Tuesday, July 26, 2011

Mendenhall, Moral Clauses & His Talent Agreement

by Eric Macramalla and Graydon Ebert
“What kind of person celebrates death? It’s amazing how people can HATE a man they never even heard speak. We’ve only heard one side… I believe in God. I believe we’re ALL his children. And I believe HE is the ONE and ONLY judge. Those who judge others, will also be judged themselves. For those of you who said we want to see Bin Laden burn in hell and piss on his ashes, I ask how would God feel about your heart? There is not an ignorant bone in my body. I just encourage you to #think.”
          - Steelers RB Rashard Mendenhall’s Tweet following the assassination of Osama Bin Laden.

“If Mendenhall commits or is arrested for any crime or becomes involved in any situation or occurrence…tending to bring Mendenhall into public disrepute, contempt, scandal or ridicule, or tending to shock, insult or offend the majority of the consuming public or any protected class or group thereof, then we shall have the right to immediately terminate this Agreement.”
          - The moral clause in Mendenhall’s Talent Agreement with Hanesbrands.

While we respect Mr. Mendenhall’s right to express sincere thoughts regarding potentially controversial topics, we no longer believe that Mr. Mendenhall can appropriately represent Champion and we have notified Mr. Mendenhall that we are ending our business relationship. Champion has appreciated its association with Mr. Mendenhall during his early professional football career and found him to be a dedicated and conscientious young athlete. We sincerely wish him all the best.
         - Hanesbrands press release announcing termination of Mendenhall.


Mendenhall is fighting back after the Champion sports apparel company dropped him from his endorsement deal after comments he made on Twitter questioning the public celebration of Osama bin Laden’s death. Last week, he sued seeking roughly $1 million in damages from Champion’s corporate parent company Hanesbrands Inc. alleging that its decision to end his deal violated his First Amendment right to free speech.

Problem for Mendenhall is that this lawsuit is unlikely to succeed. Maybe even worse is that other sponsors might never touch Mendenhall again for fear of being sued if they terminate his contract.

Brand Owners & Endorsements: Looking To Make A Match in Heaven

Companies get athletes as sponsors because they want to associate their brands with a positive image. That can help with brand identity and brand elevation. When it goes well, it’s a win-win scenario. As part of endorsement deals, though, athletes can effectively give away their ability to speak freely.

If the athlete’s public image is sullied by his or her conduct, the value of the sponsorship is significantly diminished and the brand owner may want out.

That’s where moral clauses kick in.

History of Moral Clauses

Endorsement deals with athletes contain morals clauses which are drafted to allow companies to terminate the contract if the athlete’s off-field behaviour is undesirable. These moral clauses are usually pretty broad to give a company the option of cutting an athlete if they engage in questionable behaviour. Don’t forget – brand owners are generally risk adverse and they don’t want to associate themselves with a negative image.

Morals are shaped by the beliefs of a society, and so by implication, interpreting what’s moral can be a subjective exercise, at times elusive and constantly in flux.

The history behind moral clauses reveal their vagueness and how they are tied to the beliefs of a society. In the 1920s, the clauses became notorious during the McCarthyist era when they were used to terminate contracts of many writers, directors and producers who were accused of having communist leanings.

More recently, morals clauses have been used to terminate sponsor deals with Tiger Woods (adultery), as well as Michael Vick (dog fighting), Kobe Bryant (sexual assault) and Randy Moss (photographed with cocaine).

Mendenhall & His Moral Clause

Mendenhall’s contract contains provisions barring him from engaging in actions that would bring him “into public disrepute, contempt, scandal or ridicule, or tending to shock, insult, or offend the majority of the consuming public”.

From a legal standpoint, this is a broad clause, particularly the restriction from engaging in behaviour that would “offend”.

The clause is likely to cover Mendenhall’s Twitter comments, which prompted significant outrage in the public, and caused Steelers president Art Rooney to distance the organization from Mendenhall’s comments.

Any argument that Champion’s decision to terminate the endorsement deal is somehow a violation of his constitutional right to free speech is off base as constitutional rights are not applicable to the private relationship between Mendenhall and Champion.

Ultimately Mendenhall’s lawsuit does not have much chance of succeeding, and all athletes with endorsement deals need to think twice before making potentially controversial remarks on Twitter, Facebook or through other social media.

Maybe worse I’m not sure other sponsors will go near Mendenhall. The last thing they want is to get sued if Mendenhall is behaving badly.

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