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 IssuesConsumer 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 mid-

90’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.

ETHICS 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

Social ResponsibilityDictates 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!

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.

Using an Athlete’s Identity (cont)

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

2. Event specifics—name of the event or opponent, day/date/time, location

3. Seating—gate information, section/row/seat

4. Legal disclaimers—“The management reserves the right to…”

5. Unique policies—information about refunds/exchanges, lost tickets, rain checks, etc.

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-improvement-nascar

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.