Earlier this year, firm Associate Darden Copeland attended The Racing Attorney Conference (TRAC) for its 15th annual conference at Circuit of the Americas in Austin, Texas. TRAC is an annual conference for motorsports attorneys and other sports industry professionals that is traditionally held in world-class racing venues across the country. Darden walked away from TRAC with several key insights on legal issues and other relevant topics affecting the motorsports industry. Here are some of his takeaways.
The Web of Sponsorship Exclusivity
Motorsports athletes often encounter sponsorship complexities at an early and vulnerable point in their careers, and often much earlier than other professional athletes due to the high costs associated with getting started in racing, which creates an absolute necessity for sponsor funding in most cases.
At the dawn of their career, these athletes are often met with pages of legal documents from sponsors and pressure to sign them just to keep their dream alive. Many sponsorship agreements contain broad exclusivity provisions drafted to restrict the sponsored athlete’s ability to affiliate with other brands that may be viewed as competitive within the current sponsor’s industry.
Issues arise as the motorsports athlete makes advances in his or her career and is offered additional sponsorship opportunities, as they may conflict with any broad exclusivity provisions within the athlete’s current sponsorship agreements. As a new driver markets himself or herself to prospective teams, a big part of what makes a driver appealing is that driver’s current sponsorship backing, and the ability for that driver to bring sponsorship funding to the team. Broad exclusivity provisions could prevent a driver’s current sponsors from being compatible with those of a prospective race team, thereby shuttering the window of opportunity for the driver.
It is important for motorsports athletes to understand at the beginning of their career that the sponsorship agreements they sign early on may have a long term effect on the trajectory of their racing career. Narrowly drafted exclusivity provisions within sponsorship agreements allow motorsports athletes flexibility to grow by keeping viable opportunities open, while also providing the necessary funding.
Safeguarding Consumer Data; You’re Only as Strong as your Weakest Link
The importance of data protection and data privacy is on the rise in just about every industry, and the motorsports industry is no exception. The entire sporting industry by its nature is extremely consumer-based. Venues, leagues, streaming platforms, and other market participants engage in direct-to-consumer transactions and communications, whether it be in the form of ticket sales, streaming subscriptions, data gathering, online marketing or even merchandise or concessions sales, just to name a few. Nearly every transaction involves the gathering and storing of consumers’ data, so industry players often find themselves in possession of a large amount of valuable personal information.
There has been a rise in data privacy litigation in the wake of numerous data breaches and new laws and regulations aimed at protecting consumers’ data. Since sports industry participants are so consumer-focused, it is ever important for them to maintain comprehensive data protection policies to safeguard consumers’ data. In addition, it is critical to ensure that the vendors with whom the industry participants contract are also maintaining adequate data protection standards. For example, if a ticket sales company or advertising agency contracted by a racetrack suffers a data breach, the racetrack’s customers who were in contact with those vendors are now at risk due to the inadequacies of one of those vendor’s data protection measures. In terms of cybersecurity and data protection, you can only be as strong as your weakest vendor.
Motorsports and the Streaming Era
The cord cutters have spoken, and they have been heard. NASCAR joins the ranks of other top sports leagues, namely the NFL, MLB, MLS, by inking a new broadcasting deal with four different television broadcasting outlets, each accounting for different portions of the 2025 NASCAR Cup Series season, in which one of such outlets is only available via streaming. Amazon Prime, which will broadcast five races of NASCAR’s premiere series next season, will mark the first time in the modern era that any of NASCAR Cup Series’ races will not be available through a traditional cable broadcast. However, this is not a new prospect for many other motorsports leagues such as the ARCA-Menards Series and the zMAX CARS Tour, which routinely are only available to viewers via subscription-based online streaming platforms. In recent years, NASCAR Cup Series races have brought in over 8 million viewers for a single race. It will be interesting to see if the streaming era will have an effect on this viewership going forward.
