By Bill Miras and Chris Klobucar

Law360 (June 11, 2020, 3:46 PM EDT) --

Bill Miras

Chris Klobucar

The value of professional athletes' rights of publicity could be negatively affected by COVID-19. What are these athletes doing to mitigate the damage?

While we cannot provide an escape from reality by analyzing a recent game, we can perhaps carve out some temporary relief by analyzing the intellectual property implications of the game's absence. We know. It's not exactly Tiger Wood's shot to cement the 2005 Masters golf tournament, but perhaps it's better than power washing the sidewalk for the third time this week.

Unless you have been hanging out in a cornfield waiting for an Iowa farmer with unresolved paternal issues to build a baseball diamond, you are probably aware that professional baseball — and all other sporting events — have either been canceled or postponed due to COVID-19.

June, which is this month for those still keeping track, is typically one of the best months of the year to be a sports fan — a time when we are spoiled with the National Basketball Association Finals, the Stanley Cup finals, golf's U.S. Open, the Union of European Football Associations Champions League final, the NBA draft and the start of Wimbledon — but this year, all bets are off.

To add insult to injury, this year the typical sports desert that is the month of July was supposed to get a lift from the Summer Olympics — now it's just Jelle's Marble Runs.

With the absence of sports, there has been considerable attention devoted to reductions in player salaries and tournament winnings. However, for many professional athletes, a substantial portion of their annual income results not from multimillion-dollar salaries but from the monetization of their the right of publicity.

The right of publicity is generally defined as an individual's right to control and profit from the commercial use of his or her name, image and likeness. Athletes can monetize their names and popularity through avenues such as endorsements, appearances, video games and even tattoos.

For example, at least 90% of the $1.4 billion Woods has earned since his pro debut in 1996 has come from endorsements. His primary benefactor, Nike Inc., spends on average one-tenth of its revenues ($3.8 billion in 2019) on so-called demand-creation costs, which consist of advertising expenses and endorsement deals.

Many Olympians have trained their entire lives for the chance to win Olympic gold and to end up on a Wheaties box, literally or figuratively. Graduating National Collegiate Athletic Association athletes who may have led their teams to a national championship would typically have a lot of endorsement opportunities right away, and, beginning in 2021 the NCAA is allowing student-athletes to earn endorsement money while in school prior to going pro.

How COVID-19 May Affect the Right of Publicity

The value of right of publicity is particularly vulnerable during the COVID-19 pandemic.

Like a patent or trade secret, the value of the right of publicity is largely associated with its ability to drive additional purchases or command a price premium. However, unlike these more well-known forms of IP, the value of the right of publicity is also tied to an ongoing positive emotional connection with the average consumer.

For those athletes that are not household names, this emotional connection normally hinges on their performance in their most recent season, match or race. As players remain on the sidelines because of COVID-19, those emotional ties fray and the athlete's brand value deteriorates.

The pandemic, and the uncertainty of how long it will last, also brings into focus the extremely narrow time constraints that many professional athletes face in trying to establish brand value. While the right of publicity in many cases has a longer protection period than other forms of IP, more than 100 years in some states, for the professional athlete, with a few exceptions, the opportunity to build up that value is relatively short.

For example, the average National Football League career is about three years, and most Olympic athletes get only one or two chances to make a name for themselves and monetize that short-lived notoriety. For example, Olympic sprinter Usain Bolt has earned over $200 million in endorsements since 2008. That's approximately $1.2 million per second (and counting) for the 161 seconds of Olympic medal races in which he competed.

By contrast, for the many Olympic athletes that were looking to compete this July, their training had them peaking now, but that opportunity to compete has evaporated, and so too has their chance to establish their brand value.

COVID-19 is also preventing many athletes from extracting any newly acquired brand value earned from winning events just prior to the start of, or during, the pandemic. On this point, one sports agent we interviewed for this article said that, for her sport (golf) late winter and spring is when she begins shopping her athletes to prospective brand partners. Under normal circumstances, that process involves the agent and athlete having multiple in-person meetings with potential sponsors.

For obvious reasons, those meetings are just not happening. The whole process has come to a halt. She added that many companies are taking a wait-and-see approach with respect to new deals given there is still so much uncertainty surrounding the future of spectator sports.

In addition, given the stay-at-home orders and increasingly limited disposable incomes of consumers, potential sponsors are spending their marketing budgets on meeting payroll rather than paying athletes to endorse products that no one can afford — or are physically prevented from buying.

Accordingly, athletes that planned to ink high-dollar endorsement deals on the heels of, say, a recent golf tournament win, e.g., Xander Schauffele, a come-from-behind Super Bowl victory, e.g., Travis Kelce, or a clutch World Series-winning performance, e.g., Juan Soto may be found wanting.

As leagues figure out how to proceed without fans, professional athletes are also weighing the health risks posed by COVID-19 versus the financial risks to their right of publicity. For example, Tommy Fleetwood, Nike-endorsed golfer from the U.K. has stated outright that traveling to the U.S. in order to compete is not a consideration.

And five-time NBA All-Star Damian Lillard also does not plan to return to action once the season resumes, citing the lack of reward for the risk of getting sick or worse. The long-term nature of brand building and endorsement deals may insulate some players from the loss of endorsements if they choose to sit out one season but these players also risk being replaced for the long term by those athletes that are willing to play now.

For athletes like LeBron James, Woods or Cristiano Ronaldo, who have single-name monikers and whose images and likenesses transcend sports altogether, COVID-19 is not likely to have a significant impact on the value of their right to publicity. However, athletes that are not transgenerational household names fear losing brand momentum because their profile cannot be reinforced through widely viewed performances. As such, they are currently trying to maintain the value of their right of publicity by other means.

For example, one sports agent we spoke with said that many athletes are trying to maintain good relations with their sponsors by making themselves available via the web, hosting exclusive online chats or training sessions for top customers. Nike for example has been working with many of its athletes to create fitness-focused content while they are not competing. Other athletes are getting involved in causes related to COVID-19 relief to remain in the public eye while making a positive impact.

And many athletes are relying more heavily on social media to maintain their profile. COVID-19 has even forced some athletes who have avoided social media in the past to establish an online presence. For example, one of the most notable recent additions to Twitter, Eli Manning, was welcomed by Tom Brady who tweeted "Welcome @EliManning, In typical fashion, you never showed up until the 4th quarter anyway."

While it does not appear people will be saying "Ronaldo who?" anytime soon, if COVID-19 keeps professional athletes on the sidelines long enough, Nike's next shoe line might be the "Air Fauci's," as the value of Dr. Anthony Fauci's right of publicity seems to be sky-high — no tweets necessary.

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Bill Miras is a manager and Chris Klobucar is an associate at Stout Risius Ross LLC.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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