Download Discuss legal issues associated with marketing products

WF SEM II
1.02 Describe legal issues affecting the
marketing of Sport/Entertainment products
1.03 Discuss the impact of unions on the
S & E industries.
Athlete and Entertainer Issues

Athletes & Entertainers seek to make
themselves a brand
– Michael Jordan created a brand image for
himself.
– Ex. Air Jordan shoes, clothing, and accessories
are sold in local retail stores
Athletes & Entertainers
Want to create an image for themselves.
 Sometimes they organize or endorse charity
tournaments.
 To help with time, place, budget,
promotion, concessions, sponsorship,
prizes, etc. they hire marketing firms.

Athlete and Entertainer Issues

Consumer buying may be
influenced by the endorsers
of a product.
– Athletes and entertainers
control what products they
endorse. Must match their
intended image and brand.
– Athletes & entertainers have
the ability to influence the
market.
Athlete and Entertainer Issues






Agents represent athletes and entertainers in
negotiations.
Agents understand the legal concepts behind
contracts.
Agents are paid a percentage of earnings and
understand the legalities of contracts.
Handlers are used to deal with difficult clients.
Many times today, agents are lawyers or have law
training.
As we have seen, not all agents are ethical.
Athlete and Entertainer Issues (continued)
Contract disputes with management
often result in negative connotations
from the media.
 Disputes affect the value and image
of the athlete or entertainer.

– Ex. MLB contract disputes in the mid90’s resulted in a player strike. It was
not until the homerun race between
Mark McGwire and Sammy Sosa that
baseball reclaimed a substantial fan
base.
Athlete and Entertainer Issues (continued)

Reserve Clause: a clause in a
players contract that stated
when the contract expired, the
player would automatically
remain the property of the
club that they originally
signed with.
– Players were required to:
» Negotiate a new contract
» Ask to be released or traded
» Abolished by MLB in 1975,
no longer exists in any
major sport

Free agency allows players to
explore options of moving to
another team with little or no
financial penalty.
– Higher player/personnel
costs result from bidding
wars for certain players.

Salary caps limit the
amount a team may
spend on contracts.
– Less profitable teams are
protected from continual
losses.
– A luxury tax is paid by
teams that exceed the
salary cap in the NBA and
is split between less
profitable teams.

Recognizing the
difference between right
and wrong, then choosing
what is right. Ethical
decisions can be
COMPLEX.

Guides how an organization
behaves.

Subjective , unique to an
individual– not right or wrong
but pertaining to the individual
situation
ETHICS
Social Responsibility
Dictates that corporations must be
responsible members of society.
Companies need to be active and
positive members of the community.
The goal is to embrace responsibility for the
company's actions and encourage a positive impact
through its activities on the environment, consumers,
employees, communities, and the public.
Analyze Ethical Practices
&
Codes of Conduct
Organizations must be above reproach
and hold themselves to high standards.
 Corporations adopt Codes of conduct:
regulations regarding worker conduct
 Codes of conduct improve:
-public perception/image
-business operations

Discuss legal issues associated
with marketing products.

Certain products are protected from reproduction or
use unless permission is granted by the owner.

Intellectual property is a person’s thoughts or
creations. Protecting intellectual property is
important because:
– Substantial profit is a reflection of a good idea.
– Businesses who originate an idea and protect it
usually maximize profits.
Discuss legal issues associated
with marketing products. (cont..)


Patents are granted for an invention or an
improvement on a product. Patents are granted
for a limited period of time.
Trademarks and service marks.
– A word, phrase, symbol, or design that
identifies and distinguishes the company from
others.
– Granted legal protection through the United
States Patent and Trademark Office.
Discuss legal issues associated with
marketing products. (cont..)
Trademark infringement is a violation of the
exclusive rights attached to a trademark
without the authorization of the trademark
owner or any licensees.
Ex. When one party, the “infringer”, uses a
trademark which is identical or confusingly
similar to a trademark owned by another
party.

Discuss legal issues associated
with marketing products. (cont..)


The owners of logos can license others to
use their logo to sell merchandise.
Billions of dollars of merchandise are sold
without licensing.
– Team owners see this as potential loss
of revenue.
– May result in higher prices for legally
registered merchandise.
Using an Athlete’s Identity

You may use their identity in a book, TV
news show, newspaper, or magazine, but
marketers must learn where to draw the line
between freedom of expression and
violations of rights of privacy or publicity.

You may not use their identity on your
advertisements without their consent!
Using an Athlete’s Identity (cont)
Celebrity
Rights
 Right of privacy



celebrity can sue for invasion of privacy when
his/her seclusion has been intruded upon, when
s/he has been given an unreasonable amount of
publicity, or when s/he has been placed in a false
light.
Tabloids
Right of publicity
– protects a person from the unauthorized use of
his/ her name and likeness for financial gain.
Discuss legal issues associated
with marketing products. (cont..)



Copyrights are granted to creators of:
– Literary works (novels, poems, newspapers).
– Artistic works (photography, paintings).
– Broadcasts (television, radio, Internet).
– Films.
– Original musical composition.
Industrial designs apply to structural designs,
aesthetics, or the look of a product.
Certification marks are used to protect and certify the
way products are made. (process)
Discuss legal issues associated with
marketing products. (cont..)




Collective marks are symbols used for a group or
organization.
Most sports and entertainment companies need to
retain legal counsel to navigate and protect their
company.
The Lanham Trademark Act is designed to protect
trademarks, certification marks, and collective marks.
Teams or leagues such as the NFL, NBA, and Duke
University own their logos.
Discuss legal issues associated with
marketing products. (cont..)
Identity Misappropriation is an
unauthorized use of another’s name,
likeness, or identity without that person’s
permission, resulting in harm to that person.
 Injunction, is an equitable remedy in the
form of a court order that requires a party to
do or refrain from doing specific acts.

– EX: Stop the manufacture of concert t’s for sale
out of the trunk of a car in the parking lot at a
concert, using entertainers logo or image.
Sherman Antitrust Act
Federal legislation to protect industries
from having one competitor that
discourages competition within the
industry. No monopolies!
 MLB is the only branch of sports
identified as exempt from the Sherman
Antitrust Act.

Broadcasting Rules

Sports Broadcasting Act of 1961
– allows leagues to pool their broadcasting rights
and sell them as a package to television networks.

Blackouts
– League can block its broadcast in the home
territory if the game is not a sell-out.
– Meant to encourage ticket sales but are often a
source of frustration for fans.
– Pressure on sport/event marketers working to sell
out games and keep public relations positive.
Collective bargaining can be used in
most sports with the exception of Major
League Baseball.
Excludes MLB because of the Sherman
Antitrust Act ruling.
 Gives players the right to organize, use the
agent of choice and protect themselves.
 Collective bargaining agreements are
agreements between players’ associations
(or unions) and team
ownership/management.

Collective Bargaining
(continued)

Collective bargaining gives players the right to organize,
use the agent of choice and protect themselves. Also
includes:
–
–
–
–
–
–
–
–
A minimum salary
Player’s rights
Medical disability insurance
Labor rules
Length of contract
Restrictions of certain activities or behaviors.
Rules for agents
Player and team travel
Players’ Associations aka
Players’ Union
The labor unions represent athletes and
function the same as unions in other
industries. Formed in the 1970’s.
 They help aid athletes in issues such as
salaries, contracts, and profit sharing.
 The sports’ league represents the owners and
managers and their goals = control costs.

STRIKE!
When negotiations between a players’ union
and the owners’ organization cannot be
reached, the players might vote to determine
if they should go on strike.
 National Labor Relations Act all U.S.
workers the right to organize into unions
to collectively bargain and strike.
 This leads to no revenue being generated,
employees not working, and a decrease in
consumer spending.

LOSS PREVENTION:
Ticketing
Counterfeit tickets: Fake tickets often sold
by scalpers or over the Internet
 Buy tickets in advance to ensure they are
real and buy them from official ticket
outlets.

LOSS PREVENTION:
Ticketing (CONT)

Every official sport/event ticket should contain
these five basic pieces of information:
1.
Price—base amount plus applicable taxes and service charges
Event specifics—name of the event or opponent, day/date/time,
location
Seating—gate information, section/row/seat
Legal disclaimers—“The management reserves the right to…”
Unique policies—information about refunds/exchanges, lost
tickets, rain checks, etc.
2.
3.
4.
5.
LOSS PREVENTION: Security

Security. All the functions of a sport/event organization
are dependent on each other. Marketers want to sell a
favorable image of their team.
– Coming to a game must be safe and fun
– Security teams are put in place to prevent the theft from
fans during games
– Work with law enforcement to control crowds and
diffuse any potentially dangerous situations
– After the 9/11 terrorist attacks on the United States,
security became tighter than ever, especially at
hallmark sport events
LOSS PREVENTION: Insurance
 Transfer
some risks to insurance companies
 Every state has different laws regarding insurance
 Teams and leagues need to be insured
 Athletes, venues, sponsors, vendors, and licensees are
insured
 There are many types of insurances involved with sports
and events, including
– Fire, theft, injury, and cancellation insurance.
– Prize indemnity insurance protects sport/event organizations
»I mean seriously, who pays if you make that half court shot at
halftime?
CONTRACTS: Sponsor





Exclusivity A right purchased by a sponsor to be the sole
provider of a particular type of good or service for a
sport/event
Option to renew: allows the sponsor to extend the
agreement after the contract expires
Right of first refusal: event organizers will allow the
sponsor the opportunity to renew before offering the contract
to any other sponsors
http://www.ispot.tv/ad/7ZWJ/lowes-home-improvementnascar
http://www.nascar.com/en_us/sponsors.html
CONTRACTS: TV & Venue

TELEVISION: Negotiations with broadcasters are very
complex due to the high interest in sport events and the
increase in satellite, cable, and Internet options for viewing
them.
$$$$$$$$$$$$$$$$$$$$$$$$$$
Venue contracts usually include:


– lease rate along with
– provisions for security and concession.

Venue contracts with personnel include:
–
–
–
–
–
a detailed list of responsibilities,
begin and end dates for work,
payment schedules, and
tax withholding.
These agreements also specify any provisions for changes in the
contract, such as an extension or an increase in responsibilities.