A Relaxed Rule 40 Will Allow Athletes Greater Endorsement Opportunities at Tokyo Games
Remember Ryan Lochte’s “Jeah!” sunglasses from the 2012 London Olympics?
The plastic pinhole shades, marked at $14.95 a pop and now nowhere to be found, sported a phrase that the swimmer adapted from Young Jeezy’s celebratory exclamation “Cheah!” Reezy liked the word so much that he tried to trademark it, running afoul of Compton rapper MC Eiht, who claimed to have used it first.
But the more seminal story here is that Lochte filed for the (ultimately abandoned) federal patent on Aug. 1, smack in the middle of his third Olympic Games, where he won two golds, two silvers, and a bronze. He applied with a vision to put the word all over products he would not be permitted to sell until the end of a blackout period enforced by something called IOC Rule 40.
Whether he knew it or not, his grill-wearing, medal-biting, jeah-ing ways established his own personality as a brand lying beyond his sponsor relationships, helping him get the best of Rule 40, an eligibility bylaw of the Olympic Charter that until 2019 prohibited Olympics-related advertisements by non-official sponsors from nine days before to three days after the Olympic Games. In Lochte’s case, the wait time actually generated more buzz for his promised goods; for most other Olympians, it has just been a limitation.
Previously, IOC Rule 40 dictated that, during the Games Period, Olympians were not allowed to mention or endorse companies that were not official Olympic sponsors. Even outside this window, non-sponsors from the U.S. had to submit ads attempting to reference athletes’ Olympics participation to the United States Olympic Committee (USOC) for clearance before release.
The first time that the International Olympic Committee (IOC) governing the Olympic Movement set out to regulate the advertising activities of competitors was in 1962. Back then, athletes could not receive payment for use of their name or image on television or radio if they wanted to be in the Olympics. As an event founded on independence from religious, political, and commercial influences, the Games required that participants maintain amateur status.
In 1991, the IOC created Rule 40 to guard the intellectual property (e.g. logos, images, slogans, music) of the Olympics and assert the exclusivity of its official sponsors. The fear was that, without this protection, ambush marketers could ride the fame of the Olympics without financially backing it and divert business from sponsors who had. There was no doubt by this time that corporate sponsorships funded most of the expenses of the Games.
Photo Courtesy: Peter H. Bick
The rule started visibly disenchanting a critical mass of athletes right around the time Reezy was plotting his jeahmpire of apparel and accessories. Not to be outdone, most-decorated Michael Phelps had a scare that same summer when Twitter leaked Annie Leibovitz’s photographs of him posing for Louis Vuitton. This violation of Rule 40 sparked discussions of whether he would lose the medals he had just won.
On land, Team USA track runners Nick Symmonds and Sanya Richards-Ross started spreading the hashtags #WeDemandChange and #Rule40 during the London Games to draw attention to the unfairness of the limitations. Athletes and personal sponsors also found ways to hack the system, promoting one another without naming names.
In an Aug. 8 Twitter post, Symmonds appeared in front of a shrub trimmed into a Nike running shoe, complete with the telltale swoosh of the brand, touting his personal sponsor in anything but name. His fight went deeper and farther than these moments. He was denied a path to the 2016 Rio de Janeiro Olympics over another sponsorship regulation scuffle and brought an anti-trust lawsuit against USA Track and Field and the USOC as CEO of his own brand Run Gum. A judge promptly threw the case out, stating that the defendants had immunity through the 1978 Amateur Sports Act.
But this authority began crumbling, and there were two huge reasons for this.
First, not even the Internet, let alone social media, existed when Rule 40 came into being. The London Olympics were the first Games after the invention of Instagram. And though Twitter was around for the 2008 Beijing Olympics, the rise of hashtag culture only truly got going in 2012. Rule 40’s extension to the realm of athletes’ personal accounts, where so much of advertising and amplification happens now, created an ugly juxtaposition between the IOC’s old decrees versus the privacy and free speech of athletes. And the world could see and share the clash.
Second, the concept of the amateur Olympic athlete became moot long ago. Modern athletes’ livelihoods depend on sponsorship opportunities. Rule 40’s blackout period, while presented in part as a measure to keep the focus on athleticism rather than commercialism, began seeming increasingly punishing to competitors who are at the peak of marketability during the Games. This was particularly so for lesser-known Olympians whose 16 days of semi-fame presented a once-in-a-lifetime chance to attract endorsements.
Without sponsorships, American Olympic swimmers make an average $10,000 to $30,000 for their participation. And being in the most-watched Olympic event in the world does not change the fact that only the top medalists clear $1 million dollars in sponsorships, compared with showers of multimillions for soccer and basketball players.
The IOC felt the heat from athletes in 2012 and decided to allow “generic advertising” by non-official sponsors during the next Games. But the sports law community deemed the USOC’s resulting guidelines for the 2016 Rio Olympics “an affront to athletes’ rights.”
The USOC document went so far as to state the words considered proprietary and thus off limits to non-official sponsors – “2016,” “summer,” “Rio,” “gold,” “silver,” and “bronze” were among them. The social media directives went a step further than those set in 2012, cautioning that posts on sites like Instagram and Twitter must “conform to the Olympic values of excellence, respect and friendship and must not be undertaken for the purposes of demonstration.” This smacked of the currently controversial IOC Rule 50 disallowing Olympian demonstrations – it was being injected into yet another rule that was already provoking freedom of speech concerns. Meanwhile, illegal drug dealers out on Rio’s streets sold bags of cocaine printed with the Olympic rings – the hallmark IP of the Games – with near impunity.
One of the USOC’s rationales was “to preserve sources of funding, as 90 percent of the revenues generated by the IOC are distributed to the wider sporting movement. This means that USD 3.25 million every day goes to the development of athletes and sports organisations at all levels around the world.” This suggested that the USOC already felt that athletes were being paid enough and preferred to curb the non-official opportunities of individuals rather than risk upsetting the stakeholders bringing in multiple billions of dollars to an event that took the same to put on.
In February 2019, the German Cartel Office (GCO), Germany’s national competition regulator, led the charge from the top down and set forth that Rule 40 was anti-competitive toward non-sponsors and limiting to athletes who could otherwise take advantage of promotional and advertising activities leading up to and during the Games.
Once the GCO disposed of the blackout period for German athletes, the IOC Executive Board extended the power of interpretation and application of Rule 40 to the national committees. On October 8, 2019, the USOC followed suit with new guidance on IOC Rule 40, more genuinely relaxing its approach to the rule than it did in 2016.
Leading up to, during, and after the upcoming Tokyo Games, American Olympians will be able to appear in personal sponsors’ advertisements and congratulations messages. They will also be able to engage new personal sponsors and carry on with financial and creative negotiations during what used to be a blackout period. For the first time, athletes will get to shout out to their personal sponsors during the Games. Social media posts will not carry as imminent a threat of sanctions ranging from stripped medals to fines to disqualification.
Personal sponsors will still need to register for Rule 40 permission before marketing and comply with a whole other set of rules outlined in a Personal Sponsor Commitment (PSC). Each Team USA athlete will be allowed seven thank you messages and no more. Personal sponsors will still not be able to say anything about their athletes’ being on Team USA or in the Olympics beyond giving brief congratulations.
People looking forward to the Olympics would do well to spy for changes in the field day of commercial breaks that the Games entail. Where athletes choose to direct their seven thank you messages during the Rule 40 Period from July 13 to August 10 and what they do when this quota runs out will be interesting. Athletes’ personal social media accounts, where challenges to Rule 40 and Rule 50 may converge and even synergize, could create as entertaining and meaningful of an arena as the athletic events themselves.
Thanks Ms. Jung, invaluable information for all Olympians. keep the articles coming!
Do you really think that the Instagram comment section of a thread post could actually measure up and even exceed entertainment delivered by the actual, competitive Olympic Games?
They get to compete on a world stage…..be an accountant then.