The Hindu Business Line : Endorsements are premised on a perfect meritocracy

The real criteria that brands look for are performance and longevity in the athlete's sport... Performance on the field is of paramount importance to the brand. Thus by placing a high premium on performance, endorsement contracts actually spur players to enhance their game further.

MR RAGHAVENDRA PATNAIK, LEGAL ADVISER, GLOBOSPORT INDIA PVT. LTD

There is palpable excitement in the cricket world over the ad-ban googly bowled by the BCCI (Board of Control for Cricket in India). "The alleged ban on endorsements by cricketers announced by the BCCI is an interesting conundrum from a legal as well as commercial viewpoint," says Mr Raghavendra Patnaik, Legal Adviser, Globosport India Pvt. Ltd (www.globosportworld.com) .

Globosport, a sport and entertainment management company founded by Mahesh Bhupathi, manages celebrities including Sania Mirza, Saif Ali Khan, Sushmita Sen, Lara Dutta, Dinesh Karthik, Zaheer Khan, Lt. Col Rajyavardhan Rathore, and Trisha Krishnan. The company organises tennis tournaments such as the Sunfeast Open, Kolkata, and the ATP Mumbai Open, and is also foraying into film production and new media.

Mr Patnaik, `India's youngest professional sports and entertainment lawyer,' as he entertainingly describes himself, heads the legal department of Globosport. He has negotiated and concluded `endorsement contracts for as many as thirty celebrities from sporting disciplines, Bollywood and South Indian cinema.' An alumnus of National Law School, Bangalore, he also provides legal advice to celebrities and aids them in securing their interests through their contracts, and for international WTA and ATP tennis tournaments.

Here, Mr Patnaik answers a few questions from Business Line on the `ban':

On why brands choose sportspersons for endorsements:

Globally, advertisers and corporations seek out entertainers to be the face of their products as brand ambassadors. From among musicians, film personalities and sports icons, it is the sports stars who are the preferred choice because of the universal appeal of their profession (for example, the FIFA World Cup Football has more diverse viewership than a Hollywood blockbuster) and more significantly because their achievements are real and not make-believe. Imitation being the best form of flattery, it is natural that fans adopt the consumption patterns of their sporting icons, making sports heroes the ideal fit for brands particularly those trading in consumer goods and durables.

On the importance of endorsements for sportspersons:

Save for honourable exceptions, the average sportsperson in any discipline has a professional career that extends for a maximum of a decade. Thus, more often than not, at age 35 a professional sportsperson has little or no other skills to begin a second career, post retirement from the sport. Endorsement contracts and the consequent income thus provide a fair level of financial security to the players. For a job that doesn't provide the benefits of a Provident Fund or Gratuity, one way to look at endorsements is that they help in securing the athlete's future.

On factors that earn an endorsement for a sportsperson:

Advertisers and companies invariably display wise discretion in their selection of sportspersons as their brand ambassadors. While factors such as the image of the athlete, the universality of his/her appeal and the personality attributes of the athlete are given considerable thought, the real criteria that brands look for are performance and longevity in the athlete's sport. The better the athlete is on the field, the more sought after he is in the endorsement world.

In other words, unlike the manner in which cricketers are selected to represent the country (wherein regional, zonal and other factors play a critical role), endorsements are premised on a perfect meritocracy.

On how performance is factored into contracts:

Most endorsement contracts incorporate a two-pronged performance clause. Essentially, there are performance-based bonuses by means of enhanced consideration, which are paid by the brand if the athlete excels in his discipline (for example, if the player is within the top 10 of the world rankings). Correspondingly, there are sanctions, including reduction of the consideration amount and in some cases even termination of the contract, if the athlete's performance is consistently below par. It is interesting to note that, endorsement contracts with film stars do not have similar performance clauses. So even if Shah Rukh Khan has five flops in a row, his endorsement contracts continue unabated. No such luxuries for the cricketers though.

The underlying principle behind such clauses is that the athlete is only as good as his/her last series. Performance on the field is of paramount importance to the brand. Thus by placing a high premium on performance endorsement contracts actually spur players to enhance their game further.

On possible conflicts that can arise:

In cases where the BCCI signs on a sponsor which is different from the sponsor/s of individual players, the non-compete provisions in these contracts will ensure that one only set of contracts prevails. This phenomenon has been observed worldwide; in cricket, in particular, this has been seen in the West Indies and Australia, among other countries.

Other problems:

It has been seen in some cases that endorsement contracts and the accompanying money and stardom have at times had an adverse impact on the mental make-up of the athlete. Several examples have been cited of players (particularly those from humble backgrounds) developing attitude problems. These have been attributed to the "make-believe sense of success" that endorsement contracts bestow on the athlete. However, an attitude problem is more of an individual shortcoming rather than a generic one, and this by itself is not a cogent reason to crack down on endorsements.

On the nexus between commerce and sport:

Globally, sport drives entertainment and commerce drives sport. The most successful sporting properties in the world — FIFA World Cup, NBA Basketball, English Premier League Football, Superbowl, The Tour de France, Grand Slam tennis — all have a multitude of sponsors that spend millions of dollars on these events. Sponsorship, simply stated, is a means by which a corporation subsidises the consumption of the sport for the viewer. In other words, the money generated in sponsorship help in making the viewer experience both in stadium and on television far better. The better the viewing experience the bigger the sport.

In 1983, a strike by a few officials of BBC denied millions the opportunity of watching Kapil Dev's unforgettable 175 at Turnbridge Wells. Today international cricket is covered by 24 high-power cameras and the viewer can see every minute aspect of the game. This is how commerce powers sport. Unfortunately the benefits of sponsorships have not actually trickled to the cricket viewer in India.

Even as India was preparing for its do-or-die encounter against Sri Lanka in the World Cup, the media was going overboard with stories about how much money was at stake if India exited the tournament early. To put things in perspective, the amount of money riding on Indian cricket (including BCCI and individual player sponsorships) is miniscule compared to the money involved in such sport as basketball, football, tennis, golf and Formula 1. An average footballer makes 8-10 times the money that any top cricketer receives per endorsement deal.

MuraliDe@gmail.com

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