In the event that you make it to the NFL and are in position to obtain an endorsement or two, these are some things that you’ll need to abide by.
Of course, it’s not a big deal to try to remember any of this stuff, as your agent and/or lawyer will be able to go over this stuff when the time comes, but I thought some of you might find this stuff good to know regardless.
NFL Restrictions on Endorsements
The NFL restricts the kinds of endorsements players and coaches can undertake.
Before pursuing or agreeing to an endorsement opportunity, the player and/or his agent should check some of the following rules or restrictions first.
NFL prohibits players, coaches and other employees from appearing in commercials for or endorsing alcoholic beverages or tobacco products.
Players can’t endorse any companies that produce any products that are on the NFL’s Prohibited Substance list.
Notice that the rule says that the player can’t endorse a company that produces “anything banned”.
So even if you’re endorsing a product that’s not banned, if the company makes anything that is, you can’t endorse their company, or any of their products.
When it comes to endorsing medications and pharmaceuticals, players can only endorse stuff from approved companies that make stuff like allergy medication, hair growth, dermatological products, or cholesterol reduction.
Restrictions on Athletic Wear
The National Football League recently signed a contract with Nike, which requires that all NFL players wear Nike shoes during games.
If if you have your own endorsement deal with a competitor of Nike, all logos and symbols that identify that company have to be covered up when you’re on the field, including practice fields.
You also have to cover them up in press conferences.
Three Kinds of Endorsement Contracts
There are three categories that endorsements normally fall under: hard goods, headgear and clothing, and non-marking sponsorships.
Let’s talk about these real quick.
These kinds of deals for football players are often for protective wear, like the four-year deal Darren McFadden signed with Nike back in 2008.
This was a “head-to-toe” deal, meaning that everything McFadden wore other than his NFL uniform (which were made by Reebok at the time) were to be made by Nike.
For big-time college prospects that are done with their collegiate eligibility, the sky’s the limit on what can be provided by companies that want to align themselves with you.
Headgear and Clothing
A lot of companies view Headgear and Clothing deals as the most valuable kind of endorsement, because their logos often show up on the athlete.
But as I said earlier, NFL players often find themselves unable to wear the company’s clothing (especially in games) due to the restrictions the NFL puts on showing the logos of competitors.
These are deals where the athlete doesn’t have to wear anything on them representing the company.
When you consider these types of deals, you have to make sure you don’t violate any conflicts of interest with sponsors of the NFL, just like with Headgear and Clothing deals.
In these kinds of deals, the company leverages the athletes image, likeness, or have them appear in advertisements, appearances, speaking engagements, and even autograph signings.
An example of a non-marking deal would be Peyton Manning’s endorsement for MasterCard.
Speaking of Mr. Manning, check him out here in one of his MasterCard commercials.
Important Parts of Athlete’s Endorsement Contract
Frankly speaking, every piece of a contract is important, however the following are some portions of it that should be designed to protect the athletes best interest as best as possible.
Base vs. incentives
As a player, you generally want a mix of base (aka guaranteed money) and bonuses (aka incentives).
This way, you get security from the guaranteed money, and you have the opportunity to make even more money if you meet your incentives that are laid out in the contract.
Oftentimes, the incentives are performance-based on your accomplishments on the field, but they can also include number of appearances, or whatever else both parties agree to and put in the contract.
It’s not uncommon for companies to try to cap the maximum amount that the player can make, incentives included.
Other than the obvious downside of having a max put on how much money you can make, there’s another one too.
If you meet the cap, and your term with them still has time left. you could end up in a situation where you’re advertising for the company for free, theoretically.
For example, let’s say you get $10,000 per promotional appearance, but you’ve met your cap.
If you have, say four months left with the company, and you have two more appearances left, you probably wouldn’t get paid for those last two.
Indemnity clauses are fairly common with contracts, not just for endorsement deals.
This clause protects the athlete in the event that he’s named in a suit against, or pertaining to an action the company does that he’s tied to.
Being tied to the company, without this clause existing (and written properly), the athlete could be at-risk, if someone was to sue the company for things like trademark or patent infringement, or even if they’re being sued on a personal injury claim.
If this is done right, it protect the athlete if they’re named in the suit against the company.
Quite often, the Indemnity clause allows you to get reimbursed by the company, in the event that you personally get sued.
From your perspective as the athlete, the stage of your career plays a major part when it comes to figuring out the ideal term of the deal.
Pretty often, the younger the player, the shorter the term you generally want to make the contract.
Shorter terms increase your chances of being able to hopefully renegotiate for more money in the future.
On the other hand, if you’re near the “end” of your career, you may want to seek a long-term deal, and try to maximize the amount of guaranteed money you get.
That’s it for Part one, check back for part two, where we’ll dive into the rest of the most important parts of the endorsement contract, and take a look at a couple other things you may not know as well.
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