Changes To Olympics' Controversial Rule 40 Relax Sponsor Limits
Companies without official Olympic sponsorship rights will have unprecedented freedom to use Olympians in their marketing campaigns during the '20 Tokyo Games, but only if they sign a contract exposing them to swift penalties if they go too far. According to an overhaul of the American interpretation of the Olympic Charter's "Rule 40," those companies will no longer have to submit their campaigns to USOPC for prior approval as they have for the last two Olympics. Also, they no longer face a deadline to put a campaign into market prior to the Olympics and will have more freedom on social media. However, those changes -- which experts and athlete advocates agree are significant -- only apply if an athlete registers their sponsor with the USOPC and the company signs a "Personal Sponsor Commitment." The USOPC believes that contract will give their lawyers an easier path to winning damages or an injunction than a typical rights infringement lawsuit. Before now, the primary ramification for a Rule 40 violation was, at least theoretically, to ban the athlete from the Games. "The important thing is it's balancing the accountability and responsibility across athletes and their sponsors," said USOPC CEO Sarah Hirshland. "And that is a shift from the past, where fundamentally the disciplinary process lies predominately with the athletes."
MASSIVE CHANGE TO THE RULES: This change marks a rapid evolution of Rule 40, long decried by athletes, their advocates and challenger brands. As recently as the '14 Sochi Games, athletes could be punished if their image was used commercially for any reason by any company without official Olympic rights. The USOPC in '15 created a waiver system that allowed exceptions under strict conditions. Now, if a company signs the new contract, they will be free to advertise as long as they steer clear of Olympics intellectual property. Exclusivity over athletes had historically been a major selling point for the expensive property-level rights. Currently, USOPC sponsors such as Nike and Hershey pay in the low-to-mid seven figures annually, but that is likely to rise to $25M annually if companies want to sponsor the '28 L.A. Games and Team USA. Hirshland said the new framework still protects that value while giving athletes more chances to sign their own deals. "We feel like we've been able to come to a really good place that will allow for that important balance in the ecosystem," said Hirshland.
SOME OF WHAT IS ALLOWED: On social media, athletes will now be permitted to thank their sponsors as they compete, and sponsors will now be allowed to congratulate their athletes in a limited way. In the past, that allusion to their performance was considered a violation. Another important change: Non-sponsors will now only be required to avoid actual copyrighted Olympic terms, such as Team USA and the Olympics, in their messages. Gone are the much-criticized rules that attempted to claim exclusivity over such generic terms as "gold," or even the name of the country where the Games are held. Hirshland agreed those changes were made because the USOPC recognized that "there are ways to support the athletes without creating or implying a relationship with us and the Olympics."
DOES THIS GO FAR ENOUGH? John Grady, a sports law professor at the Univ. of South Carolina who watches Rule 40 closely, praised the USOPC's new concept, though he did question whether non-sponsors would agree to the contract the USOPC is asking them to sign. "Official sponsors still have enough exclusive rights and protections through the use of Olympic IP where this would not shake their confidence," Grady said. "However, anytime more brands that are not sponsors are getting exposure during the Olympic period, it ultimately devalues the sponsorship rights they purchased." The USOPC changes come about four months after the IOC re-wrote the core of Rule 40. Because laws vary in every market, however, individual national Olympic committees were tasked with writing their own guidance. Before the IOC's decision, German athletes won a victory in court that undermined Rule 40. Han Xaio, head of the Athletes Advisory Council, said "This is definitely a step in the right direction." These rules cover a period from July 14-Aug. 14, 2020. There has not been an equivalent series of changes from the International Paralympic Committee yet.