1 Introduction
Tennis is a global sport, and the top professional players are its great ambassadors. Companies associate their brands with the images of these players as fans consider some of them celebrities. This is achieved through traditional sponsorship contracts. If a scandal occurs due to the misbehavior that affects the underlying agreement, typically coming to the public domain through its circulation on social media, the parties endeavor to protect themselves from any adverse impact by including in these contracts a specific provision known as a “morality clause.” This chapter will provide an overview of the tennis ecosystem, its business and industry, and explain the origin, history, relevance, types and characteristics of this clause, with special attention to its place in the ever-expanding digital world.
Played in more than 215 countries around the world by more than 100 million people, tennis is one of the most popular sports and probably the most practiced racket sport in the world. During recent decades, it has become considerably popular, and in addition to approximately 100,000 clubs around the world, it is also played in parks and public facilities on more than half a million tennis courts. As per the gender distribution of players, data from the latest research concludes that tennis is played by 41 percent of women and approximately 59 percent of men, thus demonstrating that it is the most gender-balanced sport in the world. The game is taught by more than 150,000 coaches around the world, all of whom are responsible for introducing anyone to the advantages of this excellent sport.Footnote 1 Nonetheless, tennis as a spectacle also attracts more than a billion fans around the world who follow the achievements of the great players on the professional circuits. Certainly, tennis can be considered a global show due to the large crowds of fans it attracts. The business is supported by a global tennis industry made up of a variety of actors with varying roles in the different areas of its existence.Footnote 2
From a historical perspective of tennis as a business, the tennis industry has grown from a sport reserved for the highest social classes to an activity that has managed to be present at all levels of society.Footnote 3 In this context, the latest data indicates that between 2023 and 2030 the size of the global tennis market will reach US$4.59 billion.Footnote 4
As per the global sports governance, tennis is composed of a classic structure that includes the International Tennis Federation (ITF) as the body that governs the destinies of the sport in the international context, to which six regional associations (Tennis Europe – TE, Asian Tennis Federation – ATF, Oceania Tennis Federation – OTF, Confederation of African Tennis – CAT, Confederación Sudamericana de Tenis – COSAT, and Confederación de Tenis de Centroamérica y el Caribe – COTECC) belonging approximately to the different continents and around 200 member nations are affiliated. In turn, as is the case in most sport disciplines, the national federations consider their respective provincial associations, players, coaches, officials and clubs as their affiliated members.Footnote 5
The fundamental task of all of these federative organizations is to govern tennis in their respective areas of influence, whether international, national or local.Footnote 6 Thus, they are responsible for carrying out different tasks, which may include but are not limited to the following: the promulgation of rules and regulations for resolving disputes in competitions organized under their aegis; the representation of teams from their organization in competitions in which they participate; the organization of tournaments and championships of different categories, which also includes the publication and management of player and team rankings; the provision and organization of training for players of different levels, which may include the management of one or several training centers and talent selection programs for those players; representation and participation before the corresponding sports entities; the organization of development programs, promotion and participation of tennis in order to achieve a greater number of players and fans; the education of coaches, officials, players and other stakeholders, among others.Footnote 7
As per the sports governance at the international and professional competitive level, tennis has a characteristic that distinguishes it from other sports, chiefly the existence of two organizations that represent the interests of professional players and their circuits: the Association of Tennis Professionals (ATP)Footnote 8 for male players and the Women’s Tennis Association (WTA) for their female counterparts, which organize their own professional tours that are held in forty countries around the world.
Furthermore, due to its great relevance and historical tradition, it is important to point out the existence of another organization, the Grand Slams, which encompasses the four most important individual professional tournaments on the international calendar, namely, the Australian Open, Roland Garros, Wimbledon and the US Open.Footnote 9
Manufacturers, tournament and event organisers, player agents, court builders, media and other relevant stakeholders play a crucial role in the global tennis industry that shapes the current complex, dynamic and evolving tennis ecosystem. In this scenario, tennis looks into the future, trying to position the game as equal, inclusive, sustainable and innovative.
Among all the various tennis constituents, players are at the center of the game, and among them, the professional players, and the great champions who are truly considered as legends of the sport in a way that culminates in the pinnacle of tennis heroes.Footnote 10 They are usually the ones who gather the attention in a sport that has generated iconic champions since its very beginnings by combining style, etiquette, tradition and an appeal that identifies with cultures, nations and individuals.Footnote 11
2 Players, Sponsors and Endorsement Agreements
The popularity of tennis on a global scale puts the great champions at the center of attention around the world as this focus is enhanced by the prominent role of media proper and social media in the current digital environment. In most cases, great tennis players are rightly considered role models by people in general and fans in particular who follow with interest not only their performance on the court, but also everything that occurs off it.Footnote 12 In this context, it is not surprising that sponsoring companies vigorously seek player endorsements and wish to associate their brand with the image of both the sporting and the social success of top tennis players, particularly those considered idols or celebrities.Footnote 13 Through this association, the sponsoring companies ensure that fans and potential clients understand that the sponsored tennis player supports the brand and, therefore, a relationship is established that both parties believe will be favorable for their respective interests.Footnote 14
This mutual endorsement implies a benefit that usually occurs if the relationship develops within the general channels of the legal business and as long as both parties respect what was agreed.Footnote 15 The positive economic value of tennis celebrity endorsements and the considerable financial and social impact of player-related sponsorship on specific aspects such as return on investment, purchase habits, brand identification, marketing recognition and other indicators has been extensively studied in the literature.Footnote 16
Tennis players are usually at the top of the lists of endorsed athletes.Footnote 17 Historically, they have been considered among the most marketable athletes as their image has usually transcended the tennis court and impacted on brand preference, user satisfaction, customer appreciation and, most importantly, purchase intention.Footnote 18
In this scenario of an endorsement cooperation, the benefits are high when the underlying relationship is well managed by both parties and the desired alignment is achieved. However, the attendant risks and potential negative outcomes can also be high, as it is well known that on some occasions, both in sport in general and tennis in particular, sponsored athletes or endorsement organizations may be involved in situations labeled as scandalous and which are obviously not desired by any of the parties.Footnote 19 Scandals in sports settings have been defined in a variety of ways as they have attracted considerable attention from the academic literature. Due to the difficulty of adhering to a single definition, it is perhaps more appropriate to mention some of the key aspects identified as the main characteristics of a scandal.Footnote 20 These include an action that: (1) is either unethical or illegal; (2) involves multiple parts; (3) occurs or it is believed to have occurred; (4) affects the reputation and integrity of the sport and its stakeholders; (5) is of public notice; (6) can happen either on- or off-field; (7) implies a transgression of social norms or values; (8) causes public indignation.
Sports scandals have also been typified according to their most salient features. Authors have distinguished among: (1) competition scandals (i.e. doping, unsportsmanlike conduct); (2) governance scandals (i.e. corruption, manipulation); and (3) off-field scandals (i.e. from minor incidences such as social media posts to violence or murder).Footnote 21 These scandals are often triggered because of unwanted conduct by one of the parties. The most usual concerns inappropriate ethical (i.e. cheating, opinions or views), illegal or criminal behavior (i.e. doping, betting or drug abuse) by the endorsed athletes. Other cases have witnessed more serious criminal conduct (i.e. assault, sexual abuse, homicide, etc.). In this scenario, some names of athletes who have seen their sponsoring companies cancel their sponsorship contracts after having been involved in scandals that became public include great champions such as Mike Tyson, Tiger Woods, Oscar Pistorius, Michael Phelps, Marion Jones, Manny Pacquiao, Ray Rice, Gilbert Arenas, Barry Bonds, Jason Giambi, Adrian Peterson, Michael Vick, Wayne Rooney, Ben Johnson, Rashard Mendenhall and Ronaldinho, among others.Footnote 22 In tennis, probably the best-known case in recent years was the one involving Maria Sharapova.Footnote 23
There are also scenarios in which someone in the player’s entourage (i.e. a coach, captain, agent, family member, etc.) is the one directly involved in controversial behavior.Footnote 24 Another situation arises where the endorsement company engages in conduct that the sponsored player or organization considers as likely to cause a loss of reputation and is therefore contrary to their interest. In many cases, these situations involving players, teams or federations have considerable consequences which both parties should effectively prevent and address.
3 Reasons for Agreement Termination and Morality Clauses in Tennis
Sport endorsement agreements as all contracts are based on trust and goodwill. They usually include a series of so-called boilerplate clauses, as well as succinct termination terms.Footnote 25 Sponsorship agreements in sport can be terminated by either party due to a variety of reasons, such as financial or economic causes, a force majeure event, impossibility to deliver or perform, applicable legal changes or negative impact due to particular misbehavior.Footnote 26
Sponsors typically include penalty clauses in sport sponsorship contracts. A novel option in tennis was provided by Yonex, which introduced a controversial contractual clause entitling the manufacturer to financially penalize its sponsored players for each racket they intentionally break.Footnote 27 This provision refers to the duty-of-care obligation for the equipment that the sponsor makes available to the sponsored party in the sports advertising sponsorship contract.
It has been noted that in the current global digital world the behavior of top players is under constant public scrutiny. In light of behavior considered unacceptable by the parties, the fans or the public, which in turn may affect the reputation of the endorsement companies or players, it seems appropriate that the parties seek legal tools and alternatives to defend their interests under these circumstances.Footnote 28 So, how do parties prevent the occurrence of these situations and the negative consequences of the impugned conduct?
A clause that has received considerable attention in contract law due to its general use in sport endorsement agreements is that which is commonly known as the “moral clause.”Footnote 29 A moral clause in sport sponsorship contracts has been defined as a contractual provision “which identifies one or several conducts carried out by one of the parties that the other party considers unacceptable and which, consequently, allows it to adopt a series of measures linked to the contractual development, among which may be contractual termination.”Footnote 30 These have been labeled using different terms such as moral, morality, disrepute, good conduct or behavior, ethical, etc. This provision is widely used in almost all sports endorsement agreements due to the obvious increase in sports sponsorship, and because of the usual occurrence of scandals involving sport celebrities.Footnote 31 Its broad use is justified by its growing relevance, as evidence has shown that the impact of players’ behavior, whether off- or on-court, on the endorsement cooperation can have unprecedented financial, ethical and social consequences for both parties. Furthermore, such clauses have been viewed as tools for setting out adequate moral standards and fulfillment of social responsibility obligations, and to lead by example by controlling unwanted behavior. Moreover, the importance of these clauses has been further acknowledged by the immediacy with which scandals involving sport celebrities are spread through the media and brought to the attention of sponsors, organizations, fans and the public.Footnote 32
Historically, these clauses were first utilized by the film industry in Hollywood during the 1920s as an attempt to control the misbehavior of some of its best-known celebrities.Footnote 33 These clauses were then emulated by teams of US professional leagues such as baseball and football, later adapted to contracts with script writers and ultimately ended up as a common practice for all endorsement agreements in the sport and entertainment industry.Footnote 34 In terms of frequency, the inclusion of morality clauses in the sports industry is very common – not only in sponsorship contracts between endorsement companies and players or other organizations, but also in employment contracts of athletes with teams or organizations that do not include a sponsorship dimension. The clauses are incorporated in endorsement agreements for both professional and college athletes.Footnote 35 It has been stated that in light of the impact of sport scandals, “moral clauses are more important than ever.”Footnote 36 From a geographical point of view, it has been noted that morality clauses are used more frequently in Anglo-Saxon countries such as the United States, Great Britain, Canada and Australia. This is because the sports industry is considerably broad and powerful within these countries. Furthermore, these clauses originally came into use in the United States. However, their use is also common in Continental Europe and gradually they have spread to the entire world.Footnote 37
In terms of drafting, they are usually the product of negotiation as parties may adopt different positions depending on their power. Obviously, the negotiating power of a great champion or a well-known company is considerably greater than that of a young talent or a start-up. In these unequal bargaining scenarios, it is crucial that morality clauses should be drafted with a view to ensuring that both parties are protected, lest they may be deemed unenforceable on a variety of grounds. There is a crucial controversy on this issue as some authors recommend that these provisions should be very precise in the description of what the athlete must not do.Footnote 38 However, in terms of the wording of the terms of morality clauses, endorsers propagate a broad view to cover as many types of behavior and circumstances as possible. This is obviously not always fair to the athlete, who may be unaware that private behavior in his or her personal life could lead to the termination of a sponsorship agreement. Therefore, the scope of the clause may vary depending on the interests of each party. Companies usually tend to prefer broad clauses that include as many situations or types of behavior as possible, whereas players are more inclined to advocate for narrower clauses or those that include a precise description of each behavior sought.
In terms of the negotiation process, a fair recommendation would be for athletes and endorsement companies to agree on concrete and clear terms as related to the application of this clause. It is crucial that the wording is precise for the athlete to understand the conduct expected, the violation of which will result in termination of the contract. If this is not the case, everyone will be unsatisfied: the athlete, the endorser and the fans.Footnote 39 From a practical perspective, and as this is related to the social media context, before any public statement, whether a tweet, post or message, the parties should carefully consider its possible implications considering the mutual contractual obligations and the morality clauses included in their endorsement agreements.
Should morality clauses encompass private behavior of the endorsed player or only that related to the sport? This is an often-debated issue. Sponsors will tend to include all behavior no matter where it occurs. Sponsored players will look to avoid intrusion into their private lives and limit the agreed behavior to that taking place on or off the field, but directly related to their sport.Footnote 40 It is suggested that in drafting morality clauses the parties should consider the athlete’s personality as well as the company’s culture and brand image, among other relevant factors.
One of the most relevant controversies related to the use of morality clauses is the definition of morality itself. It is widely accepted that the evolution over time of moral standards is an obvious fact as those behaviors that were considered unacceptable a few decades ago are viewed as perfectly acceptable today. Some of these behaviors include conduct viewed as reprehensible in the past, such as sexual orientation, political beliefs and others.Footnote 41
Another interesting facet concerning the application of morality provisions arises where it is the sponsoring company, and not the player, that engages in conduct that, in the views of the sponsored player, is unacceptable to its interest. In this case, the nature of the organization’s behavior can negatively affect the image of the player, such that it can lead to a considerable loss of reputation. Such clauses, where they exist, are known as “reverse” moral clauses.Footnote 42
A crucial question is when and how to use morality provisions. It has been suggested that they be used with caution and following a careful, balanced and thorough assessment of whether the nature of the behavior is so damaging to the reputation of the harmed party that maintaining the agreement would be more disadvantageous than termination. In this case, to avoid ambiguity, it has also been indicated that these provisions should not only include the typology of the prohibited behavior that would trigger the clause, but also the circumstances in which the resolution can be legitimately used.Footnote 43
The possibility of using other alternatives to morality clauses has also created a considerable debate as there may be preferable options to the unilateral termination of the agreement.Footnote 44 As mentioned above, provisions related to fines, sanctions, activities or community service, as well as options offering financial incentives for good behavior, are common in some contracts, so that appropriate conduct is duly rewarded.
4 The Application of Moral Clauses in Tennis: The Impact of Social Media and the Digital World
These challenging circumstances are not new in tennis. In the early periods of the game, great champions were involved in situations considered ethically inappropriate by society at that time.Footnote 45 Research has also explored the period of the so-called “bad boys” of tennis, an era in which unsportsmanlike behavior on court attracted the attention of fans and tabloids.Footnote 46 The endorsement agreements of some famous tennis players were also affected by their activism, as was the case with Arthur Ashe, who advocated for civil rights during the 1960s and 1970s. Billie Jean King also threatened to boycott the US Open if equal pay was not offered to all players.Footnote 47 Other personal orientations equally affected the sponsorship contracts of tennis players, particularly in the 1980s and 1990s, whereby sponsors of certain female tennis champions terminated their agreements because of their sexual orientation. These sponsors added a clause that specifically referred to any behavior that could bring the company or the game into disrepute or otherwise stir or cause a negative public image.Footnote 48
In 1981, some sponsors of the great champion Billie Jean King terminated their endorsement agreements, approximately up to $2 million, when the alimony suit filed by the player’s partner became public.Footnote 49 Similarly, in 1981, Martina Navratilova’s sponsorship deals were unilaterally terminated when she openly declared being gay, following which she was unable to sign any new sponsorship agreement. She felt that one of the main reasons that endorsement companies refused to sign sponsorship agreements with her was on account of her sexual orientation.Footnote 50 The case of Nick Kyrgios was one where morality clauses could have been used. According to one of his sponsors, namely, the underwear brand Bonds, which also sponsored former Australian World No. 1 Pat Rafter, Kyrgios’s borderline permissible behavior was the main cause for its unilateral termination.Footnote 51
One example among the various criteria used in the application of morality clauses in endorsement agreements of top tennis players is that of Maria Sharapova. At a press conference held on March 7, 2016, the player revealed that following a doping test conducted after losing at the Australian Open in January, she had tested positive for the substance meldonium. In 2016, the World Anti-Doping Agency (WADA) placed this substance on its banned list because it was considered as a performance-enhancing drug. She claimed full responsibility for her actions, but indicated that she had not realized the substance was illegal and she had taken it throughout her career.Footnote 52 The ITF informed Sharapova of the positive test on March 2 and provisionally suspended her from March 12. Porsche, Nike and Tag Heuer terminated their endorsement agreements with the player as soon as she announced she had tested positive. Despite the player’s admission of the positive test, the manufacturer of her racquet, Head, however, communicated it was looking to extend their agreement with the Russian Federation.Footnote 53 Later on, Nike’s head of marketing left the door open for Sharapova.Footnote 54 Sharapova was also suspended from her position as a goodwill ambassador for the UN Development Programme (UNDP), which she had assumed since 2007. This foundation works to promote education in areas affected by the 1986 Chernobyl disaster. In November 2016, the UNDP overturned the player’s suspension five months before the end of her doping ban.
The Australian player Bernard Tomic was involved in two situations related to morality clauses arising from his endorsement contracts. In 2014, it was reported that IMG, the international talent management company, which was in charge of ensuring sponsorship agreements since he was 12, terminated its contract with him before it was due to expire, mostly on the ground of allegations concerning inappropriate on-court behavior.Footnote 55 Years later, his racquet sponsor Head decided to unilaterally terminate his contract following the player’s statement after losing at the 2017 Wimbledon event, where he said: “It’s a rollercoaster and I can’t find the commitment to work hard, enjoy myself and win trophies. It’s definitely a mental problem, I wasn’t mentally and physically on the court to perform. I don’t know why, but I felt a bit bored on the court to be completely honest.”Footnote 56 Other recent cases include that of Illie Nastase, which has already been mentioned (see note 24), and those of Justin Gimelstob, Dan Evans and Simona Halep, which are related to doping offenses.
The relationship between morality clauses, social media and the digital world is explained by the globalization of the game and its sponsorship, and the fact that tennis as a mass phenomenon transcends borders and cultures.Footnote 57 Social networks are an invaluable tool to foster endorsement alliances and impact consumer trends. The fact that the new social media platforms allow the sharing of content immediately and globally has tremendous advantages to facilitate this process. The dangers are also obvious, as the use by endorsed players of platforms such as Instagram, Facebook, Tik Tok or Snapchat may not always be appropriate.Footnote 58 In this sense, social media platforms are a double-edged sword as any statement made in social media may bring about both expressions of support or dismay in equal force. Regarding the application of morality clauses in situations where endorsed athletes post or tweet on social media, it has been suggested that, before impulsively invoking a morality clause, endorsement companies should analyze the situation carefully and critically assess whether such action or conduct is actually covered by the clause.Footnote 59 A hasty termination of the sponsorship contract may be problematic for the sponsor in case the other party seeks judicial determination, in addition to attracting media attention that may be unwanted.
5 Examples of Morality Clauses in Tennis Endorsement Agreements
This section will present several examples of morality clauses included in tennis sponsorship contracts. It is important to emphasize that as the nature of these agreements is confidential, it is considerably difficult to access these or obtain credible direct information concerning the specific content of these clauses. Therefore, the examples provided hereinafter should be considered as draft templates. In the following contract between a sponsoring company and a professional tennis player, explicit reference is made to the statements that the sponsored player may not make:
8. Public Exposure. Image Consultant.
8.1. The player shall at all times, both in his public activities and in his private life, maintain decorum in accordance with his activity, avoiding at all times any act or omission that could directly or indirectly cause damage to his public image. To this end, the player shall lead a lifestyle consistent with the professional practice of tennis, and shall refrain from attending inappropriate places, frequenting unsuitable persons, or maintaining any kind of relationship with those who could hinder his or her professional career.
8.2. The player shall refrain from making public statements or representations that reflect a religious, racial, sexual, or political preference unless authorised in writing by …
The following example includes a morality clause in the termination section of the sponsorship contract between a professional tennis player and a sports equipment sponsoring company, with special mention of actions that the player cannot take, as this would be detrimental to the sponsor.
N. Termination
The Company shall have the right to terminate this contract immediately upon written notice to the Athlete and without prejudice to any other rights the Company may have at law or in equity, if: (i) the Athlete fails to comply with its obligations specifically but not only, in conjunction with Sections E – “Company Products”, 2 / – and J – “Use of Products”; (ii) the Athlete commits any act which is known to the media and which adversely affects the Company’s brand (including being charged with any criminal offence, testing positive in an ITF doping control test or failing to be admitted to a substance abuse treatment programme); (iii) the Athlete carries out any act which is known to the media and which adversely affects the Company’s brand (including being charged with any criminal offence, testing positive in an ITF doping control test or failing to be admitted to a substance abuse treatment programme); (iii) the Athlete takes any action that is inconsistent with his or her recommendation and advertising of the Company’s products and/or disparages the Company’s brands, or does not advise the use of the Company’s products; (iv) the Athlete obscures, removes or covers any Company product logos in any manner; (v) the Athlete ceases, for any reason, to be a professional tennis player for a period of ninety (90) consecutive days or more during the contract period; or (vi) the Athlete is unable, for any reason, to use the Company’s products in accordance with this contract and in particular fails to use the Company’s products during the entire course of matches and at other competitions and/or exhibitions as required under this contract. The parties agree that in the event that the Company terminates this contract pursuant to this paragraph, the Athlete shall not be entitled to receive any pro-rata compensation for services rendered and rights granted prior to the effective date of termination without prejudice to the possibility of the Company suing the Athlete for compensation.Footnote 60
The following is an example of a morality clause in a sponsorship contract between a sports federation and a professional athlete where the provision appears in the declarations and commitments section, which is of rather new import. It reads as follows:
5. Representations and Undertakings
5.1 [The sponsored athlete] represents and undertakes that it:
(a) will comply throughout the Term with all reasonable instructions of the [Federation] in relation to its obligations under clause 3 above; …
(c) is and will remain throughout the Term in good standing with his National Federation (except to the extent approved in writing by the [Federation]);
(d) shall not, during or after the term [of the contract], do or say anything which is, in the reasonable opinion of … or could be seen to be negative, disparaging, or derogatory about the [Federation] or unbecoming of a professional tennis player.Footnote 61
Advertising sponsorship of sporting events is also a modality in which morality clauses can be included. The following is an example of a morality clause between a sponsor and a tennis tournament whereby the tournament is prevented from contracting with other sponsors who have not only a similar activity to that of the sponsor in question, but also activities related to aspects that the sponsor might consider immoral:
(4) the organiser shall inform the sponsor of the identity of all potential secondary sponsors / suppliers of the tournament at least ten (10) working days before it enters into agreements with such third parties and confirm that it will not appoint as tournament sponsors organizations whose main activity is:
(i) tobacco, gambling (lotteries, betting, or similar activities) or pornography; and / or
(ii) any other activities, products, or services which, in the reasonable opinion of the sponsor, are not in keeping with the tournament or a healthy lifestyle.Footnote 62
6 Conclusion
From its origins and first application in the Hollywood film industry of the 1920s to its adoption in the sports industry today, morality clauses in sponsorship agreements have been utilized as an instrument to help the parties in the event of an undesired circumstance. The increasing presence of social networks in today’s world and the fact that the lives of tennis players are under constant scrutiny by the public and fans provide greater relevance to the inclusion of morality clauses in sports sponsorship contracts.
These provisions have not been free from criticism as their use has been considered objectionable, unenforceable and ambiguous. The fact that the term “morality” is dynamic and changes according to the evolution of society means that the application of these provisions is clearly complex. This is in contrast to many cases where the courts have repeatedly held that contract termination based on morality clauses is enforceable and valid.Footnote 63 Recent calls have been made for an increase in the precision of the drafting of these provisions to clarify the scope of their application for the benefit of both parties.Footnote 64
In this connected world in which news travels from one part of the world to another immediately and instantaneously, the role of these clauses in regulating how endorsement companies and players balance their interests may be crucial. In a changing context, characterized by uncertainty and immediacy, the only way in which morality clauses can remain useful to the parties is by adapting to the era of the Internet and social networks.