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Kristen Spanier

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World Cup Sponsorship Scandals Sure to Take Attorney's into Extra Time

Posted: 07/01/10 02:48 PM ET

For weeks now, soccer fans have been captivated by the World Cup, tuning in at odd hours to cheer for their respective teams. But given the ridiculous amounts of money involved in professional sports, stories of athletic prowess and come-back victories have been sharing the headlines with stories of the legal and business aspects of the event. So while the action on the field will keep sports pundits busy debating the wisdom of decisions by coaches and players and predicting what will happen next, the action off the field could keep a very different group of people --- law school professors and their students -- debating similar issues.

Let's start with the Orange Dress scandal. The scandal arose when more than thirty women attended a World Cup match wearing bright orange dresses. Although the dresses contained no branding, they are reportedly part of a marketing campaign by the Dutch brewing company Bavaria pursuant to which the dresses have been featured on the company's packaging and television ads and even given away free with beer purchases. Apparently aware of Bavaria's campaign and obviously committed to protecting Budweiser (who paid quite a bit more than the cost of 30 orange dresses and 30 tickets to be an official sponsor of the World Cup), FIFA ejected the women from the match. While some of the women were held and questioned, all chargers were dropped.

The most obvious legal issue that arises from the Orange Dress scandal is whether Budweiser has any recourse against FIFA or Bavaria for Bavaria's attempt to promote its product at the World Cup. Claims against FIFA seem unlikely given its practically immediate decision to remove the women (and thus any implied advertising) from the venue. Claims against Bavaria by FIFA or Budweiser also seem unlikely. While Budweiser undoubtedly has exclusivity in its sponsorship agreement with FIFA (presumably at least as the exclusive alcoholic beverage sponsor), did Bavaria really do anything to impinge on those rights? Sending women wearing orange dresses to a match would not seem to damage Budweiser. But, if there is a known association between the orange dresses and Bavaria, then it is not simply about women wearing orange dresses. The question is whether Bavaria knew of Budweiser's exclusive rights and intentionally interfered with those rights.

Another issue that arises from the scandal is how to balance the need to protect one's rights against the potentially negative consequences that can flow from taking action. In this age of instant access to information, this issue is frequently faced and debated by lawyers and their clients. Here, FIFA very quickly chose to protect Budweiser, and ejected the women from the venue. A likely unintended consequences of that choice was that the ejection received extensive coverage, which resulted in millions of people reading about the orange dresses and Bavaria. If FIFA had not ejected the women, it is probably safe to assume that far fewer people would now be familiar with Bavaria's beer and their orange dress campaign. But maybe Budweiser would have taken issue with FIFA's failure to protect its rights. Weighing the benefits and risks of taking action can be difficult, but is always necessary.

Another World Cup story which raises an interesting legal issue is the apparent unraveling of the French team, and the reported loss of certain of their sponsors. The team's downfall apparently began with an altercation between the French coach and the striker Nicolas Anelka during a loss to Mexico, which resulted in Anelka being sent home. In support of their teammate, the French team boycotted their next training session, and eventually were eliminated from the tournament. While it has been reported that sponsors will now no longer support the French team, it is unclear whether the sponsors have terminated the sponsorship contracts in their entirety or are simply attempting to distance themselves publicly from the team.

For instance, sponsor Credit Agricole has announced that it has cancelled its television campaign with the team and fast-food company Quick has announced that it will stop using advertisements featuring Anelka. If the endorsement contracts are still in tact, but the sponsors have simply elected not to run advertisements featuring the team or a particular athlete, then legal battles may not ensue. As a sponsor, Credit Agricole undoubtedly obtained the right to use the French team in its advertising. It also, however, undoubtedly retained the right not to do so. In other words, one would certainly assume that the sponsorship contract allows Credit Agricole to decide, in its sole discretion, how and when to use the French team in its print or television advertising. The same would presumably be true for any endorsement deal between Quick and Anelka.

If, on the other hand, sponsors have terminated the sponsorship contracts entirely then legal battles may ensue. A sponsor can certainly attach conditions to its sponsorship, and appropriate conditions could include the team or athlete maintaining a certain ranking. After all the purpose of the sponsorship is to obtain exposure for the sponsor's products. If a team or athlete is not highly ranked, then such exposure is much more limited and much less valuable. Sponsors also may include morals clauses in their agreements, which allow the sponsor to terminate the contract if the team or athlete engages in activities which are immoral or illegal or which bring the athlete into public disrepute or scandal.

Whether or not the French team or Anelka have an action against any of their former sponsors will depend on the precise language of the particular contracts. However, unless the agreements contained broad language allowing termination, the companies may have a hard time justifying a termination. A professional athlete screaming at his coach during a critical match is certainly childish and unprofessional, but it does not seem to constitute immoral conduct and certainly is not illegal. The same is true for a team boycotting practice because the coach sent home one of their teammates.

Only time will tell whether either of the above scandals will lead to litigation between the interested parties. However, both stories certainly provide colorful and interesting fact patterns which may appear on future law school exams.