USA Law and Practice Contributed by: Irwin A. Kishner, Daniel A. Etna, Joel Wagman and Barry Werbin, Herrick, Feinstein LLP
With respect to gambling and integrity violations, MLB has – in effect – clear guidance, through MLB Rule 21, which can provide, depending on the offence, for up to permanent ineligibility based on a single offence. MLB’s clear guidance on the penalties’ specific offenc - es contrasts with other leagues’ guidelines, such as the NFL’s, where the league or the Commissioner may analyse violations on a case-by-case basis, with the resulting disciplinary actions including severe penal - ties up to and including a fine, termination of employ - ment and/or banishment from the NFL for life. Aside from sponsorship and broadcasting rights (dis - cussed elsewhere in 2.2 Sponsorship and 2.3 Broad- casting ), key sports-related rights include merchan - dising, hospitality, events and ticketing. While these rights all involve sports teams’ licensing, they primarily relate to the use of a team’s stadium or third-party facilities. Commercial rights to merchandising most commonly relate to retail sales of a wide variety of products, including team logos and player references. To make use of these rights, teams or leagues will typically enter into agreements with retail goods companies for the design and production of gear. Those contracts often include intellectual property (IP) licences of team trade marks and copyrights, in exchange for a fee or percentage of sales. Teams and players may also engage in more specialised merchandising, includ - ing sales of memorabilia used in-game at pivotal or record-setting moments, often by way of auction or private sales to collectors. 2. Commercial Rights 2.1 Sports-Related Rights Use of stadiums and sports facilities can be a sig - nificant commercial right that sports organisations monetise, which includes the provision of hospitality services and concessions. To provide concessions at their facilities, sports organisations contract with suppliers. Alternatively, some teams form their own hospitality organisations to control both the quality of the concessions available at their events and the profits to be made therefrom.
Teams also monetise unique offerings in their sta - diums and facilities, including specialty seating for games or higher-end restaurants. Sports organisa - tions may even use their facilities for special events such as concerts, either charging a fee for use of the space or including some split of ticketing profits in agreements with event organisers. Increasingly, sports organisations are facilitating secondary ticket sales and combatting illegal sales through e-ticketing and apps dedicated to purchas - ing, storing and producing tickets for safer access to games. 2.2 Sponsorship Terms Sponsors use sport to enhance and promote their brand primarily through advertising and title rights. Sports organisations attract sponsors through the cre - ation of advertising space and marketing title rights. The primary contract terms typically revolve around payments and IP rights. Sports organisations provide sponsors with a wide variety of opportunities for advertising, including on billboards, on the field or court, or even on the players’ uniforms. Broadcast of events provides an advertis - ing opportunity by promoting different brands through commercial segments between periods of play. Addi - tionally, sports organisations can provide sponsors with title rights as the “official” service provider of the team in the sponsor’s industry, complete with in-game announcements or broadcasting tie-ins. Title rights may even extend all the way up to the large-scale sponsorship right over naming a stadium. For food and drink sponsors, stadium advertisement can be tied to exclusive sales of sponsors’ products in con - cessions at the team’s stadium or facility. Moreover, a standard sponsorship agreement between a sponsor and a sports rights-holder in the USA would typically grant the sports organisation the right to review and approve any advertising materi - als proposed by the sponsor, often including a veto or control to ensure alignment with the organisation’s brand and values. The contract may also likely contain clear provisions reserving and protecting the spon - sor’s IP rights to ensure that trade marks, logos and other proprietary materials remain under the sponsor’s
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