Faculty Research Seminars will again this year take place on Thursdays from 12:30-2pm in the Law Board Room, St Cross Building in weeks 2 and 7. Lunch and refreshments will be provided from 12:30pm with the seminar starting at 1pm.
Extreme sports and extreme sports sponsoring have become key features of the modern entertainment and sports industries. This article investigates fundamental issues of the law and economics of extreme sports sponsoring from a comparative perspective. To better understand the industry, a set of 40 interviews were conducted with sponsored athletes between June and September 2018. The main findings of the article can be summarized as follows:
First, the current sponsoring practice is characterized by a high degree of inefficient risk taking by athletes.
Second, the contracts concluded between athletes and sponsors are currently unbalanced. Risks and rewards are unbundled—while the athletes bear close to all the risks, the sponsor firms reap almost all of the rewards. These contracts incentivize inefficient risk taking by athletes.
Third, there are ways to significantly increase the cooperative surplus by changing the current practice: sponsors should establish systematic counselling, coaching and training programs; they should arrange for comprehensive health, disability and life insurance for the benefit of athletes and their families, and they should change the compensation structure by no longer paying bonuses—athletes should rather receive a (higher) flat compensation. Unfortunately, these changes might not occur spontaneously in the market, for various reasons.
Fourth, a solid case can be made for regulatory intervention. The focus in this article is on potential changes that can be induced in contract, tort and labor law. I argue that sponsor firms face heightened duties of care especially vis-à-vis young and/or inexperienced athletes. They also face higher duties of care if they are (co-)organizing an extreme sports event or control the premises/facilities on which such an event takes place. Depending on the facts of an individual case, a sponsor may also be characterized as an employer of an athlete, yielding significant consequences in labor.