1. Session #102 - Negotiating Sponsorship and Endorsement Agreements
Will Bensussen, Deputy General Counsel, SAG-AFTRA
Jason Cohen, General Counsel, Dallas Cowboys
Nyea Sturman, General Counsel, Orlando Magic
Jaimie Wolf, Associate Counsel, Kroenke Sports & Entertainment

2. GRANT OF RIGHTS Who holds the rights to be granted? Territories Team
Venue
Athlete/Celebrity
League
Territories
Defined by league rules

3. CATEGORY RIGHTS Team Perspective Sponsor Perspective
Narrow category:
Ex: AUTO - domestic auto, luxury auto, import auto, trucks, ATV, motorcycles
Sponsor Perspective
Broad Category:
Ex: BANKING – commercial and personal banking, financial services, credit cards, payment systems, savings plans, retirement account, etc.
Athlete/Celebrity Perspective
Team vs. Building
Can the team grant building rights? Does team exclusivity include building exclusivity?
League vs. Team
Can the league grant rights in the market?
How is the territory defined?
Designations
Official, proud, exclusive status? How many others can get that status in your category?
Exclusivity
What is the territory? Are there exceptions?

4. ALCOHOL SPONSORS Tied House - 27 U.S. Code § 205(b) (emphasis added)
It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or wholesaler, of distilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate to induce through any of the following means, any retailer, engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce: (1) By acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer; or (2) by acquiring any interest in real or personal property owned, occupied, or used by the retailer in the conduct of his business; or (3) by furnishing, giving, renting, lending, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value, subject to such exceptions as the Secretary of the Treasury shall by regulation prescribe, having due regard for public health, the quantity and value of articles involved, established trade customs not contrary to the public interest and the purposes of this subsection; or (4) by paying or crediting the retailer for any advertising, display, or distribution service; or (5) by guaranteeing any loan or the repayment of any financial obligation of the retailer; or (6) by extending to the retailer credit for a period in excess of the credit period usual and customary to the industry for the particular class of transactions, as ascertained by the Secretary of the Treasury and prescribed by regulations by him; or (7) by requiring the retailer to take and dispose of a certain quota of any of such products;

5. ALCOHOL SPONSORS Exclusivity Limitations Minimum Audience Age
Not tied to the pour in the building. Many contracts will explicitly state that there is no product placement tied to the advertising purchased.
Minimum Audience Age
Social Responsibility
League required messaging for certain types of inventory. E.g. tv visible signage
DISCUS Code
Beer Institute Code
Wine Institute Code

6. USE OF MARKS Team Marks Sponsor Marks Building Marks
Team’s most valuable asset
Template often includes language stating that sponsor has no right to use IP unless it is a component of the acquired rights
License to use is not automatic
Team will almost always require right to review and approve all uses
Sponsor Marks
Not as critical a provision from the team’s standpoint
Implied license if not specific language
If requested, language will typically grant the team a limited license in order to display the advertising/marketing materials that largely mirror’s the language addressing use of team’s marks
Building Marks
Treated largely the same as Team Marks, particularly if the team owns the building
Name often includes third-party IP
“Pass-through” obligations from naming rights agreement

7. USE OF MARKS Player Images Mascots Approval Process
Teams have no or very limited rights to grant a sponsor the right to use player names, images and other personality rights
Right to use an individual player image must be negotiated by the sponsor directly with the player with limited or no involvement by the team. League rules will dictate what can be done.“Group of 4” Rule
Non-player staff- team’s rights are often set forth in employment agreement.
Mascots
Team-owned IP
Chain of title considerations
Approval Process
Right to review and approval all uses in writing
Review time frame and effect of not reviewing in timeframe
Exceptions for advertising copy that will be used periodically
Impact of personnel changes
Pass-Through Rights
Discussed more with sponsors with good and services sold through traditional retailers (e.g., a soda company who’s product is sold through grocery stores)
Team’s will typically allow team marks to appear in general advertising (e.g., circulars) 
Impact of exclusivities

8. INDEMNIFICATION/INSURANCE
Overall concept here is a provision providing that one party bears the monetary costs, either directly or by reimbursement for losses incurred by a second party. You are asking for a guarantee against a loss.
Granted by Team
When a team grants a sponsor an indemnity, the Team is relieving the Sponsor of any risk associated with specific Team actions. For example the Team may indemnify the Sponsor for any issues using the Team trademarks.
Here is a sample provision:
TEAM agrees to indemnify and hold harmless Sponsor and its officers, affiliates, owners, directors, partners, agents and employees from and against any and all Losses to the extent such Losses arise out of: (1) the performance of services or actions taken by Team or Indemnified Parties, or those acting under it in connection with this Agreement, including but not limited to, any breach by Team of any representation, warranty and covenant herein; (2) the failure of Team or the Indemnified Parties, or those acting under it, to comply with the terms and conditions of this Agreement; (3) Sponsor’s valid use of Team Trademarks and/or other Team Trademarks as authorized by this Agreement; and (4) defects in the design, assembly, or manufacture of any product provided by and/or utilized by Team to execute the Agreement Benefits.

9. INDEMNIFICATION/INSURANCE
Granted by Sponsor
When a Sponsor grants a Team an indemnity, the Sponsor is relieving the Team of any risk associated with specific Sponsor actions. For example the Team may indemnify the Sponsor for any issues using the Team trademarks. For example, the Sponsor may indemnify the Team for any of the Sponsor’s vendors who may conduct sponsor activations.
Here is a sample provision:
Sponsor agrees to indemnify and hold harmless Team, the NFL and each of the forgoing entities’ officers, affiliates, owners, directors, partners, agents and employees (collectively “Indemnified Parties”) from and against any and all third party claims, demands, obligations, causes of action (including pre-lawsuit court orders), losses, lawsuits and all other damages, liabilities (determined by verdict, judgment or good faith settlement of a claim), fines, judgments and the costs and expenses associated therewith (including the payment of reasonable attorneys’ fees and disbursements) of defending a claim of liability (whether or not valid) (together “Losses”) to the extent such Losses arise out of: (1) the performance of services or actions taken by Sponsor, or those acting under it in connection with this Agreement, including but not limited to, any breach by Sponsor of any representation, warranty and covenant herein; (2) the failure of Sponsor, or those acting under it, to comply with the terms and conditions of this Agreement; (3) Team’s valid use of the Sponsor Trademarks as authorized by this Agreement; (4) the broadcasting or publication of material provided by Sponsor; (5) defects in the design, assembly, or manufacture of any product provided by Sponsor to Team; and (6) any perceived endorsement of Sponsor by Team.

10. INDEMNIFICATION/INSURANCE
Goal of this provision is to ensure that throughout the term of the agreement, the sponsor maintains sufficient coverage and policy limits to support a claim. This provision can be very detailed and spell-out the procurement and evidence process, proving up to the Team that the Sponsor has and will maintain such coverages as requested.
Team will need to be added to Sponsor’s policies as an additionally insured and look for a waiver of subrogation.
Teams would be wise to spell out specific coverages (Worker’s Compensation, Property, Auto, Umbrella policies., etc) as well as minimum limits.
Finally, a clause stating that such policies are primary and non-contributory with respect to other insurance may also help depending on the dispute.

11. TERM AND TERMINATION Length of Deal For Cause For Convenience
Considering issues of renewal, auto-renewal, weighing business considerations, timing of marketing/promotions.
For Cause
In the event Sponsor defaults under any material provision of this Agreement and such default remains uncured for a period of thirty (30) days after notice and opportunity to cure, then TEAM, in its sole and absolute discretion, shall have the right to (i) suspend the Agreement Benefits until Sponsor has cured the default, (ii) terminate this Agreement and arbitrate against Sponsor for all damages incurred by TEAM arising from or related to Sponsor’ default, or (iii) seek all such other relief available at law or in equity. If TEAM elects to terminate this Agreement pursuant to this Section 10(b), TEAM shall be entitled to retain all funds paid by Sponsor to the extent attributable to Agreement Benefits provided prior to the effective date of termination. The above rights are cumulative and any one or more of such rights may be exercised separately or concurrently to the extent provided by law.
For Convenience
In order to provide the business maximum flexibility, you may try to negotiate a termination without cause.

12. TERM AND TERMINATION Effects of Termination
Need to consider the return of materials, costs associated with termination (e.g. taking down signage), media strategy to explain the separation from sponsor(s).
Reminder that select provisions live on beyond termination (e.g. confidentiality, audit rights, etc).
Effect of Expiration or Termination. After the expiration or termination of this Agreement, Sponsor shall have no right to sell, distribute, broadcast or use the licenses, Agreement Benefits or premiums provided for in connection with this Agreement without TEAM’s prior written consent. Furthermore, after expiration or termination of this Agreement for whatever reason, all rights granted under this Agreement will revert to each Party respectively and each Party agrees to refrain from further use of, simulation of or reference to any and all of the other Party’s Marks; provided however that Parties shall maintain rights to archival references for noncommercial internal, historical use only. Upon the termination of this Agreement, each Party shall, at its option, deliver to the other Party or destroy, all artwork, promotional concepts or derivative work which (i) was developed and used in connection with this Agreement, and (ii) utilizes or otherwise references any of the other Party’s Marks. If a Party opts to destroy all artwork, such Party shall provide the other Party with an affidavit(s) of destruction to serve as evidence of such actions.

13. NEGOTIATION WINDOWS/OPTIONS
Exclusive Negotiation Windows
Notice Requirements
When do you have to provide the first offer
Right of First Refusal
Sponsor has first right to negotiate for a deal in the category. If no deal is reached, team is free to negotiate unencumbered with other parties.
Right of Last Refusal
If team don’t come to terms during the negotiation window, sponsor holds a right to accept the terms of deal negotiated with a different sponsor precluding the other company from entering into the deal. Puts team in a bad position to get to finish line with another client and pull the deal out from under them.
Options
In/Out
Notice Dates
Effective Date
End of then current contract year
Who Holds (sponsor, team, both, mutual)

14. FORCE MAJEURE/WORK STOPPAGE
Definition
Not very different from traditional commercial contract definition
Work Stoppage and venue construction/reconfigurations are typically most scrutinized, to the point that separate sections and remedies may be drafted to address these two particular items
Work Stoppage
Work stoppages involving players versus other arena staff
Best practice (from team perspective) is to specifically reference lock-outs
Mutuality
Typically fine, but teams will typically carve out failure to pay from definition
Remedies
Credit or make goods
Extension of Agreement for period of time equivalent to the force majeure event
Refund
Termination

15. ATHLETES AND CELEBRITIES
Morals Clauses
Standard of Conduct
Use of name, likeness, voice, image, photograph, signature & other identifying attributes
Personal Appearances
Services for commercial and/or radio ads
Nondisparagement
Exclusivity

16. SAG-AFTRA COMMERCIALS CONTRACT
Overview of Multiple Services Contracts with Celebrities
Typical endorsement deal and the bundle of rights
Within these rights are rights to services covered by our SAG-AFTRA contracts (typically the Commercials Contract for TV, sometimes the TV Commercials Contract, Industrial Agreement, etc.)
In order to use our performers, you must abide by the terms of our contracts

17. SAG-AFTRA COMMERCIALS CONTRACT
Allocation Issue – Guidelines (negotiated into Commercials Contract via 2009 Commercials MOA, Section 13. Current provision is Comm. Contract Section 47E1 re MSCs which points to Exh. I Guidelines and Section 58E re Special Procedures for Allocation Disputes)
Guideline A – Solely covered services. 100% Allocation.
Guideline B – Many of the celebrity endorsement contracts are in this category. 50% for performers. 40% if for modelling services.
Example: Actor signs a multi service contract with Apple where she agrees to promote Apple products for 2 years by attending 2 launch parties a year, use apple products and provide four service days a year to film a commercial.
Guideline C – athletes endorsing products closely associated with their sport. 20% (does not apply to athletes endorsing products unrelated to their sport)
Example: Basketball player agrees to wear Adidas products during his games and at press events and agrees to appear in one commercial a year for three years. Guideline applies.
Example: Basketball player agrees to use Titleist Golf Balls during his leisure time and makes one commercial. Guideline does not apply, he is not a professional golfer.
Guideline D – commercials to be used exclusively outside of the US – 40%
Example: Actor enters into MSC with Japanese beer company and shoots a beer commercial to be aired exclusively in Japan.

18. SAG-AFTRA COMMERCIALS CONTRACT
Guideline E – if performer has active role in developing the product and performer’s name or image appears on the product– 40%
Example – Recording artist enters into MSC with H&M to create a new fashion line for H&M which includes a custom logo with her signature and agrees to shoot one commercial a year for two years.
Guideline F – if royalties or stock are part of compensation - 40% of upfront non-refundable guarantee
Example –similar to above, however, recording artist is given 3% royalties on her product line and a $3 million dollar upfront guaranteed payment.
Guideline G - When Covered Services Include TV and Radio Commercials –if TV and Radio commercials cover 100% of the contract, then 80% allocated to TV, 20% allocated to Radio.
If MSC involves non-covered services, TV Commercials and Radio Commercials, then first apply whichever Guideline B-F above applies, then allocate 90% of covered services to TV Commercials and 10% to radio commercials.
Example—Actor signs a contract to make a Visa tv commercial and a radio commercial. No other services required. 80% of his contract amount is allocated to TV, 20% to radio.
Example—Actor enters into MSC for Visa and agrees to make personal appearances at Visa-sponsored events and appear in tv and radio commercials. First apply Guideline B allocating 50% of the contract to personal appearances. Then apply Guideline G, part 2 so that 45% is for TV, 5% for Radio.

19. SAG-AFTRA COMMERCIALS CONTRACT
Expedited Arbitration (Commercials Contract Section 58E)
The P&H office has an audit team which reviews contracts.
P&H tries to resolve claims, if it doesn’t work, refers to SAG-AFTRA Legal for Expedited Arbitration
Under Section 58E, P&H Allocation disputes are subject to special arbitration procedures.
The union sends a request to meet and confer.
If not settled within 30 days, demand for arbitration served.
Can mutually select an arbitrator or engage in striking process through AAA.
Each party shall submit their written submission within 10 days following designation of the arbitrator and each party must exchange the submission within 3 days following submission.
A reply may be submitted within 5 days of receipts by the party of the initial submission
Common Pitfalls
Know the guidelines and Commercials Contract. Hire attorney who knows the guidelines. (especially if race car drivers involved).
Also, go with an arbitrator who is familiar with the contract and guidelines.
It’s not enough to say your client only made 1-2 commercials, or didn’t air the commercials much. Emphasis is on right to use.
Tight deadlines. Entitled to 20% of Amount Owed.

20. REMEDIES Substitutions Termination Liquidated Damages
Can be caused by a myriad of reasons other than default (such as change in League Rules)
Team’s objective is always to provide alternative rights (“make-goods”) in lieu of credit or refund
Best recommended practice is to memorialize these in writing to ensure that the contract covers the delivery of the alternative benefits. In practice, this rarely happens.
Very careful drafting can limit the amount of make-goods/substitutions owed
Termination
When drafting agreement, consider potential out of pocket costs incurred if the Agreement is terminated and include provisions to recover (digital advertising versus naming rights agreement)
Reputational impact to consider
Often will see a termination rights that a team can exercise if they enter into a “major agreement” (such as a naming rights Agreement)
Liquidated Damages
Avoids (common law) mitigation obligations
Must be very clearly drafted
Liquidated damages must be reasonable and it would be difficult to ascertain actual damages
Appropriate (from the team’s perspective) because value of rights can vary based on team performance.

21. PAYMENT TERMS Cash Trade Spend Back Revenue Share Timing
CBA implications so teams may be reluctant to take trade that isn’t budget relieving
Spend Back
Make sure this is manageable from you business units. Address what happens if you don’t hit predetermined spend thresholds
Revenue Share
Be very careful to avoid implied joint venture
Timing
During the season. If payments are late, reserve the right to withhold delivery of assets until payment is made.
For celebrity endorsement deals involving commercial services, SAG-AFTRA Commercials Contract requires allocation to covered services

22. OTHER KEY TERMS Assignment Governing Law Dispute Resolution
This Agreement and any rights or Benefits granted under this Agreement by the Team are personal to Sponsor and shall not be sold, assigned, sublicensed, encumbered, or otherwise transferred (each a “Transfer”), directly or indirectly, by operation of law or otherwise, without the prior written consent of the Team, which consent may be granted or withheld in the Team’s sole discretion. Any attempted Transfer of this Agreement or any of the rights or Benefits granted under this Agreement in violation of this Section 10.1 shall be void. The consent by the Team to any Transfer shall not constitute a waiver of the necessity for such consent in any subsequent Transfer.
Governing Law
Dispute Resolution
Informal dispute resolution
Prior to filing any arbitration proceeding pursuant to these Terms and Conditions, the party intending to file such a proceeding shall notify the other party in writing of the existence and the nature of the dispute. The parties agree that within ten (10) business days of the other party’s receipt of such notice, a member of senior management of each party shall meet in-person for a minimum of one (1) eight (8) hour day, or such shorter period of time if the dispute is more quickly resolved, in Team’s home city, in order to attempt to amicably resolve the dispute. If such informal dispute resolution attempts prove to be unsuccessful, the notifying party may initiate the dispute resolution procedures available to it under this Agreement. Each party shall bear its own costs associated with or incurred as a result of such meeting.
Arbitration
Third Party Approvals
Does the league or other governing body need to approve the agreement. If so, what is the timeframe for approval.