An apparel sponsorship agreement is a complex legal document. Several key clauses dictate the terms of the partnership and protect the brand’s investment.

• The Morality Clause: Perhaps the most famous and feared clause in any endorsement deal. This gives the brand the right to reduce payment or terminate the agreement entirely if the athlete engages in any conduct—be it criminal, scandalous, or otherwise—that could bring the brand into public disrepute or contempt. This clause protects the brand’s image from being tarnished by the athlete’s personal mistakes.

Performance Reductions: Just as there are bonuses for success, there are often penalties for failure. The agreement may include a reduction clause that lowers the base fee if an athlete’s ranking falls below a certain level or if a team is relegated from a top-tier league.

Term and Renewal Options: The agreement will have a fixed term, often tied to major event cycles like the Olympics or the World Cup. Brands often include a Right of First Refusal or a Right to Match clause. This means that when the contract is ending, the athlete cannot simply accept an offer from a competitor (like Adidas). They must first bring that offer to their current sponsor (e.g., Nike), giving them the right to match the offer and renew the deal.