Athlete Contracts; as a manufacture do you need one?

You have a great product, and you want to get it out into the hands of some athletes. The athletes have been friends for years, and you’re not worried about them. Do you really need to have them sign a contract just to get free gear? Yes.

Real athletes, those people who are at the top of their game, that make their living showing your product to the world? Definitely Yes.

If you are just giving gear to an athlete and are not expecting anything in return except maybe some feedback, hand out the gear. You will probably ask them to post their experiences on social media so make sure you tell them about the FTC rules on the proper hashtags.  See Are you complying with the current FTC rules when you ask someone to tag you on a social network?

If you expect your gear to be on a podium or in photographs with wining athletes you need agreements with those athletes. If you are requiring feedback or exposure you need to make sure everyone understands the terms of the agreement. Everyone means the Internal Revenue Service, the athlete’s health and disability insurance company and any worker’s compensation insurance company, as well as the athlete.

Normally, these contracts specify how the athlete gets the gear and/or money for their work. The agreement may also cover when they will be paid more for wining or exposure This means your logo must be visible, not just on a blur in the background.

There are also several situations that you need in an agreement to protect yourself.

First you need to make sure the athlete knows they are responsible for any state, local or federal taxes due on the money or product you provide. Yes product. If the athlete is accepting product in excess of what is needed to do the job, there may be taxes due. If the taxes are not paid, the tax authority will go to the entity that did not withhold the appropriate taxes from the person who did not pay. That means you. Unless you can prove that the person was an independent contractor and was liable for their own taxes you may write a check. An agreement that sets forth those requirements is a good defense to any tax person knocking on your door.

Second is the athlete’s insurance company. I’ve commented several times that many of the current lawsuits are probably subrogation claims by insurance companies. See Canadian government suing Blackcomb Mountain for the health care costs of an injured snowboarder. A subrogation clause is found in every insurance contract. The subrogation clause allows the insurance company to sue, in the name of the insured, the person or persons that caused the injuries to the insurance company’s client. Meaning the lawsuit will be Your Athlete against You. Even though the athlete may not want to sue you.

If the insurance company paid for a claim for you, that gives them the right, contractually to make you sue your best friend.

In this case, the insurance company may claim one of two things: (1) the athlete was working for you and therefore, is it is a worker’s compensation claim which they are not liable for; or (2) because you gave the injured athlete the equipment that “failed” you are liable. Again your agreement needs to make sure that everyone (meaning the athlete, his or her family and their insurance companies) knows the athlete was not an employee, and your agreement should contain a release.

You don’t have to inform everyone immediately, just when the lawsuit arises that you can’t be sued.

The biggest threat is any worker’s compensation insurance carrier. If someone reports on any insurance form that the athlete was working at the time of his injury or if the injured athlete is attempting to get more money by claiming a worker’s compensation injury, the worker’s compensation insurer will look for someone to reimburse them.

One clause that I put in all athlete contracts is a release. I want the athlete and their insurance carriers to know that the athlete can’t sue the manufacture. A release signed by the athlete is effective as a defense against the insurance company with a subrogation claim.

Here again three reasons why having proper paperwork will eliminate problems. However, there are other reasons to have a contract. It will make it easy for you and the athlete to know how much money is being paid for different photo placements or copy in magazines. It lets everyone know what the athlete can and cannot do. It allows you to dodge the issues if the athlete shows up on the cover of high times rather than the podium.

Get a contract, it will make everyone know where they are going and why, as well as keep you and your company out of a litigation nightmare.

For additional articles on this subject see: Do you have contracts with all of your athletes? Manufactures who provide more than swag to athletes maybe sued without a written agreement and Athlete Contracts; as a manufacture do you need one?

What do you think? Leave a comment.

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