The Hindu Business Line : "The clear lesson is the need to diversify"

Till recently, cricketers' commercial activities and commitments did not come under official scrutiny. No one monitored what cricketers did outside of the calendar planned for them by the BCCI (Board of Control for Cricket in India), which explains why the drastic action taken by the BCCI about cricketers' contracts has generated wide interest.

This, despite the contracts being out of public domain. "The commercial and other key details in the contract would generally remain confidential among the athlete, the brand and their respective agents," says Nandan Kamath, Director at GoSports (www.gosports.in) , a Bangalore-based career management and advisory firm for sportspersons. "Some basic details might be made public through a press release or through advertising. So far, athletes have not had to disclose contract terms to the governing sports bodies or to any other third parties."

Kamath, a graduate of Harvard Law School, the University of Oxford (on a Rhodes Scholarship) and the National Law School of India, has played representative cricket at the state and junior national levels. He co-founded GoSports with the intention of enabling and empowering the country's best young sportspersons to translate their potential into performance.

Here, he answers a few questions from BrandLine.

How does the endorsement system work? Who contacts the athletes? Are lawyers engaged in the exercise? How is negotiation done and what are the other mechanics?

There are multiple stakeholders in the Indian sports endorsement ecosystem. The dramatis personae are the athletes and their agents, the brands and their managers and, in some cases, the sports leagues and/or associations that would also like a piece of the commercial pie. But the central figures are, and will always remain, the celebrity-crazy Indian fans.

The central figures in the endorsement scene will always be the celebrity-crazy fans.

Most often, an athlete would entrust management of his or her commercialisation to a sports management agency. The agent pays the athlete an upfront minimum guaranteed fee in exchange for the exclusive right to market and sell a certain number of days of the athlete's free time. The agent scours the market for opportunities to sell the athlete's contracted days and serves as a necessary contractual intermediary between the brand and the athlete. The agent bears the basic risk of marketing and receives a percentage of the total endorsement fees in consideration of his time and efforts.

The negotiations on these endorsement deals are largely centred on price although non-compete clauses and rights of first refusal are usually on the table, too. An athlete's persona is a brand in itself and I think that a meeting of minds between athlete and agent is critical. It is not easy to create and nurture a high-performance sports career as well as a desirable and lasting public persona.

So far, lawyers have had a limited role to play in the endorsement game. Historically, the lawyer's role has been limited to drafting standard format/template contracts, negotiating and documenting the bigger budget transactions and intervening when things go sour and disputes must be resolved or litigated. On the other hand, most US sports agents have law degrees from that nation's top law schools.

Our sports industry is still in a rather nascent stage and labour laws, league regulations and the like are not matters of mainstream consciousness. With increasing market maturity and the need for clear and comprehensive legal documentation, sports contracts must be able to clarify parties' expectations and commitments, must protect the athlete's and the brand's big-picture interests and must factor in regulatory, legal and other risks inherent in the industry.

At this point, I feel that the lawyer or the legally-trained sports agent will be in a position to bring far more value to the table. In fact, law firms such as J. Sagar Associates have developed specialised sports law expertise.

What are the typical ways in which companies seek to benefit from the sportsperson? Have there been innovative expectations over the years?

Once the brand has "bought" a certain number of the athlete's free days, within reason it can be as innovative as it wants to be. In most cases, the athlete will be requested to appear in an ad film shoot or to make an appearance at an event, an inauguration or a product launch.

Over the years, some brands have used athletes more innovatively than others. For example, the Future Group and ITC Sunfeast have launched product lines that are named after Tendulkar and have apparently used his experience and expertise at the product R&D stage. Others have used athletes for special appearances in Bollywood movie product placements or in consumer outreach projects through participation in sports camps or in meet-and-greet events that serve as prizes for winners of public contests. The best endorsements would have the athlete's and the brand's visions and ideals match as closely as possible. Eventually, each brand is looking for the maximum return on investment and there will be different strokes for different folks.

Do you think advertising can come in the way of performance? Any examples?

I think a poorly-structured performance-based endorsement contract can come in the way of performance in a team sport such as cricket. Cricketers should not be paid by their sponsors or brands for doing their job, i.e., taking wickets and scoring runs. If a batsman will receive a bonus from his brand for scoring a 50, when he's batting on 49 and should only be thinking of what's best for his team the potential for financial gain will unfortunately reside at least in his subconscious. Besides this, I don't see how spending 15-20 days of one's spare time on commercial activities would in itself affect a professional athlete's performance.

If an athlete is immature or misguided on how to spend his endorsement earnings this in turn could translate into poor performances. But this would be a failure of athlete management, not of the endorsement system. Any initiative that seeks to curb or cap endorsements misses this basic point. Eventually, there is no room in a team or an event for a non-performing or underperforming athlete - is any greater incentive or regulation required?

Lessons from the World Cup - for advertisers, sportspersons, fans and lawyers.

The clear lesson is the need to diversify. Advertisers need to look at sportspeople from multiple sports who might better signify the values they stand for. Sportspersons must focus primarily on performance and, at the same time, thoughtfully build and nurture a strong portfolio of meaningful brand associations and at the same time a social face with deeper involvement in charitable causes that could use their support.

A sporting celebrity must remember that he or she is a direct product of the society he or she lives in and has a huge commercial and other stake in its overall well-being. The fans have been hurt badly this time around and will want to play a more active role in guiding the future of brand strategy rather than having brands raise their expectations and hopes to only have them come crashing down with a couple of poor matches. I can tell you that lawyers thrive on complexity. With the larger sports market ready to explode, we will soon need a corps of savvy lawyers who understand the business and sociology of sport in the Indian context.

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