MORALITY CLAUSES IN SPORTS SPONSORSHIP AGREEMENTS IN FRANCE
One of the most popular and lucrative forms of sports marketing is sports sponsorship, which, globally, is worth more than US$100 billion (around Sw. Frs. 89.37 billion), and that amount is expected to almost double by 2030!
Currently, the highest paid sportsperson in the world is the Portuguese football player, Cristiano Ronaldo, and, although most of his income comes from playing for Al-Nassr in the Saudi Pro League, he actually earned US$60 million (around Sw. Frs. 53.64 million) from his sponsorship deals with Nike, Tag Heuer and his own CR7 clothing line.
In France, the sports sponsorship market is also very valuable, around 56% of which comes from football sponsorship; whilst the European sponsorship market is reputedly worth around €30.9 billion (around Sw. Frs. 28.79 billion).
With such eye-watering sums involved in sports sponsorship, it is not surprising that sponsors wish to protect their investments in sportspersons, especially in football, which is the world’s most popular and lucrative sport. This is particularly so if sponsored sportspersons fall from grace and, as a result, substantial sponsorship investments may be lost, as well as sponsors’ brands devalued. This has led to the practice of including so-called morality clauses, also known as ‘bad boy clauses’, in sponsorship agreements to mitigate, as far as legally possible, the effect of any such financial fall out.
Such morality clauses are used in sports sponsorship agreements in France.
In accordance with the general principles of French contract law, morality clauses must respect public policy (ordre public), ensuring that they do not infringe fundamental individual rights, such as freedom of expression.
Such clauses must also adhere to the principle of proportionality, which means that the consequences of breaching them must not be excessive in relation to the harm caused.
Article 1104 of the French Civil Code provides that “contracts must be negotiated, formed, and performed in good faith. This provision is a matter of public policy.” Therefore, parties are required to act fairly and reasonably in the drafting, execution, and enforcement of morality clauses. Any ambiguity or arbitrariness in these clauses may result in their becoming null and void.
Ultimately, the enforceability of morality clauses depends upon striking a fair balance (juste équilibre) between the legitimate interests of the sponsors in protecting their reputation and the fundamental rights and freedoms of the sponsored sportspersons.
Furthermore, to be legally enforceable, morality clauses need to be carefully drafted, and the conduct caught by them precisely defined, as they deal with essentially subjective matters, such as ethical issues and moral misbehaviour by the sponsored sportspersons. What may be regarded as immoral by one party may not be so considered by another party. Cultural differences often come into play.
Thus, objectivity and precision are the names of the game. For, as one Judge recently remarked in a criminal trial, where moral grounds were pleaded before him as justification for criminal misconduct, that his was a court of law and not of morals and, accordingly, dismissed such pleas!
Morality clauses should include and define immoral behaviour, such as misconduct of a sexual and a criminal nature, for example, common assault and rape, which, sadly, in these promiscuous times, is not uncommon, particularly amongst football players, as such misconduct may taint and dilute the reputation and value of sponsors’ brands. For example, see the case of the former French National Team football player, Wissam Ben Yedder, who has recently been charged with rape, attempted rape and sexual assault and bailed pending his trial.
It should also be noted that morality clauses should be drafted on a reciprocal basis. Not only to include misconduct on the part of sponsored sportspersons, but also on the part of the sponsors themselves, such as corrupt practices, which may include the payment of bribes and illegal commissions, and other corporate misbehaviour. This is important in the case of US corporate sponsors, which are subject, wherever they operate, to the US Foreign Corrupt Practices Act of 1977.
Breaches of the terms of morality clauses usually lead to the termination of sponsorship agreements. However, in practice, the parties are often advised to meet, without any delay and in good faith, to see in what ways they can limit any damage caused to the sponsors’ brands and, thereby, continue with the sponsorship arrangements. In fact, provisions requiring such meetings and reviews should be expressly included in morality clauses, on a ‘without prejudice’ basis, of course.
If it is not possible to reconcile the differences between sponsors and sponsored sportspersons on such an amicable basis, and termination, therefore, follows, sponsors, under the express terms of their sponsorship agreements, may be able to recover, as liquidated damages, some of the sponsorship fees that have been paid; and, likewise, sponsored sportspersons may be able to recover any damages for any reputational harm suffered by them.
Also, it is advisable to include in morality clauses a so-called ‘anti-disparagement’ clause, to protect each party from publicly bad mouthing one another in the event of termination of their sponsorship agreements pursuant to the provisions of morality clauses included in them.
For further information on sponsorship agreements in France in general and morality clauses in particular, email Dr Estelle Ivanova, the Head of our French Law Practice Group, at ‘ivanova@valloni.ch’