Player Endorsements
Growing up I’ve always been interested in sports. I wanted to dunk the ball like Lebron James, score goals like Lionel Messi, and hit a golf ball like Tiger Woods. But most of all, I wanted to make Floyd Mayweather money. The salaries of professional athletes, especially those in the NBA are constantly making headlines around the world with athletes signing record-breaking deals. Some notable deals include Celtics basketball forward, Jayson Tatum signing the largest deal in NBA History in 2024, a five-year, $314 million dollar deal which topped the previous largest deal of five years for $285 million signed by his teammate Jaylen Brown the previous season (Fox Sports 2024). Even though professional athletes sign with organizations for unfathomable amounts of money, big money is made off the court through endorsements, too.
An endorsement contract “grants the sponsor the right to use (i.e., license) the athlete’s name, image, or likeness in connection with advertising the sponsor’s products or services” (US Legal). Endorsements can be extremely lucrative for professional athletes, especially basketball players because they can leverage their on-court performance as well as their off-the-court persona to increase the revenue they earn over time. For example, Lebron James and his lifetime deal with the sportswear company Nike is valued at over 1 billion dollars and comes with many additional benefits for both the company and the player. Lebron gets to enjoy the perks of having a tight partnership with Nike, insight into the inner workings of the Nike business system, and the ability to leverage the popularity of Nike in his other business ventures. Nike on the other hand can use Lebron’s global audience and attention to create sales that would have otherwise not existed.
A collective bargaining agreement is “a written legal contract between an employer and a union representing employees. This agreement results from an extensive negotiation process covering essential topics such as wages, work hours, and employment conditions” (Person). It details the nature of the relationship between sports leagues, their players, and owners. The NBA Collective Bargaining Agreement (CBA) includes various provisions regarding the rights to the usage of the name, image, and likeness (NIL) of NBA players. In the past, endorsement rights for NBA players as a group have often belonged to the NBA. However, with the rise of personal player brands and images, these rights have become more lucrative than ever.
The 2017 iteration of the CBA led to the creation of Think450, a subsidiary of the National Basketball Player’s Association. We had the opportunity to speak to Daniel Anyaegbunam, a sports lawyer at Think450 and the National Basketball Players Association, to gain more insight into the intricacies of player rights outlined in the CBA. Mr. Anyaegbunam is well-versed in group rights (the name, image, and likeness rights to a group of people), negotiating favorable contracts for the players, and the inner workings of the rules of the CBA.
Mr. Anyaegbunam explained how the 2017 NBA CBA led to the creation of Think450.
Mr. Anyaegbunam indicated that the dramatic growth in league revenues, franchise values, and player salaries has led to increased NIL values for many NBA players.
Mr. Anyaegbunam spoke about the challenges that NBA players face in regard to protecting their NIL rights.
Daniel Anyaegbunam was able to provide a descriptive look at endorsements from a league-based perspective. However, this is only one side of the story. We also spoke to Donald Woodward and Kelly Jones. Donald Woodward is a sports attorney for many famous athletes, including gold medalist Masai Russell, professional women's basketball player Angel Reese, and college basketball player and musician Flau'jae Johnson (pictured with Mr. Woodard at right). These professional basketball players are the perfect example of individuals using their name image and likeness to leverage and create value outside of their ability as professional basketball players. Kelly Jones is a Senior Counsel, Marketing, Sports, & Entertainment, at Under Armour. She has been the lead attorney on some of Under Armour's largest sports marketing agreements, including endorsement, sponsorship, and licensing contracts with Power 5 colleges and universities, professional sports leagues, European soccer clubs, professional athletes and celebrities, and influencers. Ms. Jones was previously in-house counsel at Octagon in its Talent and Properties Division. Donald Woodward’s and Kelly Jones's unique positions representing the players and brands, respectively, show how endorsements are handled from a player's view and a company's view. The following clips delve more into the law behind endorsements.
Mr. Woodard explained that sports-related endorsements are still dominated by superstar athletes who have transcended their sports.
Mr. Woodard believes that women athletes are doing very well with endorsements. He explained why it is important as an attorney to resist brands’ requests for broad exclusive rights in endorsement deals in order to allow for greater opportunities in the future.
Ms. Jones articulated the importance of a moral clause and highlights how the brand and the athlete negotiate similar clauses when forming a contract.
Ms. Jones explained the key considerations when negotiating endorsement deals with athletes and explains areas of focus for the brand side of the negotiation.
In conclusion, endorsements can be a big portion of a professional basketball player’s earning potential. If you're a great player you can get a great NBA contract deal. However, if you are a generational talent, you can get endorsement deals to extend your legacy far past your playing days.
References
FOX Sports. (2024, July 2). NBA’s biggest contracts: Jayson Tatum agrees to largest contract in NBA history to stay with the Celtics. FOX Sports. https://www.foxsports.com/stories/soccer/jayson-tatum-reportedly-agrees-largest-contract-nba-history-stay-celtics
Person. (2024, September 4). What is a collective bargaining agreement?. Welcome to SHRM. https://www.shrm.org/topics-tools/tools/hr-answers/collective-bargaining-agreement
US Legal, Inc. (n.d.). Endorsement and Appearance Contracts. Sports Law. https://sportslaw.uslegal.com/sports-agents-and-contracts/endorsement-and-appearance-contracts/#:~:text=An%20endorsement%20contract%20is%20one,alcoholic%20beverages%20or%20tobacco%20products.
Photos from https://unsplash.com/