Friday, April 8, 2011

“Reverse Morality” Clauses for Celebrity Endorsers: What Are They? Something Celebrities, Including Jay-Z, Should Try Enforcing

I just listened to a CLE (Continuing Legal Education) course on the subject of morals clauses in celebrity endorsement contracts. What attracted me to learn more about that topic?

I am interested in the way that Jay-Z (in tandem with his wife, Beyoncé), financially enlisted by Forest City Ratner, have gotten themselves involved in: Promoting Bruce Ratner’s (and Mikhail Prokhorov’s) disreputable Atlantic Yards mega-monopoly. I’ve already provided Noticing New York ruminations on the subject, see: An Insert Preview - Music Superstar Ethics: How Completely You Can Sell “You can say what you say, but you are what you are.” Jay-Zzzzus! (Wednesday, March 9, 2011). A short preview of that longer article is available here.

Representing Celebrity: “Must Watch” Legal Education

The CLE course provided more food for thought on the subject. The course, “A Detailed Look at Morals Clauses in Celebrity Endorsement Deals,” available through, was put together and presented by Rutgers-educated Andrew Bondarowicz, Esq. “the Founder and President of Aregatta Group, a management consulting firm providing strategic planning and management services for clients in the fields of sports and entertainment, finance, and the non-profit sector.” Mr. Bondarowicz’s Lawline-provided bio goes on to tell us that: “In the past, Mr. Bondarowicz has served as Chair of the Entertainment, Arts and Sports Law Section of the New Jersey State Bar Association and as a panelist at the Seton Hall Sports & Entertainment Law Symposium.”

Lawline’s promo for the course bills it as:
a must-watch course for both attorneys representing celebrities as well as those seeking guidance on how to guard their clients from the risks involved in associating themselves with celebrity endorsers.
Scandalously Fun

The course was definitely worth the time I spent with it. And spending some time reviewing celebrity scandals can be fun. In Bondarowicz’s list: Kobe Bryant, (basketball player for the NBA’s Los Angeles Lakers team- accused of sexual assault), Kate Moss (high-profile English model photographed when it looked like she was snorting cocaine), Michael Phelps (Olympic swimmer holding the records for the most golds medals won in a single Olympics- eight in 2008- surpassing Mark Spitz’s seven in 1972, caught smoking what appeared to be marijuana from a glass bong) Ben Roethlisberger (football quarterback for the NFL’s Pittsburgh Steelers twice accused of sexual assault- in July of 2009 and March of 2010- without charges being brought), Michael Vick (football quarterback for the NFL’s Atlanta Falcons who served time for being involved in an illegal dog fighting ring.) and Tiger Woods (master golf player who got involved in multiple extramarital affairs).

Impetus to Stay 99 and 44/100% Pure

Impetus for morals clauses also came from Marilyn (Briggs) Chambers, the 1970s porn star actress who appeared tenderly holding a baby on the cover of the Ivory Snow box under the Proctor and Gamble "99 and 44/100% Pure" product slogan. If it is true that Proctor and Gamble had acquired an old stock photo of Chambers for the box, a morals clause wouldn’t have helped in that situation.

Tiger’s Out of the Woods

According to Bondarowicz, the scandal listed with the biggest financial fallout was the Tiger Woods marital infidelity scandal, “estimated to be somewhere between 5 and 12 billion dollars.” That this is the biggest amount reflects the fact that Woods, who after his scandal-related hiatus has resumed playing again, is (still) the most highly paid professional athlete in the world.

Bondarowicz says that the use of morals clauses has been growing substantially, initially having been used to deal with the risky living of Hollywood stars and then as a way to establish distance from and disapproval of “Communism.” According to Bondarowicz morals clauses are standard today in all endorsement contracts, whereas the likelihood of encountering them in 1997 was only 50%.

A Set of Concerns From Those That Are "Hard" to “Softer Categories”

Bondarowicz gives a list of proscribed behaviors, transitioning into “softer categories” that can be included as the trigger points for taking action under morals clauses that attorneys draft:
• Conviction for felony or misdemeanor

• Criminal indictment

• Moral turpitude violations

• Offensive or objectionable behavior

• Violations of public decency

• Actions that can bring public disrepute, contempt, scandal or ridicule
Do Unto Others

If you are imagining that the endorsing celebrity is the one that winds up proscribed from all of the above then you have not jumped ahead to what was of particular interest to me when I was considering Mr. Bondarowicz’s presentation: The extent to which the expectation of moral behavior should be a two-way street and that these standards might be reciprocally applied to the corporations dolling out the money for the endorsements.

I was, for instance, thinking about the possible contractual rights of Natalie Portman the Oscar-winning actress and celebrity figurehead for the House of Dior, who announced her decision to refuse to be associated with Dior designer John Galliano after his anti-Semitic rant in Paris. Galliano was promptly fired afterward, but where would Ms. Portman have stood if he hadn’t been?

Imagine the possibilities if celebrities, like Ms. Portman, by demanding principled action from corporations, could shift the standard of conduct on the part of those corporations.

Buying a Moral Image (and What Else?)

Right now things pretty much only work in reverse. Corporations don’t worry about their own behavior. (Bear in mind the earlier mention of Bruce Ratner/Forest City Ratner as an illustrative example.) They just worry about the behavior of their endorsers and thereby hope to acquire through purchase an image that they themselves may not necessarily deserve.

According to Mr. Bondarowicz (the quoted material below is from the written materials for his course):
* Most companies are trying to achieve a similar set of goals
and objectives through endorsement deals:
* Increase brand awareness or visibility;
* Appeal to a particular demographic;
* Implement certain public relations opportunities; and
* Increase product sales.
By applying these insights you can test to see what you think Bruce Ratner was thinking when he brought Jay-Z (with wife Beyoncé tucked into the bargain) into the his Atlantic Yards promotions. Likely much of the same was intended or hoped for with the invitation that got Jay-Z similarly involved in the Aqueduct Raceway scandal.

And if the star-endorser doesn’t deliver the goods? With the right morals clause the corporation gets to just dump the endorser and hire a new one who will.

Sauce for the Gander?

95% of Mr. Bondarowicz’s all-too-brief course deals with things from the perspective of corporations hiring endorsers (or at least the same thing from the perspective of celebrities who don’t want to get too badly screwed by their endorsement contracts if they are the ones to step out of line- like having to write big checks back to return their money), but there is something that Bondarowicz finally deals with at the end of his presentation that cuts the other way. It is called a “reverse morality” clause. That, counter-intuitively, while having the ring of a bad thing, but it is potentially a good one.

A “reverse morality” clause is where the celebrity, like the example given of Ms. Portman, gets to tell the corporation to shape up. What a phenomenally better world we might live in if there were people who could regularly dictate such corporate rectitude!

Growing Prevalence Escapes Enforcement

Unfortunately, while reverse morality clauses are actually becoming more prevalent (Mr. Bondarowicz’s says they were almost unheard of 20-30 years ago but are becoming popular in the post-ENRON environment) they are rarely enforced. Why not?

Mr. Bondarowicz puts it this way:
While the considerations may be very similar, it is very unlikely that morals clauses will be enforced in reverse situations mainly because the brand is the one typically that’s paying the endorser and unless you’re willing to forgo the financial implications of that deal you tend to find a way to work within the relationship. Secondly, the brand sought out the endorser to serve as spokesman for the company and in times of crisis it becomes even more advantageous to utilize the services of that endorsement to regain credibility and trust with the public.
That rather delicado lawyer-speak can be translated thus: If the endorser enforces the reverse morals clause they will lose a paycheck, but if they work something out with "the brand" to avoid the clause being triggered they just might get paid even more as they bail the corporation out in its days of crisis.

Selling Out At An Even Higher Price

This brings to mind the lyrics of Tom Lehrer’s “Selling Out” in which he sings about, what else (“Selling Out is easy to do/It's not so hard to find a buyer for you . . . sometimes you have to close your eyes”):
I've always found ideals, don't take the place of meals,
That's how it is and how it will always be!

It's so nice to have integrity, I'll tell you why,
If you really have integrity, it means your price is very high.
The Arrival of Crisis Tests and the Integrity of a Moral Philosopher

These lyrics, together with Bondarowicz’s admonitions about times of corporate crisis creating an opportunity for the endorser to earn much more, lead to some speculation about Jay-Z (and Beyoncé). Forest City Ratner is now in a time of crisis. In fact, if you apply the triggers above in the list of standards that usually apply to paid endorsers, Forest City Ratner has by the judgment of many of us crossed quite a few of those lines, at least in the “softer categories.” As for the “harder” categories, there hasn’t yet been a conviction for felony or misdemeanor or a criminal indictment, but many would convincingly argue that Forest City Ratner is dancing uncomfortably close to those triggers as well. - - Does all this mean that Jay-Z’s paycheck is going up?

And here is another thought: It has been Noticing New York's previous observation that with his “You can say what you say, but you are what you are,” aphorism Jay-Z has apparently held himself up to the rest of us as a moral philosopher. Does that, in Tom Lehrer vernacular, mean Jay-Z achieved the “integrity” of having a very high price to begin with? Might Jay-Z even have been lucky enough to have included a reverse morals clause in contracts with Ratner whereby he is now upping his ante?

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