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Bad celebrity behaviors affect terms of sponsorship deals

Los Angeles celebrities who please the public are rewarded with lavish attention and fabulous incomes. Entertainment law attorneys know praise can turn to criticism and condemnation quickly when well-known individuals misbehave. Advertising agencies and sponsors, who once vied for long-term sponsorship and merchandising agreements with movie, television and sports stars, are now hedging their bets.

In the last several years, celebrities seem to be making headlines for all the wrong reasons. Legal analysts link the heightened exposure of unacceptable celebrity behavior with the prevalence of photo-ready smartphones and instant social media response. Famous people simply can't hide what they do privately as easily as they once could.

Marketing managers have learned the hard way that tying a product closely to a single celebrity isn't without risks. Actions by highly-recognizable athletes like golfer Tiger Woods and more recently, pro football's Ray Rice have caused brand backlash. Sponsors are less likely now to try to weather the storm of celebrity misconduct than in the past – contractual agreements are changing.

Sponsors are shortening celebrity deals to avoid being locked in to agreements with potential powder kegs. Entertainment agencies, once open to relationships lasting several years, now negotiate short-term contracts with finely-tuned morals clauses. Consequently, famous folks receive limited sponsorships, endorsement contracts, pay and support.

Some marketers are creating celebrity sponsor stables. That way, if the reputation of one big-name personality is irreparably damaged, the individual's association with a sponsor can end without significant consequences. Loyalty to stars also has diminished – companies take action quickly to abandon ties with individuals the public perceives as miscreants.

Some legal observers believe the trend by sponsors to restrict celebrity agreements will take root. Product manufacturers and service providers are not averse to contractual agreements with celebrities. However, as entertainment lawyers have learned, companies no longer appear to be willing to carry the baggage that sometimes accompanies famous people.

Source: Adweek, "Domestic Abuse Allegations Cause Brands to Rethink Sponsorships" Michael McCarthy, Nov. 18, 2014

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