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December 23rd, 2022
Key Sports Law Cases & Developments 2022
Sports Group Partner Christopher R. Chase speaks with LawInSport on the most important legal cases and developments from the world of sports law in 2022. Christopher contributes his thoughts on the implosion of the cryptocurrency exchange FTX:
“The implosion of cryptocurrency exchange FTX and its subsequent bankruptcy filing will likely change the structure and contractual obligations of both athlete endorsements and corporate sponsorships going forward. For example, several class action lawsuits have been filed against athletes and celebrities for their role in promoting FTX (as well as other crypto and NFT brands), arguing that such promotion was an unfair and deceptive practice under federal and state law – placing a spotlight on endorser liability. To avoid potential claims, athlete and celebrity endorsers should ensure that proper substantiation exists for any advertising claims that the endorser makes on behalf of a brand and that the endorser has a good faith belief in such advertising claims. While an indemnity from the advertiser for claims about its product is generally standard and protects an endorser from liability to some extent, it may not be worth much when the brand has little ability to back it up – so the athlete or celebrity endorser would be wise to consider the actual evidence for the advertising claims before agreeing to endorse the product or service.
Regarding sponsorships, the FTX situation is yet another cautionary tale for rights holders – particularly when entering into agreements with entities in nascent industries. Seeking more payments up-front (and in dollars!), limiting the length of the contractual term, expanding the ability to terminate, and seeking regular audits or reviews of financial statements from sponsors (particularly ones that do not have publicly available financial statements) are all considerations rights holders may want to take going forward. Now that FTX has filed for bankruptcy, rights holders have to file motions to have the court reject the sponsorship agreement or otherwise lift the automatic stay so that the rightsholder can terminate the agreement – both procedural and substantive situations in which rights holders do not want to be.”
See the full article here. (Behind paywall).
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