 88 note 13 [3715]. , 2001.
6
Ibid.
11.1 Introductory Remarks 231
touch clothes before buying, especially highly priced ones. One is reminded here
of the seasoned salesmans cry: never mind the price, feel the quality!
If products are suitable for sale on the net, appropriate terms should be agreed
and incorporated in the Licence Agreement. If these selling rights are not to be
included in the Licence, this should also be expressly stated in the Agreement,
to avoid any misunderstandings.
practice of sport. The CAS has proved to be a popular and effective forum for the
settlement of sports disputes, including commercial ones.
Alternatively, the parties may decide to use ADR for the settlement of their
disputes. Mediation, one of the forms of ADR, is proving to be very successful
generally and, in particular, in sports cases. It is interesting to note that the CAS
has a Mediation Division.
If the parties in dispute prefer to settle their differences by mediationand
many do because of the special characteristics and dynamics of sport7the CAS
model mediation clause is as follows:
Any dispute, any controversy or claim arising under, out of or relating to this contract
and any subsequent of or in relation to this contract, including, but not limited to, its
formation, validity, binding effect, interpretation, breach or termination, as well as non-
contractual claims shall be submitted to mediation in accordance with the CAS Mediation
Rules.
Thus, the CAS offers disputing parties the possibility of a Med-Arb dispute
resolution process: mediation to identify the issues; and arbitration to settle them.
It may be noted, en passant, that in a landmark ruling in the English Courts in
the case of Cable & Wireless PLC v IBM United Kingdom,8 Mr Justice Colman
held that an agreement to refer disputes to mediation is contractually binding. In
this case, IBM called on Cable and Wireless to mediate a dispute that had arisen
under a contract in which the parties had agreed to mediate future disputes. Cable
and Wireless refused to do so, claiming that the reference to mediation in the
contract was legally unenforceable because it lacked certainty and was like an
unenforceable agreement to negotiatean agreement to agree is not legally
binding under English Law. The judge rejected this argument, holding that the
agreement to try to resolve a dispute, with identification of the procedure to be
used, was sufficient to give certainty and, therefore, legal effect to the clause.
7
See the case of Richie Woodhall and Frank Warren involving a time-critical dispute under
certain management and promotion agreements entered into between them, which was settled
within 72 hours by mediation, discussed at page 182 in ,,Mediating Sports DisputesNational
and International Perspectives by Ian S. Blackshaw 2002 TMC Asser Press The Hague, The
Netherlands (ISBN 90-6704-146-7).
8
[2002] 2 All ER (Comm) 1041.
11.1 Introductory Remarks 233
It may be added that, in England too, parties, who, under Court rules, refuse to
tryor even consider the possibility of mediatingto settle their disputes by
mediation at an early stage in the litigation process, may run the risk of being
denied their legal costs if ultimately successful, contrary to the normal rule that
costs follow the event.9
Another form of ADR that may be appropriateand also cost-effectivefor
settling disputes under Sports Licensing and Merchandising Agreements is expert
determination, especially for resolving disputes of a technical, quality control and
financial nature. The experts decision is final and binding on the parties. Of
course, the success of this form of dispute resolution depends upon the parties
finding and agreeing on a suitably qualified and independent expert, who is also
experienced in these matters. In the appointment clause, it should be expressly
stated that the person appointed is acting as an expert and not as an arbitrator, to
ensure that the experts decision is final and not subject to any kind of appeal or
legal challenge.
Before agreeing to such a provision, however, the parties need to appreciate the
legal nature of this dispute resolution procedure, and, in particular, the limited
rights of appeal against the experts findings. In three recent cases, the English
Courts have looked at several aspects of expert determination, and, in summary,
their findings are as follows:
once agreed expert determination clauses are binding and the parties have
no recourse to the courts;
where the expert determination clause provides that the expert shall give
reasons for a decision the Court will order that they be given; and
where a defendant refused to take part in an expert determination the
claimant may recover damages if it has to issue legal proceedings.
In Douglas Harper v Interchange Group Ltd,10 there has been a clear reiteration
that the Courts will enforce an expert determination provision in an Agreement
and that a party will be prohibited from bringing Court proceedings where the
dispute falls within an expert determination provision and that provision is
ignored. In this case, the Agreement contained a comprehensive expert determi-
nation procedure. The High Court found that the parties were contractually bound
by this procedure, so the plaintiff was barred from issuing Court proceedings
claiming commission due. He had not complied with the requirements set out in
the expert determination provision.
9
See Susan Dunnett v Railtrack PLC [2002] EWCA Civ 302; and Leicester Circuits Limited v
Coats [2003] EWCA Civ 333. But see also Halsey v Milton Keynes General NHS Trust and Steel
v Joy and Halliday [2004] EWCA Civ 576; [2004] 4 All ER 920, collectively known as the
Halsey case and described by Lord Phillips of Worth Maltravers as the most important English
judgement about ADR.
10
[2007] EWHC 1834.
234 11 Sports Licensing and Merchandising Agreements
In Halifax Life Ltd v The Equitable Life Assurance Society,11 the Court pro-
vided further confirmation that expert determination procedures are binding on the
parties, and although the Court may intervene to resolve issues, such as whether
the expert should provide a reasoned decision or not, the actual decision of the
expert will not be disturbed. Halifax had agreed to reinsure Equitable Lifes unit-
linked and non-profit business. This required an assessment of an initial premium
for the reinsurance, which was referred to an expert to determine. Crucially the
parties agreed that the expert would provide reasons for his decision. The expert
made his determination, but failed to give reasons. Halifax challenged the decision
claiming that it was non-binding on the ground of manifest error. The High Court
said that:
In litigation justice will not be done if it is not apparent to the parties why one has won
and the other has lost.
And, therefore, held that the appropriate course was to adjourn the hearing of
Halifaxs claim and to remit the matter back to the expert in order that he could
state the reasons for his decision. This allowed Halifax the opportunity to
understand the reasons for the decision and to decide whether to continue with its
legal challenge. The Judge referred by analogy to the provisions in the Arbitration
Act 1996 [Section 70(4) which allows the Court to order an arbitral tribunal to
provide reasons or sufficient reasons for its decision] and was able to require the
expert to give reasons either by way of remedy in respect of the provisions of the
contract, under the courts inherent jurisdiction or under its case management
powers contained in the Civil Procedure Rules. This case is a reminder that the
Courts can still intervene in an expert determination, although a hands off
approach is generally favoured. Parties can take comfort from the fact that they can
now expect a properly reasoned decision, if they have expressly agreed that rea-
sons are to be given and they should certainly so provide in their expert deter-
mination clause.
In Sunrock Aircraft Corporation v Scandinavian Airlines System Denmark
NorwaySweden,12 the Court of Appeal upheld the validity of an expert deter-
mination clause. It considered the measure of damages to be awarded where a
party had refused to participate in the expert determination, but the other party had
asked the Court to award damages rather than asking for a mandatory order for
expert determination. In this particular case, the Court held that nominal damages
were the correct measure of the claimants loss.
These cases indicate that an increasing number of parties are agreeing to such
dispute resolution procedures in their Agreements, whether out of a desire to
minimise their legal costs or implement a quicker dispute resolution procedure.
They also underline the need for the parties to carefully consider and think through
the suitability of such clauses, and also to appreciate that, once agreed, the
11
[2007] EWHC 503.
12
[2007] EWHC Civ 882.
11.1 Introductory Remarks 235
procedure is compulsory and the experts findings may only be legally challenged
on the narrowest of grounds. The Courts will uphold these clauses.
Certain financial provisions also need to be included in International Sports
Licence/Merchandising Agreements and these are dealt with later.
Finally, in view of the strict (i.e. no fault) product liability rules, which apply
in the EU under Council Directive 85/374/EEC of 25 July 1985 on the approxi-
mation of the laws, regulations and administrative provisions of the Member States
concerning liability for defective products,13 provisions dealing with product lia-
bility issues need to be included in the Licence Agreement. The main provisions of
this important Directive may be summarised as follows:
Scope:
the Directive applies to movables which have been industrially produced,
whether or not incorporated into another movable or into an immovable.
Principle of liability without fault:
the Directive establishes the principle of objective liability or liability
without fault of the producer in cases of damage caused by a defective
product. If more than one person is liable for the same damage, it is joint
liability.
Producer is taken to mean:
any participant in the production process;
the importer of the defective product;
any person putting their name, trade mark or other distinguishing feature
on the product;
any person supplying a product whose producer cannot be identified.
Burden of proof: the injured person must prove:
the actual damage;
the defect in the product; the defect in the product;
the causal relationship between damage and defect
Limitation Period: The injured party must bring a claim within three
years.
As mentioned above, the EU Directive on Product Liability provides for lia-
bility without fault, so it is not necessary to prove the negligence or fault of the
producer or importer. And, as also mentioned, there is a wide definition of the term
manufacturer, which includes those who affix or allow to be affixed their name or
mark to products manufactured by someone else under their authority. In other
words, licensors can also be held legally liable for defective products produced by
their licensees, which cause harm to consumers. For example, this could be a
particular problem where, for example, toys and novelty items for children are
licensed. Thus, it is usual to include indemnity provisions in favour of the licensor
in the Licence Agreement, backed by product liability insurance on the part of the
licensee. It is also usual and advisable to include provisions for noting the interests
13
Official Journal L 210 of 07.08.1985.
236 11 Sports Licensing and Merchandising Agreements
Included in the Appendix of this chapter (11.4), the reader will find a General
Precedent of a Merchandising Agreement, which provides a checklist of the scope
of and the kinds of provisions that should be included in a Merchandising
238 11 Sports Licensing and Merchandising Agreements
As will have been seen from the above account, Sports Licensing and Merchan-
dising is a complex matter and highly lucrative business. The guiding principle for
success is paying attention to details and getting the commercial and financial
terms and conditions right in the first place, and reflecting them in a clearly drafted
and unambiguous Agreement, in which nothing should be assumed or implied or
left to chance.
As mentioned above, all the terms and conditions should be expressly included
and there should be no reliance on any pre-contract oral promises or any side-
agreements. If any such exist and are relevant, they should be expressly incor-
porated in the Sports Licensing and Merchandising Agreement.
In the case of Sports Licensing and Merchandising Agreements involving an
international dimensionas is often the caseit is most advisable to have the
final draft Agreement reviewed by local legal and tax counsels to ensure its
validity and effectiveness, from both a local legal and tax point of view. Likewise,
it is also very important to take account of any EU Competition Law aspects,
which may have a bearing on the legal enforceability of any restrictive clauses,
especially any territorial licensing arrangements, which are part and parcel of the
Agreement. In such cases, it is also advisable to include a so-called severance
clause that will eliminate or sever from the Agreement any restrictions which
may fall foul of EU Competition Law and thus be void, whilst, at the same time,
preserving the validity and enforceability of the rest of the Agreement. See further
on this in Chap. 19 on Boilerplate Clauses.
See also further on the Fiscal and EU Aspects of Sports Marketing Agreements
in Chaps. 15 and 16 respectively.
11.4 Appendix 239
11.4 Appendix
*
Source: Lexis Nexis; reproduced with permission.
240 11 Sports Licensing and Merchandising Agreements
words importing the singular number shall include the plural and vice
versa
ords importing any particular gender shall include all other genders
references to persons shall include bodies of persons whether corporate
or incorporate words importing the whole shall be treated as including a
reference to any part of the whole
6.1 If the aggregate Royalties paid by the Licensee to the Licensor during the
Initial Period shall exceed then this Agreement shall continue for one
further period of (specify) until (date) (the Further Period) unless either of
the parties shall have given to the other notice of termination not less than 3
months before the expiry of the Initial Period
Royalties
In consideration of the Rights granted by the Licensor to the Licensee the Licensee
shall pay to the Licensor the following sums:
7.1. upon the signing of this Agreement an advance royalty of which shall not
in any circumstances be repayable either wholly or partly by the Licensor but
which may be set- off against the royalty payments due under sub-clause 7.2
7.2 a royalty of% on the net selling price of each unit of the Products sold by
the Licensee calculated by deducting from the price at which each unit was
sold by the Licensee VAT or other governmental taxes and levies
7.3 The Minimum Guaranteed Royalty shall be in respect of each year of
the Initial Period and in respect of each year of the Further Period
7.4 The provisions of clauses 7.1 and 7.2 shall apply to the Further Period (if
any) granted in accordance with the provisions of clause 6.1 save that in sub-
clause 7.1 for the words signing of this Agreement there shall be substituted
the words commencement of the Further Period
7.5 All payments under this Agreement to the Licensor shall be made in pounds
sterling. Any conversion of foreign currency into pounds sterling shall be
made at the rate of exchange ruling on the date of accounting
7.6 The Licensee shall within 30 days of the expiration of each calendar quarter
during the subsistence of this Agreement deliver to the Licensor a statement
giving particulars of all sales of the Products effected by or on behalf of the
Licensee during the quarter and showing the total royalty payable to the
Licensor and at the same time deliver to the Licensor a remittance for the full
amount of that royalty
7.7 When sending a statement and remittance for the final calendar quarter of
any year during the Term the Licensee shall pay to the Licensor the differ-
ence (if any) between the Minimum Guaranteed Royalty and the Royalties
earned by the Licensor under this Agreement for the year in question
7.8 The Licensee agrees to keep proper records and books of account relating to
all dealings with the Products and to make all such entries in such records
and books of account as may be necessary to calculate the Royalties payable
to the Licensor and shall allow the Licensor or a firm of [chartered]
accountants on the Licensors behalf to examine such books and records in so
far as they relate to the sale of the Products and to take copies and extracts of
such books and records. Any such inspection shall be during normal office
hours and not carried out more than twice in any calendar year and shall be at
the Licensors expense unless such inspection shall reveal an underpayment
to the Licensor of more than in which event the Licensee shall bear the
costs of such inspection
242 11 Sports Licensing and Merchandising Agreements
7.9 In the event of late payment of any money due to the Licensor under the
terms of this Agreement (including without limitation any moneys found on
an inspection carried out under clause 6.8 to have been underpaid) the
Licensee shall pay to the Licensor interest accruing from day to day cal-
culated at the annual rate of% above the base rate from time to time of
(name of bank) on all such money overdue from the due date for payment
until the actual date of payment
Licensees obligations as to conformity to specification and quality
8.1 The Licensee shall manufacture and package the Products according to their
respective Specifications and at all times ensure that the Products and
packaging are of the highest quality attainable within such specifications
8.2 The Licensee shall deliver to the Licensor for approval free of charge true
and accurate samples of each of the Products including wrappings and
packaging and the Licensee shall not commence distribution of any unit of
any one of the Products until it has received written approval from the
Licensor of its design standard of workmanship quality of presentation and
intrinsic merit
8.3 The Licensee shall ensure that all other units of the Products including their
wrappings and packaging correspond to the samples approved by the
Licensor in accordance with sub-clause 7.2
8.4 The Licensee shall supply to the Licensor free of charge such further
samples of the Products as the Licensor may reasonably require from time
to time
Requirements contract
9.1 The Licensee shall supply to the Licensor or to such other persons as the
Licensor shall require any of the Products that the Licensor may require up
to the quantities and at the prices specified in Schedule [5]
Use and protection of Intellectual Property Copyright material
10.1 Every unit of the Products and all packaging advertising and point of
sale materials used in connection with them shall bear the following
copyright identification (year of first publication) (name of Licen-
sor)5 or any other copyright notice as the Licensor may notify to the
Licensee from time to time. With the prior written consent of the
Licensor an abbreviated version the terms of which must first be
approved in writing by the Licensor may be used on such Products but
not on the packaging or other material
10.2 The date to be placed in brackets after shall be the year specified for
that purpose for the particular copyright material by the Licensor or in
the case of a combination design the year of first marketing by the
Licensee in which case the Licensor shall be notified in writing of such
year by the Licensee
10.3 No copyright material comprised in the Intellectual Property may be altered
or amended by the Licensee without the prior written consent of the
11.4 Appendix 243
Licensor but the Licensee may use a combination of such materials even
where such a combination has not previously been used
10.4 No artwork other than copyright material comprised in the Intellectual
Property shall be used in relation to any of the Products without the prior
written consent of the Licensor
10.5 No copyright material comprised in the Intellectual Property may be
used in connection with the manufacture distribution or marketing of any
goods other than the Products for which the use of such material is
specified
Trade marks
11.1 Each unit of the Products for which a trade mark comprised in the Intel-
lectual Property is specified shall display that mark in a manner first
approved by the Licensor
11.2 No other trade mark shall be affixed by the Licensee to the Products or to
any associated packaging advertising or point of sale materials without the
prior written consent of the Licensor
11.3 The Licensee shall not use in relation to or affix to any goods other than the
Products for which such marks are specified any of the trade marks com-
prised in the Intellectual Property
Provisions relating to all IP property
12.1 The Licensee shall not use any of the Intellectual Property as part of the
Licensees name or the name of any entity associated with it without the
prior written consent of the Licensor
12.2 The Licensee shall not during the subsistence of this Agreement or at any
time subsequently register or use any of the Intellectual Property in its own
name as proprietor
12.3 The Licensee recognises the Licensors title to the Intellectual Property and
shall not claim any right title or interest in the Intellectual Property or any
part of it
12.4 The Licensee shall promptly call to the attention of the Licensor the use of
any part of the Intellectual Property by any third party or any activity of any
third party which might in the opinion of the Licensee amount to
infringement or passing off of the Licensors rights in the Intellectual
Property
12.5 The Licensee shall not assign mortgage charge or otherwise deal with
(whether wholly or in part) the benefit of this Agreement or grant any sub-
licence6 without the prior written consent of the Licensor
12.6 The Licensee shall hold all goodwill generated by its operations under this
Agreement as bare trustee for the exclusive benefit of the Licensor
12.7 Any designs or other works derived by the Licensee from the Intellectual
Property or any part of it shall be held by it as bare trustee for the Licensor
and at the Licensors request shall be assigned to it without compensation7
244 11 Sports Licensing and Merchandising Agreements
Registered user
13.1 When required by the Licensor the Licensee shall join with the Licensor at
the [Licensees or Licensors] expense8 to become a registered user of the
Intellectual Property or any part of it in any part of the Territory and on
termination of this Agreement the Licensee shall co- operate with the
Licensor in securing the cancellation of any such registration
Licensee not to use the Licensors name
14.1 The Licensee shall not except with the prior written consent of the Licensor
make use of the name of the Licensor in any connection otherwise than is
expressly permitted by this Agreement
Licensees obligations as to marketing
15.1 The Licensee shall ensure that a full range of the Products shall be on sale to
the public within [6] months of the date of this Agreement
15.2 The Licensee undertakes that the Products will be sold only to recognised
wholesale firms for resale to retail firms or to retail firms for resale to the
public or direct to the public
15.3 The Licensee shall ensure so far as it is reasonably practicable that the
Products are not supplied for re-sale as an integral part of another product
and shall not be supplied either directly or indirectly to other manufacturers
or to hawkers pedlars street vendors and the like or to any person intending
to distribute the Products gratuitously for publicity
15.4 The Licensee shall at all times during the Term use its best endeavours to
promote and sell the Products throughout the Territory
15.5 The Licensee shall consult with the Licensor regarding the Licensees
proposed marketing of the Products and shall ensure that the marketing of
the Products does not conflict with the image of the Intellectual Property
promoted or intended to be promoted by the Licensor. No marketing
materials shall be published or distributed without the prior written consent
of the Licensor
No premiums
16.1 The Licensee shall not sell or otherwise dispose of any of the Products as
premiums to any person or persons whatsoever
16.2 The right to sell any of the Products as premiums is expressly reserved by
the Licensor and if the Licensee shall receive any approach for the purpose
of the use or sale of the Products as premiums it shall as soon as possible
notify the Licensor and furnish it with the names and full particulars of the
person or persons making the approach
16.3 For the purposes of this clause premium means a product or product
combined with a service which is sold or supplied in association with the
promotion of another product or service offered in association with the sales
promotional activities of retailers wholesalers or manufacturers associa-
tions or with incentive programmes of all kinds
11.4 Appendix 245
together with the difference (if any) between the Minimum Guaranteed
Royalty and the Royalties paid to the Licensor in respect of that year of
termination
19.3 Subject to the following sub-clauses upon termination of this Agreement for
whatever reason the Licensee shall discontinue all use of the Intellectual
Property and return forthwith to the Licensor all material bearing or based
upon any of the Intellectual Property
19.4 If the Licensee shall have any remaining stocks of the Products or have
Products in the course of manufacture at the time this Agreement is ter-
minated [and if this Agreement shall have terminated by expiry of the Term
and shall not have been terminated by reason of the Licensees breach of
any of its obligations under this Agreement] it may complete the manu-
facture of such Products within [30] days of termination and dispose of such
Products and/or remaining stocks in compliance with the terms of this
Agreement but not otherwise on a non- exclusive basis for a period of [4]
months from the date of termination (the Sell-Off Period) Provided that:
the price charged by the Licensee for each Product during the Sell-Off
Period is not less than the price charged by the Licensee during the 6
months prior to the termination of this Agreement; and
all other provisions of this Agreement (including those relating to pay-
ment of Royalties) are observed by the Licensee in respect of items sold
during the Sell-Off Period
Warranties and indemnities
20.1 The Licensee shall indemnify the Licensor against all actions claims costs
damages and expenses which it may suffer or sustain as a result of the
actions of the Licensee
20.2 The Licensor warrants that it is entitled to grant to the Licensee the Rights
granted under this Agreement and shall keep the Licensee indemnified
against all actions claims costs damages and expenses arising out of any
breach of this warranty
Inspection
20.1 The Licensee shall permit the Licensor [and its servants or agents] at all
reasonable times to inspect the Licensees premises in order to satisfy itself
that the Licensee is complying with its obligations under this Agreement
Product liability insurance
21.1 The Licensee shall at its own expense obtain and maintain product liability
insurance in an amount of not less than with both the Licensor and
Licensee as beneficiaries under the policy and providing cover for claims
demands and causes of action arising out of Products sold during the Term
11.4 Appendix 247
made in England and subject to clause 20.7 the parties agree to submit to
the [non- ]exclusive jurisdiction of the English courts
Arbitration 11
27.1 Any difference or dispute between the parties concerning the interpretation
or validity of this Agreement or the rights and liabilities of either of the
parties shall in the first instance be referred to the arbitration of two persons
(one to be nominated by each party) or their mutually agreed umpire in
accordance with the provisions of the Arbitration Act 1996
Notices
28.1 Any notice consent or the like (in this clause referred to generally as
notice) required or permitted to be given under this Agreement shall not
be binding unless in writing and may be given personally or sent to the
party to be notified by pre-paid first class post or by electronic mail or
facsimile transmission at its address as set out above or as otherwise notified
in accordance with this clause
28.2 Notice given personally shall be deemed given at the time of its delivery
28.3 Notice sent by post in accordance with this sub-clause shall be deemed
given at the commencement of business of the recipient on the second
business day following its posting
28.4 Notice sent by electronic mail or facsimile transmission in accordance with
this sub-clause shall be deemed given at the time of its actual transmission
provided that the sender does not receive any indication that the electronic
mail message or facsimile transmission has not been successfully trans-
mitted to the intended recipient
No modification
29.1 This Agreement may not be modified except by an instrument in writing
signed by both of the parties or their duly authorised representatives
Waiver
30.1 The failure by either party to enforce at any time or for any period any one
or more of the terms or conditions of this Agreement shall not be a waiver
of them or of the right at any time subsequently to enforce all terms and
conditions of this Agreement
Severance
31.1 In the event that any provision of this Agreement is declared by any judicial
or other competent authority to be void voidable illegal or otherwise
unenforceable or indications of this are received by either of the parties
from any relevant competent authority the parties shall amend that provi-
sion in such reasonable manner as achieves the intention of the parties
without illegality or at the discretion of the parties it may be severed from
this Agreement and in either event the remaining provisions of this
Agreement shall remain in full force and effect
Survival of terms
11.4 Appendix 249
32.1 The warranties and indemnities contained in this Agreement and the pro-
visions for payment of and accounting in respect of Royalties and other
moneys due to the Licensor under the terms of this Agreement shall survive
the termination or expiry of this Agreement
Agency
33.1 The Licensor confirms that he has appointed the Agent to act on the
Licensors behalf in all matters arising out of this Agreement including
the collection and receipt of all payments due to the Licensor under
this Agreement and declares that the receipt of the Agent shall be a
good and sufficient discharge to the Licensee in respect of such
payments
33.2 Any notice served on the Agent will be deemed to have been served at the
same time on the Licensor
VAT
34.1 All sums payable to the Licensor under this Agreement are exclusive of
VAT which shall where applicable be paid in addition at the rate in force at
the due time for payment subject to the Licensor either supplying a VAT
invoice to the Licensee or informing the Licensee of his VAT registration
number
Rights and remedies cumulative
35.1 All rights and remedies available to the parties under the terms of this
Agreement and under the general law shall be cumulative and no exercise
by either of the parties of any such right or remedy shall restrict or prejudice
the exercise of any other right or remedy granted by this Agreement or
otherwise available to it
Confidentiality
36.1 The terms [and existence] of this Agreement are confidential to the parties
36.2 Each party agrees to maintain secret and confidential all confidential
information obtained by the other both pursuant to this Agreement and prior
to and in contemplation of it (including but not limited to information
concerning the [existence and] terms of this Agreement) and all other
information that it may acquire from the other in the course of this
Agreement and to respect the others proprietary rights in such material and
to use the same exclusively for the purposes of this Agreement and to
disclose the same only to its professional advisers and those of its
employees officers agents and representatives pursuant to this Agreement (if
any) to whom and to the extent that such disclosure is reasonably necessary
for the purposes of this Agreement (and which employees officers agents
and representatives shall be made aware of and required to acknowledge
these confidentiality arrangements in writing)
36.3 The obligation of confidentiality shall not apply to any information which:
250 11 Sports Licensing and Merchandising Agreements
prior to its receipt from one party was lawfully in the possession of the
other and at its free disposal; or
is subsequently disclosed to the recipient party without any obligations of
confidence by a third party who has not derived it directly or indirectly
from the other party; or
is or becomes generally available to the public through no act or default of
the recipient party or its agents employees officers and representatives; or
is required by law to be disclosed
Binding effect
37.1 This Agreement shall bind and enure to the benefit of the parties and their
respective permitted assigns personal representatives and successors in title
Assignment
38.1 Neither party may assign the benefit of nor its obligations under this
Agreement without the prior written consent of the other party
38.2 It shall be a condition of any assignment that the assignor shall procure that
the assignee enters into a direct written covenant with the other party to this
Agreement whereby the assignee undertakes to observe and perform all of
the assignors obligations under this Agreement
No partnership
39.1 Nothing in this Agreement shall be deemed to constitute a partnership
between the parties nor the relationship of employer and employee under a
contract of service nor the relationship of principal and agent
Third parties
40.1 This agreement does not create any right enforceable by any person not a
party to it. For the avoidance of doubt the agreement does not create any
right enforceable to any successor or assignee of either Party.
As Witness etc.
SCHEDULE 1
(list of copyright, trade marks and other rights)
SCHEDULE 2
(list of goods)
SCHEDULE 3
(insert relevant specifications)
SCHEDULE 4
(insert applicable territory)
SCHEDULE 5
Requirements Contract
11.4 Appendix 251
9 An exclusive licensee of copyright has the same rights and remedies as if the
licence had been an assignment: see the Copyright, Designs and Patents Act
1988 s 101 (11 Halsburys Statutes (4th Edn) COPYRIGHT). The effect of
this contractual provision appears to be that an exclusive licensee exercising
its rights under the Copyright, Designs and Patents Act 1988 s 101 would be
in breach of contract.
10 See Form 88 note 13 [3715].
11 Arbitration can be time consuming and expensive. The parties may instead
wish to consider including an Alternative Dispute Resolution (ADR) clause,
providing for ADR to be carried out under the auspices of a suitable body,
such as the Centre for Dispute Resolution (CEDR).
Chapter 12
Sports Image Rights and Endorsement
Agreements
We live in an age in which image rules and perception is paramount. And this is not
limited to celebrities, including sports personalities, who are anxious to project their
persona, and thus maintain their celebrity status and popularity and, in turn, their
marketability. But the phenomenon also extends to companies and their products,
which, if they are to be successful in our consuming and materialistic society, also need
to convey a positive image in order to command the attention of customers and increase
sales. This is all down to branding, whose importance nowadays cannot be over
emphasised and has been likened by Peter York, the style guru, to a kind of new religion:
The fastest-growing, most profitable, cleverest global corporations are organised around
a new philosophy, a new religion and a new way of working. For these companies their
brand is their central assetphysical products are secondaryand most of their quality
time is spent making and reworking the brandits meaning, attitude and social role, its
valuesbecause its the brand that people buy, not the products. Products, so the thinking
goes, are generic, copyable, discountable, vulnerable, but brands are unique magic.1
This philosophy has been successfully transferred and applied by clever marketers to
sport, sports events and sports persons as products competing for consumer attention.
Again, according to York:
Nike isnt a maker of high-priced trainers but a world voice for sport as an agency of personal
growth and achievement The Nike swoosh logo means precisely what the crucifix meant to an
earlier generation in ghettosit promises redemption, vindication and a way out.2
1
Article entitled Branded, The Times, February 10, 2001.
2
Ibid.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 253
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_12,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
254 12 Sports Image Rights and Endorsement Agreements
Businesses are no longer being valued on their manufacturing ability but on the new and
frequently used basis of intellectual capital.3
Sport is now a mega global business and branding has played a significant part
in this processoften referred to as the commodification of sport. In fact, Sepp
Blatter, the President of FIFA, the World Governing Body of football, has said that
sport is now a product!
Sports events, teams and individual sports persons are now seen and treated a
commodities to be commercialised, bought, sold and traded.4 Sport is now firmly
part of the worldwide entertainment industry. This is particularly true of football
the worlds favourite game and most lucrative sport!5
For example, Manchester United Football Club and Team have been developed
and marketed as a brand around the world. This brand is worth millions of dollars
and a significant contributor to the value of the Club, in terms of earnings,
shareholder dividends and capital appreciation. Manchester United is also a pub-
licly quoted company on the London Stock Exchange and became the first football
club in the world in 2000 to achieve a market capitalisation of 1 billion.6 The club
is heavily involved in several lucrative affinity marketing schemes, including a
branded credit card, designed to increase its customer baseit is reported to have
50 million fans around the world, but only 1 million customers. And Manchester
United has also been reported to be interested in a possible commercial oppor-
tunity to go into the casino business!7
Power brands, like Manchester United, according to Tim Heberden, UK
Managing Director of Brand Finance plc, reputed to be the leading brand valuation
company in Europe:
.have the power to influence consumer demand, trade distribution, staff loyalty, sup-
plier terms, and investor sentiment, transforming business performance and financial
returns. [And] return on brand investment is becoming a critical issue for the board and
the finance director.8
Brands are also featuring more and more on company balance sheets as an asset
and sophisticated methods are being developed to value brands, especially sporting
3
Angela Farrugia, co-founder and joint managing director of The Licensing Company.
4
On the phenomenon and effects of commodification in sport, see Sports Law by Simon
Gardiner, Mark James, John OLeary, Roger Welch, Ian Blackshaw, Simon Boyes and Andrew
Caiger Third Edition, 2006, Cavendish Publishing London at pp. 5355. And on the related topic
of the globalisation of sport, see Paper of Professor Paul De Knop of Brussels University
presented at the TMC Asser Instituut/CMS Derks Star Busmann Round Table Conference held in
Utrecht on 9 March, 2001.
5
In Europe, football is reputed to be worth 10 billion according to the Annual Deloitte and
Touche Soccer Finance Report published on 30 July, 2003.
6
See Ian Blackshaw BSkyB and sport on the net The Times, 25 April, 2000.
7
See The Times Sport 30 July, 2003.
8
See Maximising Revenue from Licensing and Merchandising by Ardi Kolah SportBusiness
Group London 2002 at p. 252.
12.1 Introductory Remarks 255
For a striking example of this sports marketing phenomenon, take the case of
Manchester Uniteds former striker, David Beckham. He earns many more mil-
lions more off the field of play than on it through the commercialisation of his
image and name, both of which are instantly recognisable, well known and mar-
ketable throughout the world.14 In this sense, therefore, it can be said that his face
9
For an interesting account of the various methodologies and formulae used for valuing sports
brands, see ibid. at pp. 264270.
10
Indeed, according to a Survey undertaken by AsiaBUS in March 2001, the cult of the sports
star is now much stronger than the cult of the pop star in marketing terms. For example, just
less than 5% voted for Michael Jackson; whereas almost 13% voted for Michael Jordan. Over
1,000 peoplebetween the ages of 15 and 64 years oldin Hong Kong, Singapore, Indonesia,
Korea, Thailand, Malaysia, Philippines, Taiwan and in three major Chinese Cities took part in the
Survey. If the same Survey were conducted today, the gap between the popularity of sports stars
and pop stars would, it is submitted, be even wider.
11
According to John Barton, Arnaud Le Mintier and Michael Tattersall: Image rights are any
rights that a player has vested in him as an individual person. These rights have value because
they can be licensed to a third party for commercial exploitation in the market place. This may
take form in a variety of methods of marketing, from the player helping to advertise non-football
products such as bottled water, cars or soap, to the player appearing at a corporate hospitality
event. See International Studies in Sport Selected Essays 2000/2001 published by Editions
CIES, Neuchatel Suisse2003, at pp. 7379.
12
For a general overview of the commercial value and legal significance of sports image rights,
see Cashing in on the right image and Getting the image right by Ian Blackshaw of 9 & 10
December, 2002 on the SportBusiness web site (www.sportbusiness.com).
13
See Sports marketing and the law: Protecting proprietary interests in sports entertainment
events 7 Marquette Sports Law Journal 1996 at p. 154.
14
Not only do football stars earn mega sums from the commercial exploitation of their image
and personality rights, but so also do golfers, like Tiger Woods, tennis players, like Anna
Kournikova, and Formula 1 drivers, like Michael Schumacher, to mention but a few!
256 12 Sports Image Rights and Endorsement Agreements
is worth more than his feetnot only to himself but also to his club. He has
become a brand in his own right.15
Chris Britcher, editor of the SportBusiness International website,16 has
described Beckham as a marketing mans dream in an article entitled The
Beckham Brand.17 In it he posed the question whether Beckham really warrants
all the media attention and hype. And goes on to explain the reasons for his success
as a sports brand.18
15
Worth around 40 m a year in terms of sponsorship and licensing dealsslightly more than
Tiger Woods at around 38 m a year!
16
www.sportbusiness.com
17
www.sportbusiness.com 18 June 2003.
18
According to Tony Gadsby Peet of IMG, who manage many leading sports personalities,
including Tiger Woods, but not David Beckham (until recently he was managed by SFX), sports
brands, generally speaking, are more enduring and less ephemeral and opportunistic than
entertainment brands and, therefore, require a different approach for maximisation of them:
With sports brands, you are working with a property that in most cases has been around a
comparatively long time. The time frame and perspective is completely different. In this case it is
much more important to understand brand strategy and long term development..
12.2 What are Sports Image Rights? 257
It may be noted, en passant, that, although, in most of the Sates of the US,
publicity rightsas image rights are generally knownare also generally
regarded as being all embracing,20 there are, however, certain limitations as a
recent US case involving Tiger Woods has demonstrated.21
One common concern is not only what image rights are but also who owns them. This
is particularly important in the case of sports persons when they participate in
organised sports events or as members of a team. This issue has been the subject of a
pollnot apparently a very scientific one!conducted by SportBusiness Interna-
tional through their web site (www.sportbusiness.com).22
The major finding of this survey shows that the majorityalmost 55%of
sports industry executives polled consider that sports persons themselves should
have control over their image rights and their commercial exploitation.
19
[2010] EWHC 1807 (QB), at para [187].
20
First, the right to publicity recognises the economic value of an individuals identity. Second,
the publicity right is an incentive for creativity, encouraging the production of entertaining and
intellectual works. Finally, the right prevents unjust enrichment of those who usurp the identity of
another. See the case of Cardtoons, L.C. v. Major League Baseball Players Assn, 838 F. Supp
1501 (N.D. Okla. 1993).
21
See the case of ETW Corporation v Jireh Publishing, Inc. (2003 U.S. App. LEXIS 12488,
20 June 2003) discussed in the August 2003 issue of SportBusiness International Magazine at
p. 54, in which a painting entitled The Masters of Augusta commemorating Tiger Woods 1997
victory, produced and sold by Jireh without Woods consent, was held by the Court not to
infringe his right of publicity.
22
See Looking After Their Image in the July 2003 issue of SportBusiness International
Magazine at p. 17.
258 12 Sports Image Rights and Endorsement Agreements
21.6% thought that the rights should be jointly held by all interested parties;
whilst 16.5% considered that the club or team whom the sports persons represent
should control them.
Only 3.7% were in favour of the national sports governing body holding the
rights; and only 3.4% thought that the league in which the sports person plays
should have control.
A further interesting finding of this survey is the widespread lack of clarity in
commercial sports marketing contracts regarding the ownership of sports image
rights. The need for precise express provisions dealing with the exploitation of
such valuable rights cannot be overstated. Take, for example, the detailed provi-
sions of clause 4 of the English FA Premier League Standard Player Contract,
which are quite comprehensive and state as follows:
4. Community public relations and marketing
4.1 For the purposes of the promotional community and public relations
activities of the Club and/or (at the request of the Club) of any sponsors or
commercial partners of the Club and/or of the League and/or of any main
sponsors of the League the Player shall attend at and participate in such
events as may reasonably be required by the Club including but not
limited to appearances and the granting of interviews and photographic
opportunities as authorised by the Club. The Club shall give reasonable
notice to the Player of the Clubs requirements and the Player shall make
himself available for up to six hours per week of which approximately half
shall be devoted to the community and public relations activities of the
Club. No photograph of the Player taken pursuant to the provisions of this
clause 4.1 shall be used by the Club or any other person to imply any
brand or product endorsement by the Player.
4.2 Whilst he is providing or performing the services set out in this contract
(including travelling on Club business) the Player shall:
4.2.1 wear only such clothing as is approved by an authorised official of
the Club; and
4.2.2 not display any badge mark logo trading name or message on any
item of clothing without the written consent of an authorised
official of the Club Provided that nothing in this clause shall
prevent the Player wearing and/or promoting football boots and in
the case of a goalkeeper gloves of his choice.
4.3 Subject in any event to clause 4.4 and except to the extent of any com-
mitments already entered into by the Player as at the date hereof or when
on international duty in relation to the Players national football associ-
ation UEFA or FIFA he shall not (without the written consent of the Club)
at any time during the term of this contract do anything to promote
endorse or provide promotional marketing or advertising services or
exploit the Players Image either (a) in relation to any person in respect of
such persons products brand or services which conflict or compete with
12.3 Who Owns Them? 259
any of the Clubs club branded or football related products (including the
Strip) or any products brand or services of the Clubs two main sponsors/
commercial partners or of the Leagues one principal sponsor or (b) for
the League
4.4 The Player agrees that he will not either on his own behalf or with or
through any third party undertake promotional activities in a Club Con-
text23 nor exploit the Players Image in a Club Context in any manner and/
or in any Media nor grant the right to do so to any third party.
4.5 Except to the extent specifically herein provided or otherwise specifically
agreed with the Player nothing in this contract shall prevent the Player
from undertaking promotional activities or from exploiting the Players
Image so long as:
4.5.1 the said promotional activities or exploitation do not interfere or
conflict with the Players obligations under this contract; and
4.5.2 the Player gives reasonable advance notice to the Club of any
intended promotional activities or exploitation.
4.6 The Player hereby grants to the Club the right to photograph the Player
both individually and as a member of a squad and to use such photo-
graphs and the Players Image in a Club Context in connection with the
promotion of the Club and its playing activities and the promotion of the
League and the manufacture sale distribution licensing advertising
marketing and promotion of the Clubs club branded and football related
products (including the Strip) or services (including such products or
services which are endorsed by or produced under licence from the Club)
and in relation to the Leagues licensed products services and sponsors in
such manner as the Club may reasonably think fit so long as:
4.6.1 the use of the Players photograph and/or Players Image either
alone or with not more than two other players at the Club shall be
limited to no greater usage than the average for all players reg-
ularly in the Clubs first team;
4.6.2 the Players photograph and/or Players Image shall not be used
to imply any brand or product endorsement by the Player; and
4.6.3 PROVIDED that all rights shall cease on termination of this contract
save for the use and/or sale of any promotional materials or products
as aforesaid as shall then already be manufactured or in the process of
manufacture or required to satisfy any outstanding orders.
23
Club Context shall mean in relation to any representation of the Player and/or the Players
Image a representation in connection or combination with the name colours Strip trademarks
logos or other identifying characteristics of the Club (including trademarks and logos relating to
the Club and its activities which trademarks and logos are registered in the name of and/or
exploited by any Associated Company) or in any manner referring to or taking advantage of any
of the same.
260 12 Sports Image Rights and Endorsement Agreements
4.7 In its dealings with any person permitted by the Club to take photographs of
the Player the Club shall use reasonable endeavours to ensure that the
copyright of the photographs so taken is vested in the Club and/or that no
use is made of the said photographs without the Clubs consent and in
accordance with the provisions of this contract.
4.8 The Player shall be entitled to make a responsible and reasonable reply or
response to any media comment or published statements likely to adversely
affect the Players standing or reputation and subject as provided for in
clause 3.2.5 to make contributions to the public media in a responsible
manner.
4.9 In this clause 4 where the context so admits the expression the Club
includes any Associated Company of the Club but only to the extent and in
the context that such company directly or indirectly provides facilities to or
undertakes commercial marketing or public relations activities for the Club
and not so as to require the consent of any Associated Company when
consent of the Club is required.
4.10 For the purposes of the Contracts (Rights of Third Parties) Act 1999 nothing
in this clause 4 is intended to nor does it give to the League any right to
enforce any of its provisions against the Club or the Player.
4.11 Nothing in this clause 4 shall prevent the Club from entering into other
arrangements additional or supplemental hereto or in variance hereof in
relation to advertising marketing and/or promotional services with the
Player or with or for all or some of the Clubs players (including the Player)
from time to time. Any other such arrangements which have been agreed as
at the date of the signing of this contract and any image contract or similar
contract required to be set out in this contract by the League Rules are set
out in Schedule 2 para 13.
The above contractual provisions are designed to avoid cases of so-called
Conflict Marketing.
In Norway, for example, such a potential conflict between sports persons
exploiting their individual image rights by endorsing one particular brand of sports
clothing and the team, to which they belong, being sponsored by a rival sports
clothing manufacturer, is dealt with in a particular way. Several national sports
federations, including the Norwegian Football Federation, in their agreements with
players, have accepted that the players can enter into three personal sponsorship
agreements, provided that such agreements do not conflict with the federations
sponsorship programme. Under this arrangement, the federation must accept the
personal sponsor prior to the individual player entering into the corresponding
agreement. Alternatively, a practice has grown up whereby the federation co-signs
any such agreement. Either way, potential sponsorship conflicts can be identified
and nipped in the bud! And potential law suits avoided.
In The Netherlands, there are also specific arrangements for resolving cases of
so-called Conflict Sponsorship.
12.3 Who Owns Them? 261
The Nordic countries host relatively few large-scale international sports events.
And in Finland, the law is probably the least developed even though Helsinki will
host the World Athletics Championships in 2005. Throughout the region, however,
football is extremely popular and well establishedindeed the Scandinavian
countries (the Nordic countries minus Finland) has a scaled-down version of the
UEFA Champions League, known as the Royal Leagueand attracts sponsors
and broadcasters alike.
Luxembourg is a relatively small and undeveloped sports rights market too.
In the rest of Europe, the sports market is relatively well developed and established.
Thus, when planning and devising international sports image rights marketing
programmes, the state of development of the individual markets needs to be taken
into consideration, and this, of course, needs to be reflected in the provisions of the
corresponding Sports Image Rights Agreements.
12.4.1 The UK
The situation in Europe varies from country to country. Generally speaking, image
rights are legally better protected in Continental Europe. In the UK, it is more
difficult, as there is no specific law protecting image rights per se. A personality
can only take legal action if the reproduction or use of [his/her] likeness results in
the infringement of some recognised legal right which he/she does own.25
24
Cracking The Norse Code, SportBusiness International, February 2004, at pp. 3842.
25
Per Mr. Justice Laddie in Elvis Presley Trade Marks [1997] RPC 543 at p. 548.
262 12 Sports Image Rights and Endorsement Agreements
Famous persons, therefore, have to rely on a rag bag of laws, such as Trade Mark
and Copyright Law and the Common Law doctrine of Passing Off and/or vague
notions of breach of commercial confidentiality. As, for example, in the Catherine
Zeta Jones and Michael Douglas spat with Hello Magazine and their unauthor-
ised publication of their wedding photographs.26 But it may be added that, even
though successful, only modest damages were awarded by the Court to the
celebrity pair. However, earlier, in what was seen as a softening of the previous
law, the F1 racing driver, Eddie Irvine, successfully sued TalkRadio under the
Common Law doctrine of Passing Off for using, around the time of the British
Grand Prix, a doctored photograph of him holding and apparently listening to a
radio (in the original photograph he was holding a mobile phone!), which implied
that he was promoting or endorsing their radio station. For this breach, Irvine was
finally awarded 25,000 in damages after appealing against a previous award of
2,000 made by the trial judge.27 Again, not exactly a mega sum! Despite these
cases, most commentators consider they were decided on their own particular facts
and circumstances and do not herald the establishment of privacy and personality
rights in the UK.
A number of sports personalities have registered their names and likenesses as
trade marks under the UK Trade Marks Act 1994, for example, Damon Hill, the
former Formula 1 driver, has registered the image of his eyes looking out from the
visor of his racing helmet as a trade mark. And other sports personalities have
taken other measures to protect their images. For example, the British athlete,
David Bedford, a former 10,000 m world record holder, recently won a ruling
against a phone directory company, The Number, over its advertising of its
service (118-118) featuring two runners in 1970s running kit. The UK Com-
munications Regulator OfCom held that The Number had caricatured Bed-
fords imagedrooping moustache, shoulder length hair and running kitwithout
his consent contrary to rule 6.5 of the UK Advertising Standards Code.28
26
Douglas & Others v Hello Limited [2001] 2 WLR 992.
27
Irvine v Talksport Ltd [2003] EWCA Civ 423.
28
Bedford against The Number Ltd: OfCom, February 2004.
12.4 Protecting Sports Image Rights 263
In Germany, articles 1 and 2 of the Constitution protect image rights. And last
year, Oliver Khan, the German national team goalie, successfully sued Electronic
Arts, the electronic games manufacturer, for using his image and name in an
official FIFA computer football game. EA claimed that collective consent had been
obtained from the national (VdV) and international (FIFPro) football players
unions. But not, in fact, from individual players, including Khan himself! This the
Hamburg District Court ruled off side!29
Likewise, in France, article 9 of the Civil Code confers a general right of
privacy as part of a package of rights protecting the person. Thus, several years
ago, the infamous football player Eric Cantona was able to successfully sue the
publishing company, Foot Edition, and obtain substantial damages for their
unauthorised commercial exploitation of his name and image in a special number
of their magazine BUT entitled Special Cantona. The French Court held that
the use of the footballers name and image was not for general news purposes,
which would not have been unlawful, but purely for the commercial benefit and
financial gain of the publishing company, and thus against the law.
Again, articles 2 and 3 of the Italian Constitution also provide protection to
sports persons. The general legal principle is that if an image is displayed or
published except when allowed by law (the exceptional circumstances are set out
in Article 97 of the Italian Law on Copyright No. 633/41), or its display causes
prejudice to the dignity and the reputation of the person concerned, the Courts may
order the abuse to cease and award compensation. The Italian Supreme Civil Court
(Corte di Cassazione) has established that the reproduction of the image of a
famous person, created for advertising purposes without the latters consent,
constitutes an injury to an individuals exclusive rights over their own likeness
(Cassazione Civile Sez. I, 2nd May 1991 No. 4785). Exceptionally, para 1 of
article 97 of the Law on Copyright provides that the consent of the image holder is
not required when reproduction is justified by the fame or by the public office
covered by the latter, for justice and police requirements, for scientific, educational
or cultural purposes, when the reproduction is connected to facts, happenings and
ceremonies of public interest or, in any case, conducted in public. However, para
2 of the same article provides that the likeness cannot be displayed or put on sale,
when its display or sale might cause prejudice to the honour, reputation or dignity
of the person represented.
In Sweden, unauthorised use of an individuals name or picture to promote
goods and services is a civil wrongand also a criminal offence where the use is
intentional or grossly negligentunder the Act on Names and Pictures in
Advertising of 1979.
In Switzerland, well-known sports persons are legally protected against unfair
exploitation of their persons by article 28 of the Civil Code, which provides as
follows:
29
Kahn v Electronic Arts GmbH unreported 25 April, 2003 (Germany).
264 12 Sports Image Rights and Endorsement Agreements
When anyone is injured in his person by an illegal act, he can apply to the judge for his
protection from any person who takes an active part in effecting the injury.
An injury is illegal where it is not justified by the injured persons consent, by a
predominantly private or public interest or by the law.
30
These phones will permit one to view live or near-live clips of moving sports action.
31
As to their value and commercial exploitation as a sports marketing tool, see Download
Now! by Jean-Paul de la Fuente in Football Business International Magazine of 9 August 2003
at p. 19.
32
[2001] 2 WLR 992.
12.4 Protecting Sports Image Rights 265
in the UKto what extent does the law offer celebrities protection?33 However,
recently the super model, Naomi Campbell, won her breach of privacy case against
the Daily Mirror newspaper in the House of Lords.34
Not surprisingly, the USA being the pioneer and granddaddy of sports marketing
and the cult of the celebrity, image rights, generally speaking, are legally
recognised and protected in most of the Statesnot least in California, the home
of Hollywood and film stars and other celebrities. They are known as publicity
rights and are generally all embracing.35
However, there are certain limitations as a US case involving Tiger Woods well
illustrates. In this case,36 a painting entitled The Masters of Augusta commem-
orating Tiger Woods 1997 victory, produced and sold by Jireh without Woods
consent, was held by the Court not to infringe his right of publicity. Of course,
this decision was made according to the particular circumstances of the case.
Incidentally, Tiger Woods has recently been involved in two domain name dis-
putes. One case, which he won, concerned a domain name registered by a third
party in the name of his daughter; and the second case, which he lost, concerned a
domain name \charlieaxelwoods.com[ registered by a third party in the name of
his son, who was born on February 8, 2009.37 Woods was not able to rely on his
famous name alone to win this case: the Woods of the domain name does not
necessarily invoke the Woods of the trademarks. Personal names are protected
for the purposes of the ICANN Uniform Dispute Resolution Policy of 1999, but
33
April 2002, Copyright World, at pp. 1618. See further on this subject generally, The Right
of a Sportsperson to Exploit His/Her Own Image and Success in the United Kingdom by Dalton
Odendaal, a Paper presented at a Conference on Sport: The Right to Participate held at the Law
Faculty at the University of Cape Town, South Africa, on 6 and 7 February, 2003, organised by
Steve Cornelius and Rochelle le Roux of the Centre for Sports Law of the Rand Afrikaanse
Universiteit, Johannesburg and the Institute of Development and Labour Law of the University of
Cape Town, respectively.
34
[2004] UKHL 22.
35
First, the right to publicity recognises the economic value of an individuals identity. Second,
the publicity right is an incentive for creativity, encouraging the production of entertaining and
intellectual works. Finally, the right prevents unjust enrichment of those who usurp the identity of
another. See the case of Cardtoons, L.C. v. Major League Baseball Players Assn, 838 F. Supp
1501 (N.D. Okla. 1993).
36
ETW Corporation v. Jireh Publishing, Inc. (2003 U.S.App. LEXIS 12488, 20 June, 2003).
37
[1] ETW Corp. and Eldrick Tiger Woods, for itself, Tiger Woods and his minor child, Miss
Sam Alexis Woods v. Leonard Meng Lee, NAF Case, Claim Number: FA0904001256681 May 29,
2009; and [2] 1ETW Corp. and Eldrick Tiger Woods, for itself, Tiger Woods and his minor
child, Charlie Axel Woods v. Josh Whitford Claim Number: FA0905001263352, NAF Case, June
24, 2009.
266 12 Sports Image Rights and Endorsement Agreements
only if there is evidence of the name having been used in connection with the
commercial offering of goods or services or that the personal name in question has
acquired a secondary meaning as the source of those goods or services.
The Law on the protection of image rights in the Sates is quite complex and
beyond the confines of this chapter and Bookin fact, a whole Book could be
devoted to the subject. For a full account of this subject, with case studies and
examples, including the fascinating concept of post mortem rights (the so-called
richest person in the cemetery phenomenon), please refer to Chap. 19 in the Book
entitled Sports Image Rights in Europe of which the author of this Book is the
Lead Editor.38
As with any kind of business, the commercialisation of sports image rights also
has a fiscal dimension that needs to be considered. However, tax is a field in which
the old adage that circumstances alter cases is particularly pertinent. In other
words, tax advice very much depends upon the particular facts and circumstances
of each individual caseas well as the aims to be achieved through any
tax mitigation scheme. Equally, a costbenefit analysis needs to be made in each
case.
In this connection, brief mention should be made here of the English case of
Sports Club plc v Inspector of Taxes,39 in which Arsenal Football Club succeeded
in having payments made to off-shore companies in respect of the Clubs com-
mercial exploitation of the image rights of their players, David Platt and Dennis
Bergkamp, classified, for tax purposes, as capital sums and, therefore, non-taxable
as income. This case is not only interesting from a fiscal point of view, but
also from a jurisprudential point of view, in that, for tax purposes, image rights
are considered to be capital assets even though image rights per se are not
recognised as a separate species of property under the general law in the United
Kingdom.
Opportunities exist in other parts of Europe for tax sheltering the financial
returns from the commercial exploitation of sports image rightsnot least in
The Netherlands, which has a fairly comprehensive network of double taxation
treaties around the world, which can be creatively used to save tax.
Again, in Switzerland, for example, tax mitigation structures can be devised
founded on tax-exempt Not-for-Profit Foundations under Swiss Law.
For more detailed comments on these topics see Chap. 15 on the Fiscal Aspects
of Sports Marketing Agreements.
38
See following footnote for details of the Book: Chap. 19 is at pp. 345373.
39
[2000] STC (SCD) 443.
12.6 Legal Remedies for Infringing Sports Image Rights 267
Under English Law, a variety of legal remedies are available to those whose sports
image rights have been infringed, ranging from damages to interim and final
injunctions. Where trade marks are involved, under sections 1416 of the UK
Trade Marks Act 1994, the following specific civil remedies are available:
damages;
an account of profits;
injunctions both interim and final; and
orders for delivery up of the infringing articles.
In assessing damages, in a number of Continental European jurisdictions, a lost
licence fee is applied. In other words, what would the offending party have to have
paid had that party been granted a licence to commercially use and exploit the
sports image rights concerned.40 However, generally speaking, damages awards on
the Continent tend to be lower than in Common Law jurisdictions generally and
certainly in the United States. For example, in Switzerland, Courts will rarely award
more than between 10,000 and 20,000 Sw.Frs. for infringement of rights.
As for injunctions, being an equitable remedy under English law, such measures
are granted by the Courts on a discretionary basis and only where damages would
not be an adequate remedy. It may be possible, according to the particular cir-
cumstances of the case, to obtain specialised injunctions, such as Quia Timet,
which aims to prevent an anticipated breach of a legal right. In Spain, for example,
under Article 9.2 of the Basic law (Ley Organica), a Judge can adopt all required
measures in order to achieve the following results:
to stop illegal interference by third parties;
to restore the owners full enjoyment of their image rights; and
to prevent future interferences.
Where copyright infringements occur, amongst other remedies, the UK Copyright
Designs and Patents Act 1988 gives the aggrieved party the right, subject to com-
plying with certain procedures, to seize and detain infringing copies.41
In the European Union, under Regulation No. 3295 of 1994, copyright holders
can ask their Customs Authorities to stop counterfeit or pirated goods from
entering their country. This is a very valuable and practical tool for fighting
counterfeiting on a transnational scale.
However, apart from civil remedies, criminal sanctions may result from the
infringement of sports image rights. For example, under section 92 of the UK Trade
Marks Act 1994, fraudulent application or use of a trade mark constitutes a criminal
40
See the discussion in Germany regarding damages in the Oliver Khan case and also in the
Caroline of Monaco case in the Book Sports Image Rights in Europe edited by Ian S. Blackshaw
& Robert C.R. Siekmann, 2005, TMC Asser Press, The Hague, at pp. 126128.
41
See sections 96100 of the Copyright Designs and Patents Act 1988.
268 12 Sports Image Rights and Endorsement Agreements
offence; and the offender can be fined and/or imprisoned, if the required criminal
intent (mens rea) is proved. In other words, the application or use of the mark must
be either with the intention of the infringer gaining, or causing loss to someone else;
and, in either case, must be without the consent of the trade mark owner.
Likewise, under section 107(1) of the UK Copyright, Designs and Patents Act
1988, there are similar criminal consequences where the copyright infringer
knows, or has reason to believe, that an infringement is taking place.
Before resorting to legal proceedings, however, cease and desist letters are
often sent to infringers. But beware: to claim trade mark rights falsely and threaten
legal action can, under section 21 of the 1994 UK Act, produce a counterclaim for
a declaration that the threats are unjustified; and, in turn, this can lead to claims for
damages and/or injunctions.
See further on this subject generally: Sports Merchandising: Fighting the
Fakes by Ian Blackshaw.42
12.7 Precedents
As will be appreciated from the above account of the legal nature and protection of
Sports Image Rights in various jurisdictions, the subject is a complex and detailed
one. Care should, therefore, be taken when negotiating and drafting the corre-
sponding Sports Image Rights Agreements. Attention to detail throughout is
paramount and, in particular, the scope of the rights to be granted needs to be
clearly defined and agreed between the parties and spelled out in the Agreement.
As an example of the kinds of legal problems and disputes that can arise under
Sports Image Rights Agreements, see the recent Wayne Rooney case43 referred to
above. It is quite a complex case, as the judgement of 821 paragraphs and 195
pages testifies! But a general idea of the legal issues raised in this case may be
gleaned from the following rather simplistic summary of the case:
The case concerned the Image Rights Agreement signed in 2003 by Wayne
Rooney (Rooney), when he was 17, with his former agents, Proactive Sports
Management Ltd (Proactive). Proactive were seeking unpaid commission and
invoices totalling between 13 m against Wayne and over 200,000 against his
42
The International Sports Law Journal, 2004/3-4, at p. 76.
43
Proactive Sports Management Ltd v. 1) Wayne Rooney, 2) Coleen Rooney (formerly
McLoughlin), 3) Stoneygate 48 Limited, 4) Speed 9849 Limited [2010] EWHC 1807 (QB).
12.8 Concluding Remarks 269
818. Despite the length of this judgment, I can summarise my conclusions quite briefly.
The Image Rights Representation Agreement dated 16th January 2003 is not void for
mistake but is unenforceable by Proactive as being in unreasonable restraint of trade.
Proactive cannot, therefore, recover, as a matter of contract, any sums which remain
unpaid but which would otherwise have fallen due to it under the terms of the agreement
had it not been unenforceable. Nor can it recover any further commission in respect of
income receivable in the future by Stoneygate under contracts procured by Proactive or
pursue any claim for damages for breach of the Image Rights Representation Agreement.
It is, however, entitled to a restitutionary remedy in respect of those services which it has
provided to Stoneygate and in respect of which it has not yet received any remuneration.
That must be the subject of an assessment at a later stage in respect of which I will give
directions in due course.
Even if I had found that the Image Rights Representation Agreement was valid and
enforceable, I would have held that Proactives claim for commission was limited to those
sums which had already fallen due at the time when the relationship between the parties
broke down at the end of October 2008. In respect of the subsequent period prior to its
acceptance of Stoneygates repudiatory breach of contract on or about 24th December
2009, Proactive would have been entitled to compensation or damages to be assessed in
accordance with the principles laid down in Roberts v. Elwells Engineers Ltd [1972] 2 QB
586. Thereafter, it would have been entitled to recover damages in respect of the loss
sustained as a result of the premature determination of the Agreement. But on what I
consider to be the true construction of this particular contract, it would have had no right to
commission on sums receivable by Stoneygate from third parties after the expiration of the
eight-year term; and any claim for commission in respect of sums receivable prior to that
date, but after the breakdown in relations between the parties, would have formed part of
its claim for compensation and damages and would have had to be taken into account in
the assessment of the appropriate sums.
820. In relation to Speed I have concluded, albeit with some hesitation, that Proactive is
entitled, as a matter of contract, to recover the full amount of any commission which
became due and payable prior to the end of October 2008. The total amount of the
commission is, by my calculation, the sum of 78,725.25. But if I had found that Proactive
270 12 Sports Image Rights and Endorsement Agreements
was not entitled to a contractual remedy I would nonetheless have held that it would have
been entitled to a restitutionary quantum meruit.
821. Despite my conclusions on the general issues raised in these proceedings, I have
nonetheless had to consider various individual invoices which were the subject of dispute;
and I have sought to resolve the specific issues raised in respect of each of them. In all but
three instances, the resolution of these issues is immaterial to the outcome of the pro-
ceedings. But I have concluded that, in the case of both Stoneygate and Speed, there was a
wholly separate agreement for the provision of accountancy services by reason of which
Proactive is entitled to recover 5,000 plus value added tax from Stoneygate under Invoice
18022 and a total of 10,000 plus value added tax from Speed under Invoices 18021 and
18026.
The full Judgement in the Rooney case is well worth reading, especially for
anyone who suffers from insomnia!
The detailed matters to be covered in a Players Sports Image Rights Agree-
ment may be seen from the provisions of the General Precedent set out in the
Appendix to this chapter. Again, this Precedent is for guidance purposes only, and
will, of course, like all Precedents, need to customised and adapted to fit and reflect
the particular facts and circumstances of the actual commercial deal struck
between the parties.
12.9 Appendices 271
12.9 Appendices
12.9.1 Appendix 1
Between:
(name) of (address) (the Club), which term shall include any affiliated company
to which the Club assigns any of the rights and/or licences granted to the Club
under this Agreement and (name) of (address) (the Player), a professional
football player, who has separately contracted to provide certain playing and
promotional services to the Club
It Is Agreed as follows:
Definitions and interpretation
In this Agreement the following expressions shall have the following meanings:
*
This agreement is intended for use in addition to an employment contract between a player and
a professional sports club. It is intended to be an efficient division of income between playing/
employment services and those related to the use of a players name and reputation, i.e. his
image rights. Source: Lexis Nexis; reproduced with permission.
272 12 Sports Image Rights and Endorsement Agreements
In this Agreement the singular includes the plural and vice versa and any gender
includes any other gender.
The clause headings do not form part of this Agreement and shall not be taken into
account in its construction or interpretation.
1. Term
1.1 This Agreement shall commence as of (date) and shall continue, unless
terminated earlier in accordance with clause 5 (below), until (date).
2. Grant of Rights
2.1 In consideration for the Clubs payment of the Rights Fee, the Player
grants to the Club for the Term in the Territory the Rights in relation to
the Merchandising Activities. It is agreed that:
the Players Image and the Rights shall remain the property of the
Player absolutely; and
all rights in any products or services marketed by or on behalf of the
Club that make use of the Players Image and/or the Rights, and any
goodwill arising as a result, shall remain the property of the Club
absolutely.
2.2 The grant of the Rights is exclusive and the Player shall not exploit, or
authorise anyone else other than the Club to exploit, the Players Image
and the Rights in relation to the Merchandising Activities; provided
always that nothing in this Agreement shall prevent or prejudice the Player
from licensing third parties to use the Players Image and the Rights in
connection with the marketing and promotion of products and services
that do not carry the Clubs marks or logo or otherwise relate to the Club.
12.9 Appendices 273
5.3 If either (i) the Player dies or (ii) the separate employment contract
between the Club and the Player dated (date) is terminated or expires,
this Agreement shall automatically terminate and the Club shall pay to
the Player an amount equal to the consideration remaining outstanding
at that point under this Agreement (ie, less any amounts paid by
the Club to the Player pursuant to clause 5 of this Agreement prior to
the date of termination).
6. Infringements
6.1 The Player shall provide reasonable co-operation to the Club in
combating any unauthorised use by any third party of the Players
Image or the Rights in connection with the Club; and/or defending any
claim that the rights of any third party are infringed by this Agreement.
7. Confidentiality
7.1 The parties shall keep this Agreement confidential and shall not dis-
close its contents to any third party other than their professional
advisors, save as agreed by the parties or as required by law or by any
competent authority or in order to exercise the rights and perform the
obligations arising under this Agreement. This obligation shall survive
termination of the Agreement.
8. Notices
8.1 Notices to be given under this Agreement shall be in writing in English and
left at or sent by first class registered or recorded delivery mail to the
appropriate address shown at the head of this Agreement or to such other
address as the party concerned shall from time to time designate hereunder.
9. Assignment
9.1 Either party may assign its rights and/or obligations under this
Agreement without the other partys written consent, unless, in the
case of the Player only:
such assignment is made to the benefit of the Players wholly owned
company; and
the Player accepts an express obligation to the Club, as part of the
assignment, to guarantee to the Club (as principal obligor and not
merely as surety) the full due and punctual performance and
observance by the assignee company of all of the obligations owed
to the Club under or pursuant to this Agreement, which guarantee
shall remain in full force and effect until all obligations of the
assignee company under this assigned Agreement have been fully
satisfied.
12.9 Appendices 275
As Witness etc.
(signatures of (or on behalf of) the parties)
276 12 Sports Image Rights and Endorsement Agreements
12.9.2 Appendix 2
Between
(1) [ ] of [ ] [the Player]
(2) [ ][ ] whose registered office is at
[ ][the Company which
expression includes its successors in title licensees and assigns]
Recitals
A. The Company manufactures and markets the Company Products
B. The Company wishes to engage the Player to provide the Promotional Ser-
vices upon the terms of this Agreement
C. The Player hereby grants to the Company certain rights upon the terms of this
Agreement in connection with the Licensing Rights
Operative Provisions
1. Definitions
1.1 In this Agreement the following expressions shall have the following
meaning
Company Marks means the [registered] [unregistered] trade marks
[insert details]
Company Products means those Products which are manufactured
by the Company and marketed under or in connection with the Company
Marks
Company Products means any Product other than a Company
Product
Fee means all amounts payable by the Company to the Player under
clause [3]
Governing Body means [insert details]
Licensing Rights means the right of the Company to use reproduce
and publish
(i) the Players name likeness voice signature and biographical details
(ii) agreed quotations
*
Source: Lexis Nexis; reproduced with permission.
12.9 Appendices 277
2. Rights
2.1 In consideration of the Fee the Player grants to the Company the
exclusive right in the Territory during the Term to use and exploit the
Licensing Rights
2.2 The Player in each case insofar as the Player is the owner of the same
and is able to do so
2.2.1 grants to the Company the entire copyright and neighbouring
rights for [the full period of copyright (including any extensions
and renewals)] [the Term] in all the Products of Services
2.2.2 waives all so called moral rights under the Copyright Designs
and Patents Act 1988 sections 7780 in and in relation to the
Products of Services
2.2.3 consents to the use of his performers non-property rights and
assigns his performers property rights [as such terms are defined
in Part II of the Copyright Designs and Patents Act 1988 (as
amended)] to the Company for the use of the Products of
Services
2.3 If requested to do so by the Company the Player must perform the
Promotional Services
3. Payments
3.1 Subject to the Player performing his obligations in this Agreement and in
consideration of the grant of rights made to it the Company shall pay the
Player the following sums during the Term
3.1.1 [ ] for the first contract year
3.1.2 [ ] for the second contract year and
3.1.3 [ ] for the third contract year
3.2 The amount due in each contract year is payable in two equal instal-
ments on 31 March and 30 September of the contract year
3.3 If during any contract year the Player
3.3.1 [is appointed captain of his full representative national side or
3.3.2 is selected to represent his full representative national side or
3.3.3 plays in a cup or league winning team or
3.3.4 scores more than [state number of goals]]
then in addition to the amounts payable under clause 3.1 the Company
shall pay the
Player a one off bonus payment of [ ] for that contract year
4. Term
4.1 This Agreement shall remain in force for three (3) years commencing on
[date] [from the date of signature]
12.9 Appendices 279
4.2 If the Company gives notice to the Player not later than [insert date] the
Player shall enter in good faith into negotiations with the Company with a
view to extending the Term on the same terms contained in this Agree-
ment except as to clause 3 and this clause 4 for an additional twelve (12)
months from the date of expiry of the Term and shall until [ ] not enter into
any negotiations in respect of such an agreement in respect of the
endorsement of Products with any other person. In the event that the
Company and the Player have failed for any reason to agree the terms to
replace clauses 3 and 4 of this Agreement (there being no obligation upon
either party to reach any such agreement) as at the said date the Player
shall be free to enter into negotiations and/or any agreement or arrange-
ment with any person upon any terms without restriction
5. Exclusivity
5.1 Subject to clause 5.2 the Player shall not during the Term use himself or
grant the right to use the Licensing Rights or the Promotional Services
(or any rights or services the same as or similar to the rights or services
granted to the Company under this Agreement) and/or any endorsement
or advertising marketing or promotional services of the Player to any
third party
5.1.1 whose principal business is the manufacture distribution or sale
(not by way solely of being a general retailer not more than 10%
(ten percent) of whose total sales are of Drinks) of Competing
Products or
5.1.2 where the material effect of such a grant is to grant advertising
marketing or promotional or sponsorship rights in connection
with the Event in relation to or in connection with any Com-
peting Products
5.2 Notwithstanding the provisions of clause 5.1 and clause 6.2 the Company
recognises that representative national and club teams are sometimes
required to wear apparel in connection with their representation of their
national or club team which may conflict with the terms of this Agree-
ment. The Company and the Player agree that if the Player is obliged to
wear such apparel then in those circumstances only the Player is
excepted from the provisions of clause 5.1 and 6.2
6. Players Obligations
6.1 During the Term the Player shall
6.1.1 render the Promotional Services to the best of his ability at such
time and place as the Company requires
6.1.2 in performing the Promotional Services follow all reasonable
instructions made by the Company co-operate with any third
280 12 Sports Image Rights and Endorsement Agreements
10.2 The Company is not liable to the Player for any injury or damage
suffered by the Player from wearing or using the Company Products
unless such injury or damage arises from the negligence of the
Company
10.3 The Company may enter a similar promotion and endorsement
agreement for the Company Products with any other player
11. Suspension
11.1 If the Player is in the reasonable opinion of the Company unable to
perform the Promotional Services through reasons of injury and/or
physical or mental ill health the Company may by service of notice in
writing upon the Player suspend the Term. Such suspension shall
remain in force until forthwith upon either
11.1.1 the Company serves upon the Player notice in writing that
such suspension shall be lifted or
11.1.2 the termination of this Agreement pursuant to clause 11.2 or
clause 12
11.2 During any period of suspension of the Term the Company is not
obliged to pay the Fee but in all other respects both parties continue to
be bound by the terms of this Agreement
11.3 The aggregate period of any suspension of the Term shall not exceed
six (6) months and forthwith upon the date on which the appropriate
period of suspension of the term exceeds the period of six (6) months
this Agreement shall terminate forthwith
12. Termination
12.1 The Company may terminate this Agreement by giving notice to the
Player if the Player
12.1.1 fails to perform any Promotional Services or
12.1.2 commits any act which affects the Companys reputation in
an adverse manner or
12.1.3 publicly admits to or is convicted of any offence consisting of
the use of any so called controlled substance or tests positive
in any drug testing organised by the Governing Body or
12.1.4 is convicted of any offence involving dishonesty or violence or
12.1.5 dies retires or is permanently disabled or
12.1.6 [...]
12.1.7 endorses Competing Products or
12.1.8 unless the provisions of clause 11 apply is in breach of any
term of this Agreement and (where the breach in question is
capable of remedy in such period) has not remedied that
breach within fifteen (15) days of service of notice specifying
such breach
12.9 Appendices 283
12.2 The Player may terminate this Agreement by giving notice to the
Company if the Company
12.2.1 is in material breach of any terms of this Agreement and
(where the breach in question is capable of remedy in such
period) has not remedied that breach within fifteen (15) days
of service of notice specifying such breach or
12.2.2 if the Company goes into liquidation (except for the purposes
of amalgamation or reconstruction) receivership (including
administrative receivership) has an administrator appointed
or makes any arrangement or composition with its creditors
13. Effects of Termination
13.1 Upon termination under clause 12 or expiry of this Agreement due to
effluxion of time the rights and obligations of the parties to this
Agreement cease
13.2 Subject to clause 13.3 on termination the Company must immediately
pay the Player any money due under clause 3 and clause 8.1.7 up to
the date of termination
13.3 If this Agreement is terminated by the Company pursuant to clause
12.1 the Company may reclaim from the Player any money in excess of
the amount to which the Player is entitled on the basis that the sums
payable to the Player accrue day to day on a pro rata basis within the
contract year. If requested by the Company the Player must pay the
amount due within thirty (30) days of the termination of this Agreement
13.4 Termination of this Agreement is without prejudice to any rights or
obligations of either party which may have accrued at the date of
termination
14. Notices
14.1 Any notice to be served under this Agreement must be in writing and
served upon the other party at its address set out in this Agreement (or
such other address as may be notified for this purpose) either by hand
or by first class post. Notices are deemed served on delivery if
delivered by hand or seventy- two (72) hours after posting if sent by
first class post
15. Taxation
15.1 The Player shall be responsible for his own tax and national insurance
and shall indemnify the Company against any liability for payment of
such sums
[Boilerplate Clauses]
[Execution Clauses]
Chapter 13
Sports TV Rights Agreements
Sport is now big business globally and there is, therefore, a lot to play for, from both a
sporting and a financial point of view. Indeed, as the former UK Sports Minister,
Richard Caborn, who, incidentally, initiated the EU White Paper on Sport during
the UK Presidency of the EU in the second half of 2005, has pointed out:
[t]he commercialisation of sport, especially football, has moved at a pace that
no one could have envisaged.
The rise of sport as a global industry is largely the result over the years of the
marketing of sports, sports persons and events, originally in the United States of
America (USA), and subsequently in Europe and elsewhere. This has led to the
establishment of a world-wide discrete sports marketing industry, due to the vision
and pioneering work of Mark McCormack in the USA, through his company, IMG
(International Management Group); and in Europe, by Horst Dassler, of the
German sports goods manufacturer ADIDAS, through his Swiss company ISL
(International Sport Leisure and Culture), which he founded. Sadly, neither of
these pioneers is alive today to see the extent to which sports marketing has grown
and enjoy the full fruits of their work. Also, ISL went into bankruptcy several
years ago.
Of the sports marketing mix, which includes sports sponsorship, merchandising,
endorsement of products and services, and corporate hospitality, perhaps the most
important and lucrative one is the sale and exploitation of sports broadcasting
rights around the world, which contribute mega sums to many sports and
sports events, including the Summer and Winter Olympic Games and the FIFA
World Cup. Indeed, it is fair to say that, without the sums generated by sports
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 285
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_13,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
286 13 Sports TV Rights Agreements
broadcasting, such major eventsand, in fact, many otherscould not take place
and consequently sportand sports fanswould be the losers.1
In this respect, the commercialisation of sports broadcasting rights may be
considered as the oxygen of sport. There is a symbiotic relationship between
sport and TV broadcasting. Indeed, according to David Griffith-Jones, QC:
This marriage between sport and television is one made in heaven.2
For example, the English Premier Football League, the richest and most popular
in the world, has sold its principal live broadcast rights to its matches for the next
three seasons, beginning in August 2010 and ending in 2013, for another record
sum of US$3.1bn (1.782bn). Again, the lions share of these rights has been sold
to the satellite broadcaster, BSkyB, and the matches will be shown as part of its
Sky Sports package on a subscription basis. Incidentally, BSyB is owned by the
Australian media magnate, Rupert Murdoch, through his Group News Interna-
tional, who considers sports as a battering ram and a lead offering in all his pay
1
See Blackshaw, in Chap. 11 (Sports Marketing, Sponsorship and Ambush Marketing) of
Sports Law by Simon Gardiner, Mark James, John OLeary, Roger Welch, Ian Blackshaw,
Simon Boyes and Andrew Caiger, third edition, 2006, Sydney & London, Cavendish Publishing
Limited, ISBN 10: 1-85941-894-5.
2
Griffith-Jones, D., Law and the Business of Sport, 1997, London, Butterworth and Co, at
p. 289.
3
Parrish, Richard, Sports law and policy in the European Union, 2003, Manchester and New
York, Manchester University Press.
4
Verow, Richard, Lawrence, Clive, McCormick, Peter, Sports Business, Second Edition,
2005, Bristol, Jordan Publishing Limited, at p. 321.
13.1 Introductory Remarks 287
television operations around the world.5 This again demonstrates the great value
that attaches to sports broadcasting rights globally! Other broadcast rights pack-
ages to the Premier League matches, comprising overseas rights, highlights
packages and mobile phone and internet rights, have been sold separately to other
companies.6
It is interesting to note that BSkyB has held the live rights to broadcast Pre-
miership football in England since 1992, paying at that time for the three seasons,
beginning in 2003 and ending in 2006, the sum of 1.024bn. This uplift in sports
TV rights fees is staggering! According to Peter Scudamore, the Chief Executive
of the English Premier League, these rights are now more valuable and for the
first time these are platform-neutral rights available for exploitation on wider
technology. The current broadcast rights fees are very impressive and there will
be even more TV money for the 20 English Premier League Football Clubs to
share amongst themselves accordingly.
The English Football League has signed broadcast rights deals with six inter-
national agencies and broadcasters, worth 24 million over three years, beginning
in 20092010. The new deals represent a 300 per cent increase in revenue for the
rights. Again, impressive and demonstrating the value of football!
It is the first time that the English Football League has split its worldwide rights
among a number of different partners. The partners are: the IMG agency, which
acquired the rights worldwide, excluding Africa and the Middle East; Pitch Inter-
national, in the Middle East; Hi TV, in (part of) Nigeria; Supersport, in South Africa,
(part of) Sub-Saharan Africa, and (part of) Nigeria; GTV, in (part of) Sub-Saharan
Africa; and Perform, which acquired live online rights for betting websites.
Football League Chairman Lord Mawhinney welcomed the huge increase of
resources for our clubs, and said they showed that the global football audience
was increasingly recognising that The Football League prides itself on producing
some of the most competitive and exciting league and cup football in the world
game.
It may be added that the exploitation of broadcasting rights in football have
become so valuable and important that many leading football clubs, such as the
English club Manchester United, now operate their own television channels for the
benefit of their fans and also their commercial sponsors/partners/suppliers, made
possible with the advent of digital TV.
The value of sports broadcasting rights is replicated elsewhere in the world and
in relation to other major sporting events. For instance, the International Olympic
Committee sold the broadcast rights for the 2008 Beijing Summer Olympic Games
for stratospheric sums too! And the upward trend in the sale of broadcast rights for
major world sports events, such as the FIFA World Cup, seems unstoppable.
5
Address at the AGM of News Corporation on 15 October, 1996 in Adelaide, Australia.
6
For example, Yahoo won the rights to show English Premier League highlights over the
Internet in a multi million pounds deal, outbiding the current holder of these rights, Virgin Media,
in a competitive auction.
288 13 Sports TV Rights Agreements
For further detailed information on the legal aspects of sports TV rights, see the
recently published Book, entitled: TV Rights and SportLegal Aspects.7 Among
the legal issues addressed in this Book are:
the ownership of sports broadcasting rights, including the position of
individual sports persons, teams, clubs, venue owners;
the different methods of protecting them, including copyright;
the different methods of exploiting them, including collective selling and
buying, as well as pay per view and free to view arrangements;
the so-called new media rights, including the streaming of sports broad-
casts on
the Internet (so-called webcasts) and on the so-called third and fourth
generation mobile phones; and last but by no means least
the impact of the EU and National Competition Rules on the broadcasting
of sports events.
The ownership of broadcasting rights is a particularly thorny question, not least,
for example, in the UK, where there is no property right per se in a sporting
spectacle. Likewise, in the UK, a sports game is not a dramatic work, and thus
not entitled to copyright protection under the UK Copyright Designs and Patents
Act of 1988. And, similarly, those who participate in sports events are excluded
from the definition of those accorded statutory performers rightsthey are not
engaged in a copyrightable performance that can be protected under the 1988 UK
Act. How these intrinsic legal problems are overcome, in practice, especially
through the clever use of contractual arrangements, including players and offi-
cials contracts of employment.
As to the impact of EU Competition Rules on sports broadcasting rights, the
vexed legal questions of the collective selling and collective buying of those
rightswhether on an exclusive or non-exclusive basisarise and need to be
addressed. See further on this important subject Chap. 16 on EU Aspects.
The rise of new platforms for media exploitation of sports events referred to
above is also an important topic in its own right and is, therefore, dealt with
separately in Chap. 14 on Sports New Media Rights Agreements.
In order to broadcast a sporting event, there are many parties involved with
different roles, apart from the event organiser and the broadcaster, and, therefore,
there are a complex array of different but interconnected (back-to-back)
Agreements, including down stream TV Rights Sales Agreements, that need to
7
Ian Blackshaw, Steve Cornelius & Robert Siekmann (Eds.), 2009 TMC Asser Press, The
Hague, The Netherlands.
13.2 Sports Broadcasting Agreements 289
be negotiated, drafted and concluded to get the show on the road. Of course,
within the confines of this Book, it is not possible to deal with all of them. For
example, the legal, technical and operational complexities of Host Broadcaster
Agreements for a major global sporting event, such as the Olympics, would require
an entire Book to be devoted to them in order to do justice to them.
Accordingly, we will concentrate on a basic Sports Broadcast Licence Agree-
ment and also a Sports Broadcast Sponsorship Agreement, General Precedents of
which will respectively be found in Appendix 1 (13.5.1) and Appendix 2 (13.5.2)
to this chapter. Again, it should be emphasised that these Precedents are for
general guidance only and will need to be adapted and customised to fit the
particular facts and circumstances of each individual case. A few salient comments
on each of these Agreements now follow.
Another important consideration and requirement for the Event Organiser is the
protection of the Event Sponsors in relation to the broadcast coverage against any
competitors getting in on the act. After all, the extent of the exposure of the
Sponsors through the broadcast coverage, for example, through perimeter adver-
tising in the stadium or arena where the sports event is taking place, is perhaps the
most important component in any Sponsorship Rights Package. Thus, an obliga-
tion is imposed on the Broadcaster not to appoint a broadcast sponsor or grant any
sponsorship rights in relation to the broadcast coverage, nor to accept any
advertising intended for transmission during immediately before or after the
Programme (in other words commercial breaks) that is, in the reasonable opinion
of the Organiser, in direct competition with the Organiser or any Commercial
Partners as defined in the Definitions and Interpretation Clause of the Agreement.
This provision is absolutely vital to prevent any so-called Conflict Marketing
arising out of or in relation to the broadcast coverage of the Sports Event
concerned. Often, an additional clause is included in a Sports Broadcast Licence
Agreement requiring the Broadcaster to grant a right of first refusal to the Sports
Event Organisers Sponsors to commercial breaks before during and after the
broadcast of the Event. As with any right of first refusal, the provision needs to be
carefully drafted setting out the precise conditions for its exercise, including
most importantlythe corresponding time lines.
Another important obligation to be placed on the Broadcaster is the one
requiring the Broadcaster to procure that its personnel, agents and independent
contractors comply with all reasonable directions given by the Organiser its
employees, agents and representatives in relation to the positioning of its personnel
and equipment at the Event. Again, this clause is designed to get the maximum
benefit from the broadcast coverage of the Sports Event concerned.
Again, another important clausethis time as far as the Broadcaster is con-
cernedis the one that requires the Event Organiser to procure that the
Broadcaster has access for its personnel and equipment at the Event venue at the
times reasonably required by the Broadcaster and at no charge to the Broad-
caster; and also to ensure that the Broadcaster has access to the power supply,
car parking space for its equipment and personnel at the Event venue and such
other facilities as are set out at Schedule 8 butthis timeat the expense of the
Broadcaster.
The other provisions in the General Precedent of the Sports Broadcast Licence
Agreement in Appendix 1 (13.5.1) of this chapter are reasonably self-explanatory
do not require any particular comments other than taking note of their inclusion in
the Agreement, in particular, the Ownership of the Rights, Warranties and
Indemnity Intellectual Property Force Majeure Governing Body Compliance
and Limitation of Liability Clauses, the latter Clause being very important
indeed, as broadcasting a major sports event can be a particularly hazardous
operation, especially with all the complex equipment that must be brought on site
at the venue.
13.2 Sports Broadcasting Agreements 291
We now turn to consider the General Precedent of the Sports Television Spon-
sorship Agreement, set out in Appendix 2 (13.5.2) of this chapter, and will draw
attention to and comment on some of its more important and characteristic features
and provisions. As always, this General Precedent will need to be customised to
suit the circumstances of the particular case.
Apart from the grant of rights and consideration (price) clauses, which, as
always, needs to be carefully and well drafted, perhaps the most important pro-
vision, as far as the Sports Broadcast Sponsor is concerned, is the Sponsors
Credits (a defined term in the Agreement) that will appear as part of the Broadcast
of the Sports Event concerned. These need to be agreed and the cost of producing
the required materials to incorporate them into the Broadcast is, of course, to be
borne by the Sponsor and this cost will be included in the Sponsorship Fee.
As far as the Broadcaster is concerned, perhaps the most important provision in
the Sports Television Sponsorship Agreement is the right of the Broadcaster to
retain editorial control over the content and scheduling of the Broadcast, that is,
the Programme and Programme Schedules respectively. Both these matters are
defined in the Definitions Clause of the Agreement.
In the Obligations of the Sponsor Clause, particular note should be made of the
Sponsors warranty that it is the sole owner of or controls all the intellectual
property in the Sponsors Credits and that any use by the Broadcaster of the
Sponsors Credits in accordance with the terms of the Agreement will not infringe
the intellectual property rights of any third party. Notice also the usual warranty by
the Sponsor that the Sponsors Credits do not contain any obscene, blasphemous,
offensive or defamatory material and will not expose the Broadcaster to any civil
or criminal proceedings, as well as the requirement for the Sponsor to take out
comprehensive public liability insurance.
As far as the Obligations of the Broadcaster are concerned, particular attention
should be paid to the warranty in favour of the Sponsor that the Broadcaster is the
sole owner of or controls all copyright and any other rights in and relating to the
Programme, and also that the Broadcaster shall be solely responsible for all costs
incurred (except those involved in the Sponsors Credits) in the production,
broadcast transmission, distribution and exploitation of the Programme. Notice
also the important warranty of the Broadcaster that the Broadcast or the use of the
Sponsors Credits in the Broadcast does not infringe any applicable sponsorship or
advertising rules, directives, or statutes. In the UK, television and radio broad-
casting are regulated by Ofcom, which has issued regulations and guidelines to be
followed by broadcasters.8
As regards the Sponsors Credits, the parties need to agree on the timing of
them and their placement within the Sports Event Broadcast and also in respect of
8
For more information, logo onto www.ofcom.org.uk
292 13 Sports TV Rights Agreements
any and all trailers for the Broadcast. See clause 6.1 and 6.2 respectively of the
General Precedent of the Sports Television Sponsorship Agreement.
One final point, notice the Indemnity Clause included in the General Precedent
of the TV Sports Television Sponsorship Agreement (Clause 7), which imposes
obligations on the parties to indemnify each other in the event of any breach of
their respective obligations under the Agreement.
In Appendix 1 and 2 (13.5.1 and 13.5.2) respectively of this chapter, the reader
will find General Precedents of a Sports Broadcast Licence Agreement and a
Sports Television Programme Sponsorship Agreement, for general information
and illustrative purposes only.
From the above account, it is clear that, on a global scale, sports broadcasting
rights, from a legal point of view and also from a commercial point of view,
constitute a very important component of the sports marketing mix. The sale of
television and new media rights to national and international sports events already
provide a significant source of revenue to International and National Sports Fed-
erations alike, and will, no doubt, continue to do so, and the value of them will
probably reach even greater stratospheric financial heights in the foreseeable
future, notwithstanding the global recession. Indeed, hardly a day passes without
some announcement of a major sale of TV rights having been made in respect of a
particular sporting event somewhere in the world!
Despite all this economic preoccupation, sport is now a multi-billion dollar
industry worldwide and will no doubt continue to be so. As such, some would
argue, that perhaps sport has lost touch with its Corinthian roots and values, as well
as its Olympian ideals and raison dtre, since nowadays it seems to be the
winning rather than the taking part that motivates sports persons and countsand
there is certainly a lot to play for in sporting and in financial terms! Nevertheless, it
must be said that, without the mega sums generated by the sale of television rights,
sporting spectaculars like the Olympics and the FIFA World Cup could not take
placethe costs of organising and staging them would be prohibitive. And,
accordingly, athletes and sports fans alike throughout the world would be the
losers.
13.4 Concluding Remarks 293
Driving the importance and increasing value of sports broadcasting rights are
the further advances and developments in new broadcasting technologies. Not
least, the continuing growth in digital television, as many systems in many
countries change from analogue to digital broadcasting methods of transmission
and delivery.9 Digital television, in fact, particularly lends itself to the broad-
casting of sports events, providing, as it does, viewers with greater choice in terms
of programme content; control over how and when they watch; and also raising
their expectations regarding the quality of picture and sound (the advent of high
definition television (HDTV)), depth and also the personalisation and enhancement
of the broadcast experience, especially through the availability of interactive and
view on demand facilities.10
The growth of new delivery platforms, including the spread of broadband,
particularly for home computers, so-called 3G and 4G mobile phones, video on
demand and personalised video recorders will also play a significant part in the
development of the sports broadcasting market and give rise to new legal chal-
lenges and commercial opportunities. All these developments, as Andy Fry has
pointed out, have given the industry its first glimpse of a future in which the basic
rules of audience engagement will be turned on their head.11
All this, of course, is good news for sports broadcasting rights holders, not least
the leading International Sports Federations, such as the IOC and FIFA. Again, as
Andy Fry has observed: .rights holders sense an opportunity to sell their
content to customers in a range of new formats across new platforms. And adds:
In terms of pay-TV politics, digital looks like a gravy train for cable and satellite
platformsbut the big threat is that telecoms companies will use it as a way of
muscling in on the content delivery game.12
The coverage of major sports, such as the Olympics and the FIFA World Cup,
are not the only sports to benefit from this broadcasting technological revolution.
There is also scope for the rights holders of smaller sports to cash in as well,
providing their fans with video content that has not got onto television in their
particular countries. For example, Premium TV has a broadband subscription
service for fans of The World Rally Championship, offering them video stage
highlights, in-car footage, interviews with drivers, as well as a video archive
accessible on its website. Other smaller sports are exploring video streaming via
broadband as well.
9
In the UK, for example, the changeover from analogue to digital broadcasting is due to begin in
2008 and end in 2012, in time for the London Olympic Games.
10
On the subject of Digital Television generally, see Public Television in the Digital Era:
Challenges and New Strategies for Europe, 2007 London, Palgrave Macmillan, by Petros
Iosifidis, one of the contributors to this Book (see the Chapter on Greece).
11
Delivering Outside The Box, Andy Fry, SportBusiness International, June 2005, at p. 40.
12
Ibid.
294 13 Sports TV Rights Agreements
This exciting and technology-led brave new media world13 will undoubtedly
have an appreciable effect on the sporting world in general and, in particular,
present further challenges to sports broadcasting rights holders, sports governing
bodies, sports persons and teams and other stakeholders, as well as their profes-
sional advisors, not least their lawyers. This will lead to all kinds of conflicts that
will need to be resolved by public authoritiesat the national and supra-national
levelsand sports bodies and administrators themselves. As Professor Stephen
Weatherill, Jacques Delors Professor of EC Law at Oxford University has perti-
nently observed:
Some of the most intriguing tensions in the years to come are likely to centre on
the attempts of governing bodies to satisfy the commercial aspirations of the
most powerful participants while also maintaining vertical solidarity within the
sport and preserving the broader integrity of the character of the event.14
Accordingly, interesting and challenging times lie ahead for all those involved
in any way and at any level in the sports broadcasting field, not least concerning
the worlds favorite game, football. In this respect, it will be interesting to see how
the law at the national and supra-national levels and the National level develops.
As the Chinese are wont to say: we are living in interesting times!
13
See Report by Market Analysts Forrester entitled, The Battle For The Digital Home, referred
to in Delivering Outside The Box, Andy Fry, SportBusiness International, June 2005, at p. 41.
In this Report, various scenarios that might arise in the so-called converged sports world are
suggested, including a possible joint venture between the NFL and Fox to create an immersive
experience where sports fans can choose viewer-selected camera angles and split-screen
contentand Disneys acquisition of Electronic Arts. With EAs sports games, Disney/ESPN
becomes the premier sports brand on PCs, TV and 13 consoles.
14
Weatherill, Stephen, European Sports Law Collected Papers, 2007 The Hague, The
Netherlands, TMC Asser Press, ISBN 978-90-6704-243-7, at p. 246.
15
Ibid., at p. 296.
13.5 Appendices 295
13.5 Appendices
13.5.1 Appendix 1
Between
(1) [ ][ ] whose registered office is at
[ ] (the Organiser)
(2) [ ][ ] whose registered office is at
[ ] (the Broadcaster)
Recitals
A. The Organiser is the organiser of the Event (as defined in this Agreement)
B. The Organiser wishes to grant Broadcaster certain rights in connection with
the [live and delayed broadcast] of the Event
Operative Provisions
1. Definitions And Interpretation
1.1 In this Agreement the following terms have the following meanings
Broadcast Substitution means the ability to superimpose an elec-
tronic image onto any surface whether real or imaginary or the ability to
alter any image by any means whether electronic or otherwise
the Commercial Partners means [ ]
the Event means the event which is planned to be run on the dates
and at the time set out in Schedule 1
the Event Feed means the live audio visual feed signal of the Event
produced by the Producer to that detailed technical specification set out
at Schedule 3
the Event Marks means [insert details]
Excerpts means excerpts from the Event Feed each having a duration
not exceeding thirty (30) seconds
Exclusive Period means in respect of the Event the period com-
mencing at the beginning of the Event and termination [ ] hours fol-
lowing the conclusion of the Event
the Governing Body means [ ]
Intellectual Property means patents trade marks (whether registered
or unregistered) rights in any designs (whether registered or unregis-
tered) and applications for any of the foregoing trade or business names
*
Source: Lexis Nexis; reproduced with permission.
296 13 Sports TV Rights Agreements
the Term means the period from the date of this Agreement up to and
including the date following [ ] days following the conclusion of the
Event
the Territory [insert details]
2. Licensed Rights
2.2 The Organiser reserves to itself all rights in and in relation to the Event
and/or the broadcast or making available to the public of any audio-
visual materials depicting the Event other than the Rights
3. Exclusivity
3.1 The Organiser agrees that it shall not grant itself or permit any other
person to grant to any person other than the Broadcaster the Rights
during the Term and in the Territory
3.2 Save as set out at clause 3.1 (and subject only to clause 3.3) the
Organiser gives no warranty or undertaking to the Broadcaster that no
other person shall without the express grant of rights by the Organiser to
do so broadcast or make available to the public any audio-visual
materials depicting the Event
3.3 The Broadcaster understands and acknowledges that the Organiser shall
grant to other persons the right into alia to broadcast and/or make
available to the public audio-visual materials depicting the Event during
the Term
3.3.1 and in the Territory by way of methods and/or forms or formats
other than the Permitted Methods
3.3.2 and in the Territory by way of any method form or format by way
of Excerpts and/or Recorded Highlights provided no such mate-
rials may be broadcast or made available to the public until the
expiry of the Exclusive Period
3.3.3 outside the Territory by way of any method form or format in any
way or manner and in the event that any such broadcast or making
available to the public becomes capable of reception or access by
any means and/or for any reason in the Territory as a result of any
satellite overspill which may not practicably and economically
be avoided the Organiser shall not be liable to the Broadcaster as a
result thereof for any breach of any exclusivity granted to the
Broadcaster pursuant to this Agreement
4. Expenses and Fees
4.1 Each party shall bear its own costs of complying with the terms of and
undertaking its obligations under this Agreement
4.2 In consideration of the rights granted pursuant to this Agreement the
Broadcaster shall pay to the Organiser the following sums on the fol-
lowing dates [ ]
4.3 All sums payable hereunder are exclusive of any VAT which where
appropriate shall be paid by the Broadcaster in addition
5. Obligations of the Broadcaster
5.1 The Broadcaster shall produce the Programme to a standard of at least
the same quality and have the same production standards as other sports
298 13 Sports TV Rights Agreements
7.5 The Organiser will endeavour to make participants in the Event avail-
able to the Broadcaster for the purposes of interviews and commentary
for the Programme and reasonable promotional and cross-promotional
activities relating to the Programme
8. Ownership of the Rights
8.1 The Broadcaster with full title guarantee hereby assigns absolutely to the
Organiser any and all Intellectual Property in and in relation to the Event
Feed and the Pictures (by way where applicable of present assignment of
future copyright and/or other future rights) to hold the same to the
Organiser absolutely for its own benefit
8.2 In consideration of the payment to it of the fees referred to at clause 4.2
the Organiser hereby grants to the Broadcaster (by way where applicable
of present licence of future copyright or other future rights) the right by
way of non-exclusive licence to use the Event Feed and the Pictures in
relation to the exercise by it of the Rights for the Term in the Territory in
accordance with the terms of this Agreement
9. Warranties and Indemnities
9.1 Each party warrants to the other that it has the full right power and
authority to enter into and perform its obligations under this Agreement
9.2 The Broadcaster shall indemnify the Organiser against any loss cost
charge liability or expense the Organiser (or any employee of the
Organiser or any Commercial Partner) may sustain or incur as a direct or
indirect consequence of the breach by the Broadcaster of any of its
obligations under this Agreement
10. Intellectual Property
10.1 The Broadcaster shall promptly and fully notify the Organiser of any
actual threatened or suspected infringement in the Territory of any
Intellectual Property of the Organiser which comes to the Broad-
casters notice and of any claim by any third party so coming to its
notice and the Broadcaster shall at the request and expense of the
Organiser do all such things as may be reasonably required to assist
the Organiser in taking or resisting any proceedings in relation to any
such infringement or claim
10.2 Nothing in this Agreement shall give the Broadcaster any rights in
respect of any Intellectual Property or the Event Marks used by the
Organiser in relation to the Event or of the goodwill associated
therewith and the Broadcaster acknowledges that except as expressly
provided in this Agreement it shall not acquire any rights in respect
thereof and that all such rights and goodwill are and shall remain
vested in the Organiser
13.5 Appendices 301
10.3 The Broadcaster shall not use any trade marks or trade names so
resembling the Event Marks or trade names of the Organiser or of the
Governing Bodies as to be likely to cause confusion or deception
10.4 The Broadcaster shall not authorise any third party to use the Event
Marks or any Intellectual Property of the Organiser or of the Governing
Bodies. If any third party requires the use of the Event Marks or any
Intellectual Property of the Organiser or of the Event then the Broad-
caster shall inform the Organiser of such requirement. The Organiser
may (in its absolute discretion and where it is able to) grant such third
party the right or licence required
10.5 The Broadcaster shall at the expense of the Organiser take all such steps
as the Organiser may reasonably require to assist the Organiser in
mainlining the validity and enforceability of the Intellectual Property of
the Organiser during the continuance of this Agreement
10.6 Without prejudice to the right of the Broadcaster or any third party to
challenge the validity of any Intellectual Property of the Organiser the
Broadcaster shall not do or authorise any third party to do any act which
would or might invalidate or be inconsistent with the Intellectual
Property of the Organiser and shall not omit or authorise any third party
to omit to do any act which by its omission would have that effect or
character
10.7 The Broadcaster shall take such reasonable action and steps in relation
to any potential or actual infringement of its Intellectual Property in the
Rights which comes to its notice as the Organiser shall at the request and
expense of the Broadcaster do all such things as may be reasonably
required to take or remit any proceedings in relation to such infringe-
ment of the Rights
10.8 The Broadcaster shall not grant any rights in connection with or deriving
out of the Rights or otherwise share in its exploitation of the Rights or of
any benefit arising out of or in connection with this Agreement with any
third party save with the express written consent of the Organiser at its
discretion
11. Confidentiality
11.1 Confidentiality
11.1.1 Subject to sub-clauses 11.2 and 11.3 each party
11.1.1.1 shall treat as strictly confidential and use solely for the
purposes contemplated by this Agreement all docu-
ments materials and other information whether techni-
cal or commercial obtained or received by it as a result
of entering into or performing its obligation under this
Agreement and relating to the negotiations relating to or
302 13 Sports TV Rights Agreements
13.2.1 For the purpose of this clause force majeure means any cir-
cumstances not foreseeable at the date of this Agreement and not
within the reasonable control of the party in question including
without limitation
13.2.1.1 any strike lockout or other industrial action or any
shortage of or difficulty in obtaining labour or raw
materials
13.2.1.2 any destruction temporary or permanent breakdown
malfunction or damage of or to any premises plant
equipment (including computer systems) or materials
13.2.1.3 any breach of contract default or insolvency by or of
any third party (including an agent or sub-contractor)
other than a company in the same group as the party
affected by the force majeure or an employee or officer
of that party or company
13.2.1.4 any action taken by government or public authority of
any kind including not granting a consent exemption
approval or clearance
13.2.1.5 any civil commotion or disorder riot invasion war threat
of or preparation of war
13.2.1.6 any fire explosion storm flood earthquake subsidence
epidemic or other natural physical disaster
13.3 Obligations of affected party
13.3.1 A party whose performance of its obligations under this Agree-
ment is delayed or prevented by force majeure
13.3.1.1 shall forthwith notify the other party of the nature
extent effect and likely duration of the circumstances
constituting the force majeure
13.3.1.2 shall use all reasonable endeavours to minimise the
effect of the force majeure on its performance of its
obligations under this Agreement and
13.3.1.3 shall subject to sub-clause 13.4 forthwith after the
cessation of the force majeure notify the other party
thereof and resume full performance of its obligations
under this Agreement
13.4 Termination for force majeure
13.4.1 If (where the terms of clause 14 do not apply) any force majeure
delays or prevents the performance of the obligations of either
party for a continuous period in excess of one (1) month the party
not so affected shall then be entitled to give notice to the affected
party to terminate this Agreement specifying the date (which
13.5 Appendices 305
shall not be less than seven (7) days after the date on which the
notice is given) on which termination will take effect. Such a
termination notice shall be irrevocable except with the consent of
both parties and upon termination the provisions of clauses
12.1.4 and 12.1.5 apply
14. Governing Body Compliance
14.1 This Agreement is expressly subject to the rules and regulations of [the
Governing Bodies] wherever relevant and nothing in this Agreement
shall in any way prevent or restrict the Organiser from abiding by the
said rules and regulations and/or the terms of sponsorship of any
tournament league and/or event in which the Organiser at any time
participates and for the avoidance of doubt in the event that any of the
said rules and regulations and/or any such condition or term of
sponsorship in any way conflicts with any obligation arising pursuant
to this Agreement then that rule of regulation and/or condition or term
of sponsorship shall prevail over the conflicting obligation arising
pursuant to this Agreement and no failure by the Organiser to comply
with such an obligation arising pursuant to this Agreement shall be
construed as or have the effect of comprising any breach of this
Agreement but rather the effect of the conflicting obligation arising
pursuant to this Agreement shall be deemed to be suspended
throughout any period such conflict exists
15. Limitation of Liability
15.1 The following provisions of clauses 15.1 to 15.5 inclusive set out the
[Broadcasters] entire liability (including any liability for the acts and
omissions of its employees agents and sub-contractors) to the [Orga-
niser] in respect of
15.1.1 any breach of its contractual obligations arising under this
agreement and
15.1.2 any representation or tortious act or omission including
negligence arising under or in connection with this Agreement
15.2 Any act or omission on the part of the [Broadcaster] or its employees
agents or sub-contractors falling within clause 15.1 above shall for the
purpose of clause 15.1 be known as an Event of Default
15.3 The [Broadcasters] liability to the [Organiser] for death or injury
resulting from negligence shall not be limited
15.4 Save as set out at clause 15.3 above the [Broadcasters] entire
aggregate liability howsoever arising and of whatever nature in respect
of any and all Events of Default of whatever nature and howsoever
arising shall be limited to the aggregate amount of the Fees actually
306 13 Sports TV Rights Agreements
[Execution Clauses]
SCHEDULE 1
The Event
SCHEDULE 2
The Programme
SCHEDULE 3
The Event Feed Technical Specification
SCHEDULE 4
The Programme Guidelines
SCHEDULE 5
The Permitted Methods
SCHEDULE 6
Programme Timings and Broadcast Locations
SCHEDULE 7
Technical Facilities Event Feed
SCHEDULE 8
Facilities to be provided to Broadcaster
13.5 Appendices 307
13.5.2 Appendix 2
Between
(1) [ ][ ] whose registered office is at
[ ] (the Sponsor)
(2) [ ][ ] whose registered office is at
[ ] (the Broadcaster)
Recitals
A. The Sponsor is a company engaged in the business of [ ] who wish to sponsor
programmes through the Broadcaster
B. The Broadcaster is the broadcaster of the programmes the Sponsor wishes to
sponsor and is fully and effectively licensed to broadcast in the United
Kingdom by Ofcom and/or any and all relevant authorities
Operative Provisions
1. Definitions
1.1 In this Agreement the following expressions shall have the following
meanings
Broadcast has the meanings ascribed to it in the Copyright Design
and Patents Act 1988 (as amended from time to time) (and cognate
expressions shall be construed accordingly)
Fee means [ ] plus VAT
make available to the public has the meanings ascribed to it in the
Copyright Design and Patents Act 1988 (as amended from time to time)
(and corporate expressions shall be construed accordingly)
Ofcom means the office of Communications (Ofcom) whose principal
address is at Riverside House 2A Southward Bridge Road London SE1
9HA
Programme means the terrestrial broadcast television programmes
and any associated sound recordings titled [ ] being [ ] minutes long
the full nature and description of which is set out at the Schedule 3
Programme Schedules means the provisional timetable for the
broadcast and/or making available to the public of the Programmes set
out in the Schedule 2 [setting out details of all channels and/or platforms
by which the same are to be so broadcast or made available to the public
together with times and dates]
*
Source: Lexis Nexis; reproduced with permission.
308 13 Sports TV Rights Agreements
Rights
(i) means the exclusive right for the Sponsor to sponsor the pro-
gramme using the Sponsors Credits
(ii) the additional rights set out in clause [ ] of this Agreement
Sponsors Credits means the full range of agreed visual and/or
audio-visual recorded sequences (including all permutations thereof)
incorporating the logo and trade mark of the Sponsor together with
associated words to be agreed between the parties as more fully
described in respect of each of the relevant permutations thereof at the
Schedule 4 in each case as approved by the Broadcaster from time to
time such approval not to be unreasonably withheld delayed or
conditioned
Term means the period commencing on the date of signature of this
Agreement and expiring on [date]
Territory means the United Kingdom the Channel Islands and the
Isle of Man
2. Grant of Rights
2.1 In consideration of the Fee and subject to the terms of this Agreement
the Broadcaster grants to the Sponsor the Rights for the Term throughout
the Territory
2.2 The Broadcaster undertakes that it shall not grant any third party the
right to sponsor the Programme during the Term
2.3 The Broadcaster undertakes to use its reasonable endeavours to broad-
cast or make available to the public or procure the broadcast or making
available to the public of the Programme in accordance with the Pro-
gramme Schedules throughout the Territory during the Term
2.4 The Sponsor acknowledges and agrees that all copyright and all other
rights of whatever nature in the Programme are the property of the
Broadcaster and that this Agreement grants the Sponsor rights in or in
relation to the Programme
2.5 The Broadcaster acknowledges and agrees that any copyright and any
other rights in the Sponsors Credits shall remain the sole and exclusive
property of The Sponsor together with any goodwill and that the
Broadcaster shall not acquire any rights in the Sponsors Credits
2.6 The Sponsor hereby grants to the Broadcaster an exclusive licence to
broadcast the Sponsors Credits on the terms of this Agreement for the
Term in the Territory
2.7 The Sponsor acknowledges the common custom and practice as with all
sponsored sporting events that whilst the Sponsor remains at all times
the exclusive and official sponsor of the Programme it may well be the
case that the official timing and computer companies will be visible on-
screen from time to time
13.5 Appendices 309
services being credited under this Agreement together with all other
products or services owned or controlled by The Sponsor which the
public would reasonably associate with the Sponsors Credits. The
Sponsor undertakes to provide the Broadcaster with a copy of all rele-
vant insurance policies upon request
5.4 The Sponsor confirms that it has and will retain all rights and full
authority in order to enable it to enter into this Agreement
5.5 The Sponsor acknowledges that the Broadcaster may use its sole dis-
cretion as to the manner and method to be used in the marketing pro-
moting and advertising of the Programme irrespective of any rights
granted under this Agreement and that the Broadcaster shall retain all
proceeds from the exploitation of the Programme in any manner or
media at any time
5.6 The Sponsor shall bear all costs of creating producing designing and the
Sponsors Credits and of supplying the Sponsors Credit to the Broad-
caster for incorporation in the Programme
5.7 The Sponsor agrees to be bound by the requirements of the Broadcaster
in respect of any sponsorship or advertising rules directives or statutes
which apply to the Broadcaster or have been issued by Ofcom or by any
other person having the power to issue the same concerning the broad-
cast or transmission of the Sponsors Credits including but not limited to
its size shape colour wording and on-screen position and general nature
6. Obligations Of The Broadcaster
6.1 The Broadcaster agrees to use its reasonable endeavours to broadcast
and make available to the public or procure such broadcast or making
available to the public of the Programme as per the Programme
Schedules incorporating the Sponsors Credits in all other relevant
permutations as set out at the Schedule 4 including but not limited to as
follows
6.1.1 fifteen (15) seconds (maximum) opening titlesvoice and visual
credits
6.1.2 ten (10) seconds (maximum) break-bumpersvisual credits only
6.1.3 ten (10) seconds (maximum) closing titles-voice and visual
credits
6.2 The Broadcaster undertakes to give the Sponsor a visual credit of five (5)
seconds maximum on all trailers for the Programme
6.3 The Broadcaster agrees to give the Sponsor access to all the recorded
footage of the Programme for its own promotional purposes only. The
Sponsor may edit the footage at its own cost for such purposes and may
use the same in such manner and/or such purposes as may be expressly
agreed between the Broadcaster and the Sponsor in writing from time to
time
13.5 Appendices 311
[Execution Clauses]
SCHEDULE 1
SCHEDULE 2
The Programme Schedule
SCHEDULE 3
Designation of the Programme
SCHEDULE 4
The Sponsors Credits
Chapter 14
Sports New Media Rights Agreements
The inexorable rise of the Internet, the advent of Digital Television and Television
on demand have provided new platforms for not only the dissemination of
information, but also programming of various kinds, including sports events.
Not only are major sports events broadcast on television and radio, but they are
also transmitted on line in so-called webcasts. The latest generations of mobile
phones have also added a new platform for providing a wide range of commu-
nications, including text messaging and access to the Internet. They have also
provided the possibilities of downloading programmes of various kinds from the
Internet, including webcasts. Likewise, video technology has advanced greatly in
the last decade or so, and provided a wide range of commercial and business
opportunities.
Many Sports Event Organisers and Sports Rights Holders have been quick to
embrace this new advanced technology and have realised the value of these
new platforms not only for promoting their sports events, but also for cashing in
on and deriving additional and lucrative income streams from the commercial
demand for and exploitation of them.
Thus, these new media developments have opened up a new world of com-
mercial opportunities in the sports marketing and other business sectors, and given
rise to the need for the corresponding Agreements to be drawn up in order to grant
and protect these new media rights.
Because this is a vast, complex and highly technical subject, with a wide range
of Sports-related and Sports Marketing New Media Rights Agreements that may
arise, according to the particular sport and circumstances, in this chapter, we will
concentrate on only a few of the main Agreements that may need to be negotiated
and drafted, and provide some general comments on them.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 313
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_14,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
314 14 Sports New Media Rights Agreements
1
Sports Videos are very popular and much in demand and provide another useful income stream
for Sports Governing Bodies and other Rights Holders.
2
In the Internet age, a website for a Sports Governing Body, especially an interactive one, is de
rigueur!.
3
Mobile Phones are another useful platform for the dissemination of sports content, information,
such as results of sports events, especially football matches, and sports images.
4
For copying and downloading, for commercial and other specified purposes, of licensed
materials (as defined) from a website, including a sports-related one.
5
Sports Video Games have become very popular in the last ten years or so. The corresponding
Licence Agreements are highly complex and technical documents and, when drafting them, the
draftsman needs to have a good understanding of the underlying technology; and, as far as
warranties and liabilities are concerned, what can go wrong and how to limit the effects and
damages. These Games are also often sponsored by other Companies, who wish to be associated
with the sports portrayed in them. As the Oliver Khan case (see Chap. 12 on Sports Image Rights
and Endorsement Agreements) has shown, specific releases need to be obtained from the
players whose images and likenesses are shown in them, even in so-called fantasy games, in
which the players are recognisable.
14.2 New Media Sports Rights and Marketing Agreements 315
New Media Rights Agreements are highly technical reflecting highly complex
arrangements and need to be drafted very carefully and clearly indeed, to avoid
ambiguities and misunderstandings, and, therefore, unnecessary disputes in the
future.
Again, use General Precedents with circumspection and adapt them to fit the
particular facts and circumstances of each individual case. And above all,
understand and appreciate the underlying technology involved and its application
in each particular commercial deal.
316 14 Sports New Media Rights Agreements
14.4 Appendices
14.4.1 Appendix 1
*
This agreement is intended for use by an event owner who wishes to authorise a video
production company to enter the event and film footage for the purposes of producing a video
programme. If the event is being broadcast the event organiser will need to ensure that the terms
of the broadcast agreement allow access by another camera crew to film. In addition the event
organiser may wish to provide a licence of the rights in any footage produced by the event
broadcaster for use by the distributor. Where VAT is payable under this agreement the following
clause should be inserted: All fees, disbursements and expenses payable under this Agreement
are subject to the addition of VAT. As to VAT generally see Paragraph 244 [472] ante. Source:
Lexis Nexis; reproduced with permission.
14.4 Appendices 317
Sales Videos of the Programme which are sold, paid for and
not returned;
Sell-Off Period 6 months from the end of the Term;
Synchronisation a signed valid and binding licence for: (i) every clip
Licences and item of footage contained in the Programme and
owned by any party other than the Company; and (ii)
every musical composition or medley consisting of
words and/or music and every Master recording
contained in the Programme; andthe Synchronisation
Licences shall permit the exploitation of the Pro-
gramme in videogram format in accordance with the
rights granted to the Distributor hereunder;
Term (number) years from the date of signature of this
Agreement;
Territory (specify);
Trade Marks the Companys registered and unregistered marks
listed in Schedule 4;
Video(s) means a magnetic tape cassette, cartridge video disc or
DVD copy of the Programme or any like contrivance
or appliance whatsoever whether now known or
hereafter invented bearing or used for reproducing
an audiovisual recording intended for reproduction
on copies for supply to consumers for home or private
use only by means of a playback device [including,
without limitation (or) excluding], Interactive For-
mats; and
Wholesale Price the Distributors Recommended Retail Price exclud-
ing VAT.
In this Agreement the singular includes the plural and vice versa and any gender
includes any other gender.
The clause headings do not form part of this Agreement and shall not be taken into
account in its construction or interpretation.
References to clause(s) and schedule(s) are references to clause(s) and schedule(s)
of and to this Agreement.
2. The Distributors obligations
2.1 The Company appoints the Distributor (and the Distributor accepts such
appointment) to produce the Programme and the Distributor shall produce
the Programme at its own cost in accordance with the Programme
Specification.
2.2 The Distributor shall deliver the Programme, fully edited and synchron-
ised, to the Company on or before the Delivery Date for its approval prior
14.4 Appendices 319
carry forward any such earnings until such time as earnings due and
payable to the Company exceed [50].
5.5 The Distributor may establish a reasonable reserve against potential returns of
Videos in any calendar quarter provided that such reserve is released no later
than 3 months after the close of the calendar quarter year in which the reserve is
established. The Distributors liability to pay Royalties is limited to Sales of
Videos and no Royalties shall be payable on deletions or promotional copies.
6. Companys warranties and undertakings
6.1 The Company warrants, undertakes and represents that:
6.1.1 It shall obtain free non-exclusive access to the Event for the Pro-
gramme Unit and for such representatives of the Distributor as is
reasonable for the filming of the Programme and provide such
facilities as the Distributor reasonably requires to undertake its
obligations in clause 7.
6.1.2 It has the full right power and authority to enter into this Agreement.
6.1.3 It shall indemnify and keep the Distributor indemnified from and
against all losses, damages, costs (including legal costs) and
expenses arising out of any breach of the Companys obligations,
warranties, representations or undertakings in this Agreement.
6.1.4 It will endeavour to secure other licensing and promotional activities
such as publishing and merchandising activities in respect of the
Event to coincide with the Distributors release of the Video.
6.2 The Company shall provide the Distributor with reasonable assistance in
the promotion and distribution of Videos and shall ensure that its
employees, agents, all Event personnel and participants in the Event pro-
vide all reasonable assistance to the Distributor (at the Distributors
expense and request) in performing its obligations under this Agreement.
6.3 The Company shall not grant any third party any rights to produce Videos
during the Term without first offering such rights to the Distributor on
identical terms to those upon which the Company offers such rights to a third
party. The Distributor shall indicate its acceptance or rejection of such terms
within (number) days of them being offered by the Company failing which
the Company may offer the rights to such third party as it sees fit.
7. The Distributors warranties and undertakings
7.1 The Distributor warrants, undertakes and represents that:
7.1.1 it shall attend each Event and film the Programmes using the
Programme Unit to a first class technical quality suitable for the
manufacture and sale of Videos;
7.1.2 it shall deliver up all footage, materials and tapes produced and/or
created by it or by any person on its behalf relating to the Event to
the Company;
322 14 Sports New Media Rights Agreements
7.1.12 it will not make any statement or supply any information relating
to this Agreement to any third party other than to the Distributors
own or the Companys professional advisers and without prejudice
to the generality of the foregoing the Distributor will not by oral or
written word or deed bring the Company or the Programme into
disrepute;
7.1.13 it shall indemnify and keep the Company indemnified against all
losses, damages, costs, and expenses arising out of any breach by
the Distributor of its obligations, warranties or undertakings in this
Agreement;
7.1.14 it shall provide 10 copies of the Programme in Video format
(including packaging) to the Company during each year of the
Term;
7.1.15 it shall not accept any sponsorship, advertising or product place-
ment from any third party other than a duly appointed sponsor of
the Company and the Distributor shall include in the Video up to a
maximum of (number) seconds advertising for any sponsor
nominated by the Company, along with opening and closing
credits, all at the sponsors expense, in the Video.
7.1.16 it shall accord such credits and notices as required and notified to it
by the Company on all promotional and packaging material
relating to the Videos.
8. Trade marks and liability
8.1 The Company grants the Distributor the non-exclusive right to use the
Trade Marks on the Videos, in their promotion and marketing and on their
packaging and for no other purpose.
8.2 The Distributor shall use the Trade Marks together with the following
credit [ the Company] in exercising any of its rights under this
Agreement.
8.3 The Distributor shall submit all materials featuring or otherwise using the
Trade Marks to the Company for its approval and shall (without limitation)
use the Trade Marks in the form required by the Company, observe any
directions given by the Company on the colour, size and placing of the
Trade Marks and shall not use the marks in a way which would tend to
allow them to become generic or lose their distinctiveness.
8.4 The Distributor shall promptly notify the Company of any actual or sus-
pected infringements of the Trade Marks or any intellectual property rights
of the Company and shall (at the request and expense of the Company) take
such action as the Company requires in taking or defending any
proceedings.
8.5 The Company is not required to take or defend any proceedings in relation
to the Trade Marks.
8.6 The Distributor is not entitled to bring an action for infringement of the
Trade Marks under the Trade Marks Act 1994 Section 30.
324 14 Sports New Media Rights Agreements
11. Notices
11.1 Notices under this Agreement shall be in writing and delivered personally
or sent by first class post to the party to be served at the partys respective
address specified above. In the case of the Distributor any such notices
shall be addressed FAO: The Chief Executive with a courtesy copy to the
(insert details, eg head of legal and business affairs). Any notices sent
under this Agreement shall be deemed served when actually received or
within 7 working days after the date of posting.
12. Approvals and consents
12.1 All decisions, approvals or consents to be given by the Company under
this Agreement must not be unreasonably withheld or delayed and will
be deemed given if no refusal is given within 5 working days of request
therefor. Any refusal or retention must be in writing together with
written reasons for such refusal or retention.
13. Entire agreement
13.1 This Agreement sets out the entire agreement and understanding
between the Company and the Distributor relating to Videos of the
Programmes and no variation shall be effective unless in writing and
signed by a duly authorised representative of each of the parties.
14. Headings
14.1 Headings in this Agreement are for guidance only and do not form part
of this Agreement.
15. No assignment
15.1 The Company may assign the benefit of this Agreement only upon
giving written notification thereof to the Distributor and provided that
the Company remains primarily liable for its obligations under this
Agreement notwithstanding such assignment. The Distributor may
assign this Agreement only with the Companys prior written consent.
16. Force Majeure
16.1 Neither party shall be deemed in default of this Agreement if the
performance or any part of their respective obligations under this
Agreement is delayed or becomes incapable of performance for any
reason beyond either partys reasonable control including but not limited
to war, invasion, act of foreign enemy, hostilities whether war be
declared or not, act or threatened act of terrorism, civil war or strife,
rebellion, strikes, lockouts or other industrial disputes or any other cause
beyond the control of the parties, act of God or failure of any
326 14 Sports New Media Rights Agreements
technical facilities. If any of the above events occur to the extent that this
Agreement cannot be enforced or performed according to its terms for a
period in excess of 6 consecutive months this Agreement shall be deemed
to have terminated at the end of such 6-month period.
17. Jurisdiction
17.1 This Agreement shall be governed by the laws of England and Wales
whose courts shall be its competent courts of exclusive jurisdiction.
18. Further assurance
18.1 The Distributor shall execute such further documentation as is reason-
ably required in order to give effect to the terms of this Agreement.
19. Rights of third parties
19.1 A person who is not a party to this Agreement may not rely upon or enforce
any rights pursuant to the Contracts (Rights of Third Parties) Act 1999.
SCHEDULE 1
Royalties
1. In consideration of the licence and rights granted under this Agreement the
Distributor shall pay in pounds sterling to the Company a Royalty on Sales
based upon the Wholesale Price as follows:
2. Videos sold at Full Price: Royalty payable shall be%;
3. Videos sold at Mid Price: Royalty payable shall be%; and
4. Videos sold at Budget Price: Royalty payable shall be%.
5. For the purposes of this Agreement the following definitions of the Rec-
ommended Retail Prices (RRP) shall apply:
6. Full Price shall mean a RRP of not less than ;
7. Mid Price shall mean a RRP of between and ; and
8. Budget Price shall mean a RRP of or less.
9. In respect of Videos sold through mail order or so-called club sales by or
through a third party the Royalty payable hereunder shall be% of the
normal Royalty rates stated above.
10. The above royalties are inclusive of all copyright royalties (if applicable)
and other payments in respect of rental rights or otherwise.
SCHEDULE 2
The Programme Specification
(insert details)
14.4 Appendices 327
SCHEDULE 3
The Delivery Materials
The Distributor agrees that it shall effect Delivery of the following:
1 the Master(s) and material(s) strictly in accordance with this Agreement and
with the terms below;
2 a quality control report approving the Master(s);
3 production negatives suitable in the Distributors opinion for the packaging,
publicity and advertising of Videos;
4 samples of other promotional material available to the Distributor including a
selection of at least (number) stills and colour transparencies from the
Programme;
5 a music cue sheet for the Programme; and
6 the Synchronisation Licences.
The Distributor shall deliver the Master and materials not later than (number)
days after the last day of the Event. If the Distributor fails to effect satisfactory
Delivery as aforesaid then it will have an additional 10 days to rectify the situation
before it is considered in breach of this Agreement and the Company may
immediately terminate the grant of rights to the Distributor under clause 2.2 but the
assignment of the Rights to the Company by the Distributor shall not be affected
by such termination which is without prejudice to any other rights or remedies the
Company may have under this Agreement or otherwise.
SCHEDULE 4
The Trade Marks
(insert details)
(signatures on behalf of the parties)
328 14 Sports New Media Rights Agreements
14.4.2 Appendix 2
*
This agreement is intended for use by a club, governing body or similar organisation wishing to
appoint a third party to create and host a website. Care should be taken over matters such as the
ownership and maintenance of all rights relating to the website, such as the URL, as well as the
use of any third party materials contained on the site and the responsibility for obtaining the right
to use such materials. Source: Lexis Nexis; reproduced with permission.
14.4 Appendices 329
clauses and schedules are to clauses and schedules of this Agreement and
references to subclauses and paragraphs of the clause or schedule in which
they appear; and
the headings are for convenience only and shall not affect the interpretation of
this Agreement.
2. Appointment
2.1 The Owner appoints the Company (and the Company accepts the
appointment) to provide the Web Services on the terms of this Agreement.
3. Duration
3.1 This Agreement shall come into effect on the Commencement Date and
shall remain in effect until (date) unless terminated earlier in accordance
with clause 9.
4. Representations and warranties
4.1 The Company represents, warrants and undertakes to the Owner that:
4.1.1 it shall perform the Web Services with all due care, skill and
diligence using good quality materials and the best applicable
techniques;
4.1.2 it shall ensure that the Website, on completion of the Web Services,
at all times meet the functionality specified by the Owner and that
down time is eliminated;
4.1.3 it shall provide all personnel to perform the Web Services and all
such personnel shall be its employees;
4.1.4 all personnel providing the Web Services possess such skill and
experience as is necessary for the proper performance of the Web
Services and that the Company shall use its best endeavours to
minimise changes to personnel;
4.1.5 it will not make any changes to the Owner Information and
Materials;
4.1.6 it will remain up to date with all technical developments in the Web
Services during the term of this Agreement and will introduce all
appropriate improvements;
4.1.7 that the Web Package does not infringe any third party Intellectual
Property Rights, is not obscene or defamatory and that the Com-
pany has acquired all rights in and to such material free of in-
cumbrances in any and all media in perpetuity.
4.1.8 it has all requisite corporate power and authority to enter into this
Agreement and to carry out the services contemplated hereby.
4.1.9 it has obtained all consent, permissions and licences necessary to
enable it to perform its obligations.
4.1.10 the Web Services shall be provided using only hardware, software,
firmware and systems which are Date Compliant
14.4 Appendices 331
4.1.11 the Web Services shall be provided in compliance with the Data
Protection Act 1998 and so as to enable the Owner to comply with
its obligations thereunder.
4.1.12 the Web Services shall be provided in compliance with any
applicable EC law or EC Directive or Regulations relating to the
provision of goods and services by electronic means or the rights of
consumers accessing the Web Services and so as to enable the
Owner to comply with its obligations thereunder;
4.1.13 all Company software and Content incorporated into the product or
the services or otherwise used in connection with the Web Services
will be created using reasonable skill and care and by persons who are
either employees of the Company in the course of their employment
or who are acting subject to a written agreement providing for the
vesting of all Intellectual Property Rights in the Company;
4.1.14 it shall remedy any defects and bugs in all software;
4.1.15 it will use its best endeavours to ensure that all software supplied in
connection with this Agreement is free from viruses (including,
without limitation Trojan Horses and worms) and that, without
prejudice to the generality of the foregoing, all such software shall
have been first checked for viruses using the current and fully updated
versions of all commercially available virus checking software;
4.1.16 the operation, possession or use of the Website will not infringe any
Intellectual Property Rights or other rights of any third party; and
4.1.17 that it is authorised to utilise and to permit the Owner and the Cus-
tomers utilisation of any Intellectual Property Rights, items or Data
required for the provision by the Company of the Web Services.
4.2 The Companys obligations under subclause 4.1 shall be continuing and, in
the event of breach of any of them, the Owner shall have the right to
require the Company to rectify the breach at no additional charge to the
Owner.
4.3 Commencing on the Commencement Date, the Company shall perform the
Web Services.
4.4 In respect of each element of the Web Services, the Company shall notify
the Owner of the date when the relevant element is ready for acceptance by
the Owner in order to provide the required level of functionality.
4.5 If any element of the Web Services is not accepted by the Owner as not (in
its reasonable opinion) providing the required level of functionality then
the Company shall ensure (at its own cost) that the missing or degraded
functionality is corrected as soon as practicable and in any event within one
month of notice from the Owner.
4.6 The Company shall indemnify the Owner from any actions, proceedings,
costs, claims and demands brought or made against it and against any loss
or expenses suffered by them as a result of a failure by the Company to
comply with clause 4.1.
332 14 Sports New Media Rights Agreements
6.3 The Company shall procure that all necessary licences, consents and/or
waivers (including but not limited to those from all rights owners,
performers and other contributors) shall be obtained and paid for by the
Company such that the Owner may make the Website available to
Customers without:
6.3.1 any liability to make payments to third parties; or
6.3.2 infringing any Intellectual Property Rights of any third party.
6.4 Without prejudice to its rights of termination under this Agreement and
notwithstanding that the Company has complied with all its obligations
under this Agreement, the Owner may reject the whole or any part of the
Web Services on the grounds that it does not reasonably consider them
suitable for its use.
6.5 The Company acknowledges and agrees and shall (following the Owners
request) for as long as is necessary (in the Owners opinion) suspend or
discontinue any Customers access either to the Website or to the product
of the Web Services affected, as required to put an end to the events listed
below, at any time if the Website contains anything which is or may be or
the showing of which is or may be:
6.5.1 illegal, defamatory, offensive, abusive, indecent, obscene or menacing;
6.5.2 likely to cause annoyance, inconvenience or needless anxiety to
Customers; or
6.5.3 likely to affect adversely the quality of the Website as a whole.
6.6 The Company may not include advertisements, merchant links or any
commercial messages within the Website without the Owners prior
written consent or instruction
7. Payment
7.1 In consideration of the provision of the Web Services, the Owner shall pay
to the Company the Fees.
7.2 All payments to the Company shall be made against the Companys
invoices. The invoices shall be payable as agreed by the parties within 30
days of receipt.
7.3 Where under this Agreement any party agrees to pay to any other party any
sum or to furnish to any other party consideration which (in either case) is
consideration for a taxable supply that sum or consideration shall be
exclusive of VAT payable on it and the recipient of the supply shall pay
VAT in addition to any sum or consideration on receipt of a valid VAT
invoice from the relevant party.
8. Time of the essence
8.1 Time shall be of the essence for the performance of the Companys
obligations under this Agreement.
334 14 Sports New Media Rights Agreements
9. Termination
9.1 The Owner may by notice in writing immediately terminate this Agree-
ment if the Company:
9.1.1 commits a breach of this Agreement which in the case of a breach
capable of remedy shall not have been remedied within 30 days of
the receipt of a notice from the Owner identifying the breach and
requiring its remedy;
9.1.2 is unable to pay its debts or enters into compulsory or voluntary
liquidation (other than for the purpose of effecting a reconstruction
or amalgamation in such manner that the entity resulting from such
reconstruction or amalgamation if a different legal entity shall agree
to be bound by and assume the obligations created by this Agree-
ment) or compounds with or convenes a meeting of its creditors or
has a receiver or manager or an administrator appointed or ceases
for any reason to carry on business; or
9.1.3 suffers or undergoes a change of control.
9.2 The Owner may terminate this Agreement at any time prior to completion
of the Web Services on [14] days notice in writing. On such termination,
the Owner shall pay the Company all sums accrued and properly due on
or prior to the date of termination.
9.3 Upon termination or expiry for any reason (including completion of the
Web Services), the Company will return to the Owner at the Companys
expense all Owner Information and Materials, an electronic copy of the
Existing Rights and an electronic copy of the Web Package and all other
material belonging to the Owner in its possession or control, in a form
specified by the Owner.
9.4 If required by the Owner the Company will provide online notices to
subscribers and users of the Website informing them of the termination of
the service and providing them with such other information as is rea-
sonably required by the Owner. Such notice will remain online for a
period of 6 months after termination.
9.5 Upon termination or expiry of this Agreement (for whatever reason) the
Owner shall have the right, by notice in writing served within 28 days of
termination or expiry, to require the Company to continue to provide the
Web Services until either such time as the Owner appoints an alternative
provider of the services or the date 90 days following termination or expiry,
(whichever is earlier). The Owner shall continue to pay the Company the
applicable Fees in respect of such continuing Web Services.
10. Assignment
10.1 This Agreement shall be binding on and enure for the benefit of the suc-
cessors in title of the parties. The Company shall not assign any of its rights
under this Agreement without the prior written consent of the Owner.
14.4 Appendices 335
18.3 If during the term of this Agreement either of the parties becomes aware
of any threatened or actual unauthorised use of any of the other partys
Intellectual Property Rights then that party shall immediately inform the
other party in writing, setting forth the facts in reasonable detail. Each
party shall, at the other partys request and expense, co-operate in any
action the other party shall take in respect thereof.
18.4 The Owner licenses the Company to use specific brands and marks of the
Owner (and the Company shall provide the suppliers of any proposed
usage to the Owner for its prior consent) strictly for the purpose of the
provision of the Web Services. The Company shall comply with any
brand guidelines issued by the Owner from time to time.
19. Governing law and jurisdiction
19.1 This Agreement shall be governed by and construed in accordance with
English law.
19.2 Each of the parties irrevocably submits for all purposes in connection
with this Agreement to the exclusive jurisdiction of the courts of
England.
As Witness etc.
SCHEDULE 1
The Web Services
1. Site design
2. Database design and integration
3. Content integration
4. Technical services
5. Management of interactive online services and site marketing
SCHEDULE 2
Fees
(insert details)
338 14 Sports New Media Rights Agreements
14.4.3 Appendix 3
*
This Form is intended for use by a rights holder who wishes to grant a licence of rights to a
mobile telephone company to exploit certain content and materials to offer to its users. It is
similar in form and structure to a traditional broadcast rights licence. Great care must be taken to
ensure that any agreement with a mobile telephone company is back to back with all other
agreements in its commercial programme; this includes all sponsorship and licensing agreements,
in particular any other agreement involving the transmission of audiovisual materials by an
appointed broadcaster. The convergence of transmission methods for audiovisual materials
means that the distinctions between certain technology are difficult to sustain, e.g., many mobile
telephone users are able to access the Internet. Source: Lexis Nexis; reproduced with permission.
14.4 Appendices 339
In this Agreement the singular includes the plural and vice versa and any gender
includes any other gender.
The clause headings do not form part of this Agreement and shall not be taken into
account in its construction or interpretation.
References to clause(s) and schedule(s) are references to clause(s) and schedule(s)
of and to this Agreement.
2. Term
2.1 This Agreement shall take effect on and from the date of signature and shall
continue subject to clause 11 until (date).
3. Grant of rights
3.1 In consideration of and subject to the payment to the Rights Holder by the
Company of the Rights Fee, the Rights Holder grants to the Company the
Mobile Rights in the Territory during the Term. The Mobile Rights are
granted to the Company on an exclusive basis for use throughout the
Territory during the Term subject to the restrictions set out in this
Agreement.
3.2 All rights not expressly granted to the Company under this Agreement
including but not limited to rights to offer betting and gaming via Mobile
Wireless Technology are reserved to the Rights Holder.
3.3 The Company acknowledges and agrees that:
3.3.1 the Rights Holder is the owner of the Commercial Rights and of all
rights in the Rights Holder Marks;
342 14 Sports New Media Rights Agreements
3.3.2 the Company shall not be entitled to exploit any of the Commercial
Rights other than as set out in this Agreement or any other agree-
ment executed by the parties from time to time; and
3.3.3 the Company shall have no rights under this Agreement (other than
those expressly set out in this Agreement) in relation to any
Competitor.
4. Consideration
4.1 In consideration of the grant of the Mobile Rights the Company shall pay
into the Designated Account the Rights Fee on the date of this Agreement
as follows: (insert details).
5. Provision of content and content restrictions
5.1 The Rights Holder shall consult with the Company in relation to the
method of provision of Content to the Company and the terms of this
Agreement.
5.2 The Company may offer Content as part of the Service as follows:
5.2.1 the Company may provide news, score flashes, live related text and
other live information in text only form and may provide a similar
service by means of short messaging service (SMS) to Users;
5.2.2 the Company may provide not more than (specify) single frame still
photographs of action from each half of a Match together with rel-
evant audio on an as live basis provided that any stills used in any
linear or sequential presentation remain visible for not less than 30
seconds;
5.2.3 the Company may provide live or delayed audio-only commentary
and/or reports of Matches (not including any commentary from any
of the Rights Holders licensed broadcasters);
5.2.4 the Company may offer audio or audiovisual interviews from
Match venues or any other venue with players and coaches following
the end of a Match;] [and
5.2.5 the Company may exhibit audiovisual highlights of Matches of not
more than 3 minutes duration and not more than 12 minutes in
aggregate per Match at any time not less than (number) hours after
the end of a Match.
5.3 The Company has the non-exclusive right to develop official mobile
interactive games for Users of Mobile Devices in accordance with this
Agreement.
5.4 The Company will be responsible for editing the Content in accordance
with the terms of this Agreement for the Service and shall ensure that such
Content is of a high standard befitting an event in the nature of the Event.
5.5 The Rights Holder acknowledges that the Company is not obliged to use
the Content and nothing in this Agreement shall prevent the Company from
obtaining information and data from a third party and from using such
14.4 Appendices 343
8.1.1 that the Rights Holder has and will continue to have throughout the
Term full right and title and authority to enter into this Agreement
and to grant the authorities and licences referred to in this Agree-
ment and to accept and perform the obligations imposed on it under
this Agreement;
8.1.2 that the Content (if any) provided by the Rights Holder is to the best
of the Rights Holders knowledge accurate, free from errors and up-
to-date at the time of supply and shall not so far as the Rights Holder
is reasonably aware contain any information or material which
contravenes any law, regulation or guideline whatsoever;
8.1.3 that the Rights Holder will use its best endeavours to overcome
interruptions, errors or other problems of whatever nature in the
provision of relevant Content of which it becomes aware; and
8.1.4 that to the best of the Rights Holders knowledge, information and
belief all licences, consents and/or waivers (including but not limited
to those of rights owners, performers, players and other contributors
required to enable the Rights Holder to make the Content available
to the Company and the members of the Company Group have been
obtained by the Rights Holder and will be maintained by the Rights
Holder the cost of which is included in the Rights Fee.
9. Companys obligations
9.1 The Company represents, warrants and undertakes that:
9.1.1 it has and will continue to have throughout the Term full right and
title and authority to enter into this Agreement and to accept and
perform the obligations imposed on it under this Agreement;
9.1.2 it shall exercise the Mobile Rights strictly in accordance with the
terms of this Agreement and that it shall not distribute Content other
than via Mobile Wireless Technology;
9.1.3 it shall observe and abide by all relevant rules, regulations, direc-
tions, codes of practice or guidelines imposed by national law or by
any competent authority which are applicable to the Event or to any
Match or to the activities of advertisers or sponsors in connection
with the Event and/or any Match and which are notified to the
Company by the Rights Holder in writing from time to time;
9.1.4 it shall promptly observe and comply with all reasonable instructions,
directions or regulations issued in writing by or on behalf of the Rights
Holder in relation to the exploitation of the Mobile Rights;
9.1.5 it shall take reasonable steps to ensure that neither it nor any of its
directors or employees make any defamatory statements or take part
in any activities or use the Mobile Rights in any manner which is, in
the reasonable opinion of the Company, derogatory to, or is, in the
reasonable opinion of the Company otherwise detrimental to the
reputation or goodwill of the Rights Holder;
14.4 Appendices 345
9.1.6 it will refer to the Event by such title as the Rights Holder may
notify to the Company in writing from time to time; and
9.1.7 any Content it provides and displays on the Mobile Telephone Site
will not violate or infringe any third party intellectual property
rights or rights of privacy and that such information and data will
not be obscene, libellous, blasphemous, defamatory or in any other
way unlawful and will not bring the Rights Holder or the Event into
disrepute.
10. Intellectual property rights
10.1 Each party acknowledges that, save as expressly set out in this Agree-
ment, nothing in this Agreement shall operate to transfer the title to one
party of any intellectual property rights owned by the other party.
Without prejudice to any other express licence in this Agreement, no
other use of the others intellectual property rights is permitted without
the prior written consent of the other party.
10.2 The Company warrants and represents that it will not infringe the
copyright, privacy rights or other rights of any third party in exercising
its rights under this Agreement. Without limitation, the Company
undertakes to obtain the necessary consent for the use of any third party
work or material used by the Company as part of a service offered to
Users or otherwise in exercising its rights under this Agreement.
10.3 The Company acknowledges and agrees that the Rights Holder has not
granted and will not grant to the Company any rights in relation to: (i)
the names, colours or logos of any Competitors; or (ii) the names or
images of any players, coaches, officials or other persons connected to
the Event and accordingly the Company acknowledges and agrees that
the Rights Holder is not granting to it the right to advertise, promote or
sell its service in any way which creates the impression that the Service
is endorsed by specific Competitors, team(s) or player(s). The Company
shall ensure that it does not infringe the proprietary rights of any such
persons, and, in particular, the Company shall be responsible for
obtaining, at its cost, the permission of any relevant team and/or indi-
vidual for any uses of any team name, colours or logo or any individuals
name or image in such a manner.
10.4 The Company acknowledges that each and every use of the Rights
Holder Marks requires the Rights Holders prior written approval.
Accordingly:
10.4.1 The Company shall submit to the Rights Holder for its prior
written approval (not to be unreasonably withheld or delayed)
final form representative samples of each proposed use of the
Rights Holder Marks including without limitation on any Pro-
motional Material, at least 10 days prior to their release to the
public. If the Rights Holder does not respond within 10 days of
346 14 Sports New Media Rights Agreements
The Rights Holder shall not change the format in which the Content is delivered
or made available to the Company without the prior written agreement of the
Company.
Means of delivery
The Content shall be hosted by (insert details)
[(insert details/specification of means of delivery of Content)]
SCHEDULE 2
Part 1
Event Marks
(insert details)
Part 2
SCHEDULE 3
Mobile Rights
1 The right to provide means and rights of access to Content by way of sending
end users text messages or SMS giving information about the Event.
2 The right to develop, create, launch and host via the Company WAP portal an
official Rights Holder Event WAP site (or other mobile-centric information site
accessible through Mobile Wireless Technology (the Mobile Telephone Site)
which shall be designated the Official WAP/Mobile Telephone Site of the
Event.
3 The right to exploit the Mobile Telephone Site for the distribution of Content to
Users in accordance with the restrictions and guidelines set out in this Agree-
ment and the Company acknowledges that these rights in no way preclude the
Rights Holder from exploiting or authorising third parties to exploit the same
and/or similar rights on the Internet or by any other means of delivering Content
other than Mobile Wireless Technology.
4 The right to develop, market and distribute Rights Holder official mobile-centric
games accessible via Mobile Wireless Technology including but not limited to
fantasy league, managerial and action games and for the purposes of assisting
the Company to exercise such right the Company may consult with the
Rights Holder to obtain clarification of which Competitor names, logos, stadia
names and images and similar information and related intellectual property
rights (if any) the Company is entitled to use.
14.4 Appendices 351
5 The right to access archive and live video and audio footage (as such footage is
more particularly described in Schedule 1) for re-purposing and distribution via
Mobile Wireless Technology.
6 The right to access the Feed on such terms as may be agreed between the
Company and the relevant Broadcaster but which access shall usually be free of
charge at the location indicated by the Rights Holder but the Company
acknowledges that the technical costs of onward distribution of the Feed shall be
borne by it.
7 The right to no less than (number) media passes for all venues at which any
Match is to be played (including access to the Internet or other communication
system for the purposes of delivery of SMS to Users throughout the duration of
the Match being played) and for all press conferences to be held by the Rights
Holder.
8 The right of access to players, managers and other relevant individuals both
before and after each match [in the designated interview rooms/areas] for video
and/or audio interviews to be distributed via Mobile Wireless Technology as
part of the Service.
(signatures of (or on behalf of) the parties)
352 14 Sports New Media Rights Agreements
14.4.4 Appendix 4
*
Permission for reproduction received from BMJ Publishing Group Ltd.
14.4 Appendices 353
2.2 Subject to clause 6.3, except with respect to, Best Health, Best Practice,
BMJ Case Reports, BMJ Learning, Clinical Evidence and DTB. Licensor
also hereby grants to Licensee, a non exclusive, royalty free, perpetual
licence to use the Licensed Materials that were subscribed to via this
Licence and published during the Term of this Agreement, and with the
exception of any portion of the Licensed Materials that has been expunged
from the archive, damaged or sold. For the avoidance of doubt should any
back issues of any Licensed Materials be available to the Licensee and
Authorised User during the Term, these shall not be part of the Licensees
perpetual access rights granted herein. Such use by Licensee of any
Licensed Materials for which perpetual access is granted, shall be in
accordance with the provisions of this Agreement, which shall survive
expiry of this Agreement. The means by which Licensee shall have access
to such Licensed Materials shall be in a manner as determined by Licensor,
but shall be in electronic form. Where any Licensed Materials is sold,
Licensor shall use all reasonable endeavours to ensure that the purchaser
can provide ongoing access to Licensee for the relevant portion of the
Licensed Materials.
2.3 Licensor holds the copyright (or all necessary licences or rights of use), for
all works published in the Licensed Materials, as a compilation and as to
the individual articles, collectively and individually, unless otherwise
expressly noted.
2.4 The Licensee shall not claim ownership of the Licensed Material, or any
intellectual property rights in the Licensed Material, by reason of its use of
or access to the Licensed Material.
2.5 The Licensor and via its licensors reserves the right at any time to withdraw
from the Licensed Materials, any item or part of an item for which it no
longer retains the rights to publish, or which it has reasonable grounds to
believe infringes copyright or is defamatory, obscene, unlawful or other-
wise objectionable.
3. Permitted Uses
3.1 All use of the Licensed Material is subject to all applicable copyright laws
and fair use conventions, and reproduction of any portion of the Licensed
Material (other than certain journal articles which have noted on them
Open Access Article which have more liberal uses as set out in Clause
3.2 herein) is permitted for personal, non Commercial Use as follows:
3.1.1 Access the Site in order to search the Licensed Materials, and to
view and retrieve small proportions thereof;
3.1.2 Electronically save small portions of the Licensed Materials; and
3.1.3 Print out single copies of portions of the Licensed Materials.
3.2 Notwithstanding any other provision in this Clause 3, and only for any
Licensor journal articles (and not for other Licensed Materials) which
354 14 Sports New Media Rights Agreements
5. Technical Access
5.1 Licensor intends for the Site to be available 24 hours per day, 7 days per
week. However, neither to the fullest extent permitted by law, Licensor nor
any of its licensors will be liable for damages or refunds should the Site
become unavailable or access to the Site becomes slow or incomplete due
to system back-up procedures, internet traffic volume, upgrades, overload
of requests to the servers, general network failures or delays, or any other
cause which may from time to time make the Site inaccessible to Licensee.
6. Termination
6.1 Either party may terminate this Agreement:
6.1.1 where the other party commits a material or persistent breach of any
term of this Agreement and fails to remedy such breach (if capable
of remedy) within 30 days of notification in writing from the other
party; or
6.1.2 immediately upon the other party becoming insolvent, subject to
receivership, liquidation or similar external administration.
6.2 On termination of this Licence for just cause, access to the Licensed
Materials by Licensee and Authorised Users shall be terminated.
7. Warranty and Liability
7.1 While Licensor seeks to provide updated and accurate content as part of the
Licensed Materials, the Licensed Materials are supplied on an as is
basis. Any statements made to the contrary are void. Licensee shall be
responsible for notifying all Authorised Users and any other users of the
Licensed Materials or Site acting under Licensee that such users must
always read the full disclaimers on the relevant website for each of the
Licensed Materials and that their use of the Licensed Materials shall be
deemed acceptance of those terms. Licensee shall indemnify Licensor and
its licensors against any claims, costs, expenses, proceeding, awards and
demands made against the Licensor or its licensors by Authorised Users or
any other party using the Licensed Materials or Site under Licensee.
Licensor and its licensors do not warrant or guarantee its accuracy, com-
pleteness, merchantability, non-infringement or fitness for a particular
purpose of the Licensed Materials or the Site and to the fullest extent
permitted by law, Licensor and its licensors expressly disclaim the fore-
going and all others, (other than where expressly agreed to herein) and in
addition, any conditions, warranties and other terms howsoever, which
might otherwise be implied by statute, common law or otherwise.
7.2 To the fullest extent permitted by Law and other than expressly provided
for herein, in no circumstances is Licensor or its Licensors liable to the
Licensee Authorised Users, or other users acting under Licensee for any
indirect of consequential losses or expenses, however caused, including,
356 14 Sports New Media Rights Agreements
9.5 There shall be no right whatsoever for any third party to enforce the terms
and conditions of this Agreement. The Parties hereby expressly wish to
exclude the operation of the Contracts (Rights of Third Parties) Act 1999.
9.6 No delay or failure by either party to exercise any of its powers, rights or
remedies under this Agreement will operate as a waiver of them nor will
any single or partial exercise of any such powers, rights or remedies pre-
clude any other or further exercise of them. Any waiver, to be effective,
must be in writing and signed by a duly authorised representative of each
party.
9.7 Any notice under this Agreement must be hand written and may be delivered
or sent by fax or first class post to the offices of the relevant party set out on
the first page of Agreement (or as otherwise notified from time to time) and
such notice shall be deemed to have been received upon successful trans-
mission of faxing or 7 (seven) days from the date of posting.
9.8 To the fullest extent permitted by law, this Agreement constitutes the entire
Agreement between Licensor and Licensee with respect to the Licensed
Materials.
9.9 To the fullest extent permitted by law, this Licence will be governed by the
laws of England and shall be governed and construed in accordance with
the laws of England. Any action arising out of or relating to this agreement
shall be brought in courts situated in England save where it is necessary for
Licensor for enforcement to bring proceedings to bring an action in an
alternative jurisdiction.
Date of document: November 2008
SCHEDULE 1
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License
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of this License. The Licensor grants you the rights contained here in consid-
eration of your acceptance of such terms and conditions.
358 14 Sports New Media Rights Agreements
1. Definitions
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14.4 Appendices 359
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The above applies to the Work as incorporated in a Collective Work, but this
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360 14 Sports New Media Rights Agreements
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Except to the extent required by applicable law, in no event will Licensor be
liable to you on any Legal Theory for any special, incidental, consequential,
14.4 Appendices 361
punitive or exemplary damages arising out of this License or the use of the
work, even if licensor has been advised of the possibility of such damages.
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362 14 Sports New Media Rights Agreements
14.4.5 Appendix 5
Confidential Video Game License Agreement for [A] Video Game System
(Western Hemisphere)*
This Agreement is entered into between [X] INC., a Washington corporation and
[B] Inc., a California corporation (LICENSEE).
[X] and LICENSEE acknowledge and agree as follows:
1. Recitals
1.1 [X] markets and sells a high-quality video game system, including
hardware, software and an input controller, marketed by [X] under its
trademarks [A] and [B], for playing video games.
1.2 LICENSEE desires to gain access to and rights to utilize highly proprietary
programming specifications, development tools, trademarks and other valu-
able intellectual property rights in order to develop video game software and
to purchase and sell such video game software from [X] for play on the [A]
system, which system was developed by NCL and Silicon Graphics, Inc.
1.3 [X] is willing to grant a license to utilize such proprietary information and
intellectual property rights and to sell video game software to LICENSEE
upon the terms and conditions set forth in this Agreement.
2. Definitions
2.1 Artwork shall mean the final art and mechanical formats for the Licensed
Product including the Game Cartridge box, user instruction manual with
consumer precautions and warranty, Game Cartridge label and inserts.
2.2 Competing Systems shall mean hardware platforms, whether marketed now
or in the future, designed to play interactive video games, including but without
limitation: [], and any successors or derivatives of any of the foregoing.
2.3 Effective Date shall mean the last date on which all parties shall have
signed this Agreement.
2.4 Exclusive Licensed Product shall mean the audiovisual work in its
current form and as hereafter developed, which is sold by LICENSEE as a
Licensed Product under this Agreement.
2.5 Finished Goods shall mean the Game Cartridge, fully assembled with
exterior labels, packaged in a plastic or polyethylene bag, placed in a high
quality, custom packaging box, including all required Artwork.
2.6 Game Cartridge(s) shall mean interchangeable plastic cartridges
adapted for use with the [B] System, housing the Game embodied in
electronic memory devices or comparable medium authorized by [X] for
storing and playing Games on the [B] System.
*
Thomson Reuters (FindLaw); reproduced with permission.
364 14 Sports New Media Rights Agreements
2.7 Game(s) shall mean video game software compatible with the [B]
System developed under this Agreement.
2.8 Guidelines shall mean the [A] Packaging Guidelines and the [A]
Development Manual setting forth trademark, copyright and related art-
work standards, as published from time to time by [X].
2.9 Independent Contractor shall mean any third party agent, consultant,
contractor or independent programmer, other than LICENSEE.
2.10 Licensed Copyright(s) shall mean various copyrights in printed mate-
rials, art or logo designs, trade dress, computer software, microcode,
electronic circuitry and rights in integrated circuit layout designs
employed in the [B] System.
2.11 Licensed Intellectual Properties shall mean individually, collectively or
in any combination, the Licensed Inventions, Licensed Proprietary Infor-
mation, Licensed Copyrights and Licensed Trademarks.
2.12 Licensed Invention(s) shall mean improvements and inventions con-
cerning the [B] System, including inventions that are or may become the
subject matter of various patents or patent applications.
2.13 Licensed Product(s) shall mean Game Cartridges (or comparable
medium authorized by [X]) for employing the Licensed Intellectual
Properties and having electronic memory devices storing the Games.
2.14 Licensed Proprietary Information shall mean any of the following
information relating to the [B] System: (a) all current or future informa-
tion, know-how, techniques, methods, information, tools, emulator boards,
software development specifications, and/or trade secrets, (b) any patents
or patent applications, (c) any business, marketing or sales data informa-
tion, and (d) any other information or data relating to development, design,
operation, manufacturing, marketing or sales. Licensed Proprietary
Information shall include information disclosed to LICENSEE by [X],
[X]s affiliated companies, [Y], and/or other third parties working with
[X]. Such Licensed Proprietary Information shall include all confidential
information disclosed, whether in writing, orally, visually, or in the form
of drawings, technical specification, software, samples, pictures, models,
recordings, or other tangible items which contain or manifest, in any form,
the Licensed Proprietary Information. Licensed Proprietary Information
shall not include: (a) data and information which was in the public domain
prior to LICENSEEs receipt of the same hereunder, or which subse-
quently becomes part of the public domain by publication or otherwise,
except by LICENSEEs wrongful act or omission, (b) data and information
which LICENSEE can demonstrate, through written records kept in the
ordinary course of business, was in its possession without restriction on
use or disclosure, prior to its receipt of the same hereunder and was not
acquired directly or indirectly from [X] under an obligation of confiden-
tiality which is still in force, (c) data and information which LICENSEE
can show was received by it from a third party who did not acquire the
same directly or indirectly from [X] and to whom LICENSEE has no
14.4 Appendices 365
such right, title, interest or goodwill. LICENSEE shall not represent that it
has any ownership in the Licensed Intellectual Properties. Use of the
Licensed Intellectual Properties shall not create any right, title or interest
therein in LICENSEEs favor.
3.3 Reservation of Rights of Distribution Outside the Territory.
LICENSEE shall market and sell the Licensed Products only in the Ter-
ritory. LICENSEE shall not directly or indirectly export any Licensed
Products from the Territory nor shall LICENSEE knowingly permit or
assist any third party in doing so.
3.4 Reservation of Rights to Reverse Engineer.
LICENSEE may utilize and study the design, performance and operation
of the [B] System and the Licensed Proprietary Information solely for the
purpose of developing software which is compatible with the [B] System
for license under this Agreement. LICENSEE shall not, directly or indi-
rectly, reverse engineer or aid or assist in the reverse engineering of all or
any part of the [B] System, including the hardware, software, input con-
troller and/or tools. For purposes of this Agreement, reverse engineering
shall mean: (a) the x-ray electronic scanning and/or physical or chemical
stripping of semiconductor components; (b) the disassembly, decompila-
tion, decryption, simulation, debugging or code tracing of microcode; and/
or (c) the disassembly, decompilation, decryption, simulation, debugging
or code tracing of object code or executable code, specifically including,
but not limited to, any [X] supplied or developed libraries or microcode.
The limitations set forth in this Section 3.4 shall not preclude LICENSEE
from engaging in reverse engineering of any Game code which was
developed solely by LICENSEE and related only to the Game and was not
supplied by nor derived from any code supplied by [X].
3.5 Reservation of Rights of Electronic Transmission.
LICENSEE shall not directly or indirectly duplicate, distribute or transmit
Games via electronic means or any other means now known or hereafter
devised, including within limitation, wireless, cable, fiber optic means,
telephone lines, satellite transmission, microwave or radio waves or over a
network of interconnected computers or other devices. Notwithstanding
this limitation, LICENSEE shall not be prohibited from the electronic
transmission of Games during the development process for the sole pur-
pose of facilitating development; provided, however, that no right of
retransmission shall attach to any such transmission, and, provided further,
that LICENSEE shall use reasonable security measures, customary within
the industry, to reduce the risk of unauthorized interception or retrans-
mission of such transmissions.
3.6 Notification Obligations.
LICENSEE shall promptly notify [X] of the loss or unauthorized use or
disclosure of any Licensed Proprietary Information and shall promptly act
to recover any such information and/or prevent further breach of the
confidentiality obligations herein.
14.4 Appendices 367
4. Confidentiality
4.1 Disclosure of Proprietary Information.
[X] has and shall during the Term provide LICENSEE with highly pro-
prietary development information, development tools, emulation systems,
programming specifications and related resources and information consti-
tuting and incorporating the Licensed Proprietary Information to enable
LICENSEE to develop video games for use with the [B] System.
4.2 Confidentiality of Licensed Proprietary Information
LICENSEE shall maintain all Licensed Proprietary Information as strictly
confidential and will use such Licensed Proprietary Information only in
accordance with this Agreement. LICENSEE shall limit access to the
Licensed Proprietary Information to LICENSEEs employees having a
strict need to know and shall advise such employees of their obligation of
confidentiality as provided herein. LICENSEE shall require each such
employee to retain in confidence the Licensed Proprietary Information
pursuant to a written non-disclosure agreement between LICENSEE and
such employee. LICENSEE shall use its best efforts to ensure that its
employees working with or otherwise having access to Licensed Proprie-
tary Information shall not disclose or make unauthorized use of the
Licensed Proprietary Information.
4.3 Agent/Consultant Confidentiality.
LICENSEE shall not disclose the Licensed Proprietary Information to any
Independent Contractor without [X]s prior written approval. Each
approved Independent Contractor shall be required to enter into a written
non-disclosure agreement with [X] prior to receiving any access to or
disclosure of the Licensed Proprietary Information.
4.4 [Y] as a Third-Party Beneficiary.
LICENSEE hereby acknowledges and agrees that [Y] shall be a third-party
beneficiary of LICENSEEs confidentiality obligations as set forth in this
Section 4.
5. Development; Quality Standards; Artwork; Manufacturing
5.1 Development and Sale of the [B] System Programs.
During the Term, LICENSEE may develop Games and/or sell Licensed
Products for the [B] System in accordance with this Agreement.
5.2 Exclusivity; Exclusive Licensed Product.
For the Exclusive Licensed Product, LICENSEE agrees that, commencing
on the Effective Date and continuing for a period of one (1) year from
[X]s first shipment of such Exclusive Licensed Product to LICENSEE,
neither the Game incorporated into such Exclusive Licensed Product nor
any adaptation, translation, derivative, sequel or substantially similar game
which is sold by LICENSEE as a Licensed Product under this Agreement
shall be sold anywhere in the Territory by LICENSEE or by any third party
for play on any Competing System. Except as provided herein with regard
368 14 Sports New Media Rights Agreements
[X]. The approval of any Game by [X] shall not relieve LICENSEE of its
sole responsibility for the development, quality and operation of the Game
or in any way create any warranty for a Licensed Product by
5.6 Development and Quality of Artwork.
In connection with the submission of a proposed Licensed Product to [X],
LICENSEE shall submit all Artwork to [X]. All Artwork shall conform to
the requirements set forth in the Guidelines. Within fifteen (15) business
days of receipt of the Artwork, [X] shall approve or disapprove the Art-
work based upon the Guidelines. If any of the Artwork is disapproved, [X]
shall specify in writing the reasons for such disapproval and state what
corrections and/or improvements are necessary. After making the neces-
sary corrections and/or improvements to the disapproved Artwork,
LICENSEE shall resubmit new Artwork for approval by [X]. [X] shall not
unreasonably withhold or delay its approval of any Artwork.
5.7 Appointment of NCL as Manufacturer of Licensed Product.
LICENSEE hereby appoints NCL, and [X] hereby confirms that NCL
accepts such appointment, as manufacturer of the Licensed Products in the
form of Finished Goods and/or Stripped Cartridges. NCL shall acquire and
retain responsibility for all equipment, tooling, molds or masks used in
connection with the manufacture of the Licensed Products. NCL shall have
the sole responsibility for establishing and fulfilling all aspects of the
manufacturing process of the Licensed Products, including selecting the
location of the specifications of any manufacturing facilities, appointing
suppliers and subcontractors, and managing all work-in progress.
5.8 Manufacture of Licensed Products.
Upon approval of a Game and upon receipt from LICENSEE of an order in
accordance with Section 6 herein, NCL will manufacture the Licensed
Products for LICENSEE. LICENSEE may, at its option, order Stripped
Cartridges rather than Finished Goods and utilize an Independent Con-
tractor to manufacture the Artwork and/or complete the final pack-out
only, provided such Independent Contractor is approved in writing by [X].
5.9 Retention of Sample Licensed Products.
NCL may, at its own expense, manufacture samples of the Licensed
Products, only to the extent necessary, to be used by [X] for archival
purposes, legal proceedings against infringers of the Licensed Intellectual
Properties, and for other lawful purposes.
6. Purchase Price; Payment; Delivery of Completed Licensed Product
6.1 Minimum Initial Orders.
Upon placement of an initial order, LICENSEE shall order a minimum
quantity of [*] units of a Licensed Product.
6.2 Subsequent Minimum Orders.
LICENSEE may subsequently order additional Licensed Product in a
minimum quantity of [*] units per title.
370 14 Sports New Media Rights Agreements
acknowledges that [X] selects high quality [A] software for possible par-
ticipation in the program and may indentify one or more of LICENSEEs
Games for possible adaptation and participation. Should [X] identify one
of LICENSEEs Games for possible participation, LICENSEE hereby
agrees to conduct a good faith discussion with [X] about the inclusion and
adaptation of such Game for the [A] Gateway System.
8. Licensees Copyrights and Trademarks
8.1 Copyright and Trademark Warranties.
LICENSEE represents and warrants that, throughout the Territory,
LICENSEE is either: (a) the sole owner of all right, title and interest in and
to the trademarks, copyrights and Artwork used on or in association with
the Licensed Products; or (b) the holder of sufficient rights to the trade-
marks, copyrights and Artwork which have been licensed from a third
party for use in the Licensed Product.
8.2 Licensees Indemnification.
LICENSEE shall indemnify and hold [X] and NCL harmless from any
claims, losses, liabilities, damages, expenses and costs, including, without
limitation, reasonable attorneys fees and costs, which result from: (a) a
breach of any of the representations or warranties provided by LICENSEE
herein; (b) any claim of infringement of any third partys intellectual
property rights with respect to the Licensed Product, excluding claims
based solely upon [X]s trademarks, copyrights and patents; or, (c) any
claim of bodily injury (including death) or property damage arising out of,
or in connection with, the development, sale and/or use of any of the
Licensed Products. [X] shall give LICENSEE prompt written notice of the
assertion of any such claim and provided, further, that LICENSEE shall
have the right to select counsel and control the defense and/or settlement of
any such claim, subject to the right of [X] to participate in any such action
or proceeding at its own expense with counsel of its own choice.
8.3 Insurance
9. Limitation of Liability
9.1 Disclaimer of Licensed Intellectual Properties.
[X] makes no representations, guarantees or warranties concerning the scope
or validity of the Licensed Intellectual Properties and does not warrant that
the sale of the Licensed Products by LICENSEE will not infringe upon the
patent, trade secret, copyright, mask work or trademark rights of another in
the Territory. LICENSEE HEREBY ASSUMES THE RISK OF INFRINGEMENT.
9.2 Warranty Disclaimer.
[X] disclaims any and all warranties of the Licensed Products as between
[X] and Licensee and as between [X] and any third party purchasers from
licensee. Licensee purchases and accepts all Licensed Products from [X]
on an as is and where is basis and without any warranties, express or
14.4 Appendices 373
implied. With respect to the Licensed Products, [X] disclaims all war-
ranties of merchantability and fitness for a general or particular purpose
and shall in no event be liable for any incidental and/or consequential
damages of Licensee, its retailers or customers. Licensee shall be solely
responsible for providing warranty and repair/replacement services for
any defective licensed products. Notwithstanding the conditions set forth
in this paragraph, [X] will use its best efforts to resolve any catastrophic
defect in the Licensed Products purchased by Licensee from [X]. a cat-
astrophic defect is defined as a manufacturing defect rate of five percent
(5%) or greater in any shipment of Licensed Products to Licensee.
10. Infringement of Licensed Intellectual Properties and Licensees
Trademarks and Copyrights
10.1 Reporting
In the event (a) any claim is asserted against either party alleging that
any of the Licensed Intellectual Properties or a Licensed Product con-
stitutes an infringement of anothers rights; or, (b) either party discovers
that any of the Licensed Intellectual Properties or LICENSEEs copy-
rights or trademarks used in connection with the Licensed Products have
been infringed by a third party, then the party with such knowledge shall
promptly notify the other party.
10.2 Licensed Intellectual Properties.
[X] shall have the sole right, at its expense, to commence and/or defend
a legal action or negotiate a settlement relating to any alleged
infringement by the Licensed Intellectual Properties. LICENSEE agrees
to give reasonable assistance in any such legal action, but at no expense
to it. [X] shall be entitled to all of the recovery or damages collected as a
result of such legal action or negotiated settlement. In the event of a
legal action against LICENSEE alleging an infringement by the
Licensed Intellectual Properties as incorporated into LICENSEEs
Licensed Products which [X] affirmatively elects in writing not to
defend, LICENSEE may defend or settle such legal action, at its option
and expense. [X] agrees to provide reasonable assistance in defending
any such legal action. LICENSEE agrees to keep [X] fully informed
with respect to developments in any such legal action and to provide [X]
reasonable notice of the terms of any proposed settlement and to con-
sider any comments by [X] before settlement is made.
10.3 Infringement of Licensed Products.
LICENSEE shall take reasonable steps to abate any infringement of
LICENSEEs copyrights and trademarks in the Licensed Products.
LICENSEE shall also take all reasonable and necessary steps, including
legal action, to defend against any alleged infringement caused by any of
LICENSEEs software programs developed under this Agreement or any
Artwork, title or designation used in conjunction with any of the
374 14 Sports New Media Rights Agreements
IN WITNESS WHEREOF, [X] and LICENSEE have entered into this Agree-
ment on the dates set forth below.
[X]: LICENSEE:
By: By:
------------------------------------ -----------------------
Its: Executive Vice President, Its: President
Administration
------------------------------------ -----------------------
Date: Date:
------------------------------------ -----------------------
SCHEDULE 1
[X] OF AMERICA INC.
PRICE SHEET
[B] LICENSED GAME PAKS
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 379
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_15,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
380 15 Fiscal Aspects
venues. Thus, it is necessary to place a value on VIK and this value needs to be
expressed in the corresponding Sponsorship Agreement. Of course, the relevant
Tax Authorities can check this value and, if necessary, put a higher value on the
VIK to reflect its actual and realistic value. The issue here is whether the cost price
or the normal retail price of the VIK is the proper basis for tax assessment pur-
poses. The treatment can vary from country to country. To mitigate or eliminate
the tax burden, from the sponsored partys point of view (the rights holder), a so-
called tax free clause can be included in the Sports Sponsorship Agreement along
the following lines:
All payments made and value in kind granted under this Agreement to the rights holder
shall be made and granted free of all taxes, levies and imposts of any kind whatsoever,
including, but not limited to, withholding, corporation, capital gains and value added
taxes.
Before we take a look at this important decision, which continues to haunt HMRC,
a word or two on the legal position in the UK would not be amiss as general
background to the fiscal treatment of image rights in the UK.
In the UK, it is difficult to protect image rights from a general legal point of
view, because there is no specific law protecting image rights per se.2 A person-
ality can only take legal action as follows:
if the reproduction or use of [his/her] likeness results in the infringement of some
recognised legal right which he/she does own.3
1
Sports Club plc v Inspector of Taxes [2000] STC (SCD) 443.
2
Note that Guernsey is due to introduce a specific IP Image Right in the near future.
3
Per Mr. Justice Laddie in Elvis Presley Trade Marks [1997] RPC 543 at p. 548.
15.2 Sports Club Case 381
4
Douglas & Others v Hello Limited [2001] 2 WLR 992.
5
Irvine v Talksport Ltd [2003] EWCA Civ 423.
382 15 Fiscal Aspects
It will be interesting to see the final outcome of these moves by HMRC to rein
in lost taxes on sports images rights in the UK. For further information on the
extent and scope of the ongoing HMRC investigations and campaign against the
6
www.charlesrussell.co.uk
15.2 Sports Club Case 383
English FA Premier League, its Clubs and Players, see some recent UK Press
Reports in Appendix 1 (15.7.1) of this Chapter.
So, can anything be done to beat HMRC at their own game, and, if so, what? In
other words, how can one structure the image rights arrangements to fall within the
existing Law and how can these arrangements be reflected in the corresponding
Sports Image Rights Agreements?
The background, current situation and the measures that can be taken to miti-
gate the UK tax burden on payments for English FA Premier League footballers
sports image rights are well discussed and clearly explained by Stephen Wood-
house and Debbie Masterton of Deloittes in London in their article United
Kingdom: Image Rights which appeared in the first issue of Global Sports Law
and Taxation Reports published in November 2010.7 It is attached to this Chapter
as Appendix 2 (15.7.2).
To take advantage of the tax savings mentioned in this article, the corre-
sponding Sports Image Rights Agreements need to be drafted in accordance with
the general principles and ideas summarised in the article. In other words, the
terms of the Agreements have to be realistic, reasonable, proportionate and jus-
tifiable, and reflect the true factual position, which can be explained and proved by
documentary and other evidence.
7
GSLTR 2010/1 at pp. 4143, published by Nolot BV, The Netherlands; website: www.nolot.nl
8
See The Island of Guernsey to Introduce New IP Image Right by Ian Blackshaw, The
International Sports Law Journal, ISLJ 2010/1-2, at p. 135.
9
GSLTR 2010/1 at pp. 1926, published by Nolot BV, The Netherlands; website: www.nolot.nl
384 15 Fiscal Aspects
Another interesting jurisdiction for tax sheltering the financial returns from the
commercial exploitation of Sports Image Rightson a world-wide basisis
Luxembourg, or, to give it its rather grand title, The Grand-Duchy of Luxembourg.
The legal position and tax situation in the Grand-Duchy for the protection and
marketing of Sports Image Rights is described and explained in the following
article by Lars Goslings, which appeared in the first issue of Global Sports Law
and Taxation Reports published in November 2010 and is attached to the Chapter
as Appendix 4 (15.7.4).
As has been demonstrated in this Chapter, the importance of getting the Sports
Marketing Arrangements and the corresponding Agreements, especially Sports
Image Rights Agreementswhere there is much money to be made and lost- right,
from a tax as well as a legal point of view, in the first place cannot be overem-
phasised.
The financial and commercial arrangements must be realistic, reasonable,
proportionate and justifiable10 and reflect the true factual position and must be
faithfully represented and covered in the corresponding Sports Image Rights
Agreements. Otherwise, they will fall foul of the applicable legal and tax rules and,
therefore, be open to a successful legal challenge by the Tax Authorities, with the
resulting substantial financial consequences, including the possibility of penalties,
for the sports personality concerned. Tax mitigation is perfectly legalno one
wishes to work for the Revenue!
Essential to the success of any tax avoidance/mitigation scheme in relation to
the commercial exploitation of sports image rights is valuing the rights being
transferred and licensed and these valuations must reflect the current and the
potential future value of the sports personality and this, in turn, will depend upon
his/her achievements and standing in his/her sport. This, in practice, is a difficult
thing to get right but it is absolutely crucial to do so!
10
In 2009, Joey Barton, the Newcastle United midfielder, who was given a suspended jail
sentence for assault, was reputedly paid 675,000 for his image rights by the club: I wonder,
without casting any aspertions on the individual concerned, whether such a large payment could
be justified, for tax purposes, in the particular circumstances?
15.7 Appendices 385
15.7 Appendices
15.7.1 Appendix 1
*
Reproduced with permission.
386 15 Fiscal Aspects
know they are looking into image rightsregarding the validity of themand its
something of which weve made our members aware.
HMRCs investigation could potentially cost the Premier League more than
200m if Uniteds liability, estimated by tax experts at around 17m, is replicated
among the other 19 clubs.
And although top players such as Rooney might be able to convince the taxman
that their image is, in fact, worth 1.52m a year, lesser-known players will have a
harder time justifying their deals.
Rooney, who has appealed for privacy following the allegations of a prostitute
that he paid her for sex, earns 1.52m a year in image rights and 4.68m a year in
basic salary. His contract was signed in 2006, meaning he would have earned
6.08m in image rights alone over the past four years.
Taxed at 21%, that would earn the taxman 1.27m but if treated as income tax it
would have brought in around 2.4m, leaving a shortfall of about 1.15m. Players
have done nothing illegal, but the reclassification of earnings could cost them
millions.
United conceded in their prospectus to bondholders earlier this year that they
were liable for 5.3m if the ruling went against them, but that was only for national
insurance contributions. They confirm that they have an indemnity with players
image-rights companies against tax claims from HMRC.
Clubs that do not have such an indemnity written into the contract may have to
foot the bill.
Portsmouth have admitted that HMRC is chasing them for 18.2m in unpaid
taxes over image rights. In Sol Campbells last season at Pompey, his image rights
deal was worth 1.56m a year, even though the clubs entire merchandising
operation generated only 7.2m.
Birmingham City also concede they may be liable for 5.024m in tax and
national insurance payments if the ruling goes against football.
And those tax demands may arrive in the new year.
*
Reproduced with permission.
15.7 Appendices 387
*
Reproduced with permission.
388 15 Fiscal Aspects
Now the gilded lifestyles of Premier League footballers are under attack from a
new set of opponentsa team of modestly paid civil servants based in a nonde-
script office block in the West Midlands.
Some 20 tax inspectors from HM Revenue & Customs (HMRC) special civil
investigations unit in Solihull are writing to top players who receive part of their
income from their clubs in return for image rights.
The arrangements have until now allowed players legally to avoid paying an
estimated 100m a year in tax. The letters advise the players that their affairs are
being investigated and that they may need to hand over copies of accounts, con-
tracts, receipts and other documents to the Revenue.
Their agents have cried foul. Many of these arrangements have been in place
for years and suddenly the Revenue has got a problem with them, said one agent,
who represents a player who received one of the letters shortly before Christmas.
This is a Revenue fishing expeditionits about raising money.
Clubs started paying many players part of their earnings as image rights during
the 1990s. These paymentssaid to relate to any of the players off-field earnings,
such as replica shirt sales, endorsements and promotional workare normally paid
to service companies owned by the player.
The firm of the Manchester United player Michael Owen is known as Owen
Promotions; that of Steven Gerrard, the Liverpool star, is called Steven Gerrard
Promotions.
Other well-known players with these companies include Rio Ferdinand, Gary
Neville and Joe Cole.
Because the image rights payments are made to a company rather than an
individual, they are subject to corporation tax levied at 21 or 28%, rather than
National Insurance and income taxcurrently paid at up to 40%, but with a new
top rate of 50% from April.
If the player is from overseas, his service company is based offshore, often in
the Netherlands or the British Virgin Islands, allowing the star to avoid even more
UK tax.
The sums paid by clubs to players in image rights can be vast. A court recently
heard that Wayne Rooney, who plays for Manchester United, was paid 760,000 a
year for his image rights.
Last year it emerged that Joey Barton, the Newcastle United midfielder who
was given a suspended jail sentence for assault, was paid 675,000 a year for his
image rights by the club.
Frank Lampard, the Chelsea midfielder, also receives images rights as part of
his earnings from the club.
Last week Lampards agent said the arrangement complied with tax rules and
that all relevant documentation had been filed with the authorities. He would not
discuss whether Lampard had received one of the Revenues letters.
Earlier this year Manchester United, Britains richest club, revealed it was in
litigation with HMRC regarding image rights over 5.3m of tax, saying the
Revenues view was that image rights may be a form of remuneration and, as
such, should be taxed as income.
15.7 Appendices 389
Vantis, an accountancy firm that acts for numerous clubs and players, said the
image rights deals of all Premier League clubs were being looked at by the
Revenue.
Nine days ago representatives from Premier League clubs met in London to
discuss ways to respond to HMRCs assault on these pay deals. One option dis-
cussed was to limit the amount of a players income that could be paid in this way
to 15%.
Accountants and agents say that only in the past few months have HMRC
officials begun writing to the players. Such investigations can last up to two years.
If the Revenue decides the image rights deal constitutes tax avoidance, either
the player or the club could be liable for a huge tax bill, depending on how the
contract is worded.
A senior Revenue source confirmed that all image rights deals of Premier
League players would be scrutinised as part of the investigation. Those players
with such arrangements who had not received a letter so far could expect one
before long, he said.
390 15 Fiscal Aspects
15.7.2 Appendix 2
Background
As Premier League players and managers become celebrities and marketable
personalities in their own right, the use of image rights contracts has become more
prevalent. Leading players with international reputations can command fees for
personal appearances, interviews with the media and personal endorsements.
Broadly, under an image rights contract, the club negotiates the right to use or
control the personality and image of the player or manager with a third party
company (the IR Company), which legally holds the image rights of the player
or manager. The image rights contract (IR Contract) will take the form of a
contract or licence between the club and the IR Company to exploit the image of
the particular player or manager.
Many clubs are considering offering IR Contracts to their top players as it
allows them to exploit the players image rights to generate revenue, mainly
through merchandising and other promotion. In addition, as the club will hold the
licence to use the image rights the club can ensure that a player devotes his time to
sporting activities and, furthermore, is able to control the use of the image rights to
ensure the player does not undertake any activities which may potentially have a
negative impact on the club, e.g. endorsing competitor brands. For the purposes of
this Article, we have considered:
the UK tax implications of IR Contracts;
how best to structure the IR Contracts to achieve the intended tax treatment; and
HM Revenue & Customs (HMRC) current attitude towards IR Contracts.
The Use of IR Contracts
Since the advent of the Premier League in 1992, revenues generated by Premier
League clubs have increased considerably. Between 1992 and 2008, revenues for
the top 20 clubs grew at a compound annual rate of 16%, compared with 5.4% for
the UK economy as a whole.
The Premier League is the richest football league in the World. In the 2010
Annual Review of Football Finance by the Sports Business Group at Deloitte, it
was reported that Premier League revenues for 2008/09 were 2,326m, which was
751m above the second highest revenue generating league, the Bundesliga
(Germany) with revenue of 1,575m. This remarkable growth in revenue has
enabled Premier League clubs to compete with clubs from the Spanish, Italian,
French and German leagues to attract the best players from around the world.
However, this competition has led to record high wage bills, with the total wage
bill for Premier League clubs topping 1.3bn in the 2008/09 season.
*
First appeared in Global Sports Law and Taxation Reports, 2010. Reproduced with permission.
15.7 Appendices 391
In the past three years, total wages for Premier League clubs has grown by in
excess of 55% (474m). With wages growth outpacing revenue growth in 2008/09,
the Premier Leagues wages/revenue ratio increased to 67%a record high.
Agents regularly seek to renegotiate player contracts, with a key focus on how
much the player will actually take home after tax. In a world of increasing tax
rates, the cost to a club of paying a player 1 million per annum after tax is
increasing (see Salary Comparison).
Salary Comparison
Club pays a player a net salary of 1 million.
Salary comparison
Note: Income tax at 40% in 2009/10 and 50% in 2010/11 and 2011/12. Employee and Employer
NIC of 1 and 12.8% respectively in 2009/10 and 2010/11 and 2 and 13.8% respectively in
2011/12
The following table shows the taxes incurred by clubs in the Premier League and
the Football League in the 2008/09 season, showing that tax is a significant cost to
Premier League clubs.
Note: Income tax at 50% and Employee and Employer NIC of 1 and 12.8% respectively in
2010/11
Steps
It is essential that the commercial reality is that the club wishes to purchase or
manage the players image and promotional activities, over and above the extent to
which it is already provided for in his contract of employment.
In order to ensure the best chance of success when establishing an IR Contract, the
club should consider the following issues:
The Board of the club should consider its policy with regard to IR Contracts,
the benefit to the club, the success of previous arrangements and the extent to
which they may be improved;
Clubs are likely to benefit from agreeing a pro-forma contract which can be
used as a starting point for future IR Contract negotiations;
The club should ensure the IR Company is set up in an appropriate juris-
diction and the players have legally transferred their image rights to that
company. Note that if the player is UK resident at the time of the transfer,
capital gains tax would be payable on the value of the image;
The terms of each IR Contract should be negotiated with the IR Company
and the contract drafted according to the facts and circumstances of the
image involved;
When signing a player, the club should consider whether that player has an
independent image that the club wishes to exploit. If so, the image rights of
the player should be included as a separate component of the negotiations on
which the player should take independent advice;
394 15 Fiscal Aspects
HMRC are likely to challenge arrangements where they do not believe there is
any commercial substance. However, clubs should not simply accept HMRCs
view. HMRC cannot merely ignore the existence of the commercial contract
between the club and the IR Company and therefore will have to attack the
arrangements on the basis of the valuation of the rights. Provided clubs can
demonstrate that the value they have placed on the rights granted under the IR
Contract is appropriate and that they have the intention and have tried to exploit
the rights, they should have a robust starting position to defend any HMRC
challenge.
15.7.3 Appendix 3
Image Rights
The concept of an image right is relatively new when compared to traditional
intellectual property (IP). Generally speaking, an image right may be defined
as a right intended to protect the use of an individuals name, image, likeness or
other aspect of his or her distinctiveness or personality.
Some jurisdictions have accepted the concept of an image right more readily
than others. However, it seems somewhat inevitable that an image right will
become one of the major IP rights that high profile individuals seek to protect.
Over time, intellectual property has developed in response to the needs of
business and society. When it became possible for authors to mass produce their
books by way of printing processes, copyright law was introduced to protect the
authors efforts in creating a book and their right to exploit this. Similarly,
inventions were recognised and protected by way of patent law to ensure the
creators of such inventions were rewarded for their efforts in creating the inven-
tion. In todays modern society, where celebrity status is sought after and provides
a source of revenue in itself, it is clear that individuals will wish to protect the right
to their image as a celebrity as far as possible. This may be seen as the basis for
an image right.
Civil law jurisdictions such as France and the Netherlands have recognised the
concept or potential for the concept of an image right under their laws. Article 21
of the Dutch Copyright Act provides that if a portrait is made without having
been commissioned by or on behalf of the persons portrayed, the copyright owner
shall not be allowed to communicate it to the public, in so far as the person
portrayed or, after his death, his relatives have a reasonable interest in opposing its
communication to the public. This clearly provides an individual (or, if deceased,
his relatives) with some control over the use of their image.
Certain common law jurisdictions have also made progress in recognising the
right of an individual to control the use and exploitation of their image. In the US,
certain States recognise a right of publicity, which prevents the unauthorised
commercial use of an individuals name, likeness, or other recognisable aspects of
their persona. It gives an individual the exclusive right to license the use of their
*
This article first appeared in Global Sports Law and Taxation Report, November 2010.
**
This article is a summary of the subject matter discussed and is provided for information
purposes only. The authors do not purport to give specific legal, tax or other advice, and before
acting, further advice should always be sought. Neither the authors nor Collas Day shall be liable
for any errors, misprint or misinterpretation of any of the matters set out in this article. All
copyright in this material belongs to Collas Day.
15.7 Appendices 399
identity for commercial promotion. Alternatively, the Federal Lanham Act pro-
vides protection where a persons identity is used to falsely advertise a product or
designate its origin.
The concept of an image right is clearly big business for sportspersons. The
exploitation of their image may amount to a significant percentage of their overall
income. Michael Jordan, the basketball player often recognised as one of the
greatest sportsmen of all time, is said to have earned approximately $90 million in
total salary during his active career as a player. However, he earned another $750
million from sponsors for the use of his image. Tiger Woods, considered the first
sportsperson to earn more than $1 billion in his career, is a similar example. Even
with the negative PR fallout from his personal issues of late, it is estimated that he
receives approximately $70 million per year from endorsement fees.1
Regardless of the above very few jurisdictions, if any, have expressly and
specifically recognised or created a basis for image rights as a separate IP right.
However, their importance has no doubt been accepted in the UK legal and
commercial arena. For example, in anticipation of the Olympics in 2012, the
London Olympic Games and Paralympic Games Act 2006 (the 2006 Act) was
introduced. The 2006 Act gives the London Organising Committee of the Olympic
Games and Paralympic Games the exclusive right to grant its sponsors and
licensees authorisation to create an association between their business, goods or
services and the 2012 Olympics. The concept of association is not strictly lim-
ited, but may include the use of athletic images or iconic images which evoke the
spirit of the 2012 games. Although this may not be a specific or even general
recognition of an image right, it clearly acknowledges that certain images are
important from a commercial standpoint and warrant protection from use by
unauthorised parties.
In addition, even though image rights may not be expressly recognised under
English law, they still form an important part of commercial agreements and
individuals will seek to enforce them as far as possible. A notable recent example
involves Wayne Rooney2 and the rights to his off-field image, which he
assigned to his management company in return for the payment of commission.
Mr Rooney sought to terminate this agreement following the resignation of a key
employee of the management company. Interestingly, the agreement was made for
eight years (with very little possibility of termination) and found to be unen-
forceable by the courts on the basis of restraint of trade. The judge noted the
imbalance of bargaining powers between the parties and that the agreement
imposed significant restrictions on Wayne Rooneys freedom to exploit his
talents. It was, however, acknowledged that an agreement relating to image rights
and their exploitation had become a common and accepted form of commercial
agreement in such situations.
1
Kurt Badenhausen, Forbes Blogs, 23 September 2010.
2
Proactive Sports Management Limited v Wayne Rooney [2010] EWHC 1807 (QB).
400 15 Fiscal Aspects
Guernsey IP Legislation
Guernsey has a comprehensive legislative structure for protecting and exploiting
IP. The Intellectual Property (Enabling Provisions) Bailiwick of Guernsey Law
2004 (the Enabling Law) created the power for the States of Guernsey
(Guernseys executive and legislative house) (the States) to introduce separate
ordinances relating to IP.
The Enabling Law also gave the States the power to establish the office of the
Intellectual Property Registrar [under the Intellectual Property (Office of Registrar)
(Bailiwick of Guernsey) Ordinance 2005] and bring in several ordinances that deal
with specific areas of IP. The Registrar and the Intellectual Property Office are
responsible for the registration and protection of IP registrations within Guernsey.
To date, Guernsey has implemented legislation in respect of a number of IP
rights, including trade marks, copyright, design rights and database rights. Further
legislation and IP rights, such as specific laws relating to image rights, have been
proposed and are currently being progressed. However, below is a snapshot of
some of Guernseys key IP legislation which is likely to be relevant to those
involved in the sporting world.
402 15 Fiscal Aspects
Trade Marks
The Trade Marks (Bailiwick of Guernsey) Law 2006 is the principal legislation
governing trademarks within Guernsey, which is currently in the process of
acceding to the main conventions governing trademarks.
Any sign capable of being represented graphically and which is capable of
distinguishing the goods and services of one undertaking from those of other
undertakings is, subject to the requirements of the Registrar of trademarks, reg-
istrable. In the world of sport, this would include such important brand items as
team badges, logos and potentially even the colour of a teams kit.
Like English law, there are both absolute and relative grounds for refusal of
registration and the criteria bears a resemblance to UK provisions e.g. trademarks
devoid of distinctive character are not inherently registrable.
A trade mark in Guernsey is protected for a period of 10 years starting on the
date of registration. On application (and payment of a fee) up to six months before
or after the end of the protection period, registration of a trade mark may be
renewed for an unlimited period (for 10 years per renewal). Guernsey trademarks
are classified using the ninth edition of the Nice classification system, which is
based on the most up to date system used by the UK and recognised by the World
Intellectual Property Office. Applications for trademarks in more than one class are
accepted and do not require separate applications.
The proprietor of a registered trade mark must actually make genuine use of the
trade mark within the Bailiwick of Guernsey in relation to the goods or services for
which it is registered. It should be noted that, where a sportsperson locates their
worldwide trade marks in Guernsey as well as registering a Guernsey trade mark,
failure to use such a mark in Guernsey should only impact on the Guernsey
registration and not any elsewhere. Given the cosmopolitan nature of the island
and its links to global finance, it is unlikely that this problem would arise.
Copyright
The Copyright (Bailiwick of Guernsey) Ordinance 2005 is the principal legislation
governing copyright in Guernsey.
Original literary, dramatic, musical or artistic works, sound recordings, films or
broadcasts, and the typographical arrangement of published editions are all pro-
tected by copyright in Guernsey. Protection lasts for varying periods of time,
depending upon the type of work subject to copyright, and this scope varies
widely. LDMA works and films are generally protected for 70 years, sound
recordings and broadcasts for 50 years and published editions for 25 years.
Copyright does not subsist in a work unless the qualification requirements of the
Copyright Ordinance are satisfied. Qualification may arise by reference to the
country of first publication or broadcast (i.e. copyright will be protected if first
publication or broadcast is in Guernsey or in a recognised jurisdiction under
Guernsey laws and regulations). As such, should a famous footballer choose to
write his memoirs whilst spending the off-season in the South of France, he would
be provided copyright protection for this within Guernsey.
15.7 Appendices 403
Like English law, infringement can be both primary and secondary and the
principles are largely the same. The rights of the copyright holder in relation to
infringement are also similar, with copyright holders having the right to, for
example, sue for damages, or be recognised as the true author of the work.
Copyright can also be licensed, assigned, lent and in unpublished works can be
passed under a will. This would allow the memoir-writing footballer to licence his
Guernsey-based rights in this work to a publisher, or assign them to his wholly-
owned Guernsey based company, allowing for the benefit to be passed through the
generations by way of trust or corporate arrangements that Guernsey is so well
known for.
Database Rights
The Database Rights (Bailiwick of Guernsey) Ordinance 2005 is the principal
legislation governing database rights in Guernsey.
Whilst seeming irrelevant for sporting purposes, database rights may have
relevance for those using statistical applications, such as fantasy sports leagues,
sports-based computer games and other products reliant on player statistics. In
particular, this protection will likely be very important for sport betting companies,
many of which are choosing to relocate to Guernsey to take advantage of the
world-leading e-gambling regime being pioneered in Alderney (one of the islands
within the Bailiwick of Guernsey).
For a database right to subsist there must be a database, defined as a col-
lection or collation of independent works which are arranged in a systematic or
methodical way and accessible physically or electronically. There must also be
substantial investment from the maker and publisher of the database in some
form.
The Database Ordinance widens the type of investment that will qualify for the
development of a database right and grants the sort of protection that many thought
the EU directive on database protection was intended to afford. As such, it may be
possible to obtain such a right in Guernsey when not available elsewhere.
Protection lasts for 15 years from completion of the database or, if made
available to the public, 15 years from the date it was first made available. Sub-
stantial changes to the contents of the database would be considered a new
investment subject to its own protection as a new database right.
advertising standards or otherwise. Although English law has not yet established a
recognisable and specific image right, some of these approaches have had varying
degrees of success in protecting the use of an image. It is therefore appropriate to
consider how such case law and practices may be interpreted and utilised in
Guernsey.
Trade Marks
Trade marks are a registered IP that provide the owner with a monopoly over the
use of a distinctive mark or brand. Although trade marks are generally
recognised as protecting the identity of a business (e.g. Coca-Cola), trade mark
laws have been used to protect the images of famous individuals. Given the
concept behind an image right, trade marks may in fact be the best fit for pro-
tecting images in the absence of specific image right recognition. For example,
Damon Hill has a registered UK trade mark for the image of his eyes looking out
from his racing helmet.3 Notably, the proprietor of this trade mark is Damon Hill
Grand Prix Limited, a company incorporated and registered in the Channel Islands.
This is one of many examples of individuals choosing to hold their IP in an SFC
registered entity.
To be registrable, a mark must be distinctive and capable of graphic repre-
sentation. As such, a common approach is to register the name of a famous
individual in respect of classes in which that name may be exploited. For example,
Tiger Woods has a Community trade mark for his name in relation to interactive
software for computer games,4 thereby helping to protect the use of his name in the
popular Tiger Woods PGA Tour series of games produced by EA Sports. In
addition, certain sportsmen have gone even further and registered their image as a
trade mark. Damon Hill has already been discussed above and Alan Shearer had
also registered his image as a UK trade mark, although this has now expired.
Issues could potentially arise with such trade marks where there was no bona
fide intention to use the mark in respect of the goods or services for which it is
registered. The distinctive requirement may also cause problems for sportsper-
sons looking to register their name or image. The use of their name or image will
need to be associated with the relevant goods or services for it to be distinctive.
Given that most sportspersons are famous for their particular sport, and not for any
goods or services, this test may prove difficult to overcome.
Although it may be possible to register a sportspersons name, or even their
image, as a trade mark, the enforceability of such registrations is not yet known.
As highlighted above, Guernseys trade mark legislation largely reflects that of
the UK and other key jurisdictions. The UK has published its Registrys Manual of
Trade Marks Practice and this deals with certain issues relating to the registration
of celebrity names and images. Guernsey does not have such a manual, but this
3
UK Trade Mark Registration Number 2036489.
4
CTM Registration Number 1021795.
15.7 Appendices 405
Data Protection
The law governing data protection in Guernsey is the Data Protection (Bailiwick of
Guernsey) Law 2001 (the Data Law), which was largely based on the UKs
Data Protection Act 1998 (the Data Act).
The Data Act imposes certain obligations on entities collecting and processing
personal data. Personal data can be construed very widely and potentially
covers the name or a photograph of a famous sportsperson or celebrity. As such,
there have been attempts to use this as a statutory basis for creating a right over the
use of an individuals image and personality.
Should this be considered personal data, the person looking to make use of
such data will need to ensure they comply with the provisions of the Data Act.
In particular, should the data be used for commercial purposes without the consent
of the relevant sportsperson (e.g. an image of the sportsperson used for a poster
campaign), it may be that the personal data has been processed in contravention
of the processing requirements of the Data Act.
In a case against Hello! Magazine,5 it was considered that a photograph could
be subject to processing for the purposes of the Data Act where automatic
equipment transmitted it to printers or in the processes used in the preparation for,
and in the course of, the printing. Therefore, where a photograph or representation
of a famous person is considered personal data, its use in a commercial context
may very well be classed as processing meaning it will fall within the provisions
of the Data Act. Although the case was not decided on this point in the end, the use
of the Data Act in this way is intriguing.
English case law has suggested that there are limitations to the Data Acts use
as a means of creating an image right. In Murray,6 Patten Js comments imply that
damages for such unlawful processing of data are limited to circumstances where
the sportsperson has suffered some form of loss, such as the loss of fees that may
have been received for the use. As such, the recourse against the infringer under
the Data Act seems somewhat limited.
Although it is not common practice in Guernsey to use the Data Law to protect
image rights, given the similarities with the Data Act there does not seem to be any
reason why this could not be applied in the same way. As such, Guernsey should
restrict the use of images from a data protection perspective to an equal degree as
that in the UK.
5
Douglas & Ors v Hello! Limited & Ors [2003] 3 All ER 996.
6
David Murray v (1) Express Newspapers plc (2) Big Pictures (UK) Limited [2007] EWHC
1908.
406 15 Fiscal Aspects
Passing Off
In Reddaway v Banham7 Lord Halsbury stated that no-one has the right to rep-
resent his goods as the goods of somebody else. As such, the law of passing off in
the UK seeks to restrict the taking of business by presenting goods or services as
someone elses. For an action to succeed there must be three elements: goodwill in
the relevant mark or brand, a misrepresentation leading to confusion and
damage caused.
In a case involving Eddie Irvine,8 the retired British Formula 1 driver, Mr
Irvine successfully sued Talksport Limited (Talksport), a UK radio station, for
passing off. This improved the protection of image rights in the UK by recognising
passing off as a potential cause of action.
Talksport used a photograph of Mr Irvine which had been doctored to show him
holding a Talksport branded radio. The judge in this case highlighted the necessity
for damage to goodwill before passing off may be established. At the time of the
incident, Mr Irvine was an extremely well known sports figure and his image
would clearly have had significant goodwill. Talksports use of his image falsely
implied the endorsement of Mr Irvine and Mr Irvine had not received any
remuneration for this use. As such, Mr Irvine was awarded a sum equivalent to the
royalty he would have received for such an endorsement.
Although there have been no passing off cases involving image rights in
Guernsey, it is highly likely that precedents such as the Irvine case would be
looked to for guidance.
Advertising Standards
A significant example of image rights enforcement in the UK was in relation to
David Bedford. Mr Bedford was a well-known runner in the 1970 s and had a
recognisable image due to his clothing, hairstyle and facial hair. The Number (UK)
Limited (better known to us as 118 118) introduced an advertising campaign
featuring two characters with appearances very similar to that of Mr Bedford.
Mr Bedford was reported as saying that he wanted to sue, but his lawyer had
told him he had no case because he had no control over the image rights.9 That
said, in 2003 Mr Bedford lodged a complaint with the Independent Television
Commission. Ofcom found that 118 118 had been in breach of the UKs Television
Advertising Standards Code. However, as a result of Mr Bedfords delay in taking
action, the lack of any actual financial harm to Mr Bedford and the expenditure
incurred by 118 118, Ofcom refused to ban the relevant advertisement.
Guernsey does not have a code similar to the UKs Television Advertising
Standards Code or CAP Code. Given that these are non-statutory codes, it is
unlikely that these would be applied or even considered for Guernsey based
complaints. Clearly any activities in the UK (or any other jurisdiction) involving a
7
Reddaway v Banham [1896] AC 199.
8
Edmund Irvine v Lewis A May (Produce Distributors) Limited [1947] 2 All ER.
9
BBC News Website, 5 October 2003.
15.7 Appendices 407
Guernseys Position
Given the above, it is clear that the IP regime in Guernsey generally provides
equivalent protection for sport-related IP rights to that of the UK. As such,
sportspersons, sport clubs, sport related businesses and other such entities will be
able to seek protection in Guernsey on a very similar basis to that in the UK. In
addition, should they choose to relocate ownership of their current IP rights to
Guernsey, they will still be able to enforce these rights in the relevant jurisdiction,
whether in the UK or elsewhere.
10
Sports Club plc v Inspector of Taxes [2000] STC (SCD) 443.
408 15 Fiscal Aspects
Potential Structures
The introduction of a statutory image rights regime is not the only advantage
Guernsey has to offer from an IP management perspective. It may be extremely
beneficial for IP holders, particularly sporting figures and other famous individ-
uals, to consider holding all of their IP in Guernsey.
Below is a brief explanation of some of the many ways IP rights may be held
and exploited from Guernsey. Needless to say, the appropriate structure to be used
will change on a case-by-case basis. It is therefore very important to seek legal and
tax advice when considering restructuring IP in this way.
IP Holding Company
Once an individual has identified and protected their IP, whether in Guernsey or
anywhere else, it is then necessary to find an effective and tax efficient way of
holding and exploiting that IP. This is where the IP Holding Company can be
utilised.
Sporting stars may have any number of IP rights registered (e.g. trade marks for
their name, autograph and/or image, copyright in commissioned photographs or
their autobiography). These rights may be in a wide variety of jurisdictions and
subject to an array of agreements and licences. This will likely create a complex
international IP portfolio. The wrong decisions in how this IP is managed may
produce unwieldy structures or mean that IP is missed or its true value never fully
realised. Depending on certain factors, such as the residency of the individual and
their activities, there is potential for such structures to have significant tax
implications.
The IP holder may choose to assign all of their rights, title and interest in their
IP to the IP Holding Company. The IP holder is then able to streamline the
processes for registration, licensing and monitoring this IP. They could then
effectively value their IP through analysis of the IP Holding Companys income
stream. In addition, incorporating the IP Holding Company in an SFC will likely
have significant tax benefits.
By using an IP Holding Company registered in Guernsey, the IP holder can
simplify their IP structure, streamline licensing procedures and minimise cross
jurisdictional transfers of IP, whilst ensuring the continued protection afforded to
it. The obvious answer would therefore seem to be that such an entity should be an
essential part of any IP holders repertoire.
In this structure, prior to relocating to the UK the player would establish two
companies intended to hold image rights (and potentially other IP): one to hold his
UK based image rights and the other for all other countries. The location of the UK
Image Rights Company would be subject to tax advice, but would likely be in a
jurisdiction benefiting from a dual taxation treaty with the UK. The Overseas
Image Rights Company would be incorporated in Guernsey.
Once the two companies had been incorporated and the footballer assigned the
relevant image rights, the companies could then licence these rights to the foot-
ballers new team as part of his contract. The royalties payable in respect of the use
of his image within the UK would be paid to the UK Image Rights Company. All
other royalties are paid to the Overseas Image Rights Company.
The above structure has not yet been subjected to rigorous review or testing in
court and its adoption is strictly subject to legal and tax advice. However, such
structures may go some way towards ensuring the proceeds of UK based image
rights will be specifically definable. The Agassi11 case found that Andre Agassi,
the famous US tennis player, owed taxes in the UK on his global sponsorship
income apportioned to reflect the amount applicable to the UK (for example, based
on the number of UK tournaments he played in that year). Mr Agassi was taxed on
his global sponsorship, even though his image rights were held by non-UK entities
and payments were received from non-UK sources. It is cases such as this that
11
Agassi v Robinson (Inspector of Taxes) [2006] UKHL 23.
412 15 Fiscal Aspects
have stopped Usain Bolt and other famous sportspersons from attending events in
the UK.
Although the above structure is by no means a definitive answer to such tax
practices, it may help to evidence the proportion of royalties paid in respect of UK
image rights. This UK based royalty stream could potentially be used as a guide
for tax purposes, rather than the much more liberal approach taken in the Agassi
case.
The core of the PCC would hold the IP for the club or agent (if any), with a
separate cell established to hold each players IP rights. This structure would
ensure that any creditors of one player would not be able to pursue an action
15.7 Appendices 413
against any other players or the clubs IP. The club or agent would hold the core
shares and the player would hold the relevant cell shares.
Otherwise the structure is very similar to the simple licensing arrangement
described above. Each cell would licence the relevant IP rights to third parties and
receive royalties and other payments in this regard. The income would then be held
in the cell before being returned to the player in the most tax efficient manner.
In the event that a player transfers club or changes agent, it is not possible to
transfer a cell into another PCC. It is possible to transfer the assets of a cell by way
of a cell transfer order, but this will most likely require court approval. As such,
the ICC Model described below may be more appropriate for such structures.
Alternatively to a transfer, and given that an IC is its own legal entity, it is also
a relatively straightforward process to convert an IC into a stand-alone limited
company. Structured correctly, the ICC method would be an incredibly efficient
and cost-effective way to manage the IP rights of clubs or agents and the pro-
fessional sportsmen they manage.
Taxation
When considering locating IP in an SFC, tax will always be a factor of great
importance. Despite being close to the UK geographically, Guernseys taxation
system is entirely different from that of the UK. In Guernsey, there is no inheri-
tance tax, capital gains tax, capital transfer tax or VAT. Corporate income tax is
charged at a rate of 0%.
The introduction of the Zero-10 tax regime in Guernsey brought about sig-
nificant changes to the island, making it far more competitive as a jurisdiction than
previously possible. While companies in Guernsey are taxed at a rate of 0%, it is the
responsibility of the companies themselves to deduct tax from distributions of
profits (as opposed to capital) made to its shareholders. How these profits are taxed
will depend upon the shareholders place of residence. If the shareholder is an
individual resident in Guernsey, a rate of 20% (the income tax rate) is charged. If the
shareholder is a company, the company standard rate of 0% applies. If the share-
holder is a non-Guernsey resident, no Guernsey income tax is paid or withheld.
By way of example, a famous footballer resident in the UK for tax purposes
may choose to hold his IP through an IP Holding Company similar to the simple
licensing arrangement discussed above. Prior to creating such a structure, the
footballer may, in theory, be subject to tax at a rate of 50% on the income from
their IP. By creating such a structure, the footballer would be able to make a
substantial difference to their net income.
It is worth noting that there have been concerns raised recently by some
members of the ECOFIN Code of Conduct group as to whether the current cor-
porate tax regimes in Guernsey and the other Crown Dependencies are strictly
compliant with the spirit of the EU Code of Conduct for business taxation.
Although Guernsey and the other Crown Dependencies are not part of the EU, they
will generally try to comply with EU requests where possible, given the islands
close business relationship with many EU countries. Guernsey and the other
Crown Dependencies have confirmed they will review their tax regimes. However,
the States have confirmed that any replacement to the current Zero-10 regime
will continue to ensure that Guernsey maintains its position as one of the most
competitive SFCs in the world. It has been suggested that changes may include the
introduction of double-taxation treaties with other EU countries.
Guernsey
The Bailiwick of Guernsey incorporates the island of Guernsey as well as a
number of other islands including Alderney, Sark, Herm, Jethou and Brecqhou.
The official and primary language spoken is English. The islands are conveniently
15.7 Appendices 415
located in the same time zone as London and Guernsey has easy access to the UK,
France and other key European countries.
As an international SFC, Guernseys four key markets are banking, insurance,
funds and fiduciary administration. As a result, Guernsey has developed modern,
robust and highly regarded legal, tax and regulatory regimes. This has been
highlighted in a number of ways recently, including The Banker magazine rec-
ognising Guernsey as one of the worlds top five SFCs, and its early acceptance
onto the OECDs white list (a list of jurisdictions that have substantially
implemented the internationally agreed tax standards).
Guernseys legal system is unique. The island was historically part of
Normandy (now an area of France) before becoming part of the British Isles in
1066. As a result, its legal system was originally based on the laws of Normandy,
but has since followed a common law system similar to that in England. In
practice, Guernsey looks to the case law of England and other Commonwealth
countries for guidance where precedents have not been set in Guernsey courts.
Although such decisions are not binding on Guernsey courts, they are persuasive in
nature. Other than case law, the laws and practice of law in Guernsey are often
very similar to that of England.
The professional services provided in Guernsey are of a world class standard.
Many industry leading accountancy firms, banks, asset managers and adminis-
trators have an established presence in the island. This provides for extremely
efficient provision of information and ongoing support for anyone choosing to do
business within Guernsey.
The financial regulator in Guernsey is the Guernsey Financial Services Com-
mission (GFSC). The GFSCs primary objective is to regulate and supervise
financial services in Guernsey and help to uphold the international reputation of
Guernsey as a finance centre. The GFSC is an internationally recognised regulator
and ensures the financial services provided by Guernsey based companies continue
to maintain the highest standard possible.
As set out above, Guernsey also has a significant amount to offer in respect of
IP. There are numerous IP rights registrable in Guernsey. However, it is also
possible to register (or renew) international IP rights from Guernsey. In particular,
through Collas Day IP Limited (part of the Collas Day group) (CDIP). CDIP,
along with legal advice from Collas Day, is able to offer a unique one-stop shop for
international IP registration, management and protection. As the only Guernsey
advocates with specific IP qualifications, Collas Day is ideally placed to provide IP
legal advice with a Guernsey perspective that is second to none.
Conclusion
Image rights appear set to become an important part of the IP scene in the near
future. Individuals and businesses with image rights and all other forms of IP are
advised to think carefully about where they should hold their IP. With a high
quality, robust IP regime already in place, ground-breaking IP laws in the making
and the advantages of holding IP in an SFC, Guernsey is perfectly to become the
home for image rights and all other IP. The structures available in Guernsey can be
416 15 Fiscal Aspects
used to ensure the holder of any IP is able to manage and exploit this to its fullest
extent.
Collas Day
Collas Day is a leading and highly respected Guernsey law firm with a truly global
outlook. We are one of the oldest, yet most innovative, of Guernsey and Channel
Islands law firms and our advocates and lawyers deliver legal solutions to busi-
nesses and private individuals in local, international, cross-border and complex
multi-jurisdictional matters.
Authors
Jason Romer is a partner in the Commercial Department of Collas Day and a
director of Collas Day IP Limited (CDIP). He has a broad corporate and
commercial experience with a particular emphasis on intellectual property, utility
regulation, e-commerce and IT. He has advised a wide range of Guernsey com-
panies. Jason is the only Guernsey advocate with specialist IP post-graduate
qualifications. He is a member of Guernseys IP Specialist group and represents
that group on the IP Steering Group of the Commerce and Employment depart-
ment. He is the author of a number of chapters in IP publications.
Brandon Doffing is an associate in the Commercial Department of Collas Day.
He is qualified as a solicitor in England & Wales and as an attorney in New York.
Brandon has experience in a wide variety of corporate and commercial matters,
including in relation to intellectual property. He is currently studying a Masters
degree in international legal practice, which involves a specialist unit relating to
the international practice of intellectual property.
CDIP
CDIP can register, manage and protect intellectual property. Based in Guernsey, it
provides both local and international IP registration together with management of
existing portfolios and IP assets. David Evans is one of the directors of CDIP. He
has spent over 10 years involved in the intellectual property business, part of
which as head of IP for a multinational company. David advises businesses of all
sizes on their IP strategies and portfolio management. He is also qualified to
register a variety of IP rights in multiple jurisdictions throughout the world.
15.7 Appendices 417
15.7.4 Appendix 4
Me Lars R. Goslings
AS AVOCATS
Luxembourg
I. Introduction
It is an indisputable fact that the marketing of Sports Image Rights is of significant
economic importance in our globalizing world, which indisputable fact is on a day-
to-day basis being confirmed by the considerable sums of money being invested
into the world of sports, including but not limited to the creation of sporting idols
and the subsequent marketing of the relevant idols once they have been created
and accepted by the public i.e. the consumer.
Despite its tiny size the Grand-Duchy of Luxembourg (hereinafter to be
referred to as Luxembourg) has generated a few remarkable sportsmen,
including but not limited to the Angel of the Mountain Charly Gaul, the five
time World Cup overall champion alpine ski racer Marc Girardelli and the
countrys current famous road bicycle racing brothers Frnk and Andy Schleck,
which icons represent the countrys proud and goal, namely to despite its tiny size
play a noteworthy role in our globalizing world.
In consideration of the aforementioned, the object of the present article is to
analyse whether Luxembourg can play such noteworthy role in the marketing of
Sports Image Rights, more in particular the legally well-protected and tax-efficient
marketing of Sports Image Rights belonging to international sportsmen and
sportswomen (hereinafter to be jointly referred to as Sportsmen respectively
Sportsman).
Can Luxembourg thereby mark a Hole-in-one or does the Grand-Duchy need to
satisfy with a Birdie, an Eagle or even an Albatross?
*
This article was first published in Global Sports Law and Taxation Reports, November 2010.
418 15 Fiscal Aspects
1
Luxembourg has concluded double tax treaties with the following countries:
South Africa, Albania, Germany, Argentina, Armenia, Austria, Azerbaijan, Bahrain, Barbuda,
Belgium, Brazil, Bulgaria, Canada, China, Cyprus, South Korea, Denmark, United Arab
Emirates, Spain, Estonia, United States of America, Finland, France, Georgia, Greece, Hong
Kong, Hungary, India, Indonesia, Ireland, Iceland, Israel, Italy, Japan, Kazakhstan, Kyrgyzstan,
Kuwait, Latvia, Liechtenstein, Lithuania, Malaysia, Malta, Morocco, Mauritius, Mexico,
Moldavia, Monaco, Mongolia, Norway, Uzbekistan, Netherlands, Poland, Portugal, Qatar, Czech
Republic, Romania, United Kingdom, Russia, San Marino, Singapore, Slovenia, Sweden,
Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey and Vietnam.
15.7 Appendices 419
2
Est puni dun emprisonnement de huit jours un an et dune amende de 251 euros 5.000
euros, ou dune de ces peines seulement, quiconque volontairement port atteinte lintimit de
la vie priv dautrui.
420 15 Fiscal Aspects
Claims for damages following the violation of image rights shall be based on
article 1382 and 1383 of the Luxembourg Civil Code.3 The adjudication of such
damages requires a fault, a specific damage and a correlation of cause and effect
between the relevant fault and the relevant damage.
With respect to images, one can admit on the basis of Luxembourg case law
that the protection of images under Luxembourg law in fact consists of each
persons right to allow or reject to be photographed i.e. taken in pictures and each
persons right to control the use of the relevant pictures. Following the judgement
of the Civil Chamber of the District Court of Luxembourg (Tribunal dArron-
dissement de et Luxembourg) dated June 2nd 1976, any person has the
exclusive right to its image and to the use of the relevant image and the relevant
person may oppose the distribution of such image without its consent. Conse-
quently, the taking and use of someones picture in principal requires an author-
isation from the to be pictured person, which authorisation, if provided, the
relevant person may at any time retract.
Nevertheless, distinction should be made between images of a person shot in a
private place and those shot in a public place. On the one hand, the unauthorised
publication or use of an image of a person shot in a private place constitutes an
infringement of the relevant persons privacy and image rights. On the other hand,
if the image of the relevant person has been taken in a public place and the image
diffused does not imply any invasion to the relevant persons private life, there is
no infringement of the relevant persons image rights and there is a presumption of
an authorisation having been granted by the relevant person.
In addition must be considered the necessity of the diffusion of the relevant
images for the legitimate needs of information of the public. Consequently, the
diffusion of images of a footballer playing a match at the football world cup in a
TV report on the relevant sporting event does not infringe the relevant footballers
image rights, following which the relevant footballer can in principle not oppose to
the diffusion of the relevant images. The relevant footballer is in fact presumed to
have granted its authorisation to the relevant diffusion, which presumed authori-
sation stops when the footballer explicitly opposes to the diffusion of the relevant
images, provided that the diffusion is not necessary for the legitimate needs of
information of the public.
Consequently, Sportsmen have the exclusive right to prevent the unauthorised
publication of their images, provided that the relevant publication is not made for
information purposes only and that the relevant publication does violate the rel-
evant Sportsmans private life.
3
Article 1382 of the Luxembourg civil code states that: Tout fait quelconque de lhomme,
qui cause autrui un dommage, oblige celui par la faute duquel il est arriv, le rparer .
Article 1383 of the Luxembourg civil code states that: Chacun est responsable du dommage
quil a caus non seulement par son fait, mais encore par sa ngligence ou par son imprudence .
15.7 Appendices 421
company. Consequently, the restriction does not apply to companies, which are
only indirectly associated to the Luxco.
The restriction does further only apply to the acquisition of the Qualified IP
by a Luxco, following which the restriction does not apply in case of the licensing
or sale of the Qualified IP by the relevant Luxco to any of its associated
companies.
Favourable to individuals including Sportsmen is the fact that the restriction
does further not apply to the acquisition of Qualified IP from associated individ-
uals, following which a Luxco can without any restriction acquire the Qualified IP
from its individual shareholders, including but not limited to Sportsmen.
Last but not least, Article 50bis of the Tax Act requires the activation of
Qualified IP related expenses, depreciations and deductions in connection with the
creation or acquisition of the Qualified IP.
Consequently, the Qualified IP related amortizations, expenses and write-downs
must be recorded on the Luxcos balance sheet and must further be included in the
profits and loss allocation as from the first fiscal year for which the benefit of the IP
Regime is applied, provided that for a given year the aforementioned expenses,
amortizations and write-downs exceed the income in relation with the same
Qualified IP.
Qualified IP, following which the Qualified Sports IP is not required to be either
personally held nor marketed by the relevant Sportsman in order to be subject to
the IP Regime.
Consequently, the Qualified Sports IP may be held by one of the legal entities
referred to here above under subsection (b), following which Sportsmen, in order
to benefit from the IP Regime without being Luxembourg professionals, should
make their Qualified Sports IP to be held by a Luxco such as a SOPARFI.
The relevant Luxco may acquire the Qualified Sports IP by creating the relevant
Qualified Sports IP and/or by acquiring the relevant Qualified Sports IP from any
third party individual or legal entity.
The Luxco may on the one hand create the Qualified Sports IP by the regis-
tration of the thereto-related trademarks and/or domain names, in which case the
Luxco shall have the legal and commercial ownership over the relevant Qualified
Sports IP.
The Luxco may on the other hand acquire the Qualified Sports IP by acquiring
the legal title over the relevant Qualified Sports IP or by acquiring the license to
use the relevant Qualified Sports IP, which legal title and/or license the Luxco may
acquire from the individuals and legal entities referred to under subsection IV.1,
including but not limited to the relevant Sportsmen.
In case of an acquisition of the legal title, the Luxembourg tax authorities
require the relevant acquisition to from a tax perspective qualify as an alienation of
the relevant Qualified Sports IP at a fair market value in order to qualify for the IP
Regime.
The third method for the marketing of the Qualified Sports IP benefiting from
the IP Regime consists of the sale of the relevant Qualified Sports IP by the Luxco.
Similar to the licensing of the Qualified Sports IP, the Luxco may in principle at its
discretion sell the relevant Qualified Sports IP to third and affiliated parties, pro-
viding a maximum of discretion to the structuring of the relevant Sportsmens
wealth and business.
Of great benefit further are the multiple Double Tax Conventions concluded by
Luxembourg and European Interest and Royalties Directive 2003/49/EC.
The weight of this benefit follows from the fact that the marketing of Qualified
Sports IP is a global business, in which the Luxco will grant licenses to and
subsequently receive royalty payments from entities established all over the world.
Consequently, the applicability of Double Tax Conventions shall in most cases
considerably reduce the withholding tax due over the relevant royalty payments to
be made to the Luxco, following which the Luxcos relevant income shall be most
efficiently optimized from a tax point of view.
Although not a particular characteristic of the IP Regime, another benefit of the
commercial use of the Qualified Sports IP by the means of a Luxco, more in
particular a Luxembourg resident corporate entity, constitutes the fact that the
incorporation of such resident corporate entity does not require any capital duty
but merely a one-off registration tax of 75,00.
V. Conclusion
In consideration of the aforementioned one must conclude that the IP Regime in
fact is a perfect Hole-in-one shot for the tax-efficient indirect marketing of Sports
Image Rights.
15.7 Appendices 429
The reason therefore lies in the fact that the indirect marketing of Sports Image
Rights anyway requires the registration of the relevant Sports Image Rights as
trademarks and/or domain names, which registration is fundamental to the pro-
tection and the subsequent marketing of the relevant Sports Image Rights and
thereto related Sportsmans rights.
This anyway needed registration makes the relevant Sports Image Rights
qualify as Qualified Sports IP and as such eligible for the IP Regime provided that
the IP Regimes other conditions are also being accomplished.
The accomplishment of these further conditions does however not constitute
any serious obstacle to the applicability of the IP Regime as the IP Regime itself
provides enough elements for the completion of the relevant conditions. A good
example of these elements is the applicability of the IP Regime to Qualified Sports
IP holding Luxcos, following which any Sportsman can make its relevant image
rights subject to the IP Regime.
In addition, the possibility to have a Luxco market the relevant Sports Image
Rights provides the relevant Sportsman with a maximum of discretion to structure
the protection and marketing of the relevant image rights. Another example of
these elements consists of the multiple ways by which the Luxco may acquire and/
or create the relevant Sports Image Rights, again providing the Luxco and
Sportsmen with a maximum of discretion with respect to the marketing and
structuring of their Sports Image Rights.
Consequently and in consideration of the IP Regimes tax related benefits, one
must conclude that although Luxembourg is unlikely to once take home the
football world cup, the Grand-Duchy, by means of its IP Regime has definitely set
the standards for the well-protected and tax-effective marketing of the relevant
footballers and other Sportsmens image rights.
430 15 Fiscal Aspects
Contact: AS AVOCATS
Me Lars R. Goslings
1, Rue Jean-Pierre Brasseur
L-1258 Luxembourg
GD Luxembourg
Tel.: (+352) 44 46 331
Fax: (+352) 45 43 03
Email: [email protected]
4
Please note that the above article is merely intended to comment on the relevant issues of
Luxembourg law and is not intended to provide legal advice. Before taking action or relying on
the comments and the information given, the addressees should seek specific advice on the
matters which concern them.
Chapter 16
EU Aspects
Over the last 36 years or so, The European Union (EU), through the European
Commission and the Court of Justice of the European Union (CJEU) has devel-
oped a clear Policy and also a distinct body of EU Law in relation to Sport.1
In a thought-provoking article entitled Is there such a thing as EU sports law?
which appears in the first issue of Global Sports Law and Taxation Reports,2
Stephen Weatherill, Jacques Delors Professor of European Law, Somerville Col-
lege and the Faculty of Law, University of Oxford, answers this question in broad
general terms at the beginning of his article as follows:
The simple answer to the question posed in the title to this paper is: yes, there is such a
thing as EU sports law!
But most simple answers tend to mislead, and the risk is real here too. There is such a
thing as EU sports law, in the sense that since the entry into force of the Treaty of Lisbon
on 1 December 2009 sport has been explicitly recognised as an area in which the EU has
authority to intervene. However, this is apt to mislead in two quite different senses. First, it
obscures the point that December 2009 was certainly a notable milestone in the shaping of
EU sports law, but that in fact the relevant newly-introduced Treaty provisions are cau-
tiously drafted and limited in their scope. They emphatically do not elevate the EU to the
position of general sports regulator in Europe. So, in short, one should not get too excited
about them. Second, a focus on the Treaty reforms of 2009 obscures appreciation that for
some 35 years the EU has already exerted an influence on sports governance in Europe.
Beginning with its famous Walrave and Koch judgment3 in 1974 the Court of Justice has
subjected sport to the requirements of what was then EC law, and is now EU law, in so far
as it constitutes an economic activity. So sport has been brought within the explicit scope
1
See The European Union and Sport: Legal and Policy Documents by R C R Siekmann and J W
Soek (Eds.), 2005 TMC Asser Press, The Hague, The Netherlands; and European Sports Law:
Collected Papers by S. Weatherill, 2007 TMC Asser Press, The Hague, The Netherlands.
2
2 GSLTR, 2010/1, at pp. 1013.
3
Case 36/74 [1974] ECR 1405.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 431
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_16,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
432 16 EU Aspects
of the EU Treaties only as late as December 2009 but well in advance of that date sport,
though unmentioned by the Treaty, was required to comply with its rules in so far as it
constituted an economic activitywhich meant, most prominently, that sporting practices
fell to be tested against the Treaty prohibitions against practices which are anti-compet-
itive or which obstruct inter-State trade or which discriminate on the basis of nationality.
So an EU sports law (of sorts) developed as a result of the steady accretion of decisional
practice where sporting rules exerted an economic effect and interfered with the fulfilment
of the EUs mission.
As will be appreciated, if only from the brief but pertinent introductory remarks
above, the EU and Sport is a vast subject in its own rightnot least in the field of
Sports TV rights5and, therefore, in this chapter, we will concentrate on just a
few aspects of EU law in relation to Sports Marketing Agreements, namely:
Collective Selling of Sports TV Rights;
Territorial Restrictions in Sports Merchandising and Licensing Agree-
ments; and
Options to Renew and Rights of First Refusal in Sports Marketing
Agreements Generally.
Clearly these legal principles and other aspects of EU Law, in general, and EU
Competition Law, in particular, need to be taken into account when negotiating
4
See S Weatherill, European Sports Law Collected Papers 2007, TMC Asser Press, The
Hague, The Netherlands, at p. 296.
5
See TV Rights and Sport-Legal Aspects, Ian Blackshaw, Steve Cornelius and Robert
Siekmann (Eds.), 2009 TMC Asser Press, The Hague, The Netherlands.
16.1 Introductory Remarks 433
and drafting Sports Marketing Agreements generally, which, for one reason or
another, have an EU dimension to them.6
6
See, for example, the Danish Tennis Federation (DTF) case, OJ C 138/7, 1996. In this case, the
DTF authorised three manufacturers to label their balls as official and only such balls could be
used in DTF tournaments. To qualify for official status did not require any particular technical
criteria to be satisfied: the arrangement was purely a revenue raising exercise. The Commission
found the practice as being anti-competitive and ordered the DTF to allow other manufacturers of
tennis balls to participate in the scheme.
7
C 115/47 EN Official Journal of the European Union 9.5.2008.
434 16 EU Aspects
In this context, the starting point, as far EU Sports Law is concerned is the leading
2003 Decision of the Commission, which involved the collective selling of the
broadcasting rights to the UEFA European Champions League.8 This Decision has
been used as kind of template in subsequent sports broadcasting cases at the
national level; and then there is the unresolved legal questions regarding the matter
of the so-called organisational solidarity in sportconsidered to be legally and
politically sensitivewhich are of crucial importance in practice.
Following the Champions League Decision, the Commission requires the
following conditions to be satisfied when offering for sale on a collective basis
the TV rights to a sports event:
An open tender;
An unbundling of the offer allowing more than a single buyer;
8
Dec. 2003/778.
16.3 Collective Selling of Sports TV Rights 435
As mentioned above, the EU Commission now requires that the collective sale
of sports TV rights be carried out through an open tenderin effect an auction
and the terms of the tender must comply with EU requirements on tendering. The
Author of this Book requested a copy of the Form of Tender for the Sale of the TV
Rights to the UEFA European Champions League, for inclusion in this Book for
general information and interest purposes, but the request was denied by UEFA on
the grounds that the document is confidential. So much for open tendering!
Incidentally, the same rules also apply to the collective buying of sports
broadcasting rights and the European Broadcasting Union (EBU) (Eurovision)
have been involved in a number of EU Competition Law cases.12
Also, a brief mention should be made of the so-called Television without
Frontiers Directive,13 allowing EU Member States to draw up lists of protected
events which must be available on live or deferred coverage on free to view
television, and the House of Lords decision in the English case of R v Independent
Television Commissioners ex p TV Danmark 1 Ltd.14 in which the Court held that
the protection for certain designated sports events was not qualified by
9
Speech entitled Commercialising Sport: Understanding the TV Rights Debate delivered in
Barcelona by Herbert Ungerer, of the EU Competition Directorate General, on 2 October, 2003,
in which, inter alia, Ungerer argued that there must be a clear separation between sports
regulation and the commercialisation of sport. And added: TV is of high significance for
football clubs, 3070% of football clubs revenue come from TV, and this explains why
sometimes our efforts [the Commission] to bring joint selling into line with Competition law
requirements meet a certain anxietyeven bitternesson the side of some leagues, and are
initially misunderstood.
10
COMP/C.2/37.214.
11
IP/05/62, 19 January, 2005.
12
See, in particular, the Commission Decision 91/130/EEC of 19 February 1991 in Screensport/
Members of the EBU, OJ L63 of 9 March, 1991.
13
Directive 89/552 as amended by Directive 97/36.
14
[2000] 1 WLR 1604.
436 16 EU Aspects
An agreement between competitors requiring each to stay out of the others market
or territory (or to refrain from selling to the others customers) is another type of
restriction which may be caught by the EU Competition Rules. As with price
15
Comm. Dec. 2001/478.
16
www.ebu.ch
16.4 Territorial Restrictions in Sports Merchandising and Licensing Agreements 437
directly into that territory. So, many commercial scenarios are possible to suit the
requirements of the particular case.
Thus, the grant of rights clause in a Sports Licensing and Merchandising
Agreement needs to be carefully drafted accordingly to reflect the intended
position. The usual clause in a Sports Licensing and Merchandising Agreement
covering the above issues in the case of a grant of exclusive territorial rights in
respect of the licensed products runs as follows:
The Licensee shall refrain outside the Territory from seeking customers for the Licensed
Products and from establishing any branch or maintaining any distribution depot in
connection with the Licensed Products. Nothing in this clause shall prevent the Licensee
from supplying any bona fide unsolicited order or request for the Licensed Products to any
person outside the Territory.
Rights of first refusal and option clauses are characteristically found in Sports
Marketing Agreements, particularly Sports Licensing and Merchandising
Agreements.
Options to renew need to be drafted carefully, otherwise they could become
perpetual options, if worded loosely. For example:
The Licensee may renew this Agreement for a further period of [two years] on the same
terms and conditions.
To avoid this outcome, namely, creating a perpetual option, after the words
terms and conditions include the following words:
with the exception of this present clause.
As with all EU Competition Law cases, whether or not this right of first refusal
and matching option clause falls foul of the EU Competition Rules (or, indeed,
National Competition Rules) depends upon the facts and circumstances of each
individual case, including, of course, the actual terms and conditions for the
renewal of the Agreement finally agreed between the Licensor and the Licensee in
accordance with the terms of the right of first refusal and matching option clause.
The question is often asked: what has Sport got to do with the EU and what has the
EU got to do with Sport? Quite a lot, in fact, to quote Professor Stephen Weatherill
again17:
17
GSLTR, 2010/1, at p. 13.
440 16 EU Aspects
After Lisbon there is no longer any doubt that the EU has a legitimate, if subordinate,
role in the field of sport. There will be legislation (of a supporting nature): there will be a
budget. And the Treaty does at last contain material capable of nourishing the Courts
interpretation of the free movement and competition rules in the particular context of
sport. The specific nature of sport is now written into the Treaty. One would suppose that
sporting bodies would no longer waste time claiming EU law has no application to their
activities and instead seek to rely on the wording of the new provisions as a basis for
minimising the transformative effect of EU law on their practice.
The same point equally applies to negotiating and drafting Sports Marketing
Agreements of various kinds with a European dimension. So, if you fail to take
into account the EU aspects of the matter, you do so entirely at your own risk and
peril, bearing in mind that breaches of the EU Competition Rules, for example, can
result in heavy fines of up to 10% of the group world-wide turnover of the
offending party.18
You have been warned!
18
See, for example, Case T-43/92 Dunlop Slazenger v EC Commission [1994] ECR II-441, in
which Dunlop Slazenger International were fined 5 million ECUs for applying a general ban on
exports of squash and tennis balls!
16.7 Appendix 441
16.7 Appendix
Legal Department
25.7.2001/3
DAJ/WR/mp
I. Introduction
Applying EC (or national) competition law to the business aspects of the broad-
casting of sports events is nothing new, but it remains a difficult and largely
unknown issue. Let me try to give you some guidelines.
The collective exploitation of sports broadcasting rights is not, of itself, a
dominantly negative factor in determining legality under competition law. The
existing case law clarifies that most, if not all, objections were raised against the
(additional) conditions of such practices, such as the excessive duration of the
rights packages and, in combination with the extensive exclusivity, its blocking
effect on the development of new broadcasting services.
*
Reproduced with permission.
442 16 EU Aspects
popular sports (such as football, motor racing, tennis, rugby, skiing, boxing and ice
hockey) will depend on the cultural background of that public.
From the viewpoint of broadcasters and rights marketing agencies, therefore,
the differences between each sport do not create as many separate markets for the
corresponding broadcasting rights. In order to accept the logic of this view, we
should be prepared to admit that, under traditional competition law principles, the
restraining effects on competition are usually assessed on a short-term basis,
whereas the relevant market for sports broadcasting rights requires a long-term
analysis; the predominant question for any broadcaster is not how to attract as
many spectators as possible for a given broadcast production but how to achieve a
(sufficiently high) audience share for (at least) a complete broadcasting season.
Any broadcaster, whether or not it has already established itself on the market,
needs some special offers on a regular basis to attract the attention of the
potential audience, but no broadcaster could deny that the ultimate challenge for
its full programme package is to maintain a more or less permanent share of the
audience as a whole.
On the other hand, it is evident that the relevant market for sports broadcasting
rights cannot be determined by the actual or potential spectator, as in that case not
only different types of sports, but also individual matches from the same sports
competition or even within a given tournament, as well as each single match of the
national team, will have varying degrees of spectator appeal. Just as the substi-
tutability of feature films cannot be annulled by assuming that a Disney film will
appeal to a different audience from a James Bond film (and even among the
existing James Bond films you will find varying spectator appeal, partly because
different actors have played the hero), the demarcation of the relevant market for
sports broadcasting rights would be largely unpredictable, if not virtually impos-
sible, if the emphasis were put on the potential audience.
As a result of these specific characteristics of sports events and broadcasting,
there are always various premium sports events during a broadcasting season,
such as a weekly football championship match or a tennis tournament, which are
sufficiently attractive to a substantial part of the potential audience. From the
broadcasters point of view, such events within a particular type of sport (i.e. apart
from the so-called major events, which take place only once a year or even less
often) are to a large extent interchangeable, as long as they can be used throughout
the broadcast season to maintain the audience attention or share level.
For example, although the potential audience for football is likely to be
different from that of tennis, for broadcasters and rights marketing agencies the
broadcasting rights for a particular selection of tennis tournaments are regarded as
a substitute for a given series of European football matches. The extent to which
broadcasting rights to sports events are substitutable is even more obvious with
respect to the less popular sports.
These consequences of the special nature of the relevant market for sports
broadcasting rights imply that the demand side of this market has a certain level of
choice available and, thus, there is no absolute necessity for any broadcaster or agency
to acquire the live broadcasting rights to a particular batch of events of these sports.
444 16 EU Aspects
1. France
The most drastic approach seems to have been introduced in France, where the
national football federation is designated by law (Art. 17/18 of the Law No. 84-610
of 16 July 1984, as amended in 1992) as the sole authority for exploiting the
broadcasting rights to the matches of the official competitions, which are organized
by that authority, on a collective basis.
However, although the federation thereby enjoys a sui generis type of right, it
should be recalled that the original basis thereof is be found in unfair competition
law (Art. 1382 of the Code Civil).
This unique position of (in fact, all) official sports federations has been rein-
forced by an amendment of the law in 1992, which was confirmed by a decision of
the Supreme Court in 1994 (Fdration Franaise de Football ./. La Cinq).
According to that decision, the French Football Federation participates in pro-
viding the public service of sport by exercising the prerogatives of public power.
Even though the existing broadcasting agreements between the Federation and the
broadcasters were governed by private law, the exclusivity of these contracts was
deemed not to be discriminatory. However, the law prohibits the conclusion of
exclusive broadcasting agreements for more than five years.
2. Netherlands
The opposite situation from that of France can probably be found in the Nether-
lands, where the objections to collective selling caused the collapse of the pro-
posed football channel Sport 7. The Dutch Football Federation wished to sell
the broadcasting rights for the first national football league to a commercial
channel of which the Federation would also be one of the main shareholders.
However, the proposal broke down after an Appeal Courts decision that these
rights belonged (at least) also to the clubs, based on their ability to control public
access to the matches in their stadiums, and that the national Federation could not
obtain those rights on an exclusive basis simply through a change in the statutes
(Hof Amsterdam, 8 November 1996, RvdW/KG 1996, No. 448Feyenoord/
KNVB).
Later, shortly before the new Competition Act entered into force, the Dutch
Football Federation asked for an exemption (under the old rules) to its collective
sale of the broadcasting rights with respect to extracts from the matches in the
16.7 Appendix 445
national championship (the most popular clubs had sold the rights to live broad-
casts of their home matches on an individual basis to Canal+). The exclusive
position of the Football Federation was limited to 24 hour after the last match of
the day on which most of the matches were played; after that period, the clubs
were free to sell these rights individually. The Ministry for Economic Affairs took
account of the possible interests of the viewers in having all highlights shown by a
single broadcaster on a fixed time, but was not convinced that such interests alone
could justify the exemption, even in combination with the argument that the
championship as a whole would be at risk; financial inequality among the clubs
could also be reduced by creating a solidarity fund on the basis of collecting a
certain percentage of the revenue which was generated individually. The
exemption was nevertheless granted, but limited to a reasonable time (see also
Lugard, Markt & Mededinging 1998/No. 1, 28).
3. Germany
In a judgment handed down in December 1997, the German Supreme Court
confirmed two decisions of the Federal Cartel Authority that, with respect to
football matches played in Germany in the UEFA Cup and the European Cup
Winners Cup, the German Football Federation is not allowed, on the basis of
national competition law, to market centrally the broadcasting rights for these
matches, by imposing on the associated clubs a statutory obligation to grant these
exploitation rights exclusively to the Federation.
Concerning the matches played by the club teams in their home stadia, the
Court considered that the respective clubs were the real organizers of these mat-
ches, since they provide the ingredients (the players) and the local infrastructure
which result in the product in which the spectator is interested. Following on
from the explanatory regulations in the UEFA competition bye-laws, the home
club is not only responsible for the organization and cost of its matches in the
European competitions but is also entitled to the revenue therefrom. Under these
circumstances, the Court held that the clubs, at least, were entitled to exploit the
broadcasting rights. The Court deemed it possible that UEFA would be entitled to
share in the revenue from the rights, but since UEFA was not a party to the
proceedings this question was left undecided. In contrast, with respect to the
UEFA and European Cup matches involved, the activities of the German Football
Federation were regarded as limited to merely a coordination role, which could
provide a better, balanced exploitation of the broadcasting rights but did not
actually bring about the existence of the transmissions as such.
Since the individual UEFA and European Cup matches were capable of being
exploited separately, there was no compelling need to sell as a package the
broadcasting rights for the matches of all the clubs which had qualified. Thus, the
central marketing of the broadcasting rights by the Federation eliminated any
competition over the prices or conditions that might be set by the individual clubs.
An exemption for a rationalization cartel was also refused by the Court, because
the system of central exploitation, as applied by the German Football Federation,
would merely serve to increase the revenue from the broadcasting rights and would
446 16 EU Aspects
not improve any cost-benefit relationship. For the same reason, the central mar-
keting of the rights could not be justified by the pooling principle based on
solidarity among the clubs. Contrary to the situation in the United States, the Court
considered that an exemption under competition law could not follow on from the
social or political aim of retaining a sufficiently large number of clubs which are
(also) financially capable of participating in the leagues. Otherwise, such a justi-
fication would seem to enable the Federation to cover all of its costs simply by
increasing the broadcasting fees, and those fees would have to be financed at least
partly by television viewers of the matches. However, this observation must be
seen in the context of the Courts emphasis that the decision concerns only the two
European Championships, the situation regarding the central marketing of national
sports leagues being a quite separate issue.
After it became known last year that the revision of the German Competition
Act would include an explicit exemption in favour of the collective selling of
broadcasting rights by sports associations for matches organized by such associ-
ations, the European Commission stated its opposition to this development in so
far as such an exemption might apply to matches in the national league but, when
applied to European championships, would be subject to EU competition law. The
German Football Federation was therefore forced to notify the collective selling of
the television and radio broadcasting rights to the matches in the first and second
national football leagues and the matches in the national cup competition for
negative clearance or an exemption under EU competition law (see EC Official
Journal of 9 January 1999, C 6, p. 10.)
4. Spain
In 1998, the Audiencia Nacional confirmed the decision of the Spanish Compe-
tition Authority in 1993 that the agreements between the Federation and some
Spanish broadcasters on the live transmissions of the national football champi-
onship matches were unlawful, because the scope of the exclusivity was too wide.
The term of the contracts was eight years and they covered world-wide broad-
casting rights, including highlights and the commercial exploitation of videos, for
all competitions organized by the Federation. The Federation had also agreed not
to sell any rights to any other broadcaster and, in addition thereto, to extend the
agreement for another term of five years if the broadcasters were prepared to match
any other offer.
However, the decision of the Audiencia Nacional has been appealed to the
Supreme Court,and as far as I know, the issue is still under debate.
IV. Conclusions
1. Main lessons
What do we learn from this overview, other than finding a lack of uniformity
which nobody would have reasonably expected? Were the specific clauses of the
UK agreements so different from the circumstances which resulted in the prohi-
bition of the collective selling arrangements in several other countries? Or are the
UK authorities protecting the primary nature of football as a sport more than others
(also bearing in mind the complete prohibition of the proposed merger between
BSkyB and Manchester United); and if the answer is affirmative, is this because
UK competition law has yet to be modernized in line with the rules of the EC
Treaty? Or is it simply caused by the great cultural attachment to football that has
traditionally existed in the United Kingdom, so that the outcome may be different
from an investigation of similar arrangements with respect tofor example
skiing?
For the United Kingdom Court, the substance of the relevant exclusivity clauses
was the obligation not to grant to any broadcaster other than Sky or the BBC the
opportunity to experience and use for its own purposes the entertainment which
consists of the playing of the match, if the purpose of that attendance is the
making of any broadcast intended for reception within the agreed territory. Under
this approach, the broadcasting rights are based primarily on the providing of
entertainment services in the form of witnessing the playing of the match.
This implies a different notion than the so-called arena rights, which merely
derive from the basic principle under civil law that the home club may allow or
refuse anybody admission to its premises (as, for example, under Dutch case
law). In the latter case, only the home club will be regarded as the possible
proprietor of the broadcasting rights to its home matches, whilst the entertain-
ment services approach presupposes significantly stronger involvement by the
organizer of the national championship as a whole. This is confirmed by the
United Kingdom Courts consideration that the main production of the League
and its member clubs, i.e. the 380 matches of a Premier League season, is not
limited by the exclusive position of the League to sell the broadcasting rights to
these matches. Subsequently, the idea of jointly or collectively co-producing
football entertainment services logically reduces the restrictive extent of binding
rules between the federation and the clubs on the collective sale of the broad-
casting rights.
The decision of the Italian Competition Authority seems to fall between these
positions, as it emphasizes the right of the home club to prevent stadium access,
but this is accompanied by the entitlement of the organizer of an event, under the
law on unfair competition, to enjoy the fruits of the commercial exploitation
thereof. In line with its purely economic approach, however, the Authority did
not grant the visiting club any co-ownership rights. When a competition is based
on an equal number of home and away matches, this may not be decisive or even
relevant. However, the United Kingdom Court recognized more realistically that
the entertainment value of a match at least depends on two clubs and that the
value of the television rights in any individual Premier League match is also
16.7 Appendix 449
affected by the value of the League competition itself; thereby, it shows the
necessary respect for the entitlement of visiting clubs to share in the proceeds of
the rights to matches for which they have also mobilized their entertainment
forces.
The different approaches to the notion of broadcasting rights also explain the
decision of the German Supreme Court, since the input of the German Football
Federation was not sufficient to justify any co-ownership of the broadcasting rights
to the European matches between clubs of different leagues; the position of the
UEFA was not a subject of that decision. However, it should be realized that such
Cup competitions on the national level, although perhaps also involving knock-out
matches in the final phase, are nevertheless different, because the value of these
national Cup matches depends, to a much larger extent than at the European level,
on the actual achievements of the clubs concerned within the national competi-
tions, and thus shows more involvement by the organizer of both competitions.
Other reasons that may justify the collective sale of national Cup matches are
given by the Italian Competition Authority.
According to a paper issued by the European Commission (which I referred to
earlier), the determination of the notion and ownership of the broadcasting rights is
only a matter of national law. Does this mean that the European Union will have to
accept divergent opinions on the legitimacy of collective selling? To a certain
extent, the current cases before the Commission will pave the way for the appli-
cation of national competition law. On the other hand, we have come to realize that
it is not the difference between the sports but the difference between the types of
competition which leads to different approaches.
4. Neglected interests
Since public service broadcasters always take account of the interests of minorities
and the public as a whole, there are a number of players whose interests should
not be neglectednotably the less popular sports, and the viewing public.
For example, the mere possibility of a sports event forming the content of a
television broadcast does not transform that event into a purely commercial
product and even less does it deprive the event of its human, social and cultural
16.7 Appendix 451
dimension. Why should the public be forced to pay more and more for viewing
sports events which are part of their own cultural environment? (It should not be
overlooked that higher costs for broadcasting rights will raise the prices for the
advertising customers, and these costs will thus be paid by the public consuming
the advertised goods or services.) The socially integrative role of sport in each
European society should not be put at risk, which implies that an investigation
under national or European competition law cannot limit itself to purely economic
deliberations in order to meet the desire of the most popular clubs to be more
successful in financial terms.
Neither would it be socially acceptable for the general public to be obliged to
pay more (whether for decoders or for pay-per-view) in order to be able to watch
the same sports events that they are used to watching. At least the German
Supreme Court and the United Kingdom Court seemed to have recognizedand
dislikedthe development whereby the increased cost of sports broadcasting
rights is allocated to the potential audience. This means that practical solutions
aimed at promoting the social and cultural aspects of sport and resulting in a
considerable reduction in the financial burden on the audience would be a highly
relevant factor with respect to a possible exemption under the rules for rational-
ization cartels. Further case law should therefore put more emphasis on these
aspects.
Of course, the responsibility for maintaining the interest of the public in each
sport as a whole remains, in any case, a matter for both the clubs and the feder-
ation. However, with respect to the practice of central marketing from a compe-
tition law point of view, the situation would seem to be very different, if even the
successful clubs in a given sport were unable to derive sufficient income from the
broadcasting rights, because of the overall lack of popularity of the sport as such.
In such situations, there is a strong social reason for the collective exploitation of
those rights in order to maintain the publics interest in the sport as a whole.
In view of the growing desire of the larger football clubs in several European
countries to prefer the conclusion of individual contracts for pay-per-view
broadcasting, it may be assumed that the rights market with respect to the live
broadcasting of football matches will change to some extent. In fact, in all
countries where collective selling is practiced, the federations have not been
reluctant to involve the pay-TV market; on the contrary, the colossal increase in
the cost of the broadcasting rights is at least partly caused by the attractiveness of
these rights for pay-TV operatorsand the willingness of the federations to grant
them these rightson an exclusive basis. However, if the attractiveness of pay-TV
for the audience affects the live attendance of football matches and the game of
football in general, an own goal will have been scored.
The sports federations are already aware of the risks of over-commercializa-
tion, which are the result of the increasing control of popular clubs by media
companies. For example, a new UEFA rule prohibits the control of more than one
club in the same UEFA club competition. (See the Communication by the EC
Commission Official Journal of 17.12.1999, C 363.)
452 16 EU Aspects
However, this is only the tip of the iceberg; in my view, preserving the integrity
of sport should involve the more fundamental question of placing a proper limit on
any substantial form of ownership of a football club by a media company. In cases
where such a limit cannot be set by present merger regulations, as a result of the
high thresholds to be passed (the proposed BSkyB/Manchester United merger
was an exception), this task should be taken on by the federations.
Whether these developments could have any effect on the conditions for the
sale of broadcasting rights to highlights programmes is even less predictable.
Whereas both the Italian and United Kingdom decisions allowed the central
marketing thereof, partly because their sale on an individual basis would not seem
to be practicable, the Dutch Ministry assumed the opposite (but without any full
investigation). The UK approach is more reasonable, as it concentrated on the
exclusivity of the rights and held such exclusivity to be more difficult to justify, in
cases where it is possible to include time windows between such programmes.
With so much money circulating and to be made in sport at the national and global
levels, it is not surprising that disputes arise from time to time, not only of a purely
sporting nature, for example, eligibility issues, but also of a commercial nature, for
example under Sports Marketing Agreements, the subject of this Book. Such
Agreements, however well drafted, are not immune from disputes, controversies
and disagreements of one kind or another; and the question that naturally arises
and falls to be answered, in each case, is how best to resolve them. By traditional
or modern means? In other words, through the Courts or by some form of
Alternative Dispute Resolution (ADR) outside the Courts system, that is, by
extra-judicial means?
ADR in its various forms is proving to be very popular in the sporting world for
settling disputes, especially international commercial ones. Generally speaking,
extra judicial methods of dispute resolution are quicker, more flexible, less
expensive, and confidential. The sporting community, generally, prefers not
to wash its dirty sports linen in public! ADR methods also result in win
win situations, unlike the adversarial process of Court litigation, which is always,
by its very nature, a winlose situation. Also, ADR enables the parties in dispute to
maintain and preserve their business relationships and to do business together in
the future. This is particularly true in relation to sports disputes and the settlement
of them by Mediation.1
Perhaps the most common and effective forms of ADR are Mediation and
Arbitration. Or, even a combination of these two processes: Med-Arb. That is,
Mediation to identify the issues and, if unsuccessful, Arbitration to settle them.
Although it should be mentioned that, where Mediation is appropriate to settle
1
See Sports Mediations: Preserving Sporting and Business Relationships by Ian Blackshaw,
Association for International Arbitration (AIA), Brussels, Belgium, November 2010 Newsletter,
at pp. 9 & 10.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 453
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_17,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
454 17 Alternative Dispute Resolution
the dispute, 85% of Mediations prove to be successful. In any case, Mediation and
Arbitration are conducted by individuals with particular expertise and experience
in the field of business concerned and this is a further advantage that ADR has over
the Courts system, in which the Judges often lack these backgrounds and traits.
There are a number of bodies and organisations offering general ADR services
for the settlement of international commercial disputes. Mention may be made of
just a few of them: the American Arbitration Association (AAA), based in New
York, USA, which also, it should be mentioned, deals exclusively with disputes of
the US Olympic Committee (USOC); the International Chamber of Commerce
(ICC), based in Paris, France; and the Centre for Effective Dispute Resolution
(CEDR), based in London, United Kingdom.
There are also several Sports Bodies offering Mediation and Arbitration of
international sports-related commercial disputes, such as the Court of Arbitration
for Sport (CAS)2; the UK Sports Dispute Resolution Panel, now known as Sports
Resolutions UK3; the FIBA (International Basketball Federation) Arbitration
Tribunal (FAT),4 which operates on line; and EQUESTES in The Netherlands,
which offers Expert Determination of Equestrian-related disputes, including
commercial ones, for example, involving the sale of sport-horses.5
In this chapter, however, we will concentrate on the settlement of sports
business and commercial disputes through the CAS, which is based in Lausanne,
Switzerland, and has established itself over its 26 years of operations as the
principal and most popular Body in its specialised field of settling sports-related
disputes.
Before dealing with the CAS dispute resolution clauses to be included in Sports
Marketing Agreements, some words on the CAS itself on how it is organised and
how it operates would not be inappropriate.
The CAS was established in 1983 with the express purpose of providing a forum
outside the ordinary Courts system for the settlement of disputes related to sport
within the family of sport, and began its operations in 1984. It was the brain-
child of the late Juan Antonio Samaranch, the former President of the Interna-
tional Olympic Committee (IOC).
2
See on the CAS generally, The Court of Arbitration for Sport 19842004 I. S. Blackshaw and
RCR Siekmann (eds.); and Sport, Mediation and Arbitration I. S. Blackshaw; both Books
published by the TMC Asser Press, The Hague, The Netherlands in 2006 and 2009 respectively.
3
Ibid.
4
See The FIBA Arbitration Tribunal (FAT) by Ian Blackshaw, The International Sports Law
Journal, ISLJ 2009/1 & 2, at pp. 6567 (both inclusive). This article includes the wording of the
required written request for arbitration by the FAT.
5
See Equestrianism Gets Its Own Alternative Dispute Resoluion Body Equestes In The
Netherlands by Ian Blackshaw, Entertainment and Sports Law Journal, ESLJ Vol. 8 No. 2, 2010.
17.2 The CAS 455
The CAS offers Arbitration, Mediation and Advisory Opinions and has its seat
in Lausanne, Switzerland. In other words, it is a Swiss Arbitral Body.
During the Olympic Games, the CAS operates an Ad Hoc Division (AHD),
which was first set up on September 28, 1995, for the Centennial Atlanta Summer
Games of the Modern Era in 1996, resolving disputes relating to the Games within
24 hours and free of charge.6
The CAS is governed by the ICAS, the International Council of Arbitration for
Sport. The ICAS main function is to safeguard the independence of the CAS and
the rights of the parties appearing before it.7 Thus, it is responsible for the
administration and financing of the CAS. The ICAS has 20 members, who, on
appointment, must sign a declaration in which they undertake to exercise their
functions in a personal capacity, with total objectivity and independence. The
members comprise 5 sports persons; 5 independent persons, who are outside the
Olympic Movement and sport generally; 5 persons from the IOC; 5 persons from
the Association of Summer Olympics International Sports Federations (ASOIF)
and the Association of Winter Olympics International Sports Federations (AIWF);
and 5 persons from the Association of National Olympic Committees (ANOC).
ICAS members are appointed for four-year renewable terms. ICAS, like CAS
itself, is a Swiss Foundation based in Lausanne, Switzerland. The ICAS appoints
the CAS arbitrators and mediators and approves the budget and the accounts of
the CAS.8
6
See Ian Blackshaw, A sporting decision in just 24 hours, The Times, 23 July, 2002.
7
For a complete list of the functions of ICAS, see Article S6 of the CAS Code of Sports-related
Arbitration, the latest version of which is the one in force as of 1 January, 2010.
8
See generally on the ICAS Articles S4S11, ibid.
456 17 Alternative Dispute Resolution
The CAS, also known by its French acronym TAS (Tribunal Arbitral du Sport)the
official languages are French and Englishas mentioned above is based in
Lausanne, Switzerland, but has two permanent branches in Sydney, Australia, and
New York, USA, facilitating access to CAS for parties residing in Oceania and North
America.9 Because CAS is based in Switzerland, with its seat in Lausanne, the CAS
is generally governed by Swiss Law.10 It has its legal seat in Lausanne for all
purposes, even when it hears cases outside Switzerland.11 The CAS Court Office,
headed by the Secretary General and assisted by several Counsel and secretaries,
supervises the arbitration and mediation procedures and acts as a Registry; it also
organises the Ad Hoc Divisions and deals with other administrative matters.
The CAS has a minimum of 150 arbitrators, who are specialists in arbitration and
sports law.12 They are appointed for four-year renewable terms and must sign a
letter of independence confirming that they will act impartially. In establishing
the list of CAS arbitrators, the ICAS must, in principle, respect the following
distribution of candidates:
1/5 of the arbitrators selected from among the persons proposed by the IOC,
chosen from within its membership or outside;
1/5 of the arbitrators selected from among the persons proposed by the IFs,
chosen from within their membership or outside;
1/5 of the arbitrators selected from among the persons proposed by the
NOCs, chosen from within their membership or outside;
1/5 of the arbitrators chosen, after appropriate consultations, with a view to
safeguarding the interests of the athletes;
1/5 of the arbitrators chosen from among persons independent of the bodies
responsible for proposing arbitrators in conformity with the present article.13
9
See generally M. Reeb, The Role and Functions of the Court of Arbitration for Sport (CAS),
The International Sports Law Journal 2 (2002), 21, 2325.
10
For more information, log onto the CAS official website at www.tas-cas.org.
11
For the legal and practical significance of this, see the Judgement of the New South Wales
Court of Appeal of 1 September, 2000 in the case of Angela Raguz v Rebecca Sullivan [2000]
NSWCA 240. In that case, a legal challenge against a CAS arbitral award was dismissed on the
ground of lack of jurisdiction because the Court upheld the choice of Lausanne, Switzerland as
the seat (i.e. place) of arbitration under the CAS Code of Sports-related Arbitration.
12
At the time of writing, there are some 300 CAS arbitrators, from 87 countries, and around 200
cases are registered with CAS each year.
13
Article S14 of the Code of Sports-related Arbitration.
17.2 The CAS 457
The CAS also has a permanent President, who is an Italian Lawyer, Mino
Auletta, who has recently been appointed as Interim President until 2010 in
succession to the previous President and Founder Member of CAS, Judge Keba
Mbaye, from Senegal, who died on 11 January, 2007. Mr. Aulettta is also Acting
President of ICAS until 2010.
CAS arbitrators, who sit on panels composed of one or three members, are not
generally obliged to follow earlier decisions (stare decisis), but they usually do so
in the interests of legal certainty.14 Thus, a useful body of sports law (lex sportiva)
is steadily being built up.15 The extent to which this is happening continues to be
the subject of academic debate.16
Awards made by the CAS, like other international arbitral awards, are legally
enforceable generally in accordance with the rules of International Private Law,
and also specifically under the provisions of the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards of 10 June, 1958.
The CAS is also recognised under the European Convention on the Recognition
of the Legal Personality of International Non-Governmental Organizations.
So, the CAS decisions are legally effective and can be enforced internationally.
This is particularly important in the case of disputes involving intellectual property
rights, especially trademarks, which are generally of a territorial nature.
The CAS awards can be legally challenged in the Swiss Federal Supreme Court,
which is also based in Lausanne, by a dissatisfied party, but only in very limited
circumstances, under the provisions of article 190(2) of the Swiss Federal Code on
14
See Case of UCI v J. 7 NCB, CAS 97/176 Award of 28 August, 1998, 14.
15
From time to time, the CAS publishes Digests of Cases, but respecting, as appropriate,
the confidentiality of the parties. The latest Digest of CAS Awards Volume III covers the period
the period 20012003 and was published in 2004 by Kluwer Law International, The Hague, The
Netherlands (ISBN 90-411-2259-1). Previous Volumes I and II covered the periods 19861998
and 19982000 respectively and were published by Editions Staempfli SA Berne and Kluwer
Law International/Editions Staempfli respectively.
16
See K. Foster, Is There a Global Sports Law?, Entertainment Law 2/1 (2003), 118. Foster
argues that the CAS as an institutional forum is not yet globally comprehensive. And see also
James A.R. Nafziger, International Sports Law, Second Edition, 2004, Transnational Publishers,
Inc., Ardsley, New York, 4861. Prof. Nafziger characterises the CAS lex sportiva as still
incipient.
458 17 Alternative Dispute Resolution
Private International Law of December 18, 1987. This article reads (in English
translation) as follows:
[The Award] can be attacked only:
(a) if a sole arbitrator was designated irregularly or the arbitral tribunal was constituted
irregularly;
(b) if the arbitral tribunal erroneously held that it had or did not have jurisdiction;
(c) if the arbitral tribunal ruled on matters beyond the claims submitted to it or failed to
rule on one of the claims;
(d) if the equality of the parties or their right to be heard in an adversarial proceeding
was not respected;
(e) if the award is incompatible with Swiss public policy.
In practice, perhaps ground (d) is the most important one, and the CAS bends
over backwards in each case to ensure that the parties are properly heard and
receive a fair hearing.17
In practice, there have been few legal challenges to CAS awards. In the latest
challenge in 2003 concerning the independence of the CAS in view of its asso-
ciation with and partial funding by the IOC, the Swiss Federal Court held that the
CAS offered all the guarantees of independence and impartiality to be regarded as
a real court of arbitration, even where the IOCas in that casewas a party in its
proceedings.18
Before dealing with these Clauses, it is necessary to explain the legal rules on
which the jurisdiction of the CAS in any given case is based.
The general rules on jurisdiction are as follows:
These Procedural Rules apply whenever the parties have agreed to refer a sports-related
dispute to the CAS. Such disputes may arise out of an arbitration clause inserted in a
contract or regulations or of a later arbitration agreement (ordinary arbitration proceed-
ings) or involve an appeal against a decision rendered by a federation, association or
sports-related body where the statutes or regulations of such bodies, or a specific agree-
ment provides for an appeal to the CAS (appeal arbitration proceedings).19
Furthermore, under the special provisions that apply to the CAS Ordinary
Arbitration Proceedings, the party seeking CAS Arbitration of a sports-related
17
See the Judgement of 22 March, 2007 in the ATP Tour Appeal case brought before the Swiss
Federal Court against a CAS Award of 23 May, 2006; Reference: 4P 172/2006, which was
brought under either para. (d) or para. (e) of article 190(2) of the Swiss Federal Code on Private
International Law of December 18, 1987.
18
See Judgement of 27 May, 2003 of the First Civil Division of the Swiss Federal Tribunal in
the case of A. & B. v International Olympic Committee and International Ski Federation
(4P. 267/2002; 4P. 268/2002; 4P. 269/2002; and 4P. 270/2002).
19
Article R27 of the CAS Code of Sports-related Arbitration.
17.3 CAS Dispute Resolution Clauses 459
dispute is required to file a written Request for Arbitration, which shall contain,
inter alia:
a copy of the contract containing the arbitration agreement or of any document providing
for arbitration in accordance with these Procedural Rules.20
20
Article R38, ibid.
460 17 Alternative Dispute Resolution
circumstances so require, the mediator may, at his own discretion or at the request of a
party, seek an extension of the time limit from the CAS President.
For the sake of completeness, the standard CAS reference clause for an ad hoc
CAS Arbitration, that is, a reference to the CAS by the parties in dispute after the
dispute has arisen, is as follows:
AD HOC CAS Arbitration Clause
1. [Brief description of the dispute]
2. The dispute will be submitted exclusively to the Court of Arbitration for Sport in
Lausanne, Switzerland, and settled definitively in accordance with the Code of
sports-related arbitration.
Alternative 1
3. The Panel set in operation by the Court of Arbitration for Sport will consist of a sole
arbitrator designated by the President of the CAS Division concerned.
Alternative 2
4. The Panel set in operation by the Court of Arbitration for Sport will consist of three
arbitrators. Each party designates the following arbitrator:
Claimant: Mr/Mrs [insert the name of a person included on the list of CAS
arbitrators (see Annex I)];
Defendant: Mr/Mrs [insert the name of a person included on the list of CAS
arbitrators (see Annex I)];
These two arbitrators will designate the President of the Panel within 30 days
following the signature of this agreement. If no agreement is reached within this
time limit, the President of the Division concerned will designate the President of the
Panel.
once agreed expert determination clauses are binding and the parties have no
recourse to the courts;
where the expert determination clause provides that the expert shall give
reasons for a decision the Court will order that they be given; and
where a defendant refused to take part in an expert determination the
claimant may recover damages if it has to issue legal proceedings.
In Douglas Harper v Interchange Group Ltd,21 there has been a clear reiteration
that the Courts will enforce an expert determination provision in an Agreement
and that a party will be prohibited from bringing Court proceedings where the
dispute falls within an expert determination provision and that provision is
ignored. In this case, the Agreement contained a comprehensive expert determi-
nation procedure. The High Court found that the parties were contractually bound
by this procedure, so the plaintiff was barred from issuing Court proceedings
claiming commission due. He had not complied with the requirements set out in
the expert determination provision.
In Halifax Life Ltd v The Equitable Life Assurance Society,22 the Court pro-
vided further confirmation that expert determination procedures are binding on the
parties, and although the Court may intervene to resolve issues, such as whether
the expert should provide a reasoned decision or not, the actual decision of the
expert will not be disturbed. Halifax had agreed to reinsure Equitable Lifes unit-
linked and non-profit business. This required an assessment of an initial premium
for the reinsurance, which was referred to an expert to determine. Crucially the
parties agreed that the expert would provide reasons for his decision. The expert
made his determination, but failed to give reasons. Halifax challenged the decision
claiming that it was non-binding on the ground of manifest error. The High Court
said that:
In litigation justice will not be done if it is not apparent to the parties why one has won
and the other has lost.
And, therefore, held that the appropriate course was to adjourn the hearing of
Halifaxs claim and to remit the matter back to the expert in order that he could
state the reasons for his decision. This allowed Halifax the opportunity to
understand the reasons for the decision and to decide whether to continue with its
legal challenge. The Judge referred by analogy to the provisions in the UK
Arbitration Act 1996 (Section 70(4) which allows the Court to order an arbitral
tribunal to provide reasons or sufficient reasons for its decision) and was able to
require the expert to give reasons either by way of remedy in respect of the
provisions of the contract, under the courts inherent jurisdiction or under its case
management powers contained in the Civil Procedure Rules. This case is a
reminder that the Courts can still intervene in an expert determination, although a
hands off approach is generally favoured. Parties can take comfort from the fact
21
[2007] EWHC 1834.
22
[2007] EWHC 503.
17.4 Expert Determination Dispute Resolution Clauses 463
that they can now expect a properly reasoned decision, if they have expressly
agreed that reasons are to be given and they should certainly so provide in their
expert determination clause.
In Sunrock Aircraft Corporation V Scandinavian Airlines System Denmark
NorwaySweden,23 the Court of Appeal upheld the validity of an expert deter-
mination clause. It considered the measure of damages to be awarded where a
party had refused to participate in the expert determination, but the other party had
asked the Court to award damages rather than asking for a mandatory order for
expert determination. In this particular case, the Court held that nominal damages
were the correct measure of the claimants loss.
These cases indicate that an increasing number of parties are agreeing to such
dispute resolution procedures in their Agreements, whether out of a desire to
minimise their legal costs or implement a quicker dispute resolution procedure or
both. They also underline the need for the parties to carefully consider and think
through the suitability of such clauses, and also to appreciate that, once agreed, the
procedure is compulsory and the experts findings may only be legally challenged
on the narrowest of grounds. In other words, the Courts will uphold Expert
Determination clauses.
23
[2007] EWHC Civ 882.
24
Lord Irvine of Lairg, the former UK Lord Chancellor, in the Inaugural Lecture to the Faculty
of Mediation and ADR, London, 27 January, 1999.
464 17 Alternative Dispute Resolution
Meaning of the terms best endeavours reasonable endeavours and all rea-
sonable endeavours in Sports Marketing Agreements
So-called best endeavours clauses, which are generally known in the United
States as efforts clauses, are very popular in Commercial Agreements in general
and also in Sports Marketing Agreements in particular. However, they are prob-
lematic, in practice, and should be used with care and circumspection. They should
always be mutual and never unilateral.
Best endeavours clauses come in various guises ranging from pure and
unadulterated ones requiring the party concerned to use its best endeavours or in
watered down variations requiring the party concerned to use either all reasonable
endeavours or just reasonable endeavours.
When using these various versions, it is crucial to have a clear understanding of
their precise meaning and legal effect. In other words, to be fully aware of the
nature and extent, legally and practically speaking, of the obligations their
inclusion in Sports Marketing Agreements impose upon the parties concerned.
We will now take a look in this chapter at the various forms of best endeav-
ours clauses and see what legal obligations they actually entail.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 465
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_18,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
466 18 Best Endeavours Clauses
The inclusion of the term best endeavours in a clause originally placed an onus
on the obliged party to broadly speaking, leave no stone unturned.1
This very onerous obligation has been lessened somewhat over the years in
subsequent English Court cases to allow for the concept of standards of reason-
ableness to be introduced into its meaning. In other words:
best endeavours are something less than the efforts which go beyond the bounds of
reason, but are considerably more than casual and intermittent activities.2
An obligation to use best endeavours probably requires a party to take all the
reasonable courses he/she can. The party concerned must act honestly, reasonably
and make a positive effort to perform the relevant obligation.
In the case of a company, the required standard is that of a
reasonable and prudent board of directors, acting properly in the interest of their
company and applying their minds to their contractual obligations.5
1
See Sheffield District Railway Co. v Great Central Railway Co. (1911) 27 TLR 451.
2
See Pips (Leisure Production) Ltd. v Walton (1980) 43 P&CR 415.
3
Ibid.
4
See IBM UK Limited v Rockware Glass Ltd. [1980] FSR 335 (CA).
5
See Terrell v Mabie Todd & Co. Ltd. (1952) 69 RPC 234.
6
Ibid.
7
See Midland Land Reclamation Ltd. and Leicestershire County Council v Warren Energy
Limited 1995 ORB No. 254.
18.1 Introductory Remarks 467
The Court reiterated the position that reasonable endeavours only requires a
party to take one reasonable course, not all of them; whereas the obligation to use
8
See UBH (Mechanical Services) Ltd. v Standard Life Assurance Co. The Times 13 November,
1986.
9
See RAE Lambert v HTV Cymru (Wales) Ltd. 1998 Court of Appeal.
10
See Phillips Petroleum Co UK Ltd. v Enron Europe Ltd. [1997] CLC 329.
11
See Rhodia International Holdings Ltd. v Huntsman International LLC [2007] EWHC 292.
12
Ibid.
468 18 Best Endeavours Clauses
best endeavours probably requires a party to take all the reasonable courses he/
she can.13
The principle laid down in Rhodia was confirmed in the case of Yewbelle Ltd. v
London Green Developments Ltd.,14 namely, that a party will not be required to
spend a significant amount of time or money on fulfilling a reasonable endeav-
ours obligation. As to what the Court will judge to be significant will be decided
on a case-by-case basis.
See also the latest case, at the time of writing, on the subject: CPC Group Ltd. v
Qatari Diar Real Estate Investment Company,15 in which the clause to use all
reasonable but commercially prudent endeavours was considered and held not to
equate to a best endeavours obligation, but a reasonable endeavours obligation
only, because of the qualifying words commercially prudent. But note that such
qualifying words would not extend to political interests but only commercial
ones. As usual, the devil is in the detail of the drafting.
To take all reasonable endeavours has been described as something more than
reasonable endeavours but less that best endeavours.16
Clearly, whilst it does not impose as onerous an obligation as best endeavours,
an obligation to take all reasonable endeavours requires the party concerned to
expend more than merely minimal efforts in an attempt to fulfill its responsibility;
but the party is not required to take all those steps in its power to reach the desired
result.
As has been seen in the above account, best endeavours clauses are problematic
and should be used with caution. When drafting them, the draftsman should ensure
that all the parties to the Agreement, in which they are included, are fully aware of
the extent of the obligations that they impose upon them.
In fact, if they can, in practice, despite their popularity, be avoided, in my
opinion, it is better not to use these clauses in any shape or form! For one main
reason: however well these clauses are drafted, as they are open to interpretation
they involve some degree of uncertainty.
13
Ibid.
14
[2007] EWCA Civ 475.
15
[2010] EWHC 1535 (Ch).
16
See footnote 8, supra.
18.2 Concluding Remarks 469
17
See footnote 7, supra.
18
See footnote 8, supra.
Chapter 19
Boiler Plate Clauses
So-called Boiler Plate Clauses1 are standard clauses found at the end of an
Agreement, which, as their name suggests, are intended to reinforce and strengthen
the Agreement, and make it water-tight from a legal point of view.
As with standard clauses generally, they need to be used with care and only
included where it is appropriate to do so; and, in any event, they need to be
customised to reflect the particular commercial facts and circumstances of the deal.
In other words, they should not be used slavishly and as a matter of course.
An Amendment Clause provides the means by which the parties are entitled to
make changes to the Agreement. Amendments are usually to be made in writing
and to be signed by or on behalf of the parties to the Agreement, with the proviso
that any and all other such amendments are not legally binding on the parties to the
Agreement. In other words, strict compliance with the Clause is required. Addi-
tionally, it is advisable to indicate what is meant by in writing. For example, are
amendments made by e-mail with encrypted digital signatures valid?
1
Also known, in the jargon, as belt and braces clauses!
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 471
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_19,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
472 19 Boiler Plate Clauses
This is a useful Clause because it reflects very well Sam Goldwyns famous
aphorism that: oral contracts are not worth the paper they are written on!
This Clause deals with the assignability or not, as the case may be, of the Agreement
and the rights and obligations arising under it to a third party. Often Sports Marketing
Agreements, especially Sports Merchandising and Licensing Agreements, contain a
no-assignment provision, because such Agreements are usually entered into
because of the particular characteristics of the parties concerned. For example,
because of the expertise, experience and reputation of the Licensee in the field of
sports merchandising. They are so-called intuitu personae Agreements.
This Statute allows a third party that is a person who is not a party to the
Agreement to enforce a term of the Agreement in two situations:
Firstly, if the Agreement expressly includes this right; or
Secondly, if it is apparent from its tenor that the Agreement gives a third party
some kind of benefit.
In other words, the Statute overrides the normal English Common Law principle
of privity of contract, namely, that anyone that is not a party to an Agreement cannot
claim any rights or incur any obligations under the Agreement concerned.
In practice, many Agreements exclude third parties from claiming any rights
under the Agreement; or, alternatively, expressly list the parties who are to have
recognised rights under the Agreement.
This Clause makes it clear that where the Agreement is executed in two or more
Counterparts that each counterpart shall be considered to be an original and the
Counterparts taken together shall constitute one legal document (instrument).
This is a very useful clause that has the effect of limiting all the parties rights and
obligations to only the provisions contained within the Agreement and any
Schedules forming part of the Agreement.
19.2 Some Common Boiler Plate Clauses 473
This means that neither party can claim to have acted based on any statement,
discussion or document not expressly contained within the Agreement. This
excludes so-called side agreements whether oral or in writing.
Such a Clause can have serious consequences for a party relying on a pre-contract
understanding as the English High Court case of White v Bristol Rugby Club2
clearly demonstrtates. In view of its importance, the full text of the Judgement of
Judge Havelock-Allan, QC in Appendix 1 of this Chapter (19.5.1). Incidentally, this
decision has been generally criticised as being an unduly harsh one!
A Force Majeure Clause prevents the parties to an Agreement from being liable
in the event that circumstances outside their control preclude them from being able
to undertake and fulfill their obligations under the Agreement. The theory behind
this lies in the legal doctrine of frustration and that parties should not be pena-
lised for the actions or fault of another which they could not reasonably have
foreseen at the time the Agreement was entered into.
Under English Common Law, it is necessary to spell out in some detail the
actual circumstances that would constitute a Force Majeure situation relieving
the parties from their obligations of fulfilling the terms of their Agreement. Thus,
in the English practice, such Force Majeure Clauses tend to cover several pages
of text: certainly in the case of American Agreements!
Whereas, under European Continental Civil Law, the Force Majeure Clause is
a much shorter one as the applicable Civil or Commercial Code contains a full
definition of what amounts to Force Majeure.
This Clause takes care of a situation that may arise, in practice, after the execution
of the Agreement that requires the completion of some other formality or the
execution of some other document to make the Agreement fully effective legally.
This is a Clause requiring the parties to an Agreement to act in good faith and in a
timely manner in order to give full legal and practical effect to the Agreement.
2
[2002] IRLR 204.
474 19 Boiler Plate Clauses
Of course, one difficulty in drafting this Clause is defining the concept of good faith
which is better known and recognised in Civil Law than at English Common Law.
This Clause is a useful one that provides the parties to an Agreement with a pre-
agreed method of giving notice upon the occurrence of specific events. For
example, notice of termination on breach of the Agreement.
The Clause is a very important provision, in practice, as it sets out the manner
in which the parties to an Agreement should communicate with one another, and
also lays down the corresponding timescales in which the notices shall be given.
In this way, disputes later on may be avoided.
If the parties to the Agreement are in different countries, notices could be by
electronic means, but this must be expressly reserved in the Agreement. In any case,
the Notices Clause should provide for all communications between the Parties to the
Agreement will only be legally effective if made in writing. As to what constitutes
written notices, this should also be clearly defined in the Agreement.
Likewise, regarding timelines in which notices are to be given and expressed in
days or months, the Notices Clause should expressly define the meaning of days
and monthsnatural days or working days; lunar or calendar months. In practice,
it is better, for example, to lay down these time lines in days rather than months:
for example, 30 days; 90 days; 180 days.
This is a useful Clause which makes it clear that the parties to the Agreement are
acting as independent contractors and that the Agreement does not constitute a
partnership or a joint venture, with the resulting rights and obligations, particularly
the sharing of profits.
This Clause is used to make the Schedules an integral part of the Agreement, even
though they may appear in the Agreement after the signature clause.
Avoid lazy drafting by including in this Clause the further provision that, in the
event of any conflicts between what is provided in the body of the Agreement and
the Schedules, the provisions in the Schedules shall prevail. Ensure, in the first
place, that by careful drafting and editing of the Agreement as a whole no such
conflicts arise!
19.2 Some Common Boiler Plate Clauses 475
This is generally a clause that prevents one party from deducting money owed
from money payable to the other party, even if the transactions are unrelated.
For example, if a seller owes a purchaser money, for whatever reason, the pur-
chaser cannot deduct this from money that is used to pay the seller the purchase
price under the Agreement. In other words, both debts are kept separate and dealt
with under their respective terms and conditions accordingly.
This Clause, however, may be useful, from a practical and accounting point of
view, under, for example, a Sports Merchandising and Licensing Agreement,
where there are several accounts to be settled between the parties. Again, it is a
matter of looking at the commercial and financial arrangements of the actual deal
and deciding whether such a Clause would be relevant or not.
Again, this is a useful Clause which provides that certain rights and obligationsit
is necessary to specify themcontinue after the Agreement has come to an end for
whatever reasonexpiration of the term or by reason of premature termination.
This Clause is particularly relevant in the case of confidentiality provisions,
which are a particular feature of Sports Marketing Agreements.
This Clause requires deadlines provided for in the Agreement to be complied with
strictly and on time; otherwise, the party, that is entitled to the benefit of the deadline
in the event of the other partys failure to meet it, can terminate the Agreement.
476 19 Boiler Plate Clauses
But, be careful in using this Clause, which may operate as a two-edged sword!
Because of its mutuality, on occasions, it may either work for you or against you!
However, its effects may be tempered by making the right of termination a dis-
cretionary and not a mandatory one. In other words, to be exercised at the option of
the party entitled to terminate the Agreement, according to the particular facts and
circumstances of the case obtaining at the time.
This Clause is a useful one, allowing flexibility in the operation of the Agreement,
in that it provides that waiver by one of the parties of strict compliance by the
other party on one particular occasion will not prevent that party on insisting on
strict/complete performance of the same provision (that is, the one previously
waived by that party) on some future occasion.
In Appendix 2 to this Chapter (19.5.2), the reader will find some examples of
common Boilerplate Clauses, for general information purposes.
19.5 Appendices
19.5.1 Appendix 1
*
Source: Lexis Nexis (UK Law Reports); reproduced with permission.
478 19 Boiler Plate Clauses
Mr White began to have doubts about joining Bristol and eventually, he decided
that he wanted to exercise the right, which he thought he had, to opt out. He also
decided to terminate his agreement with his original agent and appointed a new
agent. On 31 January 2001, the new agent wrote to Bristol notifying them that
Mr White would not be joining the club on 1 July 2001 and enclosing a cheque for
15,000 by way of repayment of the advance of salary. The letter alleged that the
clubs chief executive had represented that Mr White could walk away from the
agreement at any time on repayment of the 15,000 and it was only in reliance of
that representation that Mr White had agreed to sign the contract. The club
returned the cheque, maintaining that no such representation was made and that the
contract was valid and binding.
Subsequent attempts to resolve the dispute failed, notwithstanding an open offer
from Bristol to Mr White on 11 May 2001 to improve the contract terms by
increasing his salary from 80,000 to 100,000, adding a bonus of 500 for each
match in which he was selected to play in the first team and giving him an option
to break the contract after the first season.
At all material times since the end of January 2001, Mr White denied that he was
bound by any obligation to join Bristol. Since 1 July, which was the first day of
employment under the contract, he was absent from the club premises and made no
attempt to make contact with the club or to proffer his services. The club in turn refused
to pay him so long as he remained unwilling to make himself available to them.
Mr White began proceedings against Bristol, seeking a declaration that he was
not bound by the contract. His primary case was that, by virtue of the alleged
representation of the clubs chief executive, the contract contained an express oral
term to the effect that he could opt out of it by returning the advance of 15,000.
In the event of a finding that the contract was still binding because it contained
no opt-out clause, a further argument was advanced to the effect that the con-
tract had been terminated by Mr Whites repudiatory breach of contract and that
Bristol, by their conduct in various respects, had accepted the repudiation as
bringing the contract to an end. Alternatively, it was submitted that that conduct
amounted to a repudiation by Bristol which Mr White had accepted.
The High Court, Queens Bench Division [Bristol Mercantile Court] (Judge
Havelock-Allan QC) on 17 August 2001 found that the contract between the claimant
and the defendants remained valid and subsisting and dismissed the claim.
The High Court held:
The contract between the claimant professional rugby player and the defendant
rugby club could not be interpreted as containing an express oral clause allowing
the claimant to opt out of the contract by returning a salary advance of 15,000.
Such an interpretation was precluded by a clause in the written contract under
which the parties to the agreement acknowledged that this agreement and its
schedules together with the documents referred to in this agreement contain the
whole agreement between the parties and that they have not relied upon oral or
written representations made to them by other persons, its employees or agents.
Entire agreement clauses are an increasingly common feature of sophisticated
19.5 Appendices 479
and detailed contract documents and, if clearly worded so as to do so, which the
clause in the present case was, are effective to exclude claims based on collateral
warranties or oral terms outside the four corners of the written document.
In the present case, therefore, the clause precluded the claimants contention that
the contract included a separate oral term not reflected in the written document or that
anything said at a meeting which was not reflected in the written wording may
never-theless have acquired contractual force as a contract term or collateral
warranty.
It could not be accepted that the provision in the agreement that Should the
player, for whatever reason, not join Bristol Rugby Club the 15,000 will of course
be repayable, when properly construed in the context of statements allegedly
made, conferred a right to opt out on the claimant. The wording of that provision
was not apt to create a right not to join the club; it simply addressed what was to
happen if the player did not join. In any event, the evidence did not substantiate
that any statement had been made which the claimant could fairly interpret as
giving him the right to opt out of the contract on repayment of the salary advance.
There was nothing in the defendants conduct which indicated that they had
accepted the claimants repudiation as bringing the contract to an end, notwith-
standing their declared position that the contract was still open and the claimant
was welcome to join them at any time.
An acceptance of a repudiation must be unequivocal. If a party says one thing
and does another, his conduct is equivocal. Although it is possible for a party to a
contract to declare that he is treating it as open for performance by the other party
who is in repudiatory breach, but to be held in reality to have accepted the breach
as bringing the contract to an end, that would be an unusual case and would
probably only arise where there was conduct on the part of the innocent party
which had effectively disabled him from entertaining further performance by the
party in breach. For example, in the context of the present case, it would not have
availed the defendants to announce that the claimants contract was being kept
open if at the same time they had engaged someone to replace him. It was not
suggested, however, that the defendants had done anything so final.
The defendants conduct in failing to pay the claimant his salary was not an
indication of their acceptance of the claimants repudiatory breach in refusing to
make himself available to train and to play for the club. Nor was it a repudiation of
the contract by them.
The claimant was not entitled to any salary because he did not do any work.
Whilst it is entirely possible for a contract of employment to provide that an
employee should receive his full wage even where he refuses to turn up for work
through his own free choice and through no fault of the employer, the contract in
the present case could not be read as containing any such provision.
It could not be accepted the defendants must be regarded as having accepted the
claimants conduct as bringing the contract to an end because the trust and con-
fidence on which the master and servant relationship is based had been irrevocably
destroyed and they could therefore have no purpose in keeping the contract alive.
If the logic of that argument was accepted, it would come very close to
480 19 Boiler Plate Clauses
4 The background is that until 30 June 2001, Mr White was under contract to
Saracens. He had signed a two-year contract with Saracens which expired on
that date. Saracens are a London club and Mr White comes from the West
Country. His parents live in Devon. Not long after he joined Saracens,
Mr White decided that he would like to return to the West Country and play for
one of the West of England clubs. He tried to gain release from his Saracens
contract after the first six months. He was unsuccessful. The club insisted that
he stay with them for the two seasons. Nevertheless he told his agent early last
year to start looking for clubs in the West Country who might employ him
when his contract with Saracens came to an end.
5 His agent at the time was Mike Burton Management. Mr Burton began to look
around for other clubs in the Allied Dunbar Premiership who were based in the
West Country and who might be interested in signing Mr White. When
Mr Burton approached Bristol, their chief executive, Mr Nick de Scossa,
expressed an interest and Mr Burton entered into negotiations with him. He
negotiated the terms of a three-year contract to run from 1 July 2001 at an
annual salary of 80,000 per annum. When he reported this offer to Mr White,
he was willing to accept it but asked if Mr Burton could get Bristol to agree to
pay 15,000 of his salary in advance. Mr Burton went back to Mr de Scossa
and secured from him Bristols agreement to pay Mr White an advance of
15,000 on signing of the contract.
6 A meeting was arranged to take place at the Bath Spa Hotel on 12 May 2000,
at which Mr White would sign the contract. The meeting was attended by
Mr White and Mr Burton and by Mr de Scossa. Mr de Scossa brought with him
a typed copy of the contract. I have been told that the RFU has certain standard
terms for players contracts, which member clubs are recommended, but not
obliged, to use. In practice, player contracts differ between clubs, even within
the Premiership, but certain features are common. The draft contract which
Mr de Scossa produced was based upon the RFU standard terms with adap-
tations. It was a formal document consisting of a frontsheet and 21 clauses,
some with sub-clauses, occupying 13 pages of A4. Appended to these were
four schedules of eight pages in total and a page for signatures. The contract
was dated 12 May 2000.
7 From Mr Whites point of view, the essential provisions of the draft contract
were the salary and that his employment would commence on 1 July 2001 and
terminate at midnight on 30 June 2004. The draft contract also contained
detailed provisions entitling him to be released by Bristol to play for England;
but, aside from the England team, his services were to be devoted exclusively
to Bristol. His salary was recorded in s.1 of Schedule 1 in the following manner
(the italics are mine):
482 19 Boiler Plate Clauses
Basic salary means the sum of 80,000 sterling per annum, payable monthly
in accor-ance with clause 4 of this agreement. Upon signing
this contract, an advance of 15,000 will be paid to the player
which will be deducted out of his first years salary. Should the
player, for whatever reason, not join Bristol Rugby Club the
15,000 will of course be repayable.
8 During the meeting on 12 May 2000, Mr Burton spent about 15 minutes
taking Mr White through the main provisions of the draft contract because
Mr White had not seen it before. Mr White accepted in evidence that he read
the draft contract and understood the general effect of it. At some stage,
probably when they looked at the basic salary clause quoted above, there was
a discussion between the three persons present about the 15,000 advance.
There is no issue that Mr de Scossa was persuaded to agree to amend the
provision which stated that the advance would be deducted from the salary
payable in the first year and to substitute instead a provision that it be repaid
at the rate of 5,000 per annum over the three years of the contract term.
Mr Burton deleted in ink the words out of his first years salary and wrote in
the margin at the rate of 5,000pa over the period of the contract. Both he
and Mr White then initialled this change.
9 Before the contract was signed, something was also said about other cir-
cumstances in which the 15,000 would be repayable. Here recollections
differ. Mr White says that Mr de Scossa made it clear to him that even if he
signed the contract he had an option not to go to Bristol: but in that event the
15,000 would have to be repaid. Mr White says in his first witness statement
that Mr de Scossa said: If you dont come to Bristol or change your mind,
15,000 has to come back. Mr de Scossas recollection, and Mr Burtons as
well, is that nothing of that kind was said. They both maintain that the only
other remark made about the 15,000 was a remark by Mr de Scossa towards
the end of the meeting that If Mr White failed a medical the 15,000 would
have to be refunded. Mr White denies that this remark was made.
10 Although the contract was not subject to any condition that Mr White should
pass a medical before joining, I was told by Mr Burton and by Mr de Scossa
that it is routine for rugby clubs to subject new players to a comprehensive
medical test before the start of their employment, not least because, if they are
found to have a pre-existing injury, this has implications for the clubs
medical insurance. In certain circumstances, the player would be required to
bring his previous medical cover with him. All this makes perfect sense. So it
is strange that the contract should not have contained a term that the start of
Mr Whites employment with Bristol was conditional on his passing a
medical. Indeed, Mr de Scossa thought that the contract did contain such a
term. His remark, however, was focused on the 15,000. If Mr White was
subjected to a medical before starting his employment and failed it badly, it
might be argued that the contract was frustrated, in which case it is plain that
the advance of salary would have to be repaid. The issue is whether this was
19.5 Appendices 483
all that Mr de Scossa said or whether he went further and conceded that
Mr White could opt out of the contract if he changed his mind.
11 Mr White did not seek payment of the 15,000 immediately. He waited until
September of last year, when he wanted to buy a house in Devon. He did not
need the 15,000 in order to finalise the purchase but his financial adviser
suggested that it would be a good idea to make use of it. It was paid to him on
or about 19 September and used to finance the purchase. However, he was
already having doubts about joining Bristol. His doubts increased to the point
where he decided that he wanted to exercise the right, which he thought he
had, to opt out.
12 On 5 January 2001, Mr White parted company with Mike Burton Manage-
ment. He terminated his agreement with them and wrote to Mr Burton
thanking him for his support in the past. Mr White then appointed Mr Powell
of Clarke Willmott & Clarke as his new agent and Mr Powell arranged for
Mr White to receive advice from Mr Richard Harry of that firm as to his
entitlement under the contract not to join Bristol.
13 Mr Harry met Mr Dean Ryan, Bristols head coach, on 23 January. Following
that meeting, at which it is to be inferred that Mr Ryan indicated that Bristol
regarded Mr White as bound by the contract, Mr Harry wrote to Bristol on
31 January 2001 notifying them that Mr White would not be commencing
employment at the club on 1 July 2001 and enclosing a cheque for 15,000 by
way of repayment of the advance of salary. Mr Harry provided in the letter
the following explanation:
We are instructed that our client was unwilling to sign the agreement with
Bristol Rugby Club unless and until Mr do Scossa represented that our client
could walk away from the agreement at any time on payment of the 15,000
that was presented at that time as consideration.
As the document was signed by our client in reliance on this representation, it is
clearly of fundamental importance, and will be construed as a term of the
agreement. In the alternative our client now wishes to take advantage of that
representation.
17 The court granted the injunction because it appeared that there was a serious
issue to be tried as to whether the contract contained an opt-out, and that if the
order was not granted Bristol could, by taking the prohibited steps, effectively
preclude Mr White from seeking employment by any other club and thereby
bring pressure on him to play for them against his will and even if he was not
obliged to do so. The injunction was intended to leave Mr White free to seek
engagement with another club at the risk, if his primary case failed at trial,
that he might have to pay damages to Bristol for the privilege of doing so.
18 In the event, the injunction has not had that effect. Under the RFU Code of
Conduct, a club wishing to sign a player currently under contract to another
club must pay a transfer fee equivalent to the maximum remuneration
19.5 Appendices 485
achievable by the player in the remaining term of that contract to the limit of
12 months. Although it is a little-disguised secret that Bath have been keen to
secure Mr Whites services, it appears that neither they, nor any other club in
the RFU, are willing to sign a contract with Mr White until his contractual
position with Bristol, and therefore any contingent liability to pay a transfer
fee, is clarified.
19 The injunction has complicated the argument about repudiation of the con-
tract because Bristol say that certain of the steps they have taken, or rather not
taken, and which Mr White now relies upon as conduct constituting a repu-
diation or alternatively an acceptance of a repudiation of the contract, were
steps dictated by a desire on their part not to infringe the injunction. Thus (i)
Bristol did not include Mr White in their squad which toured Argentina in
July 2001, (ii) Bristol have not hitherto included Mr Whites name in the list
of first team players on their website (although, following cross-examination
of Mr White on the first day of the trial, they have now done so) and (iii)
Bristol have not invited Mr White to any training sessions since 1 July 2001
and have not yet offered him any work. Mr Ryan explained in the course of
his evidence that he had adopted this stance because he was instructed by his
superiors that the injunction prevented him from doing otherwise. Whether or
not the injunction did have that effect is a matter I will have to consider when
I come to Mr Whites alternative case.
20 The fact remains that, at all material times since the end of January 2001,
Mr White has denied that he is bound by any obligation to join Bristol. Since
1 July, which was the first day of his employment under the contract,
Mr White has been absent from the club premises and appears to have made
no attempt to make contact with the club or to proffer his services. The
parties respective positions are therefore as follows. Mr White vigorously
asserts, through his legal advisers, that he is not contractually bound to play
for Bristol and therefore declines to do so. But he complains, in the alter-
native, that Bristol should be paying his salary even though he has not made
himself available for training and has obtained an injunction precluding
Bristol from registering him as their player. By contrast, Bristol maintain,
equally vigorously, that Mr White is contractually bound to play for them and
that they want him to do so. But so long as he refuses to make himself
available to the club, they are not willing to pay him. With that broad survey
of the history of this dispute, I turn to Mr Whites primary case.
21 The opt-out clause
As already indicated, the principal argument on Mr Whites primary case is
that, by virtue of what was said by Mr de Scossa at the meeting on 12 May
2000, the contract contained an express oral term that he could opt out of the
contract by returning the advance of 15,000. Although Mr Harry claimed in
his letter of 31 January that this meant that Mr White could walk away from
the contract at any time, I think that, if there was a right to opt out, it can
only have been exercisable prior to 1 July 2001, since Mr White was due to
486 19 Boiler Plate Clauses
start work at the club on that date and cancellation thereafter would have been
highly disruptive to the arrangements of both parties. In the event, Mr Owen
Williams, on behalf of Mr White, was content to accept this time limit.
22 The burden is on Mr White to prove what Mr de Scossa is alleged to have
said, to establish that any statement made bears the interpretation for which
he contends and that it was a statement intended to have contractual effect.
That burden is heavy one because, where the parties have reduced the terms
of their bargain to writing, the implication or presumption is very strong
that such contract is intended to contain all the terms of their bargain (per
Lord Russell of Killowen CJ in Gillespie Bros v Cheney, Eggar & Co [1896]
2 QB 59 at 62. Chitty on Contracts, 28th edn at para 12-095). Mr White is
inviting the court to find that the bargain struck between himself and Bristol
included an oral term, notwithstanding that all of the remaining terms were
incorporated into an apparently comprehensive and detailed written docu-
ment. Moreover, the oral term is one which would permit him to determine
that the written contract is not binding.
23 The starting point must be to consider the oral evidence of Mr White,
Mr de Scossa and Mr Burton as to what happened at the meeting. But Mr Tim
Kerr QC, who appears for Bristol, says that that inquiry is unnecessary.
He relies on two clauses in the written contract which are in the following terms:
15. Acknowledgment
Each party to this agreement now acknowledge that this agreement and its
sched-ules together with the documents referred to in this agreement contain
the whole agreement between the parties and that they have not relied upon
oral or written representations made to them by other persons, its employees
or agents.
17. Previous agreement
All previous agreements between the club and the player are hereby can-
celled with- out prejudice to any rights or obligations which shall have
accrued or become due between the parties prior to the date of termination of
any previous agreements.
24 Mr Kerr says that these clauses, in particular clause 15, are designed to
preclude any factual investigation into the pre-contract history. They are fatal
to the contention that the contract here was part oral and part written. I agree
that the purpose of an entire agreement clause, such as clause 15, is to defeat
any argument that the contract is qualified or supplemented by any oral
collateral warranty or oral term existing outside the four corners of the written
document. However, I am not persuaded that a clause such as clause 17 has
any bearing on oral terms alleged to have been agreed simultaneously with
the written contract. In the end, Mr Kerr did not press his reliance on clause
17. He did not need to, in view of the plain terms of clause 15.
25 Entire agreement clauses are an increasingly common feature of sophisticated
and detailed contract documents and, if clearly worded so as to do so, are
effective to exclude claims based on collateral warranties or oral terms like
Mr Whites claim in the present case. In Deepak Fertilisers and Petrochemicals
19.5 Appendices 487
Corporation v ICI [1999] 1 Lloyds Rep 387, one of the clauses under con-
sideration provided that: This contract comprises the entire agreement between
the parties and there are not any agreements, understandings, promises or
conditions, oral or written, expressed or implied, concerning the subject-matter
which are not merged into this contract and superseded hereby Rix J and the
Court of Appeal (at p. 395) held that the opening phrase, in conjunction with the
words and there are not any agreements, understandings, promises or condi-
tions, oral or written plainly excluded a claim based on a collateral warranty.
26 Another example of an entire agreement clause is given in Chitty on Con-
tracts, 28th edn, at para 12102. The opening words are This agreement
contains the entire and only agreement between the parties Mr Williams
seized on this example to draw a distinction between a clause which said that
the written contract was the entire and only agreement between the parties
and a clause such as clause 15 which simply stated that the contract was the
entire agreement and included no further exclusion of other potential agree-
ments not reflected in the written document. In my judgment, this is a dis-
tinction without a difference so far as the effect of the clause is concerned.
27 In Inntrepreneur Pub Co v East Crown Ltd [2000] 3 EGLR 31, Lightman J
was confronted by an entire agreement clause in these terms:
14.1 Any variations of this agreement which are agreed in correspondence
shall be incorporated in this agreement where that correspondence
makes express reference to this clause and the parties acknowledge
that this agreement (with the incorporation of any such variations)
constitutes the entire agreement between the parties.
14.2 Before executing this agreement the tenant and guarantor have:
14.2.1 received independent professional advice about its terms; or
14.2.2 been advised of the wisdom of taking independent professional advice
but have chosen not to do so and accordingly they have not relied
upon any advice or statement of the company or its solicitors.
a collateral warranty) shall have no contractual force, save in so far as they are
reflected and given effect in that document. The operation of the clause is not to
render evidence of the collateral warranty inadmissible in evidence, as is sug-
gested in Chitty on Contract (28th edn) vol. 1 para 12102; it is to denude what
would otherwise constitute a collateral warranty of legal effect.
Entire agreement clauses come in different forms In this case the formula
used is abbreviated to an acknowledgment by the parties that the agreement
constitutes the entire agreement between them. That formula is, in my judg-
ment, amply sufficient to constitute an agreement that the full contractual terms
to which the parties have agreed to bind themselves are to be found in the
agreement and nowhere else. That can be the only purpose of the provision
would want to argue that s.3 did not apply but that, if it did, the exclusion was
reasonable. On this last point Mr Kerr said that Bristol would want to call
evidence.
32 It is unfortunate that clause 15 was not pleaded: but there are mitigating
circumstances. The time for preparation of the trial has been somewhat
compressed. Mr Kerr was only instructed by Bristol at a comparatively late
stage and the amended defence and counterclaim which he drafted, and which
was only served on 3 August 2001, had to deal not only with the re-amended
particulars of claim dated 13 July, but also with further draft amendments
notified in letters from Mr Whites solicitors dated 30 July and 1 August.
33 The impact of s.3 on a provision in an entire agreement clause stating that the
parties have not relied on any pre-contract representations was considered in
Government of Zanzibar v British Aerospace Ltd [2000] 1 WLR 2333
(at 2344B-2347F). But in that case the clause also contained an express
exclusion of all liabilities for and remedies in respect of any representations
and, in his judgment, Judge Jack QC focused on this part of the wording as
attracting the test of reasonableness in s.3. He held that he could not decide
the issue of reasonableness without hearing evidence.
34 Clearly, if the wording in the last one-and-a-half lines of clause 15 is subject
to s.3, it will not be possible to determine the effect of the clause on
Mr Whites claim in misrepresentation without hearing further evidence.
However, there is likely to be an argument as to whether s.3 applies at all. In
McGrath v Shah [1989] 57 P & CR 452, Mr John Chadwick QC (as he then
was) held (at p. 459) that s.3 had no application to an entire agreement
provision. In Inntrepreneur Pub Co v East Crown Ltd, Lightman J agreed
with him (p. 33F). Neither case appears to have been cited to Judge Jack in
Government of Zanzibar v British Aerospace. Nor do they appear to have
been cited to the Court of Appeal in E Grimstead & Sons Ltd v McGarrigan
(unreported) 27 October 1999; Court of Appeal (Civil Division) transcript
no.1733 of 1999. That case is referred to by Judge Jack in Government of
Zanzibar v British Aerospace at some length. It is a case in which Chadwick
LJ delivered the leading judgment. He held that a clause containing an
express acknowledgment by the parties that they have not relied upon any
oral or written representations could exclude a claim in misrepresentation by
founding an evidential estoppel. But he expressly declined to decide whether
an acknowledgment of non-reliance fell within s.3. He did not have to decide
that issue, because he held that the clause in that case satisfied the test of
reasonableness in any event. The contract also contained an entire agreement
provision, but the appellant did not seek to rely on it.
35 None of these authorities, with the exception of the Inntrepreneur Pub case,
were referred to at the trial for the reasons I have indicated. I have to decide
how the matter should proceed from here. I am not minded to refuse per-
mission to Mr Kerr to rely on clause 15 as a defence to the misrepresentation
claim simply because it was not pleaded as a defence, any more than I am
minded to refuse Mr Williams leave to respond to that defence by relying on
490 19 Boiler Plate Clauses
s.3. In the light of the cases I have just referred to, it seems to me that there
are arguments which both parties have not addressed to me, and might wish to
address, as to whether, and if so how, clause 15 operates to exclude the claim
in misrepresentation. There may also be further evidence which one or other
or both parties would wish me to hear on these issues. In the end, I think it
best to leave the parties to review their respective positions after reading this
judgment, in particular the reasons given for the conclusion in paras 43 to 47
below that the alleged representation was not made. Unless that conclusion is
to be challenged on appeal, the application of clause 15 to the misrepresen-
tation claim is academic.
36 Before coming to the factual issue of what was said at the meeting on 12 May
2000, I should deal with the alternative way in which the claim in contract is
advanced. Mr Williams submits that, even if there was no oral term by reason
of clause 15, the wording in italics in the definition of the basic salary
(Should the player, for whatever reason, not join Bristol Rugby Club the
15,000 will of course be repayable), when properly construed in the context
of the statements made at the 12 May meeting, confers on Mr White a right to
opt out.
37 Even accepting the premise that Mr Whites version of what was said at the
meeting is the correct one, I am not persuaded that the words in italics bear
this interpretation. They deal with what is to happen to the advance if, for
whatever reason, Mr White does not join the club. The wording is not apt to
create a right not to join: it simply addresses what is to happen if Mr White
does not. The phrase for whatever reason is general. Whilst it probably does
cover the present situation, where Mr White is simply refusing to join Bristol
because he has changed his mind, it covers any situation regardless of the
reason for not joining. The reason might be that, through no fault of
Mr White, the contract had become impossible to perform by the starting date
of 1 July 2001. Alternatively the reason could be that, through the fault of one
or other party, Mr White was unable to join, or that one or other party had
changed its mind. In these circumstances arguments might arise as to whether
the party responsible for the fact that Mr White had not joined was in breach
of the contract. But the agreement is that the advance of salary is to be
refunded pending resolution of those arguments.
38 If I am right that the words in italics are a contractual provision providing for
what is to happen to the advance of salary in the circumstances I have
described, Mr Williams says that the words are redundant unless they confer
on his client a right to opt out of the contract with impunity any time prior to
the starting date. The reason, he says, is that the common law would provide
for restitution of the advance in any circumstance where it became impos-
sible, through no fault of either party, for Mr White to join Bristol. I think that
there are three answers to this submission. The first is that it is not at all
unusual for contracts to make express provision for what is to happen in
certain eventualities, notwithstanding that the common law may provide its
own remedy. Force majeure clauses are classic example. The second is the
19.5 Appendices 491
point I have already mentioned, namely, that the words do not purport to
absolve Mr White from the consequences of a decision not to join Bristol if
the implementation of that decision would arguably be a breach of the con-
tract. If the words were to have that effect they would have needed at least to
say if for whatever reason, such as the cancellation of this contract by either
party The third point is that if the words are to be construed as
Mr Williams submits, they must confer a similar right of opt-out on Bristol.
Maybe Mr Williams would concede that they do, but the only indication in
the circumstances surrounding the concluding of the contract that Bristol
might want an opt-out was if Mr White failed a medical. There is nothing to
suggest that Bristol wanted a general right to reconsider the signing. And so
far as passing a medical is concerned, I do not understand from the evidence I
have heard that Bristol wanted the right to cancel the contract if Mr White
failed his first medical on grounds falling short of those which might frustrate
the contract. I take the reference by Mr de Scossa to failing a medical to
have been a reference to Mr White being found medically so unfit that it was
unlikely he would be able to play for the club at all or at least for a very long
time.
39 For the above reasons, I do not consider that either way in which Mr White
seeks to contend that the contract was subject to an express opt-out clause in
his favour can possibly succeed.
40 In consequence, it is strictly unnecessary for me to consider the evidence
concerning the statement alleged to have been made by Mr de Scossa. But
I shall do so in case I should be wrong in my conclusions thus far or in case
Mr White should hereafter successfully demonstrate that, by virtue of s.3,
clause 15 is not effective to preclude a claim in misrepresentation.
41 As I have already said, I heard oral evidence from Mr White, Mr Burton and
Mr de Scossa about the meeting on 12 May 2000. I also heard oral evidence
from Mr Andrew Reid, Bristols financial controller, and Mr Ryan. Mr Reids
evidence concerned his understanding of the circumstances in which the
salary advance would be repayable and the mechanics of the payment of the
15,000. His understanding derived from what he was told. It is no disrespect
to him to say that his evidence is of little assistance in determining what was
said at the meeting on 12 May. The evidence of Dean Ryan was largely
directed to matters which may be relevant to whether the contract has been
terminated for breach, and is also of little assistance in determining what was
said at the meeting on 12 May.
42 I have outlined the conflict of recollection between Mr White on the one hand
and Mr de Scossa and Mr Burton on the other about the statements made by
Mr de Scossa in the course of the meeting. It is for Mr White to prove that
Mr de Scossa made a statement or statements to the effect that he could opt
out of the contract and, as I have already observed, in so far as Mr White
asserts that these statements acquired contractual force as an oral term of the
contract, this burden is a heavy one.
492 19 Boiler Plate Clauses
43 I have come to the clear conclusion that that burden has not been dis-
charged. I can summarise my reasons under three heads: (1) in the circum-
stances it is inherently improbable that Mr de Scossa should have granted an
opt-out, (2) the terms in which the opt-out was allegedly granted are not
sufficiently clear, and (3) of the three vital witnesses on this issue I find Mr de
Scossa and Mr Burton the more reliable. I will expand on each of these heads
in turn.
44 A remarkable feature of the evidence is that, contrary to the instructions
which Mr Harry said in his letter of 31 January he had received from his
client, there was no suggestion that Mr White was unwilling to sign the
contract unless he was given an opt-out. None of the witnesses said that
Mr White asked for an opt-out or needed to be given one. The evidence was
that he came to the meeting ready and willing to sign the contract which
Mr Burton had negotiated for him. He did not need persuading. There was no
hint that he hesitated or expressed himself in any way reluctant to sign the
contract. It was not said by anyone that he held out for some further
inducement. On Mr Whites case, this was an unsolicited and unprompted
concession by Mr de Scossa. There was simply no need for Mr de Scossa to
give Mr White a right to cancel the contract. Since Mr de Scossa thought that
Mr White was probably the best prop in the northern hemisphere and he
appeared willing to sign for Bristol, it is hard to see why he would jeopardise
the whole deal by telling Mr White, just before he was going to sign, that, in
effect, he could tear the contract up if he had second thoughts.
45 Mr Whites evidence as to exactly what was said to give rise to this con-
tractual opt-out was not entirely satisfactory. True, the meeting was some
15 months ago. On the other hand, he might have better cause to remember
what was said at a meeting focused on his personal future than Mr Burton or
Mr de Scossa, whose professional lives were concerned with the careers of
many players. However, Mr White was unable in the witness box to pinpoint
with any precision the words which led him to believe that he could treat
himself as released. When he was cross-examined, it transpired that the words
placed in quotation marks in his witness statement, namely, If you dont
come to Bristol or change your mind, 15,000 has to come back, were not
the words which he recollected Mr de Scossa as saying but merely an
expression of his understanding of what was said. When pressed to say
whether the quote reflected his understanding or represented the actual words,
his answer was, That is what I thought he said. Elsewhere in his statement
Mr White says that Mr de Scossa made it clear to me that even if I signed the
service contract, I had the option not to go to Bristol. Yet Mr White did not
suggest that Mr de Scossa said anything other than the single remark, the
effect of which is summarised in the quote. In my judgment it is not self-
evident that those words do confer a general right to opt out in any cir-
cumstances, including even a change of mind. At the very least one would
have expected Mr White or Mr Burton to have sought clarification from
Mr de Scossa that that was precisely what he meant. But there is no evidence
19.5 Appendices 493
that there was ever any discussion of the point. Certainly nothing was said by
Mr White to Mr de Scossa to indicate that he understood he was being given a
right to opt out and that in view of that concession was now happy to sign.
I am left with the firm impression that, at best, if the remark attributed to
Mr de Scossa was made, Mr White read more into it than was justified.
On balance, however, I do not think that the evidence substantiates that
Mr de Scossa made the statement alleged or any statement which could fairly
have been interpreted as giving Mr White the right to opt out which he claims.
46 It follows, in my view, that this is not a case where I have to decide the
conflict of recollection by reference to the impression which the witnesses
made in giving their evidence. Nevertheless, if I am driven to choose between
them on this ground, I prefer the evidence of Mr de Scossa and Mr Burton to
that of Mr White. All three witnesses gave their evidence in a clear and
forthright manner and were undoubtedly trying to give as truthful a version of
what happened at the meeting as they could remember. However, I consider
that Mr Whites recollection is the more likely to be at fault for two reasons.
The first is that on two aspects of the case I do not believe that the answers
Mr White gave in cross-examination were accurate. He admitted that he had
discussed the Bristol contract with Mr Burton in the winter of last year, but
denied that Mr Burton had told him that the deal was binding. He further said
that lack of support from Mr Burton for his attempt to get out of the Bristol
signing had played no part in his decision to dismiss Mr Burton as his agent
early in January. Mr White also said that he was not introduced to his new
agent, Mr Powell, until after he had dismissed Mr Burton. I am afraid that I
find all of these answers impossible to accept. Mr Burtons evidence-in-chief,
which I accept because it is inherently likely to have been the case and
because Mr Burton was not challenged about it in cross-examination, is that
he did indeed discuss the Bristol contract with Mr White towards the end of
last year and told him that It was a binding commitment. In the circumstances
it is simply not credible to suppose that Mr Burtons stance was not a factor in
Mr Whites decision to get rid of him in the New Year. Moreover, it is, to my
mind, equally incredible that at such a critical juncture in his career Mr White
should have dispensed with the services of so well-known and experienced an
agent as Mr Burton, having no one in mind to replace him. I find as a fact that
the overwhelming probability is that Mr White already had in mind to appoint
Mr Powell as his agent when he dismissed Mr Burton, and that one reason for
the change was that he believed that Mr Powell would be of greater assistance
than Mr Burton in getting him out of the Bristol contract.
47 The second reason why I find that Mr Whites recollection is likely to be less
reliable than that of Mr de Scossa or Mr Burton is that, in not dissimilar
circumstances, Mr White misunderstood the result of the negotiations for his
previous contract with Saracens. On that occasion, the evidence was that the
signing was an altogether more hurried affair. Nevertheless, Mr White
believed that he had been given an oral assurance by the club that he could
leave at the end of 1999 if he so chose. When he tried to do so, he was told
494 19 Boiler Plate Clauses
that the contract contained a break clause in favour of Saracens, which could
be operated after the first six months; but no break clause in his favour. He
therefore had to stay with Saracens for the full two years of his contract. As I
say, the circumstances of the negotiations and signing were different: but not
so different as to dispel the impression which I have that Mr White has a
tendency not fully to understand the implications of remarks made in the
course of negotiating a deal or the implications of signing a detailed written
contract in which such remarks have not been translated into an express term.
For Mr de Scossa, and certainly for Mr Burton, negotiating and concluding
player contracts was second nature.
48 Misrepresentation
The claim in misrepresentation is advanced as an alternative case. The pre-
mise here is that the contract contained no opt-out clause. The false repre-
sentation was that it did. I add in parenthesis that Mr Williams abandoned the
submission that the representation was that Bristol would not enforce the
contract if the advance of salary was repaid. For that statement of intent to
found a misrepresentation, Mr Williams would have to contend that the
Mr de Scossa did not genuinely have that intention when he made the rep-
resentation, and Mr Williams very properly disclaimed any imputation of
fraud or dishonesty on the part of the club.
49 It will be plain from the findings I have already made about the 12 May
meeting that I am not persuaded that any such representation was made.
However, if it was made, and clause 15 does not preclude Mr White from
raising it, there is no dispute that he relied on the representation in signing the
contract, in other words, that it was an inducement to him to contract. The
issue is whether Mr White had lost the right to rescind before he purported to
exercise that right on 31 January 2001.
50 Rescission for misrepresentation is an equitable remedy. The right to rescind
a contract for innocent or negligent misrepresentation can be lost by affir-
mation, by the inability of the court to restore the parties to the position they
were in before the contract was made (which may arise from any change of
circumstance making restitution impossible, including the intervention of
third party rights), and by lapse of time, if of sufficient duration that it would
be unjust to allow the remedy to be exercised after so long a delay.
51 It is common ground here that it was still possible to restore the parties to
their pre-contract positions on 31 January 2001. But Mr Kerr submits that
Mr White should have exercised his right, if any, to rescind the contract much
earlier than the end of January. By that time, he says, Mr White had elected to
affirm the contract, alternatively it was too late to rescind having regard to the
prejudice to Bristol caused by the delay.
52 It is a fundamental principle that there can be no affirmation without actual or
constructive knowledge. The affirming party must be aware or ought rea-
sonably to be aware of the right which he will forgo by his election to
maintain the contract. The key question, therefore, is, when should Mr White
reasonably have appreciated that the contract did not allow him to opt out and
19.5 Appendices 495
unusual case and would probably only arise where there was conduct on the
part of the innocent party which had effectively disabled him from enter-
taining further performance by the party in breach. Transposing this scenario
into the present context, it would not have availed Bristol to announce that
Mr Whites contract was being kept open if at the same time they had
engaged a prop forward to replace him. However, it is not suggested that
Bristol have done anything quite so final.
61 The second point, which is a concomitant of the first, is that the court must
examine the whole course of the innocent partys conduct in order to ascertain
whether, in truth, the repudiation has been accepted. It is not legitimate to
look at certain acts in isolation. This aspect of the task is made easier in the
present case because Mr Williams does not contend that any one of the above
steps on its own constituted an acceptance of Mr Whites repudiation. Rather,
he relies on the cumulative effect of all of these steps as compelling that
conclusion.
62 Mr Williams began by drawing a distinction between the clubs words and
deeds. According to him, all of the evidence on which Mr Kerr relied in
support of Bristols contention that they had kept the contract alive consisted
of statements and declarations of intent. Bristols actions were very different.
I cannot accept this distinction. Even if it were permissible in this situation to
apply the maxim actions speak louder than words (which I do not think it
is), the matters on which Mr Kerr relies include actions as well as words. First
and foremost, Bristol returned the cheque for 15,000 on 12 February. That
was positive conduct which asserted that, so far as Bristol were concerned,
the contract was still on foot. Second, they drafted the revised contract of
11 May and put it to Mr White in an endeavour to persuade him to change his
mind again. The revised contract was clearly prepared without prejudice to
Bristols contention that Mr White was already under an existing commitment
to join them. The significant feature of the offer is that it publicly reinforced
the clubs declared position that they still wanted Mr White to join them and
to play for them. Viewed in its proper context, I am quite unable to interpret
the offer as being inconsistent with the stance that Mr White was still bound
by the contract of 12 May 2000. Third, Bristol posted on their website on
10 July what was described at the time as an impassioned plea by their
chairman to Mr White to think again. All the while, Bristols declared
position, in correspondence with Mr Whites solicitors, in this action and
even in the evidence of the head coach, Mr Ryan, has been that the contract is
open and Mr White is welcome to join the club at any time.
63 Against that background, I address the various steps relied on by
Mr Williams, remembering that it is the cumulative effect of all of them
which he says shows that the contract is at an end. I have already expressed
my view about (i). I regard it as excessively technical to treat the offer of
improved terms in this situation as somehow involving a recognition that the
old terms were no longer binding. To my mind it simply shows that the old
terms, although binding, are not good enough to persuade Mr White to move.
498 19 Boiler Plate Clauses
As to (ii) to (iv), Mr White knows the clubs address better than the club
knows Mr Whites address. He has made no attempt to contact the club,
let alone to visit the clubs premises. He made no secret of the fact, in his oral
evidence, that he was not in the least bit perturbed or disappointed at not
having been selected to tour Argentina or at not being named on the website
or at not being invited to training sessions. The reason is not hard to divine.
He has had no intention of responding to any such invitation were it to have
been made. Indeed, his legal representatives would have insisted that he reject
any such overtures lest it compromise his stated position that he was under no
binding commitment to the club. I am therefore quite unable to attribute to the
absence of such window-dressing measures on the part of Bristol an
acknowledgment by them that the contract was at an end. In the light of this
conclusion it is unnecessary, after all, for me to consider whether the conduct
in (ii) to (iv) above is excusable in any event by reason of the injunction. Had
that been a live issue, I would have been inclined to hold that it was not.
If Bristol were in any quandary as to the ambit and effect of the injunction,
they could and should have returned to the court for clarification.
64 I will leave the non-payment of salary until last, and come to the counterclaim
in this action. It is true that a claim for loss of a transfer fee presupposes that
the contract is terminated. If it were alive, Bristol would still be entitled to
exact a transfer fee from any other club wishing to sign Mr White. But the
counterclaim is expressly pleaded as being subject to Bristols principal
defence that Mr Whites breach has not been accepted and that the contract
remains in being. The counterclaim for the potential loss of a transfer fee is
not prefaced by the phrase if, which is denied, the contract has been ter-
minated by reason of the claimants breach, but it is quite plain that it
should be read in that way. The damages counterclaimed therefore give no
clue as to whether the breach has been accepted. Nor, in my judgment, does
the abandonment of the counterclaim for an injunction. This head of coun-
terclaim was abandoned by Mr Kerr because he recognised that, if Bristol
were to seek such relief, the court might only be willing to grant it on terms
that Bristol pay Mr Whites salary. Bristol is not willing to pay Mr Whites
salary whilst he refuses to make himself available to train and to play for the
club, and so this particular counterclaim was dropped. There is nothing more
to be read into it. As for disciplinary procedures, the contract provides for
disciplinary procedures to apply If the player is in breach of any obligation in
this agreement (clause 10.1). I have my doubts whether this provision applies
where the player is not in breach of a particular obligation in the contract but
repudiates the entire agreement and refuses even to join the club. Assuming,
however, that it does, I do not read clause 10 as imposing on Bristol an
obligation to invoke disciplinary procedures whenever a player is in breach.
The clause merely provides that, if a player who is in breach is to be punished
or suffer any sanction, the disciplinary procedures annexed to the contract are
to be applied. Bristol are free in any given situation to decide not to institute
disciplinary procedures. In the present case it is rather obvious why they have
19.5 Appendices 499
decided not to do so. It would only exacerbate the situation. Moreover, dis-
ciplinary procedures conducted in the absence of Mr White, and against the
background that he does not recognise the validity of the contract, would be
fraught with legal problems. The fact that Bristol have not invoked disci-
plinary procedures against Mr White is no indication whatever that Bristol are
accepting that the contract is terminated.
65 I come, finally, to the non-payment of salary. The basic common law prin-
ciple underlying the payment of salary pursuant to a contract of employment
is that the salary is earned in return for the specified work. As the work is
done, a debt arises, from employer to employee, for the salary due in respect
of it. Aside from any express contractual provision to the contrary, if the
employee does not work, eg because he goes on strike, no salary is due or
payable. If he renders partial performance of his duties, the consequences
probably depend on whether the employer accepted that performance.
The present case is one of total non-performance. Unless Mr White can show
that the contract otherwise provides, he is entitled to no salary because he has
done no work.
66 It is entirely possible for a contract of employment to provide that, even
where the employee refuses to turn up for work through his own free choice
and through no fault of the employer, he should receive his full wage; but I do
not read the contract of 12 May 2000 as containing any such provision.
Mr Williams submitted that, read as a whole, the contract entitled Mr White
to be paid his salary unless either payment of it was suspended because
Mr White was incapacitated by illness, injury or accident for a period of more
than 26 weeks (clause 8.3), or Mr White was fined in the course of disci-
plinary proceedings and the fine was deducted from his salary pursuant to the
set-off agreed in clause 10.2. However, Mr Williams conceded that there
might be debate as to the salary entitlement of a player who was renouncing
the entire contract. I agree. For my part, I am unable to accept that the
contract of 12 May 2000, on its proper construction, confers any entitlement
on Mr White to be paid his salary in the circumstances of this case.
Mr Williamss alternative argument is that the non-payment of salary, and all
the other steps enumerated above, constitute a repudiation of the contract by
Bristol If they are not an acceptance of a repudiation. Ultimately he conceded,
in my view rightly, that the non-payment of salary could not, on its own,
amount to a repudiatory breach by the club. It is simply relied on as evidence,
together with the other enumerated matters, of either a repudiation or an
acceptance of a repudiation by Bristol. In my judgment it is negligible support
for either, especially against the background of Bristols declared intention
that if only Mr White will join the club they will pay him his salary and,
better still, will pay him at the enhanced rate in the revised contract of 11 May
2001 if he agrees to it.
67 It only remains for me to mention one further argument which Mr Williams
advances in support of his contention that Bristol has accepted Mr Whites
conduct as bringing the contract to an end. He submits that there are two
500 19 Boiler Plate Clauses
limbs to a contract of employment: the first is the master and servant rela-
tionship and the second is the contractual engagement between the parties on
the various terms agreed. The former is usually regarded as being founded on
mutual trust and confidence. In the present case, Mr Williams submits that
that trust and confidence has been irrevocably destroyed. All that is left is the
contractual engagement. What purpose, asks Mr Williams rhetorically, can
Bristol possibly have in keeping the contractual engagement alive when the
master and servant relationship has been destroyed? If the logic of this
argument is accepted it comes very close to acknowledging that an employee
can, by unilaterally refusing to serve his employer, bring about the termi-
nation of the contract of employment. This is precisely the result which
Megarry V-C declined to countenance in Thomas Marshall Ltd v Guinle.
In any event, I would not concede that the master and servant relationship has
irretrievably broken down in this case. Bristol still have a legitimate aim of
building bridges with Mr White if only he will change his mind and honour
the contract. Second, I would hold that, even if the master and servant rela-
tionship is destroyed and Bristol can expect nothing more than that Mr White
will remain recalcitrant on the touchline, they have a legitimate interest in
seeking to preserve the contractual arrangement with him, if only to secure
the payment of a transfer fee when he seeks to move to another club.
68 It will be apparent from what I have said thus far that, with no disrespect to
the ingenuity of Mr Williams, I am no more impressed with his argument that
all of the steps relied upon as evidencing an acceptance of a repudiation by
Bristol may equally be regarded as evidence of a repudiation by them, than I
am with the alleged acceptance of the repudiation. A repudiation of a contract
is not to be lightly inferred (see Lord Wright in Ross T Smyth v Bailey [1940]
3 AER 60 at 71). If, as I find, Bristol have not accepted Mr Whites repu-
diation of the contract as bringing it to an end, they have certainly not
repudiated it themselves. In my judgment, no reasonable person, viewing the
whole of Bristols conduct since the end of January 2001, would infer that
Bristol had repudiated the contract.
69 Accordingly, I hold that the contract of 12 May 2000 remains valid and
subsisting. I will hear the parties advocates on clause 15 and s.3 and, subject
to that point, on the form of order which is appropriate.
19.5 Appendices 501
19.5.2 Appendix 2
Notices Clause
Any notice consent or the like (in this clause referred to generally as notice)
required or permitted to be given under this Agreement shall not be binding unless
in writing and may be given personally or sent to the party to be notified by
*
By I.S. Blackshaw.
502 19 Boiler Plate Clauses
No Modification Clause
This Agreement may not be modified except by an instrument in writing signed by
both of the parties or their duly authorised representatives.
Waiver Clause
The failure by either party to enforce at any time or for any period any one or more
of the terms or conditions of this Agreement shall not be a waiver of them or of the
right at any time subsequently to enforce all terms and conditions of this
Agreement.
Severance Clause
In the event that any provision of this Agreement is declared by any judicial or
other competent authority to be void voidable illegal or otherwise unenforceable or
indications of this are received by either of the parties from any relevant competent
authority the parties shall amend that provision in such reasonable manner as
achieves the intention of the parties without illegality or at the discretion of the
parties it may be severed from this Agreement and in either event the remaining
provisions of this Agreement shall remain in full force and effect.
Schedules Clause
The Schedules to this Agreement shall form an integral part of this Agreement and
shall be construed accordingly.
Agency Clause
The Licensor confirms that he has appointed the Agent to act on the Licensors
behalf in all matters arising out of this Agreement including the collection and
receipt of all payments due to the Licensor under this Agreement and declares that
19.5 Appendices 503
the receipt of the Agent shall be a good and sufficient discharge to the Licensee in
respect of such payments
Any notice served on the Agent will be deemed to have been served at the same
time on the Licensor.
VAT Clause
All sums payable to the Licensor under this Agreement are exclusive of VAT
which shall where applicable be paid in addition at the rate in force at the due time
for payment subject to the Licensor either supplying a VAT invoice to the
Licensee or informing the Licensee of his VAT registration number.
Assignment Clause
Neither party may assign the benefit of nor its obligations under this Agreement
without the prior written consent of the other party.
It shall be a condition of any assignment that the assignor shall procure that the
assignee enters into a direct written covenant with the other party to this Agree-
ment whereby the assignee undertakes to observe and perform all of the assignors
obligations under this Agreement.
The promotion, marketing and commercialisation of sport, sports events and sports
personalitiescollectively, in the jargon, Sports Marketinghas come a long way
since the early pioneering days of Mark McCormack, of IMG, and Horst Dassler
of ADIDAS and ISL fame. Indeed, Sports Marketing has developed and grown
into a sophisticated, complex and discreet multi-billion US$ global industry. The
part played by the Law to date in these developments is quite significant and will
continue to be of critical importance, in the foreseeable future, as Sports Marketing
further develops and expands.
With the advent of the digital broadcasting age and the inexorable rise of the
Internet, both of which provide innovative marketing and commercial platforms
for sport, Sports Marketing is set to grow even further and reach stratospheric
heights in terms of reach and revenues, offering new challenges not only to the
creativity of sports administrators and marketers, but also placing further demands
upon the technical skills and resourcefulness of their legal and other professional
advisers, especially in the drafting of the corresponding Sports Broadcast and New
Media Agreements, which are highly complex and technical and require particular
attention.
In this process of the continuing and further development and evolution of the
commercialisation of sport, often nowadays referred to as the commodification of
sport,1 the need for well-drawn and creative Sports Marketing Agreements of
various kinds will also be of crucial importance. In particular, these Agreements
will need to cope with the new and ever-widening and expanding concepts of
Sports Marketing and faithfully reflect the underlying commercial, financial and
technical arrangements.
1
For an interesting explanation of this phenomenon, whereby sport is now a commodity to be
bought, sold, traded and commercially exploited like any other goods and services, see Sports Law
by Simon Gardiner, Mark James, John OLeary, Roger Welsh, Ian Blackshaw, Simon Boyes and
Andrew Caiger, Third Edition, 2006, Cavendish Publishing, London and Sydney, at pp. 5355.
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 505
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7_20,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
506 20 Concluding Remarks
Sports Marketing Agreements, as has been seen in this Book, also need to
include suitable provisions dealing with all kinds of unfair competition, especially,
Ambush Marketing, which, like Sports Marketing itself, has also become more
sophisticated and more widespread, not least because of the very valuable
commercial opportunities riding on major sports events, in order to protect not
only the integrity of the sport concerned, but also the commercial and financial
interests of the sports bodies concerned, as well as other major rights holders, such
as their corporate sponsors, whose financial contributionsin the form of spon-
sorship feescannot be underestimated or, indeed, taken for granted. Even the
sports business is a highly competitive one in a financial and business sense.
Likewise, Sports Marketing Agreements need to take into account the Fiscal
and European Union aspects, which impactmore and moreupon their validity
and viability. The need, therefore, for Sports Marketing arrangements to be
structured from a tax efficient point of view and appropriate Agreements entered
into to reflect these aims cannot be overstated. This is especially true, as has been
explained in the Book, in the case of Sports Image Rights Agreements in Chap. 15
on The Fiscal Aspects. Why pay more tax than is properly due if, quite legiti-
mately, one can arrange matters in order to significantly reduce this financial
burden? As has been well said, the only certainties in life are taxes and death!
Again, Sports Marketing Agreements also need to include suitable Alternative
Dispute Resolution (ADR) Clauses for the more effective, efficient and less time
consuming and more economical settling extra-judicially of disputes arising under,
out of or in relation to these Agreements, whenever and wherever it is appropriate
to do so. However, as has been pointed out, ADR is not a panacea for the set-
tlement of all disputesin certain cases, the Courts are the appropriate forum.
As has been demonstrated in the Book when negotiating and drafting Sports
Marketing Agreements, planning and precision are the essential hallmarks of this
process, for it has also been well said that, if a Sports Marketing deal makes
commercial and financial sense, it also makes legal sense, and, therefore, with
care, it is relatively easier to draft a meaningful and legally effective corresponding
Agreement. But, be very careful not to overload Sports Marketing Agreements
with unnecessary clauses; only include those clauses that serve a particular pur-
pose in relation to the deal at hand and merit inclusion. Gone are the days when
lawyers were paid by the foliothe length of the documents they produced! And
always edit your drafts to ensure that there are no inconsistencies in them and that
they are clear and make sense.
The Author and the Publishers sincerely hope that this Book will make a useful
and significant contribution to the exciting and challenging brave new world of
Sports Marketing, which, despite the general economic downturn and recession,
seems to be going from strength to strength, and also provide helpful guidance on
the planning and drafting of a variety of Sports Marketing Agreements , especially
from a legal, fiscal and practical point of view.
But, of course, the final judgement on these matters rests with you the readers
and users of this Book!
Table of Legislation
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 507
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
508 Table of Legislation
London Olympic Games and Paralympic Games Act of 2006, 227, 399
Luxembourg Civil Code, Articles 1382 and 1383, 420
Luxembourg Income Tax Act, Article 50bis, 422
Luxembourg law on the protection of a persons private life, 11 August 1982, 419
New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards of 10 June 1958, 457
Olympic Charter Rule, 9
Spanish Basic law, Article 9.2, 267
Spanish Constitution, Article 18.1, 264
Swedish Act on Names and Pictures in Advertising of 1979, 263
Swiss Civil Code, Article 28, 263
Swiss Code of Obligations, Article 22, 31
Swiss Federal Code on Private International Law, Article 190(2), 457
Television without Frontiers Directive, 435
TFEU Articles 101 and 102, 433
TFEU: Treaty on the Functioning of the European Union, 433
Trade Marks (Bailiwick of Guernsey) Law 2006, 402
Treaty on the Functioning of the European Union (FEU), Articles 101 and 102,
224
UEFA: Union of European Football Associations, 434
UK Advertising Standards Code, rule 6.5, 262
UK Arbitration Act 1996, Section 70(4), 462
UK Bribery Act of 2010, 91
UK Copyright Designs and Patents Act of 1988, 288
UK Copyright Designs and Patents Act of 1988, Section 11(2), 23
UK Copyright Designs and Patents Act of 1988, Section 12, 19
UK Copyright Designs and Patents Act of 1988, Section 4 (1) (a), 22, 227
UK Copyright Designs and Patents Act of 1988, Section 90(3) 23
UK Copyright, Designs and Patents Act 1988, Section 107(1), 267
UK Trade Marks Act 1994, Section 21, 268
UK Trade Marks Act 1994, Section 3(1)(c), 22
UK Trade Marks Act 1994, Section 92, 267
UK Trade Marks Act 1994, Sections 1416, 267
UK Trade Marks Act of 1994, Section 1(1), 22, 226
UKs Data Protection Act 1998, 405
UKs Television Advertising Standards Code, 406
US Internal Revenue Code, 167
Table of Cases
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 509
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
510 Table of Cases
ETW Corp. and Eldrick Tiger Woods, for itself, Tiger Woods and his minor
child, Miss Sam Alexis Woods v Leonard Meng Lee, 265
ETW Corp. and Eldrick Tiger Woods, for itself, Tiger Woods and his minor
child, Charlie Axel Woods v Josh Whitford, 265
ETW Corporation v Jireh Publishing, Inc. (2003 U.S. App. LEXIS 12488, 20 June
2003), 257
Ex p Dawes Re Moon (1886) 17 QBD 275, 6
Exxon Corporation v Exxon Insurance Consultants International Ltd., 21
Guernsey Financial Services Commission (GFSC), 415
Halifax Life Ltd v The Equitable Life Assurance Society [2007] EWHC 503, 234,
462
Halsey v Milton Keynes General NHS Trust and Steel v Joy and Halliday [2004]
EWCA Civ 576; [2004] 4 All ER 920, 233
IBM UK Limited v Rockware Glass Ltd [1980] FSR 335 (CA), 466
Irvine v Talksport Ltd. [2003] EWCA Civ 423, 262, 381
Italian Supreme Civil Court (Cassazione Civile Sez. I, 2nd May 1991 No. 4785),
263
Kahn v Electronic Arts GmbH unreported 25 April, 2003 (Germany), 263
Leicester Circuits Limited v Coats [2003] EWCA Civ 333, 233
Little v Courage Ltd [1994] 70 P&CR, 469, 30
Midland Land Reclamation Ltd and Leicestershire County Council v Warren
Energy Limited 1995 ORB No. 254, 466
Peak Construction (Liverpool) Ltd. v McKinney Foundation Ltd. [1970] 1 BLR
111, 7
Perfume and Levi Straus/Tesco Stores cases, 230
Phillips Petroleum Co UK Ltd. v Enron Europe Ltd. [1997] CLC 329, 467
Pips (Leisure Production) Ltd. v Walton (1980) 43 P&CR 415, 466
Poussard v Spiers (1876) 1 QBD 410, 8
Preliminary Ruling by the Court of First Instance of the European Court of Justice
(ECJ) (C-102/07), 19
Proactive Sports Management Ltd. v (1) Wayne Rooney, (2) Coleen Rooney
(formerly McLoughlin), (3) Stoneygate 48 Limited, (4) Speed 9849 Limited
[2010] EWHC 1807 (QB), 257
R v Independent Television Commissioners ex p TV Danmark 1 Ltd. [2000] 1
WLR 1604, 435
R&D Construction Group Ltd. v Hallam Land Management Ltd. [2009] CSOH
128, 30
RAE Lambert v HTV Cymru (Wales) Ltd. 1998 Court of Appeal, 467
Ray v Classic FM [1998] unreported, 23
Reddaway v Banham [1896] AC 199, 406
Rhodia International Holdings Ltd v Huntsman International LLC [2007] EWHC
292, 467
Richardson v Mellish (1824), 2 Bing. 229, 11
Table of Cases 511
Sheffield District Railway Co. v Great Central Railway Co. (1911) 27 TLR 451,
466
South Core Inc v Besant and Others (t/a Reef) The Times Law Report of 9 October
2001, 229
Sports Club & Ors vs HM Inspector of Taxes, 392
Sports Club plc v Inspector of Taxes [2000] STC (SCD) 443, 266, 380
Street v Mountfort [1985] AC 809, 6
Sunrock Aircraft Corporation v Scandinavian Airlines System DenmarkNorway
Sweden [2007] EWHC Civ 882, 463
Susan Dunnett v Railtrack PLC [2002] EWCA Civ 302, 233
Swiss Federal Tribunal in the case of A. & B. v International Olympic Committee
and International Ski Federation (4P.267/2002; 4P.268/2002; 4P.269/2002; and
4P.270/2002), 458
Terrell v Mabie Todd & Co. Ltd. (1952) 69 RPC 234, 466
UBH (Mechanical Services) Ltd. v Standard Life Assurance Co. The Times 13
November, 1986, 467
Victoria Park Racing and Recreation Grounds Co Ltd. v Taylor and Others [1937]
58 CLR 479, 18
White v Bristol Rugby Club [2002] IRLR 204, 8, 473
World Wide Fund for Nature v World Wrestling Federation Entertainment Inc.,
227
Yewbelle Ltd. v London Green Developments Ltd. [2007] EWCA Civ 475, 468
Index
I. S. Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects, 513
ASSER International Sports Law Series, DOI: 10.1007/978-90-6704-793-7,
T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author 2012
514 Index
J
E Joint liability, 235
Economic activity, 431
Endorsement agreements, 253
English common law of contract, 30 L
EU Competition Authorities, 224 Lease agreement, 97101, 103108
EU Competition Law, 435 Lease: standard terms of, 96
EU Competition Rules on sports broadcasting Letters of Intent, 2931
rights, 288 Lex sportiva, 457
European Union, 267 Licensees, 1
Exclusions clause, 209 Licensing, 432, 472
Expert determination provision, 460 Character licensing, 223
Exploitation of a players image, 271 Logo licensing, 223
Personality licensing, 223
Product licensing, 223
F Sports licences, 223
FIFA World Cup, 29, 89, 92, 287, 292293 Licensing rights, 1
Football sponsorship, 122123 Licensors, 1
Index 515
M R
Matching option , 169 Registered user agreement, 228, 244
Med-Arb, 69, 171, 232 Remaindering rights, 314
Media rights: new, 1 Right of publicity, 255
Merchandising rights, 1 Rights of personality, 256
Minimum performance obligations, 228 Rights of privacy, 256
Mobile sports content rights
agreement, 314
S
Salary plus IR contract, 391
N Simple licensing arrangement, 409
Naming and shaming procedure, 128 Sponsorship, 90, 379, 506
Naming rights agreement, 165166, Sponsorship agreements, 269
168170 Sponsorship rights package, 290
Negotiating Sport: commercialisation of, 1
Negotiation Sport: marketing of, 1
skills, 12 Sports broadcast, 505
strategy, 12 Sports broadcast licence agreement,
tactics, 14 289, 292, 295
New media agreements, 505 Sports broadcasting, 1
Nice Classification of Trademark Goods Sports Concession Agreement, 209
and Services, 228 Sports Event Management Agreements, 74
Non-Disclosure Agreements, 67 Sports event marketing, 17
Sports image rights, 256, 380
Sports licensing and merchandising
O agreement, 233, 438, 461
Olympic Charter, 224 Sports Licensing and Merchandising
Olympic Games, 18, 29, 89, 92, 227, Agreements, 7
285, 287, 293 Sports licensing revenues, 236
Olympic Games: marketing of the, 1 Sports marketing, 2930, 33, 6768, 8990
Olympic Movement, 227 Sports marketing agreement, 453
Olympic symbol, 18 Sports Marketing Agreement, 6768
Olympics Merchandising Sports marketing agreements, 379, 475
Programme, 224 Sports Marketing Agreements, 9, 7374, 465,
505506
Sports marketing industry, 1
P Sports marketing mix, 223, 285, 292
Pourage rights , 209, 211 Sports marketing package, 167
Pouring/pourage Rights, 209 Sports Marketing/Management Agency, 73
Preliminary agreements, 2932 Sports Merchandising Agreement, 69
Premiums, 224, 244 Sports merchandising and licence agreements
Price fixing arrangements, 437 Sports Merchandising and Licensing Agree-
Principle of culpa in contrahendo, 32 ment, 475
Principle of liability without fault, 235 Sports new media rights agreement, 314
Privacy and personality rights, 381 Sports Pourage Agreement, 210211
Privity of contract, 472 Sports promotion and endorsement contract,
Product tie-ins, 167 276
Proper law clause, 68 Sports sponsorship, 165, 171
Proprietary information, 68 Sports sponsorship agreements, 9, 121, 124
Public interest, 68 Sports stadia concession agreement, 209
Sports stadia naming rights agreements, 165
Sports television sponsorship agreement,
Q 291292
Quality control provisions, 225, 228 Sports TV Rights, 432
516 Index