The Karnataka High Court has appointed former High Court Judge R. Gururajan as the arbitrator to resolve the dispute between the Indian Cricket Team captain Mahendra Singh Dhoni and Karnataka Soaps and Detergents Ltd. (KSDL), which manufactures the Mysore Sandal soap (http://www.hindu.com/2009/06/24/stories/2009062454931000.htm). The dispute arose when KSDL claimed that Dhoni had breached an endorsement agreement that he executed with KSDL in January 2006, by not performing the promotional obligations for which he had contracted with KSDL. The contract was subsequently terminated by KSDL in December 2007, a month before it was to officially expire.
From media reports, it appears that Dhoni has defended his non-performance of the contract by stating that he was not given enough time by the Board of Control for Cricket in India (BCCI) (http://www.business-standard.com/india/news/dhoni-ksdl-spar-on/315662/). A common provision in most endorsement agreements executed by cricketers is an acknowledgment by both the Player and the Sponsor that the Player is bound by the rules and regulations of the ICC, BCCI, IPL Governing Council, the IPL Team and the State Association. Accordingly, the performance by a Player, of his obligations under an Endorsement Agreement is made subject to any of his obligations, specified under the rules and regulations of the aforementioned bodies or any agreements he may enter with any of these bodies from time to time.
If the endorsement agreement between Dhoni and KSDL contained a clause similar to the one mentioned above, and if Dhoni’s counsel is relying on such a clause to defend his non-performance, the onus will be on Dhoni to establish that either (a) he was prohibited by the aforementioned governing bodies from specifically performing his endorsement agreement with KSDL; or (b) that his Playing commitments during the period between January 2006 to December 2007 were such that there was no time for him to perform any of his endorsement obligations. The above arguments, while being reasonable grounds for Dhoni’s defence, would be particularly difficult for Dhoni to make, if he has performed other endorsement obligations during the same period.
While the final outcome of this dispute is still some time away (!!), considering that the arbitrator to the dispute has been appointed a good two years after the contract was terminated, the dispute throws up several lessons for Players, Player Agents and Sponsors on how to manage endorsement relationships effectively.
From the perspective of Players and Player Agents, they need to take a careful look at a Player’s playing calendar before committing their time to sponsors, so as to avoid outcomes such as the above. In addition, even if there are sufficient breaks for a Player in his Playing Calendar, an agent may also need to consider a Player’s obligations towards his family, his training schedule, and his employment obligations (if a Player is employed by either a Government organization or a bank) before committing a Player’s time. There has to be a larger industry realization that a breach of contract (apart from creating legal hassles for the Player), also impacts the credibility of the Player and the agency that manages the Player.
Another important point to note here is that the Player-Agent relationship traditionally has been structured on the basis of a “Minimum Guarantee” commitment i.e. that the Agent has to commit to a Player that he/it will necessarily obtain endorsement/sponsorship/media/licensing & merchandising contracts worth a minimum amount in a year if the Agent is to represent a Player for that duration. If the Agent is not able to provide a Minimum Guarantee, then the Player has a right to terminate his relationship with such Agent and obtain the services of another agent. The “Minimum Guarantee” commitment places the Agent under a tremendous strain to ensure that the Player obtains as many commercial relationships as possible. Consequently, this also places the same amount of strain on a Player to commit to as many commercial relationships as possible, thereby increasing the chances of conflicts/breaches in a Player’s playing commitments as also his sponsor commitments. A good agent plays a critical role in shaping the public persona of a Player. Therefore, it is critical that there be a certain amount of stability in a relationship between a Player and an Agent. For this to goal to be achieved, a Player-Agent relationship ought to transcend, if not do away with, a “Minimum Guarantee” obligation. This in turn, will be a function of the maturity of the Player Representation Industry in India over a period of time.
From a Sponsor’s perspective, it is essential that a Sponsor undertake a basic due diligence on the Player’s ability to perform an endorsement contract (by examining his past track record, if any) and by asking for a confirmation from the Player and his Agent that none of his other endorsement commitments during the same period will prevent him from performing his obligations towards such Sponsor. Furthermore, a Sponsor should also determine whether a Player is so over-exposed in the media that it may not serve the best interests of a brand for such Player to act as its Brand Ambassador.
A basic level of due diligence from all concerned parties to an endorsement relationship, as described above, can go a long way in structuring a win-win relationship.
About the Author:
Amrut Joshi leads the sports practice at MMB Legal in Bangalore and can be contacted at amrut@mmblegal.in. The views expressed in this post are his personal views.
