Phelps & A Look At The Morality Clause

Tuesday, 3 Feb 2009 | 3:12 PM ET
Michael Phelps
Michael Phelps
Michael Phelps

I think it's wait-and-see for Michael Phelps' sponsors, but you'll hear a lot about these morality clauses that are in endorsement contracts that allow a company to get out if their endorser messes up. Some of them are specific and require an athlete to be convicted of a crime, others are so vague that termination often then leads to the legal system to decide whether it was specific enough for it to be called "with cause."

We asked one agent to pull one of these clauses out of an endorsement contract of one of his athletes so we can show you what it looks like.

This one seems to be more of the vague variety: Athlete (a) engages in detrimental conduct; or (b) is publicly alleged to have engaged in detrimental conduct during the term in a reputable print, radio, internet or television source; or (c) has, prior to the contract term, engaged in detrimental conduct and information about athlete’s past detrimental conduct becomes public during the contract term.

Questions? Comments? SportsBiz@cnbc.com

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