“Happy” Tax Day to those of you here in the United States celebrating/commiserating (noting of course that certain taxpayers have until May 17 to file their returns this year). Like taxes, this installment of the Spotlight ought not be evaded. I know that some of my readers are accountants, so let’s waste no time diving right into this week’s featured topics/stories:
- With increased public acceptance for, and state legalization of, adult-use cannabis, new endorsement and branding opportunities have emerged for celebrities on which to cash in. Jaleel White of Family Matters’ Steve Urkel-fame is launching his own cannabis brand called “Purple Urkle.”…High-dee ho, Winslows!
- Fresh off his historic 2021 Masters Tournament victory, Hideki Matsuyama looks poised to profit off of massive endorsement deals that will make his $2.1 million tournament winnings pale in comparison.
- Art collective MSCHF and Nike found their better angels and settled their dispute over the so-called “Satan Shoes” created in collaboration with country singer/rapper, Lil Nas X. The reported settlement appeared to be more driven by PR considerations than financial ones.
- A venture-capital backed platform aims to create a crypto-token-based market to trade on the reputation and popularity of prominent influencers, celebrities, athletes and entertainers – many of whom have not granted permission to use their name, images and likenesses. This could get interesting.
- Khloé Kardashian uses her right of publicity as a sword to demand takedowns of off-brand photographs.
Thanks for your readership! Hope to see you back next week.
Happy Thursday and a big congratulations to the Stanford Cardinal and the Baylor Bears on their respective NCAA Women’s and Men’s Basketball Tournament wins (the latter of which helped yours truly place second in our Firm’s Bracket pool). Perhaps it also counts for something that my alma mater Wisconsin Badgers were defeated by the eventual champions, but I digress…
At any rate, here are the highlights from this week’s Spotlight:
- The latest chapter in the unfolding saga surrounding sexual misconduct allegations against all-pro Houston Texans quarterback, Deshaun Watson, has Nike among several brands putting the brand partnership on hold pending further investigation and legal process.
- Clorox cleans up with several NBA team partnerships aimed at building fan trust and security in the midst of the still-raging pandemic as spectators gradually return to arenas (and other venues) in parts of the country.
- Oldies rock stars continue to follow the trend of selling off their song catalogues for more than just a few dollars “Blowing in the Wind.”
- Retail financial trading platform, Robinhood, gets told to “check itself” over the use of rapper and actor, Ice Cube’s image on its website.
- Brothers and former NFL quarterback, Eli and Peyton Manning, are the latest athletes looking to cash in on the NFT craze, though after a wild March for NFTs, there appear to be signs of the air being let out of the NFT market.
Thanks for reading – see you back here next week.
March is over, a new month begins.
Congrats on the Final Four to the Zags, Cougars, Bears and Bruins.
Opening Day is upon us, it’s time to play ball,
And battle for the World Series title deep into the fall.
Enough setting the stage, let’s get on with the show,
Here’s what’s going on this week to put you in the know:
A devilish sneaker collaboration leads to a lawsuit by Nike,
with allegations that its brand was tarnished and that consumer confusion is likely.
NFTs as collectibles remain one of the hottest items in town,
as the creators of NBA Top Shot close a huge financing round.
Apple throws it support behind a DIY music distribution up-start
That enables creators to shun labels and retain ownership of their art.
Against the NCAA, student-athletes took their case to the Supreme Court,
And Justices tipped their hands to show the NCAA skepticism and the athletes support.
Will be back next week with my usual pithy prose,
If you guessed this was April Fools’ hijinks, you hit it right on the nose.
Happy Spring! After an especially long winter throughout several parts of the country, it is a welcome sight to see many of the familiar hallmarks of this time of year (even as our daily lives remain markedly different from this time two years ago): MLB Spring Training, Awards season and busted brackets (thank you, Oral Roberts).Without further ado, below is a sampling of the latest for you to tuck away in your bonnet:
- Notwithstanding the successes of the NCAA Men’s and Women’s Basketball Tournaments to this point, the NCAA and its Commissioner, Mark Emmert, have had a full-court press put on them while in the limelight of the tourneys. For decades, the relaxation or roll-back of amateurism rules in collegiate athletics has at times seemed to be a chimera, but given the prominent student-athlete activism proliferating across social media, and more states enacting measures that claw back publicity rights for student athletes, we appear to be close to (if not at) a tipping point.
- For some time we’ve been reading about Special Purpose Acquisition Companies (SPACs) and just how popular they’ve become among athletes and entertainers, and retail investors looking to ride the wave of increased democratization during the pandemic – but now we see the data and the trend is astronomical, with fundraising up 2,000 percent since this time last year. While there is no sign of slowing down, athletes, entertainers and investors alike are well advised not to lose sight of the investment risk involved.
- Non-fungible tokens (NFTs), the other asset that has been red hot in the increased digitization of the world wrought by the pandemic, produced another eyebrow-raising first – the sale of an NFT house for half a million dollars. At that price, I would make my digital guests take off their NFT shoes at the front door.
Welcome back and to those of you who celebrated a belated Happy St. Patrick’s Day. While I can’t promise that this installment of the Spotlight will be the “hair of the dog,” it should still make for a great accompaniment with your coffee(s). Without further ado, here is a sampling of what I found at the other end of the rainbow:
- Former NFL greats (and momentary draft day teammates) Eli Manning and LaDainian Tomlinson are the latest big name athletes to get into the SPAC game, backing a $200 million blank check company in its pursuit of a consumer-oriented company that can leverage “influence driven purchases” and “talent as brands.”
- Music streaming service SoundCloud appears to be experimenting with a new per-stream royalty structure, marking a deviation from the model favored by streaming giants Apple Music and Spotify. Pay-per-stream certainly seems like it could go a long way to provide transparency and allow more artists to garner meaningful streaming income.
- The Non-fungible Token (NFT) market remains hot, with more influencers and institutional players adapting to take advantage of the new crypto opportunities in the sports, arts and entertainment world, while others sound the alarm on the viability of NFTs as an asset. Only time will tell whether we are witnessing a passing fad or a sign of things to come.
- After a two-year hiatus because of the COVID-19 pandemic, the National Collegiate Athletic Association (NCAA) Men’s and Women’s Basketball Tournaments will be (fingers crossed) set in motion, and due to recent legislative developments in New Mexico and Maryland, it appears that at least some of the players and their fellow collegiate athletes will soon be able to be compensated for the use of their name, image and likeness (NIL). Until the ever-elusive federal legislation is passed, collegiate athletes (and the NCAA) will have to deal with a patchwork of laws and regulations in the near term.
Welcome back to another week in the Spotlight. It is truly remarkable to think that it has (already? only?) been one year since the World Health Organization’s declaration of the COVID-19 pandemic, shuttering sports arenas, film sets, theatres, concert venues and disrupting people’s way of life – that of course is nothing in comparison to the human toll of the disease. Still, the beat goes on…
At any rate, below is a sampling of some developments that caught my attention this week:
- Non-Fungible Tokens (NFTs) continue to gain traction in the sports, entertainment and art world, with one notableheadline that Twitter CEO and Founder Jack Dorsey is making waves by putting the world’s first-ever tweet (his own) up for auction as an NFT—current bid stands at $2.5 million. The jury remains out on bidding for last week’s very first Sports & Entertainment Spotlight.
- Another emerging trend is that a growing number of so-called blank check companies or Special Purpose Acquisition Companies (SPACs) are hitching to celebrities’ stars and grabbing headlines for taking private companies public in multibillion dollar transactions. Consequently, regulators’ warnings to speculative retail investors looking to get in on the action are to focus on the associated fundamentals – not the number of social media followers.
- Lastly, it appears that the next time a social media personality/influencer plugs a skincare routine, a new piece of workout equipment or even the latest entrant into the chicken sandwich war, they may be doing so as a guild or union member. Whether and how that will affect brands’ marketing strategies remains to be seen, but it will be interesting to watch it play out. Now if you’d excuse me, it’s time for my seven-day union break.
Greetings, and welcome to the inaugural edition of the Sports & Entertainment Spotlight series! The product of my unrequited desire for human interaction nearly one year into the COVID-19 pandemic, this weekly feature will endeavor to bring readers up to speed on new, noteworthy and/or cutting-edge business and legal developments in the sports and entertainment industries. I hope you find it informative and fascinating, as I certainly do. If there are any topics you’d like to read more about, please feel free to let me know.
This week’s installment spotlights some noteworthy trends and developments, including:
- The anatomy of a successful branding and investment empire;
- The relatively nascent world of non-fungible tokens (NFTs) and the exciting opportunities for athletes, entertainers and brands to monetize digital assets through the use of blockchain technology;
- The hot market for music copyright acquisitions; and
- The latest legislative proposals that move collegiate athletes one step closer to having the right to profit off of name, image and likeness (NIL) rights while many athletic programs remain on the sidelines.
With the Super Bowl coming up, it is important for brands looking to capitalize on football-themed promotions to remember that the terms “Super Bowl” and “Super Sunday” are registered trademarks guarded by the National Football League (NFL) more closely than a shutdown corner on a wide receiver. Because there is a fine line between permissible fair uses of Super Bowl and Super Sunday (e.g., in on-air banter and news and sports reports) and impermissible promotional uses that may infringe the NFL’s trademark, here are some guidelines to keep you from going “offsides:”
California Adopts Bill Allowing Athletes to Earn Money from Marketing Promotions or Endorsement Deals
On Monday, September 30, 2019, California Governor Gavin Newsom signed into law SB 206, the "Fair Pay to Play Act," which is a bill that could fundamentally transform collegiate athletics amateurism rules. The bill allows college athletes to earn money from the use of their name, image or likeness through sponsorships and/or endorsements, which is in direct conflict with the National Collegiate Athletic Association (the "NCAA") amateurism rules. The Fair Pay to Play Act will go into effect in 2023 and will apply to all 58 California NCAA-affiliated schools.
The Fair Pay to Play Act does not require colleges to pay their athletes, but rather will prohibit schools from upholding rules preventing student athletes from participating in intercollegiate athletics because the athlete is being compensated for the use of their name, image or likeness. This prohibition will apply to institutions and organizations affecting California student athletes, including the athlete’s academic institution, the NCAA and collegiate athletic conferences such as the Pac-12. However, colleges will be able to control the types of sponsorships or endorsements students may enter into, so that student deals will not directly conflict with preexisting school sponsorship deals.
The Largest College Admissions Bribery Scandal Erupted in the United States With a Number of Celebrities as Targets
In the early weeks of March, news broke of the largest college admissions scandal in the country's history, nicknamed "Operation Varsity Blues". At least 40 people were charged with conspiracy to commit mail fraud and honest services mail fraud for their alleged participation in the scheme. Among those charged was actress, Lori Loughlin, who is most famous for her role as Aunt Becky on ABC's hit sitcom series Full House. Charges against her allege that, in order to get her children into the University of Southern California ("USC"), Loughlin paid $500,000 to have her daughters designated as crew recruits, although it is reported that they did not participate in that sport. One day after 14 parties involved in the scheme agreed to plead guilty, 16 parents, including Loughlin and her husband, were charged in a second indictment for conspiring to commit fraud and money laundering. Loughlin has refused to plead guilty and plans to fight these charges.
The Sports, Arts & Entertainment group at Foster Garvey provides full service legal representation on sports, entertainment and business matters, including handling transactions related to brand management, licensing, joint ventures, venture capital, private equity, technology, the Internet and new media.