The unknown can be torturous when it comes to athletes entering the sponsorship market with a vacuum of information.
One of the most sadistic aspects of Big Dog’s Backyard Ultra is its unknown duration. As runners, we inherently want to know a race’s distance so we can gauge our effort and, ideally, reach exhaustion just as we cross the finish.
The unknown is also torturous when it comes to athletes entering the sponsorship market and the vacuum of information due to secrecy that pervades most brand endorsement agreements.
Many are curious about these agreements and very few ever see athlete contracts. That is primarily due to the non-disclosures that everyone involved is required to sign. The amounts to be paid and governing terms in sponsorships, at least in the trail and ultra running scene, are shrouded in secrecy. And athletes, while adept at their sport, may be less adept when it comes to financial and legal negotiations, and are often left to struggle through and make sense of a contract with minimal context, baselines, or reference points.
The following are some of the key aspects and trickier clauses that are likely to be found in such agreements:
This is a changing world, especially in light of athletes’ recent stances on the politics of certain races and race organizations and how those races may impact the goodwill of brand sponsors. A similar issue has to do with the challenge athletes face in gaining entry into highly-restricted races, like Hardrock 100. Those events present challenges to brands’ incentive programs, given the limited chance of a sponsored athlete’s opportunity to toe the line.
The discussion of which races deserve higher bonus money awards is an important aspect of an athlete’s contract. The success at races should be viewed as a win-win situation for the brand; so much so that a runner has a compelling argument for what is known as an “escalation clause.” That is, if a runner has a great season and wins a large amount of bonus awards in year one of their multi-year agreement, year two begins at the elevated level, allowing the athlete to grow from the prior year’s success.
The length of a contract and termination causes can also be a point of contention. Signing a multi-year contract is risky for both parties but, at the same time, it can build momentum and security. From a brand perspective, being able to accumulate goodwill by having an athlete represent the business season after season, year after year, builds trust and authenticity in the marketplace, as well as the corporate synergy. It provides the athlete with security and stability and reduces the stress of having to engage other brands in order to play the right of first refusal game towards the end of the contract. With escalation clauses, both the athlete and brand can benefit from such long-term relationships.
The risk of such a multi-year relationship is if something goes awry or, in contrast, exceptionally well. On the awry front, there are examples of athletes testing positive for performance-enhancing drugs or committing heinous crimes. Or chronic injury to the point of not being able to perform. On the other side, what if an athlete wins big on a global scale and the bonus incentives don’t suffice to properly compensate for those performances? Another important discussion point that may need to be addressed in contracts is the prospect of pregnancy and parental leave policies.
Rights of first refusal allow the sponsor to retain the athlete at the end of the contract period if the sponsor matches other offers to the runner. One difficulty in these right of first refusal negotiations is that it can be difficult to get competing brands to provide written offers early enough in the negotiation process and the whole process can be a little messy. Multi-year sponsorships help alleviate some of that pressure.
Appearance fees are woven into most endorsement agreements and the associated expenses, travel, number of days and types of appearances must be explicit. Some brands have found that, by compensating their athletes for such appearances as product testing, modeling, speaking at corporate functions, and the like, they are able to retain the athlete and grow a more fulfilling and lasting relationship with their athletes.
Complementary sponsors and what is considered a competitor brand must be addressed in the contract. Brand support and promotion are critical aspects of an endorsement agreement and it should be incumbent on a brand to promote the athlete, not only holding the athlete responsible for promoting the brand. Moreover, it would greatly benefit the brand to provide coaching to assist sponsored athletes in elevating their social media presence. Included in that instruction from the brand should be the clarification of the legal parameters around allowable social media promotion and Federal Trade Commission regulations. Athletes should not be expected to be experts in advertising law and it would behoove sponsors to provide guidance.
One brand can greatly benefit when another brand invests heavily to promote their joint athlete, such as when a sunglasses sponsor puts up posters of an athlete who wears the footwear of one sponsor and the hydration pack of another. The challenge, however, is when one sponsor ends up taking up many of the categories and owns the athlete head to toe. The sponsorship should pay, accordingly.
Anna Gibson, who entered the world of professional running last year, says that those going pro should find a mentor or two or three. “It’s important that this person or people have nothing to gain from you and truly want to see you succeed outside of any financial interest.” She observes that mentors who are truly unbiased and worth gravitating towards “could be a lawyer experienced in contract law, a coach who has seen a lot of athletes go pro or a good friend who already went through the process for themselves.” She advises, “connecting with these people and asking their advice may change the course of your professional career.”
Andy Wacker, head of The Trail Team, of which Gibson is a member – one of six domestic sub-ultra runners in their 20s – serves as a mentor, having experienced the difficulties of transitioning to professional running upon graduating. He notes “there isn’t much of a ‘road plan’ and support from sponsors differs wildly.” Wacker gives the following advice: First, like Gibson, he recommends finding a mentor and suggests they be, “ideally someone you want to be in a few years as a runner. Older, more experienced athletes in the sport are often more than willing to help. They have contacts for companies and can pass on advice on navigating race selection …”
Wacker cautions against the pressures of social media, which can be a mental burden.
Wacker also recommends the athlete know themselves and their true motivation for running. “Longevity can be hard to come by, so make sure you are running in a sustainable way towards goals that fulfill YOU (not a coach, sponsor, or social media).” He also advises to be O.K. with saying no and to knowing your limits. Athletes need to avoid agreeing to race distances that aren’t realistic for them, especially when it might only be for gear. Finally, Wacker cautions against the pressures of social media, which can be a mental burden. He sagely suggests finding balance in that world and suggests “more athletes need a team or brand social media manager.”
Many of Gibson and Wacker’s points about entering the challenging world of athlete endorsement agreements are addressed with the help of an agent and the pros and cons of such representation depend on many factors. The linking of those successful at trail and ultra running, both podium-dominant athletes and social media influencers, with financial backers has become a reality but the parties are not yet on an even playing field. Brands and athletes can and should derive mutual benefit and a little direction in that relationship negotiation goes a long way.
*Adam W. Chase has been on all sides of athlete contracts, from the brand, as an advisor and team manager of several trail teams; from the represented athlete, as lawyer; and, what seems like ages ago, from the athlete’s side as a sponsored athlete.