Unlike the professional services contract, the endorsement contract does not involve an employer-employee relationship. Rather, it is one of contractor- independent contractor. An independent contractor is a person or business who performs services for another person pursuant to an agreement and is not subject to the other’s control or the manner and means of performing the services. An independent contractor is distinguished from an employee, who works regularly for an employer. The exact nature of the independent contractor’s relationship with the hiring party is important since an independent contractor pays their own Social Security, income taxes without payroll deduction, has no retirement or health plan rights, and often is not entitled to worker’s compensation coverage.
An endorsement contract is one that grants the sponsor the right to use (i.e., license) the athlete’s name, image, or likeness in connection with advertising the sponsor’s products or services. In most professional sports, the leagues prohibit individual players from endorsing alcoholic beverages or tobacco products. Also, the NFL recently established a policy that players may not endorse certain nutritional supplements. There are no set rules for an endorsement agreement other than that they be legal. The more an sponsor feels that the athlete can assist in the sales of the particular product, the greater the likelihood of more money.
An appearance contract compensates the athlete for appearing at a public function, sports camp, golf tournament, etc.
Outline of Typical Endorsement Agreement
- Contract Year
- Licensed Products
- Marketing Materials
- Net Sales
II. License to (Name of Company)
- Grant of License
III. Compenation Formula
IV. Governing Law
VII. Modification of Agreement
VIII. Assignment of Rights