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February 21st, 2019
February 2019 Sports Industry News
Here’s what’s happening at the intersection of sports, marketing, and entertainment law as we kick off 2019.
After an investigation lasting over a year, the US Department of Justice approved the merger between college marketing and media rights giants IMG College and Learfield, which individually were the two dominant players in the college marketing space. These entities handle advertising opportunities for college athletic programs by assisting with game and event sponsorships, in-arena advertising, and radio programs. During the investigation, the DOJ found that the two entities engaged in anti-competitive behavior by agreeing or otherwise coordinating “to limit competition between one another and between themselves and smaller competitors” which reduced the revenue received by colleges. The entities settled with the DOJ, agreeing to refrain from participating in joint bids for multimedia rights contracts with competitors, to refrain from agreeing with competitors to not bid on multimedia rights contracts, and to put certain compliance measures into place, among other things. The combined entity, which is believed to now be worth more than $2 billion, will now represent 54 of the top 65 “Power 5” (football playing conferences) schools in the US and over 200 in total.
Playing The Name Game
The recently announced merger of BB&T and SunTrust (entities that have naming rights to several prominent sports venues – from the Atlanta Braves’ SunTrust Park to the Florida Panthers’ BB&T Center) brings to mind a critical clause in naming rights sponsorship agreements – the right to change the venue’s name. As naming rights deals are long term (generally 10 to 20 years), this is an important provision. The keys are to address when this right can be triggered (solely for an acquisition or merger, or for a strategic marketing re-brand as well?) and which party pays for the cost of the re-branding.
Official Recognition Made Here
The USOC and NCAA, which have recently attempted to work more closely together, have announced that schools that can claim a current student or alumnus who made the U.S. Olympic or Paralympic teams may use a specific US Olympic logo to promote Olympic sports at such schools. Interested schools "will be able to opt into a free agreement that would allow use of a template with the USOC’s 'flag and rings' logo on the right and the school’s logo on the left, with the words 'Olympians Made Here' in the middle." This seemingly sensible decision is noteworthy because the USOC generally opposes allowing the use of their logos for free, given that these rights are often the critical element for their sponsorships.
The Old College Try
As the controversy over whether colleges should pay their student-athletes continues, several state lawmakers have recently proposed bills that would benefit collegiate athletes in their respective states. In California, the "Fair Pay to Play Act" would allow student-athletes from California’s public colleges and universities to make money from the use of their “name, image, or likeness” and would prevent these schools or other organizations with authority over intercollegiate athletics from removing these student-athletes’ scholarship eligibility. In Maryland, HB0548 - Collective Bargaining-Student Athletes, would allow student-athletes at public colleges and universities in Maryland to collectively bargain over their scholarship terms, their health insurance benefits, and the use of their image and likeness. Finally, in Washington, lawmakers introduced HB 1084, which would allow student-athletes at any college or university in the state to receive payment for the use of their name, image, or likeness and have the right to be represented by an agent – all without losing eligibility for intercollegiate athletics. These bills would not mandate payment to student-athletes by their schools, but would open the door for student-athletes to receive compensation and other benefits – something long prohibited by the NCAA. Although the NCAA is a private entity not bound to specific state laws, if bills like these gain traction around the country, the Association could be forced to change its position.
Many Atlanta businesses, including hometown giants Coca-Cola and Home Depot, had to face rivals’ marketing up close and personal at this year’s Super Bowl, as many non-hometown brands are official NFL sponsors who amped up their in-town marketing during the big game. For example, official league sponsor Pepsi blanketed the town in blue branded advertisements and even had its cola served during the Super Bowl; although Coca-Cola has “pouring rights” inside Mercedes-Benz Stadium, all Coke-branded fountain drinks poured at the Super Bowl were in Super Bowl-labeled cups without any Coca-Cola branding. Additionally, the temporary “clean zone” that the NFL requires host venues to enforce, snared the tailgating space near Mercedes-Benz Stadium that Home Depot sponsors, as its logos were mostly obscured as a result of rival Lowe’s NFL sponsorship. These results show the often fraught relationships between team/arena and league sponsorships, where the local deals are subordinate to the overall league deals – something that is always included in team/arena sponsorship agreements.
Who Really Is the “Official Pizza of Football”?
Pizza Hut, an official sponsor of the NFL, NCAA college football, and ESPN’s College Gameday, opposed sports marketing agency Genesco Sports Enterprises’ federal trademark application for OFFICIAL PIZZA OF FOOTBALL. With all of its official promotional activities, Pizza Hut argued that allowing an unaffiliated entity like Genesco (which would likely use the mark in conjunction with one of its own marketing clients or events) to register an “Official Pizza of Football” mark would therefore be misleading. NFL Properties, the commercial arm of the NFL, also got in on the action and filed extensions of time to oppose this application.
Noted and Quoted
We are pleased to announce that The World Trademark Review included Frankfurt Kurnit in its “The World’s Leading Trademark Professionals 2019.”
High Wire Act
In January, the U.S. Department of Justice (DOJ) made waves in the online gambling industry with an Opinion interpreting the Wire Act (18 U.S.C. § 1084), where it concluded that most sections of the Wire Act are not limited to sports-related wagers and instead prohibit the use of interstate wires for any bets or wagers. Tyler Maulsby and Sean Kane address how risky business just got riskier.
Want to Learn More?
Kim Maynard co-hosts the International Trademark Association’s Young Practitioners & Trademark Administrators Panel and Reception titled “Getting in the Game: IP Protection in Professional Sports” at New York Law School on March 6, 2019.
Christopher Chase will be a panelist at the New York Law School Sports Law Society’s annual symposium on March 28, 2019.
If you have questions about sports industry legal matters, please contact Christopher Chase at firstname.lastname@example.org or (212) 826 5568, or contact any other member of the Sports Group at Frankfurt Kurnit. To keep up with changes in advertising and marketing law, please check out our Advertising Law blog.
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