By Weston Anson, Lacy J. Lodes, esq., and David Noble
Original Posting: February 2013, Law Journal Newsletters, Entertainment Law & Finance
Unlike Patent, trademark and copyright law, rights of publicity are governed by a patchwork of state statutes and common-law decisions, rather than by a single federal statute. And unlike trade secret law, rights of publicity are not subject to a uniform state law adopted in the vast majority of states. But as with valuing other intellectual property assets, right of publicity (ROP) valuations need to consider the unique characteristics of the subject asset and the context of the valuation.
Typically, ROP valuations are needed for one of three reasons: when negotiating a transaction (i.e., endorsements, licensing, etc.); calculating damages for ROP violations; or valuing celebrity estates and trusts. Each ROP asset is unique and each of these contexts varies, posing some unique challenges for reasonable analysis of ROP assets.
Endorsement Transactions
Before the opening ceremonies of the 2012 Summer Olympic Games had even taken place, Jamaican sprinter Usain Bolt had collected $20 million in endorsement revenue. After he won three gold medals, online delivery company Shutl offered Bolt a 1% equity stake in the company to headline its new marketing campaign. See, “Usain Bolt Gets Most Awesome Endorsement Offer Yet,” Adweek.com, http://bit.ly/Thwypk. A few months before that, the Chicago Bulls signed reigning National Basketball Association MVP Derrick Rose to a five-year extension worth $94 million. However, his new endorsement deal with adidas was by far the largest contract he signed during the season. As the second largest shoe deal in history, Rose’s deal with adidas reportedly included $185 million in guaranteed money over 13 years, with the potential to reach $260 million through incentives; far larger than his on-court compensation. See, “Derrick Rose, Adidas Agree to Massive Endorsement Deal, According to Reports,” SB Nation Chicago, http://bit.ly/VREbAW.
The trend of corporations looking to celebrities to market their products is nothing new. With the immense popularity of sports, even athletes with average on-field performance may be more recognizable than other celebrities. However, even in highly visible transactions, the future economic benefit and appropriate endorsement fee can be difficult to ascertain. Even after the fact, a concrete determination of worth created through endorsement-based marketing is difficult. And instances of celebrity falls from public grace, such as Lance Armstrong’s recent steroids-use scandal, can complicate ROP valuations even further.
Changes in sales trends can provide strong evidence of value generated, but apart from conducting exhaustive surveys, corporations can’t know conclusively if these products would have sold with or without the endorsement in question. Further complicating the matter, preliminary research by CONSOR Intellectual Asset Management indicated a celebrity’s relative level of fame bears little correlation to the amount paid for endorsements. In other words, relying solely on observed market transactions may not provide a reasonable indication of value for analyzing celebrity endorsement opportunities.
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