LAP
Teaching Guide
Leadership, Attitude, Performance ...making learning pay!
Productcc
Performance
Indicator:
Business Law
LAP 3 PM:013
Performance Indicator: BL:058
Legal Issues in Sport/Event Marketing
Playing fair
Risky business
Three strikes and
you’re out
Comstock Images/Comstock /Thinkstock
ACKNOWLEDGMENTS
LAP development requires the leadership and active participation
of many individuals—instructors, writers, editors, and others.
Special credit is due the following individuals for their
contributions to this LAP:
Original Developer: Sarah Bartlett Borich
Final Editing: April J. Miller
Production Manager: Mary Carlisi
Production Assistance: Barbara Boggs, Alana Gildner
Graphics: Christopher C. Burke
Produced and distributed by MBAResearch, a non-profit research
and development center, 1375 King Ave., P.O. Box 12279, Columbus,
Ohio 43212-0279 Ph: (614) 486-6708. ©2013, by MBA Research and
Curriculum Center, Columbus, Ohio.
Sample logos and trademarks used in this learning activity package are
for instructional purposes only. Many are registered trademarks. Use in
this instructional material does not imply endorsement.
Details: www.MBAResearch.org
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 2
TABLE OF CONTENTS
4
So What?
Rationale for studying legal issues in
sport/event marketing
4-18
Discussion Guide
An outline of the content in the student
booklet of LAP-BL-003—Cover Your Bases
(Legal Issues in Sport/Event Marketing).
In addition, discussion questions have
been included throughout the content to
build classroom discussion/ interaction.
4-18
17
Presentation Slides
Optional visual support for the LAP can
be obtained in graphics presentation
software. The slides to be shown are
numbered within the discussion guide.
Make It Pay!
Ways students can use their understanding
of legal issues in sport/event marketing NOW!
17
The Gray Zone
An ethical dilemma associated with
legal issues in sport/event marketing
19
Directions for Activities
Directions are provided for four activities
that reinforce the lesson. Two of the
activities are designed for completion by
an individual student, while the other two
provide preparation and process information for group completion.
20 Individual Activity 1: Legal Issues in
Sport/Event Marketing Match-Up
activity. Students complete a handout,
matching terms to different legal
issues in sport/event marketing.
24-25 Total Recall Key
Answers to the Total Recall questions
found in the student booklet on pages
5, 7, and 8
26
Practice Test
A short-answer test covering main aspects
of LAP, can be used as a guide for note
taking, as a formative test, as a summative
test, etc.
27-29 Practice Test Key
Answers to the short-answer questions
found in the Practice Test
30-32 Posttest
Twenty multiple-choice questions that
assess student understanding of legal
issues in sport/event marketing
33-36 Posttest Key
Descriptive answers to the multiple-choice
questions found in the Posttest
37
Posttest Grader
A listing of correct responses to the
multiple-choice questions
38-39 Glossary
Definitions of words defined in the LAP
and other words with which students may
not be familiar
40-41 Questionnaires
Student and teacher questionnaires that
can be sent to MBAResearch to improve
the LAP
22-23 Individual Activity 2: Major League
Franchise Relocation. Students
research a franchise relocation in
major league sports.
19 Group Activity 1: Small groups of
students research right of
publicity/right of privacy cases.
19 Group Activity 2: Small groups of
students research labor relations
incidents in professional sports.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 3
Performance Indicator: Describe legal issues affecting
the marketing of sport/event products. (BL:058)
OBJECTIVES
A – Explain issues of unfair trade practices in sport/event marketing.
B – Explain issues of risk management in sport/event marketing.
C – Explain issues of contract law in sport/event marketing.
1-3
DISCUSSION GUIDE
OBJECTIVE A (Slides 1-3)
(Slide 4)

So What? (Why learn about legal issues in sport/event marketing?)
A. Each of these situations illustrates an aspect of sport/event marketing that involves the law.
1. Sitting down to watch the big game, only to find that it was “blacked out” in your area
2. Buying tickets outside a stadium for more than face value because the game was sold
out
3. Entering a half-court shot contest at a basketball game for some major prize money
DISCUSSION #1: Ask students to discuss situations such as these in which they
have been involved.
B. Legal issues affect sport/event marketing at every level.
C. National, state, and local laws and court decisions have shaped organized sports and events
into what they are today.
D. From the highest level of a sport organization to the lowest level, legal issues must be
constantly and carefully considered.
E. If you’re thinking of pursuing a career in sport/event marketing, you’ll need to start with a
basic understanding of the laws and regulations in the industry.
(Slide 5)
•
Sports are a business.
A. Teams and owners are trying to make money.
B. U.S. economy has always depended on honest, healthy competition between businesses.
1. They offer better quality products.
2. They offer lower priced products.
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DISCUSSION GUIDE (Obj. A, cont’d)
3. Modern sport franchises fit capitalist model.
a. Championships—corporate excellence as well as athletic excellence
b. Winning teams amass great numbers of fans.
1) Greater ticket sales
2) Greater licensed merchandise sales
3) Greater sponsorship fees
DISCUSSION #2: Ask students to discuss the different ways they have observed
sport teams competing for fans. What methods do they think are most effective?
•
Unfair trade practices in sport/event marketing
(Slide 6)
A. Trademark infringement and effects on licensing:
1. Two reasons trademarks are important to sport organizations:
a. Money
1) Licensed product sales—lucrative business venture
2) Can charge other companies for the right to use trademarks
a) Initial fee for permission
b) Portion of profits
EXTRA INFORMATION: The initial fee a licensee pays for permission to use
trademarks is called a guarantee. The portion of profits a licensee pays back to a
licensor is called a royalty.
3) Maximum revenue with minimum effort
b. Reputation
1) High-quality merchandise gives customers a positive impression of the team.
2) Licensed products are a way to connect with people.
3) Licensed products are a way to package a “perishable” product and let fans take
it home with them.
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DISCUSSION GUIDE (Obj. A, cont’d)
(Slide 7)
2. The Lanham Act
a. Clearly outlines procedures for trademark application and registration
b. Defines trademark infringement
1) Illegal
2) Occurs when one organization copies, counterfeits, or reproduces another
company’s trademarks to use for its own profit
3) The copy doesn’t have to be exact, just close enough to cause confusion.
4) Damages a sport/event organization
a) By taking away potential licensing profits
b) By confusing the public
5) Example—counterfeit Atlanta Braves cap
a) Takes away potential licensing profits from the Braves
b) If poorly made, tarnishes or reduces the Braves’ image
DISCUSSION #3: Ask students if they have ever purchased an item (sport or
other) because they were confused by similar trademarks.
6) Legal action against trademark violators
a) Prosecution in court
b) Injunction—court order that stops infringing activities until a trial begins
c) Fines/imprisonment
EXTRA INFORMATION: As more and more information and commerce
exchanges take place over the Internet, it’s important for trademark owners to
consider registering their marks in foreign countries. A group called the World
Intellectual Property Organization is heading up an effort to globally standardize
application and registration procedures to save trademark owners time and
money when trying to make their marks international.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 6
DISCUSSION GUIDE (Obj. A, cont’d)
(Slide 8)
B. Antitrust, the baseball exemption, and television blackouts
1. The Sherman Antitrust Act of 1890
a. Passed by Congress in response to a small number of companies controlling a great
deal of the economic power in the U.S.
b. Based on Congress’ constitutional power to regulate interstate commerce
c. Makes illegal any action restricting free trade and competition
d. Prevents monopolies (conditions in which a market is controlled by one supplier and
there are no substitute goods or services readily available)
e. Updated a few times during the 1900s, but basically unchanged
DISCUSSION #4: Ask students to discuss any cases of antitrust violation they
know about (e.g., Microsoft).
EXTRA INFORMATION: Updates to the Sherman Act include the Clayton
Antitrust Act (1914), the Robinson-Patman Act (1936), and the Hart-ScossRodino Antitrust Improvement Act (1976). Antitrust laws are regulated by the
Antitrust Division of the U.S. Department of Justice as well as the Federal Trade
Commission (created by the Clayton Act).
(Slide 9)
2. The baseball exemption (1922)
a. Back then, baseball teams were more local businesses than interstate ones.
b. Court ruled that Sherman Act did not apply to baseball.
c. Although baseball is now interstate and even global, the exemption still exists.
d. Modern effects:
1) Franchises cannot relocate without the approval of Major League Baseball,
although teams in other professional sport leagues can move at will.
2) Baseball owners can’t sue the league for blocking relocation since antitrust laws
do not apply.
3) MLB can contract (eliminate) teams from the league.
4) MLB has total control over all minor league affiliates.
5) Unique situation for sport marketers working in baseball because they may have
to market teams in cities that have lost interest
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DISCUSSION GUIDE (Obj. A, cont’d)
DISCUSSION #5: Certain groups are working to get the baseball exemption
revoked. Ask students to discuss and explain their opinions on whether the
exemption should stay or go.
(Slide 10)
3. The Sports Broadcasting Act of 1961
a. Granted all the major professional sport leagues a limited antitrust exemption
b. Allows leagues to pool their broadcasting rights and sell them as a package to
television networks
c. Over the years, the courts have interpreted this law to include a league’s right to
“black out” games in certain territories.
1) When a team is playing at home, the league can block its broadcast in the home
territory if the game is not a sell-out.
2) Rules are meant to encourage ticket sales but are often a source of frustration
for fans.
3) Puts pressure on sport marketers to sell out games and keep public relations
positive
EXTRA INFORMATION: In 2004, the National Invitation Tournament (NIT) filed
an antitrust lawsuit against its competitor, the NCAA, for requiring all NCAA
basketball teams to compete in the annual NCAA tournament if they are invited.
The NIT claimed that this requirement put its tournament and, therefore, its
financial survival, in jeopardy. The two parties settled in 2005 when the NCAA
purchased the NIT’s pre- and post-season tournaments for $40 million.
C. Right of publicity and right of privacy
1. Celebrities’ images—very valuable
a. Great commercial worth
b. Many individuals are considered their own personal brand.
1) Justin Bieber
2) Danica Patrick
3) David Beckham
4) Katy Perry
DISCUSSION #6: Ask students what other celebrities they would consider a
“brand.”
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
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DISCUSSION GUIDE (Obj. A, cont’d)
2. State laws and many court cases have established a person’s right to protect his/her
name and likeness.
a. If someone feels that his/her identity is being misappropriated, that person can take
legal action.
b. Two types of laws meant to prevent identity misappropriation:
(Slide 11)
1) Right of publicity
a) Meant to financially protect a person
b) Protects a person from the unauthorized use of his/her name and likeness
for financial gain
c) Gives individuals the exclusive right to their identities for commercial use
d) Example—Only LeBron James himself has the right to decide to endorse a
certain product or license his name to a company.
(Slide 12)
2) Right of privacy
a) Meant to mentally/emotionally protect a person
b) When seclusion has been intruded upon
c) When given an unreasonable amount of publicity
d) When placed in a false light
e) Example—celebrities suing tabloid newspapers for harassing them or making
up lies about them
3. Acceptable to use a celebrity’s identity
a. In a book
b. On a television news show
c. In a newspaper
d. In a magazine
e. But sport/event marketers must learn where to draw the line between freedom of
expression and violations of right of privacy and right of publicity.
f. Important to obtain written consent and provide payment to the celebrity before
using his/her image to benefit your organization
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
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DISCUSSION GUIDE (cont’d)
OBJECTIVE B (Slide 13)
(Slide 14)
•
Risk management in sport/event marketing
A. Loss prevention—a function of risk management that focuses on planning and security
procedures to avoid fraud, theft, or injury
1. All sport events, big and small, carry a certain amount of risk for everyone involved.
2. Sport/Event managers and marketers follow national, state, and local laws to minimize
risk and avoid liability for any losses or injuries that may occur.
3. Two major areas in loss prevention:
a. Security
1) How security is the concern of a sport/event marketer:
a) All the functions of a sport organization are dependent on each other.
b) Marketers want to sell the public a favorable image of their team.
c) Included in that image is an idea that coming to a game is a safe and fun way
to spend an evening.
EXTRA INFORMATION: There is a delicate balance between a sport/event
organization providing a safe environment and fans assuming the risk of being
there. There are inherent dangers at almost any sporting event—flying pucks,
foul balls, players crashing into the stands. Sometimes tragedies can occur, such
as in 2002, when a 13-year-old girl died after being hit in the head with a hockey
puck at an NHL game. Although tickets have legal disclaimers regarding the
inherent risks involved with attendance at the event, sometimes legal action can
be successful if the injured party can prove the team or venue didn’t do
everything it could to minimize those risks.
DISCUSSION #7: Ask students if they have ever had an experience where they
felt unsafe at a game or an event. Where were they? What happened? How was
the situation resolved?
2) Sport organizations put security teams in place.
a) To prevent the theft of money from fans during games
b) To prevent the theft of property from fans during games
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
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DISCUSSION GUIDE (Obj. B, cont’d)
3) Sport organizations work with law enforcement.
a) To control crowds
b) To diffuse any potentially dangerous situations
4) After the 9/11 terrorist attacks on the United States, security became tighter
than ever, especially at hallmark sport events.
DISCUSSION #8: Ask students to discuss the changes that have been made
regarding security at games/events since 9/11.
EXTRA INFORMATION: Another important element of security is athlete
protection. During the 1990s, several attacks on athletes, including tennis star
Monica Seles and figure skater Nancy Kerrigan, prompted sport/event
organizations to tighten up security at venues. The route of an athlete from the
locker room to the competition area or the media/hospitality areas should be
carefully traced and inspected for vulnerable spaces.
b. Tickets
1) Counterfeit tickets
a) Sometimes ticket forgers may try to enter an event with fake tickets.
b) More often, situations occur when unsuspecting fans purchase counterfeit
tickets from scalpers.
c) This is an issue of fraud.
d) The best ways to combat ticket forgery:
i.
Teams and leagues educate fans on how to distinguish real tickets from
fake.
ii. Teams and leagues discourage fans from buying tickets from any sources
other than official ticket outlets.
2) Ticket scalping
a) Reselling tickets for more than their face value
b) Scalping laws and regulations
i.
Complicated
ii. Vary from state to state and city to city
iii. No federal law regarding scalping
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
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DISCUSSION GUIDE (Obj. B, cont’d)
iv. Some states have outlawed scalping entirely.
v. Other states require a broker’s license for reselling tickets.
DISCUSSION #9: Ask students if they know what the scalping laws are in your
state or city.
vi. Violations are almost always misdemeanors.
vii. Offenders usually fined and compelled to sign statements agreeing not to
break the laws again
c) High-tech ticket scalping
i.
Increased use of the Internet
ii. Popularity of auction sites such as eBay and StubHub
iii. Volume of tickets available combined with anonymity of sellers makes it
even harder to investigate scalping.
d) Keeps sport/event marketers working in ticket sales or management “on
their toes”
DISCUSSION # 10: Ask students to relate any experiences they have had with
ticket scalpers. How do they feel about the practice? Do they think it’s a
victimless crime?
EXTRA INFORMATION & DISCUSSION: Teams and leagues don’t want their fans
and season ticket holders scalping tickets on the Web. As a matter of fact, some
teams monitor sites such as eBay and, if they can figure out which season ticket
holder is reselling tickets for a higher profit, they take the tickets away. However,
some teams are starting their own online ticket resale services and receiving
extra profits from tickets they’ve already sold. Many fans complain that it is
hypocritical for teams to do this while expecting police to arrest scalpers outside
the stadiums. Ask students what they think.
(Slide 15)
B. Insurance
1. Sport/Event managers and marketers minimize risk by making sure they carry adequate
insurance as required by state law.
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DISCUSSION GUIDE (Obj. B, cont’d)
2. Not only do the teams and leagues need to be insured, so do:
a. Athletes
b. Venues
c. Sponsors
d. Vendors
e. Licensees
3. Types of insurances involved with sports and events
a. Fire
b. Theft
c. Injury
d. Cancellation
e. Prize indemnity
1) Of particular interest to the marketing department
2) Protects sport organizations or sponsors from loss of income due to contest
awards
a) $50,000 hole-in-one golf contest
b) Shooting a puck from center ice through a tiny opening in the goal for a
brand-new car
3) Teams/Sponsors take out insurance policies to cover the slim chance that a
person will actually win.
4) If it happens, the insurance policy covers the liability so the team or sponsor
doesn’t take a major hit.
DISCUSSION #11: Ask if any students have ever participated in this type of highdollar competition. Where was it? How did they do?
EXTRA INFORMATION: So far, few precedents have been established regarding
commerce that takes place over the Internet. To be on the safe side, sport/event
organizations should consider taking out insurance to manage the risk of their
Internet activities.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
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DISCUSSION GUIDE (cont’d)
OBJECTIVE C (Slide 16)
(Slide 17)
•
Contract law in sport/event marketing
A. Labor relations—contract negotiations between workers and management
1. National Labor Relations Act of 1935
a. Gives all workers the right to organize into unions to collectively bargain and strike
b. Collective bargaining—when employees join together as a single unit (as opposed to
individuals) to negotiate with management
2. Labor relations in professional sports
a. In the 1970s, athletes in the major leagues began forming unions called players’
associations.
b. Today, each league has a collective bargaining agreement with its players’
association, usually involving:
1) Salary cap issues
2) League authority over players
3) Revenue sharing
4) Free agency
c. When players’ associations and leagues can’t reach mutually agreeable terms,
there’s a possibility of a player strike or an owner lockout.
1) Over the years, these situations have happened several times in American pro
sports, resulting in thousands of lost games.
2) In each instance, the leagues and players suffered significant financial losses and
public relations damages.
3) In some leagues, sport/event marketers are still working to regain the amount of
fan support and interest they enjoyed before these incidents.
DISCUSSION #12: Ask students if they can remember any strikes or lockouts in
pro sports. How do they feel about the frequent labor disputes that take place in
professional sports?
EXTRA INFORMATION: Teams and players aren’t the only ones who suffer
during these strikes and lockouts. Sponsors who count on star athletes for
advertising lose money as well. Nike took a major financial hit during the 1998–
1999 NBA strike, and even withheld payment to some of its endorsers until the
standoff was over.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 14
DISCUSSION GUIDE (Obj. C, cont’d)
B. General contract information
1. Each sport/event involves a number of parties working together to produce it.
2. Each party has specific responsibilities.
3. It’s in everyone’s best interest to draw up formal, written contracts that leave no doubt
as to what the agreements entail.
4. Hire an attorney to draft the contracts, especially the first time through.
5. Contract law is intricate and varies from state to state.
EXTRA INFORMATION: Contracts should also include provisions for dispute
resolution and termination. It’s a good idea to include an arbitration clause that
states that, in the event of a dispute, both parties agree to seek resolution
through an arbitrator. An arbitrator is a mediator who makes binding decisions,
and arbitration saves the time and money it takes to go to court.
(Slide 18)
C. Sponsorship agreements
1. Most important element—exclusivity
a. Sponsors usually insist that they be the only ones in their particular category of
goods or services.
b. Examples
1) Coke and Pepsi would never sponsor the same event.
2) Nike and Reebok would never sponsor the same event.
EXTRA INFORMATION: Sometimes sponsors may also request the right to
approve sponsors in categories other than the one they are in. For example,
Coke would not want to sponsor the same event as Taco Bell or Pizza Hut. Even
though soft drinks are a separate category than restaurants, Taco Bell and Pizza
Hut’s affiliation with Pepsi would be a conflict for Coke.
2. Option to renew and right of first refusal
a. Option to renew allows the sponsor to extend the agreement after the contract
expires.
b. Right of first refusal means that the event organizers will allow the sponsor the
opportunity to renew before offering the contract to any other sponsors.
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DISCUSSION GUIDE (Obj. C cont’d)
3. Trademarks
a. Specifies parameters and procedures regarding the use of trademarks
b. Includes design handbook with guidelines on how sponsors can use the event’s
trademarks and logos in its advertisements and promotions
c. Specifies how long the sponsor is allowed to use the trademarks
4. Payments
a. Sometimes sponsors pay with cash.
b. Sometimes sponsors pay with services.
c. Sometimes sponsors pay with a combination of cash and services.
d. Example—Subway might agree to cater meals in the press dining room as part of its
sponsorship fees.
1) The contract should state exactly how much food would be provided, to avoid
any confusion over how much food equals the specified dollar amount.
DISCUSSION #13: Ask students to think of companies whose goods or services
might be a good fit to exchange with a sport/event organization as part of a
sponsorship fee.
D. Television contracts—agreements between sport/event organizations and TV networks
about broadcasting the game(s)/event(s)
1. Very complex due to:
a. High interest in sport events
b. Increase in satellite, cable, and Internet viewing options
2. Most include stipulations regarding:
a. Exclusivity—the only network broadcasting the game/event
b. Territorial rights
1) Important for national and international events
2) Specifies what countries or territories the game/event will be broadcast in
c. Copyright credits—who has ownership of the recorded broadcast in the future
d. Technical support—how much electrical/technological equipment is available from
the sport/event organization or venue
e. Location and number of cameras
f. Preferential treatment
1) Most event organizers ask that the broadcast network give sponsors right of first
refusal for commercial airtime during the game(s).
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DISCUSSION GUIDE (Obj. C, cont’d)
E. Venue contracts—agreements between sport/event organization and facility where
games/events take place
1. Lease rate—how much the sport/event organization pays to use the facility
2. Provisions for security—division of responsibility between sport/event organization and
venue
3. Provisions for concessions—division of responsibility between sport/event organization
and venue
F. Personnel contracts—agreements between sport/event organization and employees
1. Detailed list of responsibilities
2. Begin and end dates for work
3. Payment schedules
4. Tax withholding
5. Any provisions for changes in the contract
a. Extension
b. Increase in responsibilities
(Slide 19)
•
Make It Pay
A. What is your school’s logo or mascot for its sports teams?
B. Find out if the school has a trademark for it and, if so, how the school handles licensing
issues.
(Slide 20)
•
The Gray Zone
A. College athletic departments face a tough situation when it comes to alcohol.
1. On American campuses, drinking is common.
2. Campus alcohol-related incidents sometimes create major problems.
3. Besides the obvious issue of illegal underage drinking, schools face situations such as:
a. “Open container law” violations at tailgating parties
b. Security nightmares when students sneak beer into stadiums
c. Post-game rioting by drunken fans
d. Star players or coaches getting into trouble for drinking
B. Most college athletic departments say they want to discourage drinking on their campuses
and at their games to avoid student run-ins with the authorities.
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DISCUSSION GUIDE (cont’d)
C. However, partnering up with alcohol companies can often mean big revenues in college
athletics.
1. Some schools permit the sale of beer at their games.
2. Other schools allow beer companies to sponsor them by advertising in their venues.
3. Even if a school doesn’t allow alcoholic drinks or advertisements at its games, beer
commercials are still the life-blood flowing through the NCAA’s television contracts.
4. Some people say that these actions are hypocritical for schools trying to discourage
drinking on their campuses.
5. What do you think?
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DIRECTIONS TO THE INSTRUCTOR
Individual Activities
These activities are designed to reinforce individual student understanding of legal issues in
sport/event marketing. Read the two exercises, and select the one that better meets the
individual’s needs.
1. Duplicate the handout Legal Issues in Sport/Event Marketing Match-Up on page 20. The
answer guide is on page 21.
2. Duplicate the handout Major League Franchise Relocation on page 22. The student will
need to access information on the Internet. Suggestions to help the students get started
and a sample are provided on page 23.
Group Activities
These activities are designed to provide group reinforcement of the concepts related to legal issues
in sport/event marketing. Read the two activities, and select the one better suited to the group’s
needs.
1. Preparation: Divide the class into groups of two or three students each.
Process: Explain that each team has 10-15 minutes to conduct an Internet search for a
celebrity or athlete who has been involved in a lawsuit (or potential lawsuit) regarding right
of publicity or right of privacy. Each team should choose a different celebrity or athlete.
The teams should then identify the specifics of the case. Which type of law was being
violated—right of publicity or right of privacy? What person or company was the celebrity
or athlete suing? What was the offense? Did the case go to court? What was the
outcome? Have the teams briefly share their findings with the rest of the class.
2. Preparation: Divide the class into groups of two or three students each.
Assign each group, or allow them to choose, a specific labor management incident in
professional sports with the past half-century, such as a player strike, an owner lockout, or a
court case.
Process: Each team should research the incident it has been assigned, through an Internet
or library search, email contact, Instant Messenger, personal interview, or any method you
approve. The students should identify all the basic information about the conflict as well as
how it was resolved and how it affected the parties involved. When the groups are finished,
each should present its findings to the class.
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LEGAL ISSUES IN SPORT/EVENT MARKETING MATCH-UP
Directions: For each term listed below, determine what legal issue in sport/event marketing it
corresponds to: unfair trade practices, risk management, or contract law.
1. Loss prevention _________________________________________________________
2. Trademark infringement __________________________________________________
3. Right of first refusal _____________________________________________________
4. Game/Event security _____________________________________________________
5. Injunction _____________________________________________________________
6. Option to renew _________________________________________________________
7. Right of publicity & right of privacy ________________________________________
8. Counterfeit tickets _______________________________________________________
9. Sports Broadcasting Act of 1961 __________________________________________
10. Exclusivity ___________________________________________________________
11. Antitrust _____________________________________________________________
12. Ticket scalping ________________________________________________________
13. Sherman Act __________________________________________________________
14. Players’ associations ____________________________________________________
15. Baseball exemption _____________________________________________________
16. Prize indemnity insurance ________________________________________________
17. Lanham Act ___________________________________________________________
18. Collective bargaining ___________________________________________________
19. National Labor Relations Act _____________________________________________
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LEGAL ISSUES IN SPORT/EVENT MARKETING MATCH-UP—ANSWER GUIDE
For each term listed below, determine what legal issue in sport/event marketing it corresponds to:
unfair trade practices, risk management, or contract law.
1. Loss prevention __risk management__
2. Trademark infringement __unfair trade practices__
3. Right of first refusal __contract law__
4. Game/Event security __risk management__
5. Injunction __unfair trade practices__
6. Option to renew __contract law__
7. Right of publicity & right of privacy __unfair trade practices__
8. Counterfeit tickets __risk management__
9. Sports Broadcasting Act of 1961 __unfair trade practices__
10. Exclusivity __contract law__
11. Antitrust __unfair trade practices__
12. Ticket scalping __risk management__
13. Sherman Act __unfair trade practices__
14. Players’ associations __contract law__
15. Baseball exemption __unfair trade practices__
16. Prize indemnity insurance __risk management__
17. Lanham Act __unfair trade practices__
18. Collective bargaining __contract law__
19. National Labor Relations Act __contract law__
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Cover Your Bases 21
MAJOR LEAGUE FRANCHISE RELOCATION
Directions: Baseball’s exemption to the Sherman Antitrust Act has greatly limited franchise
relocation within the league and created some unique situations for marketers
involved with the sport. However, in the other major professional sport leagues,
owners can move their teams at will.
Take 15-30 minutes to research a franchise relocation in major league sports.
Be sure to find the answers to the following questions:
In what league did the relocation take place?
Which team moved?
What year was it?
Where was the team originally located?
Where did the team move? Why was that city chosen?
Was the team’s name changed?
Was the team sold or simply relocated?
If the team was sold, how much was the price?
Who was the original owner? The new owner?
What was the main reason for the move?
How did the move affect the marketers’ jobs?
Was the move successful?
Record your findings on a separate sheet of paper.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 22
MAJOR LEAGUE FRANCHISE RELOCATION—EXAMPLE GUIDE
Web sites will change over time, but the best sites for students to use are the official team web
sites for the teams involved in the relocation they choose to research. Below is a list of several
major-league franchises that have relocated over the years that you can use to help students get
started with their research.
Major League Baseball:
 Baltimore Orioles (formerly the St. Louis Browns)
 Oakland Athletics (formerly the Philadelphia Athletics and the Kansas City Athletics)
 Texas Rangers (formerly the Washington Senators)
 Atlanta Braves (formerly the Boston Braves and the Milwaukee Braves)
 Los Angeles Dodgers (formerly the Brooklyn Dodgers)
 San Francisco Giants (formerly the New York Giants)
 Washington Nationals (formerly the Montreal Expos)
National Football League:
 Baltimore Ravens (formerly the Cleveland Browns)
 Indianapolis Colts (formerly the Baltimore Colts)
 Tennessee Titans (formerly the Houston Oilers)
 Kansas City Chiefs (formerly the Dallas Texans)
 Arizona Cardinals (formerly the St. Louis Cardinals and the Chicago Cardinals)
 St. Louis Rams (formerly the Los Angeles Rams and the Cleveland Rams)
National Basketball Association:
 Atlanta Hawks (formerly the St. Louis Hawks and the Milwaukee Hawks)
 Houston Rockets (formerly the San Diego Rockets)
 Los Angeles Lakers (formerly the Minneapolis Lakers)
 New Orleans Hornets (formerly the Charlotte Hornets)
 Sacramento Kings (formerly the Kansas City Kings and the Cincinnati Royals)
 Utah Jazz (formerly the New Orleans Jazz)
 Washington Wizards (formerly the Baltimore Bullets and the Chicago Packers)
National Hockey League:
 Carolina Hurricanes (formerly the Hartford Whalers)
 Colorado Avalanche (formerly the Quebec Nordiques)
 Dallas Stars (formerly the Minnesota North Stars)
 Phoenix Coyotes (formerly the Winnipeg Jets)
 Winnipeg Jets (formerly the Atlanta Thrashers)
Sample: In 2001, the Vancouver Grizzlies of the NBA moved to Memphis. The Grizzlies were an
expansion team in 1994 that had always struggled and never reached the playoffs. They played
before crowds that filled only about 70% of their arena’s capacity. So when John Heisley bought the
Grizzlies in 2000 for $160 million, he immediately began looking for a new home for them. He
chose Memphis because the city had long been wanting a professional sport team and had never
had one. It was easy to market to a hungry audience. Since the Grizzlies have been in Memphis,
their record has improved as well as their attendance.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 23
TOTAL RECALL KEY
OBJECTIVE A (Page 5 of student LAP)
1. Capitalism is honest, healthy competition between businesses. It allows them to compete for
customers by trying to offer them better quality and/or lower priced products than what
competitors are offering.
2. There are two reasons that trademarks are important to sport/event organizations—money
and reputation. Sport/event organizations use their trademarks to make money from licensed
product sales. The organizations can charge other companies for the right to use the
trademarks on their products. They collect an initial fee for granting the permission and also
collect a percentage of the profits. Licensing systems are also an integral part of a sport/event
organization’s public relations efforts. When customers see high quality team/event
merchandise, it gives them a positive impression of the team/event itself.
3. Trademark infringement is illegal and occurs when one organization copies, counterfeits, or
reproduces another company’s trademarks to use for its own profit. The copy doesn’t have to
be exact, just close enough to cause consumer confusion. Trademark infringement damages a
sport/event organization by taking away potential licensing profits and by confusing the public.
4. The Sherman Antitrust Act was passed by Congress in 1890. It makes any actions that restrain
free trade and competition in the interstate marketplace illegal. In the United States, one
company or group of companies cannot hold a monopoly over a certain industry.
5. Baseball franchises cannot relocate to other markets without the approval of Major League
Baseball. Owners cannot sue the league for blocking relocation since the league is exempt from
antitrust laws. MLB also has the right to contract (eliminate) teams from the league as well as
total control over all minor league affiliates.
6. All the major professional sport leagues were granted a limited antitrust exemption with the
Sports Broadcasting Act of 1961. The Act allows leagues to pool their broadcasting rights and
sell them as a package to television networks. Over the years, the courts have interpreted this
law to include a league’s right to “black out” games in certain territories.
7. The two types of laws meant to prevent identity misappropriation are right of publicity and
right of privacy. The main difference between the two is that right of privacy is meant to
mentally protect a person, whereas right of publicity is meant to financially protect a person.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 24
TOTAL RECALL KEY (cont’d)
OBJECTIVE B (Page 7 of student LAP)
1. All the functions of a sport/event organization are dependent on each other. Marketers want to
sell the public a favorable image of their team/event, and included in that image is an idea that
coming to a game/event is a safe and fun way to spend an evening.
2. Ticket scalping is reselling tickets for more than their face value. In some states, it is illegal, and
in others, it is regulated. Ticket scalping is hard to control because of the complicated laws and
the popularity of reselling on the Internet.
3. Prize indemnity insurance protects sport/event organizations or sponsors from loss of income
due to contest awards, such as $50,000 hole-in-one golf contests. Teams or sponsors take out
insurance policies to cover the slim chance that a person will actually win. If it happens, the
insurance policy covers the liability so that the team or sponsor doesn’t take a major hit.
OBJECTIVE C (Page 8 of student LAP)
1. In 1935, the National Labor Relations Act gave all workers the right to organize into unions to
collectively bargain and strike. Collective bargaining is what happens when employees join
together as a single unit (as opposed to individuals) to negotiate with management. In the
1970s, athletes in the major leagues began forming unions called players’ associations. Today,
each league has a collective bargaining agreement with its players’ association. When players’
associations and leagues can’t reach mutually agreeable terms, there’s a possibility of a player
strike or an owner lockout.
2. Sponsorship agreements usually include an exclusivity clause, an option to renew and a right of
first refusal, trademark guidelines and procedures, and details regarding payments.
3. Most sponsorship agreements include an option to renew and a right of first refusal. An option
to renew allows the sponsor to extend the agreement after the contract expires. A right of first
refusal means that the event organizers will allow the sponsor the opportunity to renew before
offering the contract to any other sponsors.
4. Sometimes sponsors pay their fees with cash, sometimes with services, and sometimes with a
combination of both.
5. Most television contracts with sport/event organizations include stipulations regarding
exclusivity, territorial rights, copyright credits, technical support, and the location and number
of cameras. Another element commonly found in these contracts involves preferential
treatment for event sponsors. Most event organizers ask that the broadcast network give
sponsors a right of first refusal for commercial airtime during the game(s)/event(s).
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 25
PRACTICE TEST
Directions: Answer each of the following questions. Use a separate sheet of paper to record your
responses.
OBJECTIVE A
1. How do modern sport franchises fit into the capitalist model?
(6 points)
2. Why are trademarks important to sport/event organizations?
(6 points)
3. Explain the Lanham Act.
(6 points)
4. What is trademark infringement?
(4 points)
5. What is an injunction?
(4 points)
6. Explain the Sherman Antitrust Act.
(6 points)
7. How does the baseball exemption affect the modern sport industry?
(6 points)
8. Explain the Sports Broadcasting Act of 1961.
(6 points)
9. What is the right of publicity?
(4 points)
10. What is the right of privacy?
(4 points)
OBJECTIVE B
11. Why is security the concern of a sport/event marketer?
(4 points)
12. What is ticket scalping?
(4 points)
13. Why are ticket scalping laws difficult to enforce?
(6 points)
14. What is prize indemnity insurance?
(4 points)
OBJECTIVE C
15. Explain the National Labor Relations Act.
(6 points)
16. What is collective bargaining?
(4 points)
17. How does the National Labor Relations Act affect the modern sport industry?
(6 points)
18. What is the most important element of a sponsorship agreement?
(4 points)
19. Explain option to renew/right of first refusal.
(4 points)
20. List three elements of a television contract with a sport/event organization.
(6 points; 2 points each)
Suggested Criterion Level: 80 points
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 26
PRACTICE TEST KEY
OBJECTIVE A
1. Capitalism allows businesses to compete for customers by trying to offer them better quality
and/or lower priced products than what competitors are offering. The quest for a major-league
championship is more than just a pursuit of athletic excellence. It is also a pursuit of corporate
excellence. Winning teams amass great numbers of fans. Great numbers of fans equal increases
in revenue from ticket sales, licensed merchandise sales, and sponsorship fees. It all adds up to
more money for the teams, players, and owners.
(6 points)
2. There are two reasons that trademarks are important to sport/event organizations—money
and reputation. Sport/Event organizations use their trademarks to make money from licensed
product sales. The organization can charge other companies for the right to use the trademarks
on their products. Not only do the trademark owners collect an initial fee for granting the
permission, they also collect a percentage of the profits. Licensing is a lucrative business
venture because sport/event organizations are able to make maximum revenue with minimum
effort. Licensing systems are also an integral part of a sport/event organization’s public
relations efforts. When consumers see high-quality team merchandise, it gives them a positive
impression of the team itself.
(6 points)
3. The Lanham Act is a set of laws that regulate trademarks in the United States. It clearly outlines
the procedures for trademark application and registration and also defines several important
terms, including trademark infringement.
(6 points)
4. Trademark infringement is illegal and occurs when one organization copies, counterfeits, or
reproduces another company’s trademarks to use for its own profit. The copy doesn’t have to
be exact, just close enough to cause confusion. Trademark infringement damages a sport/event
organization by taking away potential licensing profits and by confusing the public. (4 points)
5. Sport/Event organizations often need to take legal action to combat trademark infringement.
Trademark violators can be prosecuted in court, and trademark owners can also get injunctions
to protect their property when a case is pending. An injunction is a court order that stops the
infringing activities until the trial begins.
(4 points)
6. During the nineteenth century, much of the economic power in the United States was
concentrated in a very small number of companies. To counteract the trend and open up the
market to competition, Congress passed the Sherman Antitrust Act based on its constitutional
power to regulate commerce between the states. The Sherman Act makes restraining free
trade and competition illegal. One company or group of companies cannot hold a monopoly
over a certain industry.
(6 points)
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 27
PRACTICE TEST KEY (cont’d)
7. Baseball franchises cannot relocate to other markets without the approval of Major League
Baseball. In other leagues, team owners can move their franchises at will or sue on the basis of
the Sherman Act if the league tries to block the move. But baseball owners can’t sue their
league for blocking relocation because of the exemption. The baseball exemption also gave
MLB the right to contract (eliminate) teams from the league as well as total control over all
minor league affiliates.
(6 points)
8. The Sports Broadcasting Act of 1961 granted all the major professional sport leagues a limited
antitrust exemption. The Act allows leagues to pool their broadcasting rights and sell them as a
package to television networks. Over the years, the courts have interpreted this law to include
a league’s right to “black out” games in certain territories.
(6 points)
9. State laws and many court cases have established a person’s right to protect his/her name and
likeness. If someone feels that his/her identity is being misappropriated, that person can take
legal action. The right of publicity is a type of law meant to protect a person financially. It
protects him/her from the unauthorized use of his/her name and likeness for financial gain. It
gives individuals the exclusive right to their identities for commercial use.
(4 points)
10. State laws and many court cases have established a person’s right to protect his/her name and
likeness. If someone feels that his/her identity is being misappropriated, that person can take
legal action. The right of privacy is a type of law meant to protect a person mentally and
emotionally. A person can sue for invasion of privacy when his/her seclusion has been intruded
upon, when s/he has been given an unreasonable amount of publicity, or when s/he has been
placed in a false light.
(4 points)
OBJECTIVE B
11. All the functions of a sport/event organization are dependent on each other. Marketers want to
sell to the public a favorable image of their team, and included in that image is an idea that
coming to a game or event is a safe and fun way to spend an evening.
(4 points)
12. Ticket scalping is reselling tickets for more than their face value. It is a major issue for many
sport/event organizations.
(4 points)
13. Ticket scalping laws are difficult to enforce because they are complicated and vary from state to
state and city to city. There is no federal law regarding scalping. With increased use of the
Internet and the popularity of auction sites such as eBay and StubHub, ticket scalping has gone
high-tech. The sheer volume of tickets available combined with the relative anonymity of sellers
makes it even harder for sport/event organizations and law enforcement to investigate
scalping.
(6 points)
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 28
PRACTICE TEST KEY (cont’d)
14. Prize indemnity insurance protects sport/event organizations or sponsors from loss of income
due to contest awards, such as $50,000 hole-in-one golf contests. Organizations or sponsors
take out insurance policies to cover the slim chance that a person will actually win. If it
happens, the insurance policy covers the liability so the team or sponsor doesn’t take a major
hit.
(4 points)
OBJECTIVE C
15. In 1935, the National Labor Relations Act gave all workers the right to organize into unions to
collectively bargain and strike.
(6 points)
16. Collective bargaining is what happens when employees join together as a single unit (as
opposed to individuals) to negotiate with management.
(4 points)
17. In the 1970s, athletes in the major leagues began forming unions called players’ associations.
Today, each league has a collective bargaining agreement with its players’ association. The
terms of the agreements usually include issues such as salary caps, league authority over
players, revenue sharing, and free agency. When players’ associations and leagues can’t reach
mutually agreeable terms, there’s a possibility of a player strike or an owner lockout.
(6 points)
18. The most important element in a sponsorship agreement is the issue of exclusivity. Sponsors
usually insist that they be the only ones in their particular category of goods or services.
(4 points)
19. Most sponsorship agreements include an option to renew and a right of first refusal. The option
to renew allows the sponsor to extend the agreement after the contract expires. The right of
first refusal means that the event organizers will allow the sponsor the opportunity to renew
before offering the contract to any other sponsors.
(4 points)
20. Most television contracts with sport/event organizations include stipulations regarding
exclusivity, territorial rights, copyright credits, technical support, and the location and number
of cameras. Another element commonly found in these contracts involves preferential
treatment for event sponsors. Most event organizers ask that the broadcast network give
sponsors right of first refusal for commercial airtime during the game(s)/event(s).
(6 points; 2 points each)
Suggested Criterion Level: 80 points
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 29
POSTTEST
Directions: Identify the correct answer to each of the following questions. Use a separate sheet of
paper to record your responses.
OBJECTIVE A
1. Which of the following is not a benefit of winning a major league championship in a market
economy:
(5 points)
a. Increased ticket sales
b. Increased licensed merchandise sales
c. Increased sponsorship fees
d. Increased payroll
2. Which of the following is an unfair, anticompetitive trade practice in sport/event marketing:
(5 points)
a. Loss prevention
c. Employee strike
b. Trademark infringement
d. Sponsorship exclusivity
3. Sport/Event organizations use their trademarks to make money from
a. sponsorship fees.
b. lawsuits.
c. licensed product sales.
d. ticket sales.
4. A court order that stops a certain activity until a trial begins is a(n)
a. injunction.
b. infringement.
(5 points)
c. antitrust act.
d. right of publicity law.
5. Which law makes restraining free trade and competition illegal?
a. The Lanham Act
b. The Sherman Antitrust Act
(5 points)
(5 points)
c. The Sports Broadcasting Act of 1961
d. The National Labor Relations Act
6. In 1922, the Supreme Court ruled that the sport of baseball was exempt from antitrust laws
because
(5 points)
a.
b.
c.
d.
baseball was the most popular sport in the country.
antitrust laws do not apply to sports.
the baseball monopoly did not harm consumers.
baseball teams were local operations.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 30
POSTTEST (cont’d)
7. Which law allows major professional sport leagues to prevent certain games from being shown
in certain territories?
(5 points)
a. The Sherman Antitrust Act
b. The Lanham Act
c. The National Labor Relations Act
d. The Sports Broadcasting Act of 1961
8. When a league blocks the broadcast of a certain game in a certain territory, it is known as a(n)
(5 points)
a. antitrust violation.
c. injunction.
b. blackout.
d. right of publicity.
9. If an athlete or celebrity’s seclusion has been intruded upon, s/he can sue for violation of
(5 points)
a. antitrust laws.
c. the right of privacy.
b. trademarks.
d. the right of publicity.
10. Which type of law gives individuals the exclusive right to their identities for commercial use?
(5 points)
a. Right of publicity
c. Antitrust
b. Right of privacy
d. Ticket scalping
11. Which of the following is an unacceptable place to use an athlete or celebrity’s identity without
his/her permission:
(5 points)
a. On your company’s advertisements
b. In a magazine
c. In a book
d. On the news
OBJECTIVE B
12. Sport/Event marketers are concerned with security because they
a.
b.
c.
d.
(5 points)
want to stop trademark infringement.
must comply with the Sherman Antitrust Act.
don’t want to violate right of publicity/right of privacy laws.
want to sell a favorable image of the team.
13. The best way to avoid buying counterfeit tickets to a game/event is to purchase them
(5 points)
a. from reputable scalpers.
c. at official ticket outlets.
b. several months in advance.
d. at an online auction site.
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 31
POSTTEST (cont’d)
14. Reselling tickets for more than their face value is known as ticket
a. infringement.
b. piracy.
c. scalping.
d. counterfeiting.
15. What development has made ticket resale harder to regulate?
a.
b.
c.
d.
(5 points)
(5 points)
The popularity of online auction sites
The types of insurance involved with resale
The unions formed by professional ticket scalpers
The laws subjecting ticket outlets to antitrust litigation
16. Which type of insurance protects sport/event organizations or sponsors from loss of income
due to contest awards?
(5 points)
a. Theft
b. Injury
c. Cancellation
d. Prize indemnity
OBJECTIVE C
17. Which law gives workers the right to organize into unions?
a.
b.
c.
d.
(5 points)
The Sports Broadcasting Act of 1961
The Sherman Antitrust Act
The Lanham Act
The National Labor Relations Act
18. Employees joining together as a single unit to negotiate with management is known as
(5 points)
a. labor relations.
c. collective bargaining.
b. free agency.
d. group negotiation.
19. Unions in professional sports are called
a. athlete organizations.
b. players’ associations.
(5 points)
c. sport unions.
d. athlete committees.
20. Which element of a collective bargaining agreement allows athletes to move from team to
team?
(5 points)
a. Right of first refusal
b. Free agency
c. Salary cap
d. Revenue sharing
Suggested Criterion Level: 80 points
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 32
POSTTEST KEY
OBJECTIVE A
1. d Increased payroll. The quest for a major-league championship is a pursuit of corporate
excellence. Winning teams amass great numbers of fans. Great numbers of fans equal
increases in revenue from ticket sales, licensed merchandise sales, and sponsorship fees.
A winning team might have an increased payroll, but that is a disadvantage for the
management rather than a benefit.
(5 points)
2. b Trademark infringement. Trademark infringement is an unfair, anticompetitive trade
practice. Loss prevention, employee strikes, and sponsorship exclusivity are all legal issues
in sport/event marketing and are not unfair or anticompetitive trade practices. (5 points)
3. c Licensed product sales. Sport/Event organizations use their trademarks to make money
from licensed product sales. The organizations can charge other companies for the right to
use the trademarks on their products. Not only do the trademark owners receive an initial
fee for granting the permission, they also collect a percentage of the profits. Sport/Event
organizations may make money from sponsorship fees, lawsuits, and ticket sales, but they
do not use their trademarks to do so.
(5 points)
4. a Injunction. A court order that stops a certain activity until a trial begins is an injunction.
Infringement is what takes place when one company uses another company’s trademark
without permission. An act of antitrust is a violation of the laws that prevent monopolies
and restricted competition. Right of publicity laws give a person the exclusive right to use
his/her name and likeness for profit.
(5 points)
5. b The Sherman Antitrust Act. During the nineteenth century, much of the economic power
in the United States was concentrated in a very small number of companies. To counteract
the trend and open up the market to competition, Congress passed the Sherman Antitrust
Act based on its constitutional power to regulate commerce between the states. The
Sherman Act makes restraining free trade and competition illegal. One company or group
of companies cannot hold a monopoly over a certain industry. The Lanham Act regulates
trademarks. The Sports Broadcasting Act of 1961 allows professional sport leagues to pool
their broadcasting rights and sell them as a package to television networks. The National
Labor Relations Act gives all workers the right to organize into unions to collectively
bargain and strike.
(5 points)
6. d Baseball teams were local operations. Since 1922, the sport of baseball has been
completely exempt from antitrust laws. The Supreme Court ruled that the Sherman Act did
not apply to baseball since baseball teams operated locally and were not involved in
interstate commerce. Back then, baseball teams truly were local businesses. But today,
baseball teams share revenues and have nationwide sponsors and global licensing deals.
The business of baseball has expanded greatly, yet the exemption is still in effect. Baseball
may have been the most popular sport in the country, and the monopoly may not have
affected consumers, but antitrust laws do apply to sports.
(5 points)
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 33
POSTTEST KEY (cont’d)
7. d The Sports Broadcasting Act of 1961. The Sports Broadcasting Act of 1961 allows leagues
to pool their broadcasting rights and sell them as a package to television networks. This is
a limited antitrust exemption. Over the years, the courts have interpreted the Act to
include a league’s right to “black out” certain games in certain territories. The Sherman Act
makes restraining free trade and competition illegal. The Lanham Act regulates
trademarks. The National Labor Relations Act gives all workers the right to organize into
unions to collectively bargain and strike.
(5 points)
8. b Blackout. When a league blocks the broadcast of a certain game in a certain territory, it is
known as a blackout. Since the Sports Broadcasting Act of 1961 gives leagues a limited
antitrust exemption, it is not an antitrust violation. An injunction is a court order that stops
a certain activity until a trial begins. Right of publicity laws give a person the exclusive right
to use her/his name and likeness for profit.
(5 points)
9. c The right of privacy. The right of privacy is meant to protect a person mentally and
emotionally. An athlete or celebrity can sue for invasion of privacy when his/her seclusion
has been intruded upon, when s/he has been given an unreasonable amount of publicity,
or when s/he has been placed in a false light. Antitrust laws prevent monopolies and
restricted trade. Trademark laws sometimes do protect a person’s name and likeness, but
invasion of privacy does not violate trademark laws. The right of publicity is meant to
protect a person financially and prevents the unauthorized use of names and likenesses for
financial gain.
(5 points)
10. a Right of publicity. Right of publicity laws are meant to protect a person financially. They
prevent the unauthorized use of a person’s name and likeness for financial gain. They give
individuals the exclusive right to their identities for commercial use. The right of privacy is
meant to protect a person mentally and emotionally. A person can sue for invasion of
privacy when his/her seclusion has been intruded upon, when s/he has been given an
unreasonable amount of publicity, or when s/he has been placed in a false light. Antitrust
laws prevent monopolies and restricted trade. Ticket scalping laws regulate the resale of
sport/event tickets.
(5 points)
11. a On your company’s advertisements. It’s perfectly fine to use an athlete or celebrity’s
identity in a book, on a television news show, in a newspaper, or in a magazine; but
sport/event marketers must learn where to draw the line between freedom of expression
and violations of right of privacy and right of publicity. Using the identity on your
company’s advertisement would be unacceptable without written consent and payment.
(5 points)
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 34
POSTTEST KEY (cont’d)
OBJECTIVE B
12. d Want to sell a favorable image of the team. All the functions of a sport/event organization
are dependent on each other. Marketers want to sell to the public a favorable image of
their team, and included in that image is an idea that coming to a game/event is a safe, fun
way to spend an evening. Although sport/event marketers would like to stop trademark
infringement and don’t want to violate right of publicity/privacy laws, those issues do not
involve security. The Sherman Antitrust Act prevents monopolies and also does not involve
security.
(5 points)
13. c
At official ticket outlets. The best way to avoid buying counterfeit tickets to a game/event
is to purchase them at official ticket outlets. There is a chance of getting fake tickets even
from a “reputable” scalper or over the Internet. Buying tickets in advance does not ensure
that the tickets are real.
(5 points)
14. c
Scalping. Reselling tickets for more than their face value is known as ticket scalping. While
scalping may infringe on the sales activities of a league or team, the practice is not known
as ticket infringement, nor is it referred to as piracy. And while ticket counterfeiting is also
a problem, it is a separate issue from the resale of real tickets.
(5 points)
15. a The popularity of online auction sites. The sheer volume of tickets available on the
Internet combined with the relative anonymity of sellers makes it even harder for sport/
event organizations and law enforcement to investigate scalping. There are no types of
insurance involved in resale. There are no ticket scalpers’ unions. Ticket outlets have not
been subjected to antitrust litigation.
(5 points)
16. d Prize indemnity. Prize indemnity insurance protects sport/event organizations or sponsors
from loss of income due to contest awards. The policy covers the slim chance that a person
will actually win and absorbs the liability so the team or sponsor doesn’t take a major hit.
Theft, injury, and cancellation insurances do not cover these types of situations. (5 points)
OBJECTIVE C
17. d The National Labor Relations Act. In 1935, the National Labor Relations Act gave all
workers the right to organize into unions to collectively bargain and strike. The Sports
Broadcasting Act of 1961 allows professional sport leagues to pool their broadcasting
rights and sell them as a package to television networks. The Sherman Antitrust Act was
passed by Congress to open up the market to competition; it makes monopolies illegal.
The Lanham Act regulates trademarks.
(5 points)
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POSTTEST KEY (cont’d)
18. c
Collective bargaining. When employees join together as a single unit (as opposed to
individuals) to negotiate with management, it is known as collective bargaining. Labor
relations and group negotiation are accurate terms to describe the process, but are not
correct. Free agency is one of many elements that may be addressed within a collective
bargaining agreement.
(5 points)
19. b Players’ associations. In the 1970s, athletes in the major leagues began forming unions
called players’ associations. Although the other choices could describe these unions, none
is correct.
(5 points)
20. b Free agency. Free agency allows players to sell their services to the highest-bidding team
after playing an agreed-upon number of years with their original team. Right of first refusal
is an element of a sponsorship agreement. Salary cap and revenue sharing are both
elements of a collective bargaining agreement, but they do not affect player movement.
(5 points)
Suggested Criterion Level: 80 points
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POSTTEST GRADER
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Page 31
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7. d
14. c
1. d
15. a
8. b
2. b
9. c
16. d
3. c
10. a
17. d
4. a
11. a
5. b
18. c
6. d
12. d
19. b
20. b
13. c
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 37
GLOSSARY
1. ANTITRUST LAWS: Regulations that prevent a person or company from taking any actions to
restrain free trade and competition in the marketplace
2. BLACKOUT: A legal right of professional sport leagues to block the broadcast of certain games
in certain territories
3. CAPITALISM: An economic system that depends on honest, healthy competition between
businesses
4. COLLECTIVE BARGAINING: The negotiating process in which union leaders and company
representatives engage to determine the terms and working conditions that are to be
provided to employees
5. EXCLUSIVITY: A right purchased by a sponsor to be the sole provider of a particular type of
good or service for a sport/event
6. FREE AGENCY: In professional sports, an athlete’s ability to renegotiate his/her contract with
his/her existing team or with another team
7. INJUNCTION: A court order forbidding someone from carrying out an act
8. LANHAM ACT: Federal law that provides trademark protection; specifies proper procedures
for registering trademarks
9. LICENSEE: The buyer of copyrighted, patented, or trademarked material
10. LICENSOR: The owner of copyrighted, patented, or trademarked material
11. LOCKOUT: A company strategy in which the business is closed and the employees are not
allowed to work
12. LOSS PREVENTION: A function of risk management that focuses on planning and security
procedures to avoid theft or injury
13. LUCRATIVE: Profitable
14. MONOPOLY: A condition in which a market is controlled by one supplier, and there are no
substitute goods or services readily available
15. NATIONAL LABOR RELATIONS ACT: Legislation passed by Congress in 1935; gives all workers the
right to organize into unions to collectively bargain and strike
16. OPTION TO RENEW: An element of a sponsorship agreement that allows the sponsor to extend
the agreement after the contract expires
17. PLAYERS’ ASSOCIATION: A union in a professional sport league
18. PRIZE INDEMNITY: A type of insurance that protects organizations or sponsors from loss of
income due to contest awards
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 38
GLOSSARY (cont’d)
19. RIGHT OF FIRST REFUSAL: An element of a sponsorship agreement that says that the event
organizers will allow the sponsor the opportunity to renew the contract before offering it to
any other sponsors
20. RIGHT OF PRIVACY: A type of law that protects a person mentally and emotionally; prevents
intrusion upon a person’s seclusion, giving a person an unreasonable amount of publicity, or
placing a person in a false light
21. RIGHT OF PUBLICITY: A type of law that protects a person financially; prevents the
unauthorized use of a person’s name and likeness for financial gain
22. RISK MANAGEMENT: A business activity that involves the planning, controlling, preventing, and
procedures used by management to limit business losses; optimizes the relationship of
potential loss to gain
23. SHERMAN ANTITRUST ACT: A federal regulation intended to prevent monopolies from forming
and prices from being fixed
24. SPORTS BROADCASTING ACT OF 1961: Allows professional sport leagues to pool their
broadcasting rights and sell them as a package to television networks
25. TICKET SCALPING: Reselling tickets for more than their face value
26. TRADEMARK: A word, name, symbol, or device used by a manufacturer or merchant to
identify and distinguish goods from those manufactured and sold by others
27. TRADEMARK INFRINGEMENT: The reproduction, counterfeiting, copying, or imitation, in
commerce, of a registered mark
28. STRIKE: A union strategy in which employees stop working and leave their jobs
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 39
COVER YOUR BASES STUDENT QUESTIONNAIRE
Directions: After completing Cover Your Bases (Legal Issues in Sport/Event Marketing), please rate
the following statements to help MBAResearch improve the LAP. Marking a five
indicates that you “strongly agree” with the statement, while selecting a one indicates
that you “strongly disagree.” When you have finished, please fax your responses to
614-486-1819 or mail them to MBAResearch at P.O. Box 12279, Columbus, OH 43212.
1. The information in So What? encouraged me to want to know more
about legal issues in sport/event marketing.
1 2 3 4 5
2. The examples used in the LAP helped to increase my understanding or
interest in legal issues in sport/event marketing.
1 2 3 4 5
3. The LAP content is clear and easy to understand.
1 2 3 4 5
4. I liked the application exercise/activity.
1 2 3 4 5
5. I understood the directions for the application exercise/activity.
1 2 3 4 5
6. I better understood legal issues in sport/event marketing after
completing an activity/application exercise.
1 2 3 4 5
7. I easily understood what the test questions were asking.
1 2 3 4 5
8. I guessed and got the right answer to test questions most of the time.
1 2 3 4 5
9. The Gray Zone presents an ethical dilemma that does not have a blackand-white answer.
1 2 3 4 5
10. The Gray Zone really made me think about ethical dilemmas involving
legal issues in sport/event marketing.
1 2 3 4 5
11. Make It Pay! offers useful tips that will help me to implement
information about legal issues in sport/event marketing.
1 2 3 4 5
12. What did/didn’t you like about this LAP?
1 2 3 4 5
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 40
COVER YOUR BASES TEACHER QUESTIONNAIRE
Directions: After completing Cover Your Bases (Legal Issues in Sport/Event Marketing), please
respond to the following questions to help MBAResearch improve the LAP. When you
have finished, please fax your responses to 614-486-1819 or mail them to
MBAResearch at P.O. Box 12279, Columbus, OH 43212.
1. What information could be presented in So What? that would compel students to want to know
more about legal issues in sport/event marketing?
2. What information in the student or teacher booklets needs to be changed to make it more
accurate, easier to understand, and/or more up-to-date?
3. What anecdotes, examples, etc., could be added to the LAP to increase student understanding
or interest in legal issues in sport/event marketing?
4. How would you improve the application exercises and their directions?
5. What specific changes need to be made to test questions so that they will be clearer?
6. How would you change The Gray Zone to make it relate more to legal issues in sport/event
marketing and present an ethical dilemma that does not have a black-and-white answer?
7. What useful tips could be added to Make It Pay! that would help students implement
information about legal issues in sport/event marketing?
LAP-BL-003-SP ©2013, MBA Research and Curriculum Center®
Cover Your Bases 41