Intellectual property (IP) has a significant impact on the intangible asset value of most businesses, no more noticeably than in the realm of sports. Broadcasting revenues, merchandising, and trade marks related to everything from team logos to team names and slogans are just some of the many areas that display the extent to which sport has generated and continues to generate valuable IP assets.
Three key factors encapsulate value: cash flow, growth, and risk. The IP value generated by sport is no different and relies upon the same factors; furthermore, due to the extent to which most global sporting organisations rely on IP for the generation of positive cash flow, the importance of protection and growth plays a significantly larger role.
IP in sports is often broken down into the following main categories:
Broadcasting rights represent a substantial portion of sports-related IP. International organisations like the International Federation of Association Football (FIFA), leagues like the English Premier League (EPL), and teams negotiate deals with broadcasters, granting them the exclusive rights to televise or stream games and events. This generates a substantial amount of revenue and has continued to steadily increase over time. The English Premier League, for example, which previously between 2007 and 2010 generated $3.16 billion in media rights revenue, is now expected to generate a mammoth $12.1 billion in media rights revenue in the next 3–5 years.
Trade marks play a central role in merchandising. Team names, logos, and slogans are trade marked to prevent unauthorised use and ensure that only authorised merchandise, often a substantial revenue stream, enters the market.
The popularity of merchandise is directly linked to the strength of the associated trade marks. A strong brand that is not adequately protected by IP protections will directly impact sales and lead to a decrease in the overall asset value, as weak protection will likely result in the rise of unofficial or counterfeit goods entering the market.
Commercialisation of an athlete’s image or being associated with a club through endorsement deals is a common and lucrative practice in the world of sport. Athletes and clubs, particularly those with high visibility, popularity, and influence, leverage their brand to secure endorsement agreements with various brands and organisations.
For athletes, these endorsement deals often involve the licensing of the athlete’s image, which includes their name, image, likeness, and possibly even their voice, for use in advertising or promotional campaigns.
The Sports IP Management Conundrum
Managing these key assets is often a difficult but necessary task. IP rightsholders should at all times be kept up to date, aware of any new IP that has been developed, and decide on an appropriate manner in which to protect these assets.
World Rugby found itself under fire for the removal of content from Youtube by one of rugby’s biggest fan content producers, Squidge. World Rugby, as the rightsholder, has the right and is required to protect its IP however, as IP generated in sport is so unique, unique management systems are required. In removing such fan content, World Rugby has strongly protected its IP, but it has also restricted the ability of fans to produce content, which could impact the growth of the game in the long term.
The chosen IP management systems must allow fans the opportunity to interact with the IP generated while simultaneously allowing for adequate protection of the brand as a whole. Understanding the nature of the IP generated, the possible protections, and its consequences is essential to effectively generating a positive cash flow while simultaneously ensuring the growth and happiness of the fan base. As IP remains the largest contributor to positive cash flow for almost all sports franchises and the like, implementing an effective and adequate IP management system is an essential requirement.
Article by Viteshen Naidoo | Junior Associate