Legal Issues for Legal Issues for Sports and Sports and

Entertainment Entertainment MarketingMarketing

May 2010

The LawThe Law There are an overwhelming There are an overwhelming

number of laws governing sports number of laws governing sports and entertainmentand entertainment

These laws have a major impact These laws have a major impact on the marketing of sports and on the marketing of sports and entertainment productsentertainment products

Products that deal with sports Products that deal with sports and entertainment are and entertainment are perishable productsperishable products

The LawThe Law Technology allows easy Technology allows easy

duplication and transmission of duplication and transmission of many productsmany products

Protecting celebrities, producers, Protecting celebrities, producers, promoters, and investors is the promoters, and investors is the purpose of most of the lawspurpose of most of the laws

Laws also increase the safety of Laws also increase the safety of the consumers, viewers, and fansthe consumers, viewers, and fans

Managing RiskManaging Risk Sports, entertainment, and Sports, entertainment, and

recreation marketing require an recreation marketing require an initial examination of the laws and initial examination of the laws and legal issues to ensure compliance legal issues to ensure compliance and to prevent liability for injury or and to prevent liability for injury or lossloss

Being liable means that you are Being liable means that you are legally responsible for damageslegally responsible for damages

Being familiar with the laws and Being familiar with the laws and knowing when to seek legal counsel knowing when to seek legal counsel are prerequisites for business are prerequisites for business successsuccess

Managing RiskManaging Risk Inviting large groups of people Inviting large groups of people

to view an event is asking for to view an event is asking for potential legal actionpotential legal action

Risk analysis requires an Risk analysis requires an analysis of potential problems analysis of potential problems and a plan for reducing or and a plan for reducing or preventing the problemspreventing the problems

Risk is the possibility of Risk is the possibility of financial loss or personal injuryfinancial loss or personal injury

Managing RiskManaging Risk One method of transferring the risk to One method of transferring the risk to

the fans is the inclusion (on the back of the fans is the inclusion (on the back of most event tickets) is a statement that most event tickets) is a statement that the promoter is not responsible for any the promoter is not responsible for any harm to the ticket holderharm to the ticket holder

By accepting the ticket, the holder By accepting the ticket, the holder agrees to accept liability for their own agrees to accept liability for their own possible riskspossible risks

This does not relieve the facility or This does not relieve the facility or event management from providing a event management from providing a safe environmentsafe environment

An event sponsor has a legal duty to An event sponsor has a legal duty to protect the spectator from protect the spectator from unreasonable risk of harm or injuryunreasonable risk of harm or injury

Steps to Risk Steps to Risk ManagementManagement

Identify risksIdentify risks Estimate the possibility Estimate the possibility

of each riskof each risk Determine how great the Determine how great the

consequences areconsequences are Determine how to control Determine how to control

the riskthe risk

Control the RiskControl the Risk Limit the possibility of risk Limit the possibility of risk

through planningthrough planning Purchase insurance that Purchase insurance that

transfers the cost of the risk to transfers the cost of the risk to the insurance companythe insurance company

Transfer liability through a Transfer liability through a contractcontract

Cover the risk in the event Cover the risk in the event budgetbudget

Avoid offering the risky eventAvoid offering the risky event

Who has the Rights?Who has the Rights? Musicians, artists, and athletes make Musicians, artists, and athletes make

money by selling their product, money by selling their product, which happens to be their talent which happens to be their talent

Laws are necessary to protect the Laws are necessary to protect the rights of celebritiesrights of celebrities

When pricing their product, artists When pricing their product, artists and athletes take into consideration and athletes take into consideration that the work is protected by that the work is protected by copyright law and is theirs alone to copyright law and is theirs alone to sell sell

The price of a CD includes the cost of The price of a CD includes the cost of the materials to make the CD and the the materials to make the CD and the amount of money to pay the writer of amount of money to pay the writer of the material for its use on the CDthe material for its use on the CD

Copyright LawsCopyright Laws Laws protecting the unique Laws protecting the unique

work of the originator within work of the originator within the geographic boundaries the geographic boundaries to which the laws applyto which the laws apply

Before 1978, works were Before 1978, works were copyrighted for 28 years and copyrighted for 28 years and then renewed for 28 years, then renewed for 28 years, making a total of 56 yearsmaking a total of 56 years

Since 1978, works may be Since 1978, works may be copyrighted for life plus 70 copyrighted for life plus 70 yearsyears

Copyright LawsCopyright Laws Owners of a copyright have Owners of a copyright have

the exclusive right to the exclusive right to reproduce, sell, or perform reproduce, sell, or perform a producta product

For the life of the For the life of the copyright, the owner must copyright, the owner must give permission for the give permission for the work to be used work to be used

Usually the owner of a Usually the owner of a copyright is paid for the copyright is paid for the use of the workuse of the work

Copyright LawsCopyright Laws Payment for the use of a Payment for the use of a

work is known as a work is known as a royaltyroyalty

After a copyright expires, After a copyright expires, the work can be used by the work can be used by anyone without cost or anyone without cost or permissionpermission

Many types of works can Many types of works can be copyrightedbe copyrighted

Copyright LawsCopyright Laws The most common items The most common items

are books, songs, and are books, songs, and computer programscomputer programs

In order for a work to be In order for a work to be copyrighted, it must be copyrighted, it must be fixed and originalfixed and original

Fixed means that it must be Fixed means that it must be set down on some set down on some permanent medium such as permanent medium such as paper or a computer diskpaper or a computer disk

U.S. LawsU.S. Laws U.S. laws are not enforceable in U.S. laws are not enforceable in

other countries except where the other countries except where the United States is part of an United States is part of an international copyright conventioninternational copyright convention

The United States and China The United States and China battle verbally over the piracy of battle verbally over the piracy of intellectual property, such as intellectual property, such as musicmusic

In the mid-1990s the U.S. In the mid-1990s the U.S. threatened trade sanctions threatened trade sanctions against China because 90% of the against China because 90% of the compact discs made in China were compact discs made in China were believed to be illegal copiesbelieved to be illegal copies

U.S. LawsU.S. Laws The two countries reached an The two countries reached an

agreement that included closing 15 agreement that included closing 15 of the 30 factories that produced of the 30 factories that produced illegal CDsillegal CDs

The illegal discs were said to be The illegal discs were said to be worth $2.3 billion in 1995worth $2.3 billion in 1995

A celebrity has the right to give or A celebrity has the right to give or deny the use of their likeness or deny the use of their likeness or voicevoice Many times this can be a major Many times this can be a major

source of income for the individualsource of income for the individual Vanna White sued Samsung for using Vanna White sued Samsung for using

a robot that resembled her in an a robot that resembled her in an advertisement — she won and advertisement — she won and collected $403,000 in damagescollected $403,000 in damages

Tech CopiesTech Copies The entertainment industry continues The entertainment industry continues

to be worried by new technology that to be worried by new technology that makes it easier for consumers to make makes it easier for consumers to make quality recordings of audio and visual quality recordings of audio and visual performancesperformances

The Recording Industry Association of The Recording Industry Association of America tried unsuccessfully to stop America tried unsuccessfully to stop Diamond Multimedia Systems, Inc. Diamond Multimedia Systems, Inc. from selling Rio software that allows from selling Rio software that allows storage and playback of music storage and playback of music transferred from a personal computertransferred from a personal computer

The trade group believes that Rio The trade group believes that Rio supports illegal copying of music from supports illegal copying of music from the internetthe internet

Federal LawsFederal Laws Federal laws affect sports and Federal laws affect sports and

entertainment marketingentertainment marketing Article I of the U.S. Constitution Article I of the U.S. Constitution

gives Congress the power to gives Congress the power to regulated commerceregulated commerce

Sports and entertainment are Sports and entertainment are considered commerceconsidered commerce

There are several long-standing There are several long-standing acts that have major affects on acts that have major affects on the sports and entertainment the sports and entertainment industryindustry

Sherman Anti-Trust Sherman Anti-Trust ActAct

This Act was signed into This Act was signed into law in 1890law in 1890

The Act declared The Act declared restraint of trade and restraint of trade and made price-fixing illegalmade price-fixing illegal

The Act also set The Act also set monopolizing a trade as a monopolizing a trade as a felonyfelony

Clayton ActClayton Act

This Act was written into law This Act was written into law in 1914in 1914

The law set up the right to The law set up the right to sue and receive threefold sue and receive threefold damages plus other costs damages plus other costs and interest for monopoly and interest for monopoly and other commercial and other commercial violationsviolations

It gave organized labor the It gave organized labor the right to confront violations right to confront violations of the Sherman Actof the Sherman Act

National Labor Relations National Labor Relations ActAct

Made a law in 1935Made a law in 1935 Gave the right to Gave the right to

organized labor to organized labor to collectively bargain and to collectively bargain and to strikestrike

Prohibited companies from Prohibited companies from coercing employees in coercing employees in union-related mattersunion-related matters

ContractsContracts Agreements on the transactions of Agreements on the transactions of

business business Anyone working in sports and Anyone working in sports and

entertainment law should be familiar entertainment law should be familiar with contract law with contract law

A contract should be worded so that it is A contract should be worded so that it is not subject to multiple interpretations not subject to multiple interpretations

Examples of sports and entertainment Examples of sports and entertainment contracts:contracts:

Player or performance Player or performance ConcessionsConcessions SponsorshipsSponsorships Broadcast RightsBroadcast Rights Facility ContractsFacility Contracts

Organized LaborOrganized Labor

Since the 1970s, athletes Since the 1970s, athletes have organized themselves have organized themselves into labor unionsinto labor unions

These labor unions are These labor unions are called Players’ Associationscalled Players’ Associations

Each sports league has a Each sports league has a collective bargaining collective bargaining agreement with the agreement with the Players’ AssociationPlayers’ Association

Organized LaborOrganized Labor

Collective bargaining happens Collective bargaining happens when a group of employees when a group of employees join together as a single unit join together as a single unit to negotiate with employersto negotiate with employers

The league is made up of The league is made up of individual teams and includes individual teams and includes all non-player employeesall non-player employees

The labor side is made up of The labor side is made up of players, their agents, and the players, their agents, and the Players’ AssociationPlayers’ Association

Organized LaborOrganized Labor

Each group has a point of Each group has a point of view on how the business view on how the business should be operated and should be operated and how the profits should be how the profits should be sentsent

Sponsors such as NIKE took Sponsors such as NIKE took a major hit in earnings a major hit in earnings during the 1998 lockoutduring the 1998 lockout

Organized LaborOrganized Labor

NIKE withheld payment to NIKE withheld payment to some players during the some players during the strikestrike

The bulk of TV advertising The bulk of TV advertising income was not affected income was not affected because it is generated because it is generated from the post-season from the post-season games and the lockout games and the lockout ended before these gamesended before these games

Owners vs. PlayersOwners vs. Players The National Basketball Players’ The National Basketball Players’

Association was formed in the Association was formed in the 1950s1950s

The NBA Players’ Association was The NBA Players’ Association was locked out through most of the locked out through most of the 1998-1999 basketball season1998-1999 basketball season

Results of the lockout:Results of the lockout: Disheartened fans Disheartened fans Disgusted fans Disgusted fans Loss of revenue for advertisers Loss of revenue for advertisers Loss of concession revenues Loss of concession revenues Loss of salaries for ushers and Loss of salaries for ushers and

maintenancemaintenance

The image of super-wealthy The image of super-wealthy owners and players refusing to owners and players refusing to find a common ground does not find a common ground does not get sympathy from most fansget sympathy from most fans

Players and owners hoped fans Players and owners hoped fans had short memories and would had short memories and would quickly return to the gamequickly return to the game

Prior to the lockout, the NBA Prior to the lockout, the NBA had not had any labor problemshad not had any labor problems

NBA owners feared that the league NBA owners feared that the league would price itself out of business would price itself out of business with high salaries and debt-ridden with high salaries and debt-ridden clubsclubs

The players believed fans would The players believed fans would rally to their side and demand rally to their side and demand games at any costgames at any cost

Issues in the 1998-1999 standoff Issues in the 1998-1999 standoff included:included: Salary caps Salary caps Rookie contracts Rookie contracts Free agencyFree agency Revenue sources Revenue sources NBA authority over the players NBA authority over the players