Sponsorship contracts are omnipresent in the sports world, offering mutual benefits to the parties involved: the sponsor (company or brand) and the sponsored (athlete, club, or sports event).
When this service relationship is centered on an athlete's image, it can have significant implications.
Since a ruling by the Court de Cassation on May 12, 2021 (Cass. 2e civ., No. 19-24.610), case law tends to requalify sponsorship contracts as modeling contracts. This trend, confirmed by several recent decisions (see Cass. 2e civ., June 23, 2022, No. 21-10.416, or Court of appeal of Aix-en-Provence, May 23, 2023, No. 21/14908), calls for careful attention and raises major legal, social, and tax issues, redefining the relationships between athletes and sponsors.
Definition and purpose of a sponsorship contract
A sponsorship contract is an agreement in which an economic player, the sponsor, aims to capitalize on the athlete's image to promote its brand. In return, the sponsor provides the athlete with compensation (financial or in kind—equipment, outfits, etc.). This promotion may take the form of wearing branded accessories, social media posts, photo shoots, or participating in brand events.
This partnership seeks to enhance the sponsor's image through the athlete's fame and influence. Under French law, sponsorship contracts do not have a specific legal definition. For many years, they were considered simple service contracts. Athletes were viewed as independent contractors, free to perform the contract without subordination to the sponsor. This independent status limited tax and social obligations for both parties.
In recent years, this classification has been questioned when the athlete's image, rather than their sporting performance, becomes the central element of the contract.
The sponsored athlete considered as a model
The Court de Cassation's ruling on May 12, 2021, followed by a decision from the Aix-en-Provence Court of Appeal on May 23, 2023, marked a turning point in the classification of sponsorship contracts involving athletes.
In this case, an athlete was paid by the sponsor to “exclusively wear the sponsor's branded equipment at all events related to their sporting activity, and to provide photos of themselves with the brand's equipment or make themselves available for such photos required for promoting the equipment.”
The French Labor Code, Article L.7123-2, states:
"A person is considered to be engaged in modeling activities, even if performed occasionally, when they are tasked with:
1° Presenting to the public, directly or indirectly via visual or audiovisual media, a product, service, or advertising message;
2° Posing as a model, with or without subsequent use of their image."
Given that the agreement between the sponsor and the athlete was primarily based on exploiting the athlete's image, the Court legally reclassified the sponsorship contract as a modeling contract.
This reclassification presumes that the athlete-model benefits from employee status, under Article L.7123-3 of the Labor Code. Consequently, labor law automatically applies to the contractual relationship.
To escape this regime, the parties must prove the absence of a subordination relationship, which, in practice, is a complex legal challenge. Article L.7123-4 of the Labor Code stipulates that the presumption of employee status "remains regardless of the mode and amount of remuneration as well as the qualification given to the contract by the parties" and "is not negated by proof that the model retains full freedom in performing their modeling work."
Social and tax consequences of reclassifying the sponsored athlete as an employed model
Reclassifying the relationship as an employment contract has significant implications for both parties:
- For the sponsor (now the employer): unforeseen costs and legal obligations:
- Payment of employer social contributions on the athlete's earnings, including contributions for social security, retirement, unemployment insurance, and other employee-related charges.
- Compliance with labor law, particularly regarding working hours, rest periods, employee health and safety, and leave.
- Administrative obligations to declare and remit payments to social organizations (URSSAF, pension funds, etc.).
- For the athlete (now the employee): unforeseen fiscal and employment obligations:
- The athlete gains social protection linked to employee status, granting rights to health coverage, accident insurance, retirement contributions, and unemployment benefits.
- The athlete is subject to mandatory payroll deductions and income tax, potentially reducing their net income.
- The reclassification limits the athlete's contractual freedom, obliging them to comply with employee obligations, such as defined working hours or sponsor instructions.
Conclusion and recommendations
Drafting a sponsorship contract involving an athlete in France requires careful consideration of the nature of the contractual relationship, ensuring clear definitions of obligations concerning image enhancement and exploitation, the athlete’s involvement, and remuneration conditions.
To manage these challenges, consideration should be given to:
- The athlete's autonomy within the contractual relationship and their degree of freedom in organizing their working time and performing the service ;
- The necessity of including exclusivity or non-compete clauses, which limit the athlete’s freedom ;
- The inclusion of clauses that impose penalties on the athlete, such as in cases of reputational damage (e.g., doping) or failure to uphold the sponsor's image.
If an employment contract is required, it must include mandatory legal elements, such as the nature of the contract (permanent/temporary - with associated risks of reclassification), working hours, leave rights, applicable collective agreement, and notice periods.
Melvina VALERII and Paul ALEXANDRE
