United States: 2018 Holiday Sports Industry News

Last Updated: December 6 2018
Article by Christopher R. Chase

What's Happening

Here's what's happening at the intersection of sports, marketing, and entertainment law as we enter the 2018 holiday season.

Lessons Learned

Christopher Chase presents "18 for '18: Sports Marketing and Media's Top Legal Issues from 2018" on January 9, 2019 at Frankfurt Kurnit's New York office. Register here.

Getting in on the Action

With the broader legalization of sports gambling resulting from the Supreme Court's Murphy v. NCAA decision, casinos and gambling-minded consumers are not the only beneficiaries - sports leagues and teams are also getting in on the action by selling sponsorship rights to casino and sportsbook operators. For example: MGM Resorts International recently announced partnerships with the NBA, the NHL, and Major League Baseball, whereby MGM will receive official designations, exposure across league media platforms, rights to league trademarks, and in certain circumstances, rights to official league statistics and data; sportsbook William Hill U.S. recently partnered up with the NHL's Vegas Golden Knights, sponsoring in-game, on-ice line changes under the clever play on a common hockey phrase: "The William Hill Line Change;" and Caesars Entertainment teamed up with Harris Blitzer Sports & Entertainment and its marquee properties, the Philadelphia 76ers, New Jersey Devils and Prudential Center, in a deal that includes branding of a premium lounge at the Prudential Center. Additionally, sports league and team media rights will likely become more valuable because of the increased advertising spending by casinos and sportsbooks, media buyers that did not exist previously. The Murphy decision essentially opened up a new category of sponsorship (the "Official Gaming Partner") and a new buyer of advertising time.

Newsworthy Indeed

In a case closely watched by the sports industry (and sports betting industry in particular), the Indiana Supreme Court determined that online fantasy sports operators (that condition entry to their contests on payment and distribute cash prizes to participants)" do not violate the Indiana right of publicity statute when those organizations use the names, pictures, and statistics of players without their consent because the use falls within the meaning of 'material that has newsworthy value'" - an exception under the relevant Indiana statute. Arising out of a lawsuit brought by college athletes against FanDuel, Draft Kings, and other fantasy sports operators that ultimately made its way to the Seventh Circuit Court of Appeals, the college athletes argued that these fantasy sports operators violated their right of publicity through the use of their names, images, and statistics in the fantasy contests. Answering a certified question from the Seventh Circuit, the Indiana Supreme Court examined the state's right of publicity statute and found that the term "newsworthy" is to be construed broadly. The term does not solely apply to media companies or news broadcasters nor does newsworthy information get "stripped of its newsworthy value simply because it is placed behind a paywall or used in the context of a fantasy sports game." After reviewing cases with similar factual backgrounds, the court determined that "when informational and statistical data of college athletes is presented on a fantasy sports website - it would be difficult to draw the conclusion that the athletes are endorsing any particular product such that there has been a violation of the right of publicity." Although this case applies only to cases brought under Indiana law, the result cuts against athletes and other celebrities who want users of their names, likenesses, and statistics to pay them and obtain written consent.

A League of Their Own

While we've recently seen a wave of athletes creating their own media properties and thereby creating a business off the court or field (such as LeBron James' Uninterrupted and Derek Jeter's Player's Tribune), two prominent athletes have decided to create a business that is the court or field. Lacrosse star Paul Rabil and volleyball star Kerri Walsh Jennings have created their own lacrosse and beach volleyball properties, the Premier Lacrosse League and p1440 volleyball series respectively, with an athletes-first mindset. In the PLL's case, equity in the league for the players, and in p1440's case, more per-event prize money than current beach volleyball tours. Not only do these properties provide more opportunities for athletes, but for investors as well, as sports content and intellectual property owners like these two properties can "take advantage of multiple avenues of monetization." The resulting media attention on these innovative sports properties may also raise the profile of each sport, both long considered up-and-coming.

This Bud's For You, Team Sport Athlete

Overcoming the long-standing practice of not allowing current team sport athletes to appear in beer advertising, Anheuser-Busch InBev signed agreements with the NBA and Major League Baseball players associations in September allowing the Budweiser brand to use NBA and MLB player names and images in beer ads. Such imagery may include game footage or otherwise show the player in uniform, due to the brand's prior sponsorship deals with the leagues and teams. For decades, brewers (through the Beer Institute's Advertising and Marketing Code) and the leagues voluntarily banned beer advertising using active team sport players (individual sport athletes such as golfers and tennis players, however, have previously appeared in alcohol advertising). Despite the change, players will not be shown holding or drinking beer in the advertisements.

Cover It Up

Running afoul of NBA rules prohibiting players from displaying commercial branding on their bodies or in their hair during league games, the league reportedly required J.R. Smith of the Cleveland Cavaliers to cover up his tattoo featuring the Supreme brand logo and Lonzo Ball of the Los Angeles Lakers to cover up his Big Baller Brand tattoo. Although athletes may want to show off their style (or perhaps personal endorsements), sports leagues also want to protect current league sponsors against any form of ambush marketing - including by the players themselves.

Made In the USA?

The Federal Trade Commission aggressively polices deceptive "Made in the USA" claims in all industries - and the use of such claims in the sports equipment industry is no different. In this article, Jeff Greenbaum discusses two FTC settlements from September - one against hockey puck maker Patriot Puck and one against Sandpiper of California/PiperGear USA, wherein each party agreed to no longer make unqualified U.S.-origin claims unless they can show that the products' final assembly or processing and all significant processing took place in the U.S. and that all or virtually all components of the products were made and sourced in the U.S.

Noted and Quoted

Recognition

We are pleased to announce that Christopher Chase was named to the North American Editorial Board for LawInSport.

All You Need to Know about Video Game Law

The Games Industry Law Summit in Vilnius' newsletter spotlights Gregory Boyd and Sean Kane's newly published book "Video Game Law: Everything You Need to Know about Legal and Business Issues in the Game Industry," released over the Summer through CRC Press.

Want to Learn More?

Christopher Chase recently moderated roundtables on Legal Issues in Sports Marketing and Media for Practical Law Institute, featuring Tori Chami of American Express, Andy Latack of CAA Sports, Olivier Manigat of Heineken USA, and Clarence Nesbitt of the NBA Players Association discussing issues that are pertinent for their organizations. The program is now available for download.

Hayden Goldblatt moderates the sold out Gotham Media's Media / Tech Preview 2019 panel discussion on December 5, 2018 at Frankfurt Kurnit's New York office.

www.fkks.com

This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

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