Athlete Endorsement Restrictions as Unreasonable Restraints of Trade

Abstract

Towards the last quarter of the 20th century the revenue stream of major sporting organisations increasingly moved away from gate receipts towards sponsor endorsement. The shift was due to developments in the communications industries, in particular colour television and then two decades later the digital revolution, both of which placed the images of sport and the products it endorsed before audiences at times numbering into the millions. Psychological studies reveal that the more a consumer ‘identifies’ with a sport the more likely he or she is to purchase sponsors products associated with that sport. The association between product and sport is the basis of the lucrative ‘endorsement market’. The sporting organisation and the athlete are competitors in endorsement marketing. To combat this competition sporting organisations, as the dominant party, incorporated terms into player contracts restraining their athletes from engaging in endorsement marketing. This thesis argues that such restrictions are unreasonable under the common law restraint of trade doctrine. This thesis also considers the unique relationship between athletes and their sporting organisation and how changes in technology prompted courts to accept sport as an industry amenable to the restraint of trade doctrine. The application of the restraint of trade doctrine is a matter of policy. It is argued that an historical freedom of trade and the response of courts to changing technological paradigms are pertinent guides as the world enters the uncertain commerce of the digital age. A ‘21st century’ policy response under the restraint of trade doctrine is argued as necessary. It is argued that certain endorsement concessions granted by sporting bodies to athletes that give the appearance of a ‘partial restraint of trade’ are in fact so impractical that the overall unreasonableness of endorsement restraints cannot be offset. It is proposed that the athlete's persona, a trait that makes endorsement marketing so effective, is in fact an extension of the athlete's subjective property’ and cannot be claimed by the organisation. This thesis considers in some detail the sporting organisations contractual claim to what is referred to as the ‘cyber-markets’. These ‘new’ market structures require a modern policy reappraisal argued to favour the athlete. The thesis closes by examining what are referred to a ‘multiple restraints of trade in sport’ suggesting that any review of the reasonableness of endorsement restraints can only accurately be appraised by considering the accumulated impact of multiple restraints on individual athletes.