While the beginning of the Trump era started with debates over the size of crowds and immigration bans, last week was all about brands and their affiliation (or desire to be unaffiliated) with President Trump. Most recently, this issue came to the forefront when Under Armour’s CEO gave an interview on CNBC and called Trump “a real asset for the country.” In response, several Under Armour celebrity spokespersons – Stephen Curry, The Rock and Misty Copeland – voiced their disapproval with the CEO’s comments. While most people probably viewed this disapproval from a political lens, advertising/media lawyers immediately thought: “I wonder what their contract says?”
It is highly unlikely that any of their contracts contain a provision that would allow the celebrity to terminate the contract because he/she doesn’t agree with the political statements of a company executive. Such a provision isn’t practical or realistic from either party’s perspective. Further, as the Rock wisely stated in an Instagram post, the statements of a corporate CEO are not necessarily the statements of the brand. Things are more complex when dealing with a multi-national corporation.
On the other hand, almost all celebrity spokesperson agreements contain some type of “morals” or “behavior” clause. Such clauses give the advertiser the right to terminate a contract if the celebrity does something material that could be damaging to the brand. Nike did this with Maria Sharapova, Manny Pacquiao, Michael Vick and Lance Armstrong, to name a few. Tiger Woods was reportedly dropped by Gillette, Accenture, AT&T, Gatorade and Tag Heuer.
While morals clauses vary and can be quite elaborate, a simple clause might read:
“Advertiser shall have the right to terminate the Agreement if Spokesperson (1) commits an act which brings Advertiser into public disrepute, contempt, scandal or ridicule; or (2) makes disparaging statements about Advertiser or Advertiser’s products.”
(1) “Commits an act which brings Advertiser into disrepute, contempt, scandal or ridicule.” From the advertiser’s perspective, if you’re paying a celebrity millions of dollars to endorse your brand, the celebrity should be on good behavior and not do anything to tarnish the brand’s reputation. That said, it wouldn’t be fair for a brand to terminate a contract for an act that has no true damaging impact on the brand.
- What type of “act” will trigger the clause?
- A celebrity will want the provision to be narrow and specific, such as “commits a felony or a crime of moral turpitude and is convicted by a court of law.” In response, an advertiser will argue that merely being “charged” with a crime should be sufficient for termination because it’s likely the term of the agreement will be over before the celebrity is tried or convicted for the crime. Also, from the advertiser’s perspective, the damage is done once the act is publicized.
- What effect did the act have?
- The celebrity will argue that the bottom line should be whether or not the brand is impacted. They would want the act to substantially diminish the value of the celebrity’s association with the advertiser. In response, the advertiser will argue that the damaging impact of the act should be decided in the advertiser’s sole discretion.
- In all reality, however, if an advertiser has invested substantially in the ad campaign behind the celebrity, it is unlikely to terminate an endorsement deal for an act that will have little or no impact on the brand or its core values. The more common approach is to deal with the aftermath through a concerted public relations campaign.
(2) “Disparages Advertiser or Advertiser’s products.” Why would an advertiser pay a celebrity only to have them say bad things about the brand? Here are some things to think about with this provision:
- What does disparage mean?
- The celebrity will want any provision to be narrow and specific, such as “Intentionally and knowingly makes disparaging public statements about Advertiser.” In response, the advertiser will assert that the intent of the celebrity is irrelevant. Further, the advertiser will argue that the disparagement doesn’t need to be of a public nature; even comments made in private can have an adverse effect on a brand if the comments are later disseminated to the public.
- Who is being disparaged?
- The celebrity will want to limit the disparagement to only the advertiser (i.e., the brand itself), and not to any individuals. In response, the advertiser will argue that disparagement of an “employee or officer” of the advertiser should trigger a termination right if such disparagement has a negative adverse effect on the brand.
What is notably absent from today’s morals provisions are express prohibitions on political speech. While it’s not uncommon to have an advertiser prohibit a celebrity from making statements or supporting causes that are antithetical to the advertiser’s business practices (for instance, a fashion brand that sells fur coats would not want its celebrity to publicly support PETA – People for the Ethical Treatment of Animals), if more advertisers become concerned with celebrities making public statements about their personal political views, such clauses may see changes. There is no question that brands prefer to avoid publicity that is coupled with political rants that could alienate a brand’s purchasers (even if the brand’s leadership agrees with the celebrity’s viewpoint). For most brands, politics is not part of their marketing strategy.