Endorsement Deals and the Value of Name and Likeness

April 4, 2016

Uber agencies like CAA and WME were once known as “tenpercenteries”. That’s because their bread and butter was the 10% commissions earned on any deal they put together for their talent. Much of the value of those deals can be attributed to name and likeness. Every individual has the right to control the commercial exploitation of his or her name, image and likeness. Name and likeness, when built into an endorsement deal, can have incredible value depending on the usage rights acquired. For example, if A list talent agrees to work on a low budget film for scale rates, the producer’s right to incorporate the celebrity name and image in the advertising for that film is critical to its success. That right isn’t automatic and needs to be carefully negotiated into the deal. The same applies to athletes. An endorsement deal might simply include appearances at various experiential marketing™ events. Or, as XMC is seeing more and more of these days, simply a few timely tweets with some flowery brand messages. Robust deals, however, are multifaceted and involve a suite of elements including, of course, the right for the company to incorporate the athlete into various advertising and promotional campaigns.

When it comes to image, often it’s the person’s face that makes the talent desirable from a commercial perspective. However, other times it’s a signature move or pose. Consider Michael Jordan and the value derived from his iconic look with legs spread wide and arm (with ball in hand) stretched to the skies as he defied gravity time and time again. That image, now the embodiment of the Jumpman 23 brand, is key to a $5B juggernaut under the Nike banner. It goes without saying that Nike’s legal team works hard to protect that intellectual property. And speaking of legal matters, the issue of name and likeness will soon be litigated in federal court in Chicago as Pele is suing Samsung claiming the company used a look-alike in a full page ad that ran in the New York Times last year.

Samsung Pele Ad

The ad in question. [Image credit: Webber Represents]

Like MJ, Pele also has a signature move…a modified scissors-kick that remains etched in the memories of soccer fans, even though he hasn’t played professionally since 1977. It is alleged that Samsung included a man that looks strikingly similar to Pele in its ad along with an image of a soccer player in mid, Pele-like, bicycle kick position. Those two elements together are clearly designed to confuse consumers, or so it is claimed. Complicating matters further for Samsung is that good faith does not appear to be on its side. Samsung, supposedly had engaged in discussions with Pele two years earlier regarding an endorsement deal, but those talks ended at the boardroom table.

It will be interesting to see the results of the Pele v. Samsung case. A win by Pele would further strengthen the value of name and likeness rights as a component of Sponsorship deals and Endorsement arrangements. The amount of damages awarded to Pele (the claim is for $30M) will also shed light on how far courts will go to protect those rights. When representing brands and sponsors looking to acquire name and likeness rights from artists and athletes, XMC will continue to nuance contracts to give our clients the broadest possible basket of rights and benefits while protecting our clients to the fullest extent possible.

Steven Lewis is the President of XMC, Canada’s official Sponsorship And Experiential Marketing™ Agency.