Sports Shorts recently wrote about morality clauses in the context of Sharapova and Head, asking whether we are seeing a shift in sponsors’ attitudes. Last week, in the wake of a Trump electoral victory, morality clauses were once again brought into focus when Mexican racing driver Sergio Pérez announced on Twitter that he was severing ties with one of his sponsors after it published a tweet apparently mocking Mexicans. In what appears to have been an attempt to encourage Mexicans to purchase its sunglasses in the aftermath of the US election result, Hawkers (the sponsor in question), tweeted:
“Mexicans, put on these glasses so they can’t see your crying eyes tomorrow when building the wall”
Unsurprisingly, the tweet was swiftly removed and Hawkers followed with a series of tweets stressing that its comment was meant in jest. Pérez, however, was not amused, commenting:
“I didn’t find it funny at all. I have decided to split with the brand because I am not in favour at all of the comment…” “They are very sorry and I am very sorry too. I know the owners and they have done incredibly well and the relationship was going to be very successful. But my country and my people come first and I want to support them and won’t let anyone make fun of my country.”
The Pérez /Hawkers incident provides a particularly interesting example of the interactions between sponsors and athletes in the field of morality. Whereas we are used to reading reports of sponsors ‘dropping’ their athletes following various indiscretions, it is much rarer to see such a glaring example of the reverse, where it is the athlete who terminates the relationship due to the sponsor’s behaviour. So, what is at stake in a situation like Pérez’s and Hawkers’?
The answer, reportedly, is 20,000 pairs of sunglasses.
The sunglasses in question are limited edition “Hawkers x Pérez” sunglasses, which had been manufactured ready for sale shortly after the offending tweet and which have now been scrapped.
Of course, we do not know the terms of Pérez’s agreement with Hawkers (although it is interesting to pause here and note the recent approach of Skins, which proactively publicised its investigation into Robert Young, including publishing a redacted version of its contract with the runner) but, assuming he has validly exercised a right to terminate his agreement with Hawkers, it is highly likely that he did so by reference to a morality clause. Most sponsorship contracts will include an obligation on the parties not to make defamatory remarks about the other. However, the specific contents of a morality clause can vary hugely beyond this starting premise. Where the athlete and the sponsor are equally well-advised and enjoy relatively balanced bargaining power, a morality clause is likely to be drafted mutually. The specific behaviours that trigger the clause, however, are up for negotiation. For example, is the termination right triggered only by objectively measurable occurrences (such as the commission of a criminal offence) or is it broad enough to cover more subjective matters (such as sexual infidelity)?
If Pérez’s morality clause is not mutually drafted or is not broad enough for a termination right to arise due to Hawkers’ tweet, then Pérez may himself be in breach of contract, having purported to terminate the agreement without any right to do so. In this author’s opinion, in the absence of a contractual right to terminate, it is unlikely that Pérez would succeed in relying on a common law right to terminate (for example, by arguing that Hawkers’ tweet amounted to a repudiatory breach). In that scenario, the driver might find himself on the hook for the entire batch of Pérez branded sunglasses which had to be scrapped.
That said, the reality for Hawkers is arguably bound to be PR-focused. A sponsor (or indeed athlete) on the receiving end of a morality-related termination is likely to think carefully before suing its counterparty. Arguably this is particularly so in the case of a racially sensitive issue in the current post-election climate. Indeed, Hawkers has repeatedly apologised for the tweet and apparently refocused its marketing efforts, apparently seeking to reinforce diversity as one of its core brand values. Some reports suggest it has in fact sold the Pérez branded glasses and donated the profits to a Mexican children’s charity.
It remains to be seen whether anything more will become of the matter but, regardless, it will no doubt serve as a reminder to athletes and sponsors alike of the implications of tweeting in haste.