Business

Rule 40 and the business of the Olympics

Kerry-Ann Heavens

Wednesday, October 17, 2012    

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The London Games may be over but the war over Rule 40 of the Olympic Charter has just begun. Usain Bolt recently added his name to the growing list of high profile athletes protesting the rule which prohibits participants in the Olympics from engaging in certain advertising activities for the period of the Games. Rule 40 stipulates that:

"Except as permitted by the International Olympic Committee (IOC) Executive Board, no competitor, coach, trainer or official who participates in the Olympic Games may allow his person, name, picture or sports performances to be used for advertising purposes during the Olympic Games."

This means that, for a specified period, an athlete may not use his own name or image for advertising purposes without consent. For the 2012 Olympics, Rule 40 was in effect from July 18th until three days after the Closing Ceremony, August 15th. During that time, athletes could not publicly acknowledge or endorse their personal sponsors; this included thanking sponsors on social media websites or wearing paraphernalia bearing the logo of an unofficial sponsor of the Games (hence the furor over Yohan Blake's custom-made US$500,000 watch).

Athletes found to be in breach of Rule 40 face a wide array of sanctions including removal of accreditation, financial penalties and/or disqualification from the Games.

Sanya Richards-Ross, the 400m Olympic champion and one of the athletes at the forefront of the protest, argues that not all Olympians have the benefit of million-dollar sponsorship deals. Many athletes do not receive any funding and are compelled to combine training with study or part-time jobs. The injustice of this is exacerbated by the fact that the sponsorship yield from the Olympics is estimated to be in the billions- the fact is the Olympics is big business. In December 200, Richard Carrion, the IOC's negotiator for US television rights, indicated that the IOC expected to amass over US$2 billion for television rights in the United States for the 2014 and 2016 Summer and Winter Olympics. In 2010, the organizers of the 2014 Winter Olympics had already raised US$1 billion in sponsorship revenue and were on the verge of surpassing the US$1.2 billion raised by the Beijing organizers.

Rule 40 protects such sponsorship revenue. Unfortunately, many athletes, none of whom receive direct compensation from the IOC for participating in the Olympics, feel as though they are getting the short end of the stick. Athletes are not paid for their performance in the Games but are prohibited from capitalizing on their participation. The argument is that Rule 40 is far too restrictive at a time when an athlete's income-generating capacity is at its peak. The demand is, therefore, that the IOC's Rule 40 be amended so that athletes are permitted to promote brands of their choosing and receive compensation for same.

Should the IOC's Rule 40 policy be given primacy over these practical considerations being raised by the athletes?

The IOC, in its defence of Rule 40, states that the rationale for the rule is grounded in the amateur roots of the Olympic movement. The rule was established to ensure that athletes maintained their amateur status. The highly commercialised nature of the sports industry and the fact that the majority of Olympians have long outgrown their amateur status serves to undermine the potency of this argument. The more viable justification is that the rule protects against ambush marketing.

Ambush marketers have in the past used their association with athletes to imply an association with the Games which undermines the exclusivity offered to official sponsors. The Olympic Marks and Imagery Usage Handbook defines ambush marketing as "a planned attempt by a third party to associate itself directly or indirectly with the Olympic Games to gain the recognition and benefits associated with being an Olympic Marketing Partner."

Official sponsors invest millions of dollars to facilitate the staging of the Games in return for the unparallelled marketing opportunity afforded by the event which is broadcasted around the world. Ambush marketers seek the same benefit for free. But, without sponsorship revenue, the show will not go on.

Traditionally, the war has been between the IOC and ambush marketers. The recent campaign launched by the athletes against Rule 40 may provide ambush marketers with a potent ally. The outcome will, undoubtedly, be dependent on the IOC striking a balance between the needs of its commercial partners and the athletes.

Kerry-Ann Heavens is an Associate at Myers, Fletcher & Gordon and is a member of the firm's Commercial and Intellectual Property Department. Kerry-Ann may be contacted via email at kerry-ann.heavens@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.

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