'Bad boy' clauses can sink Woods, other endorsers
APNews
Dec 17, 2009
As Tiger Woods' personal life continues to get heavy public scrutiny, "morality clauses" presumed to be in his multimillion-dollar marketing contracts are now the topic of discussion too.
The clauses allow sponsors to pull the plug on endorsement deals in the event of poor personal conduct. Depending on their wording, they may allow corporations to cut ties with the golfer without having to pay a break-up fee.
Typically included in major sponsorship pacts, morality clauses go by many names: behavioral, good conduct, moral turpitude, personal conduct and public image clauses _ even "bad boy" clauses. Companies' decisions on whether to invoke them start with the contract wording and the immediate cost of firing the celebrity.
"It's a hard call because sponsors ideally want to be associated with the No. 1 golfer," says David Ervin, who drafts endorsement agreements for companies as a partner in the Washington, D.C. office of law firm Kelley Drye & Warren.
Here are some questions and answers about morality clauses.
Q: What are morality clauses and what do they stipulate?
A: They are provisions in contracts that prohibit certain behavior in a person's private life. They're included in the contracts of many public figures such as athletes, actors and other celebrities and increasingly for top business executives as well _ anyone whose misbehavior could easily tarnish a company's image.
Sometimes the behavior is spelled out, such as being charged with a crime. But most clauses are written generally because they couldn't possibly foresee every potential offense, according to Marc Edelman, who teaches contract and sports law at Barry University in Orlando, Fla. For example, who would have thought to ban running a dogfighting ring in the case of NFL quarterback Michael Vick?
Wording from one typical contract requires that the person "refrain from conduct which would bring him into public hatred, contempt, scorn or ridicule, or shock, insult or offend the community, or offend public morals or decency."
Q: Where did the clauses originate?
A: They date to the early days of Hollywood when stars' wild parties and drug use resulted in bad publicity. Universal Film Co. started inserting them in contracts in 1921 after actor Fatty Arbuckle was arrested on suspicion of manslaughter in a starlet's death. Arbuckle was ultimately acquitted but the clauses became standard.