In early 2020, Hurley terminated its eight-year $30 million sponsorship package with professional surfer John John Florence. The termination came on the heels of the acquisition of Hurley by Bluestar Alliance, a brand management company, from Nike in December 2019. The business details of what led to the internal decision to terminate surfing’s largest contract along with numerous others isn’t relevant to this post; however, the consequences are an apt illustration of why tight contract drafting and careful adherence to contract provisions are so important.
Surfing will make its debut as an Olympic sport in 2021 when the 2020 Olympic Games are rescheduled to occur. As an amateur sporting event, Olympic regulations prohibit the appearance of endorsement logos on surfing equipment unless, as reported by Stab Mag, the “surfer’s board was made publicly available six-months prior to the event, complete with glassed-in sponsors logos.” If a surfer doesn’t abide by these regulations, then he or she must ride a logo-free board. Because Hurley reportedly refused to cooperate in complying with these regulations, the brand’s surfers were left with a difficult choice – turn their back on surfing’s splashy debut as an Olympic sport or be in breach of contract with Hurley for surfing without a Hurley sponsored board.
Regardless of the ultimate outcome or inevitable finger-pointing that occurs in the wake of Bluestar’s cleaning house at Hurley, the important question for those looking to enter into contracts of any kind – whether you’re an athlete seeking sponsorships, a social media influencer representing a product, a service provider entering into service contracts, or a business owner selling your company – is “how can I protect myself from a similar unforeseen situation?” In the case of Hurley and its surfers, negotiation and tighter drafting of the contract could have required Hurley to use commercially reasonable best efforts to comply with regulations that prohibit the use of sponsored boards in widely attended and viewed events. Further, if Hurley failed to engage in such efforts, then the surfer would not be in breach of contract if he or she competed with a logo-free board.
The goal is not to create a book-length contract that imagines every single conceivable (and inconceivable) scenario, but rather to draft flexible language that can encompass as many scenarios as possible. For a sponsorship or social media influencer contract this might mean an opportunity that allows the sponsored individual/influencer to attend an event outside the parameters of the contract’s stipulations (i.e. ride a logo-free board) if the event meets certain criteria that would raise the awareness of the individual/influencer and thus the brand. The key takeaway from John Florence and Hurley’s parting ways is this – a well-drafted contract is imperative in protecting your interests, especially when the company you are contracting with might change ownership or management styles before the contract expires. Seeking experienced advice from others in the industry whether investment bankers, attorneys, or industry consultants will help alleviate the risk of unforeseen circumstances in the operation of your contract.
This blog was written by Hunter Business Law Attorney David Kronenfeld.
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