Chasing Adam: What to Make of Run Gum v. USATF and the USOC
This is the second edition of “Chasing Adam,” a new column from longtime running writer Adam W. Chase aimed at telling thought-provoking stories from all corners of the running world.
[Editor’s note: The law suit filed by Run Gum against the USOC and USATF was dismissed on May 12 by a federal judge, who ruled that antitrust laws were not broken because the organizations have implied immunity under the Ted Stevens Amateur Sports Act of 1978.]
Is it fair for USA Track & Field (USATF) and the United States Olympic Committee (USOC) to prevent athletes from competing in this summer’s U.S. Olympic Track & Field Trials in Eugene, Ore., while promoting their non-apparel sponsors? That is the question posed by track star and two-time U.S. Olympian Nick Symmonds through his business, Gold Medal, LLC, dba, Run Gum, in a Federal lawsuit, filed back in January.
Some 25 years ago, I clerked for a Federal District Court Judge, the same type of judge who will be assigned to rule on Run Gum v. USATF, USOC. Federal judicial clerks are newly-minted lawyers hired to, among other things, write bench memoranda to help their judge analyze key issues and, ultimately, write decisions, either as a summary judgment or, if the case goes to trial, as a full-on decision.
The case has not advanced beyond the initial pleading stage and neither party has briefed their arguments so the following is a shoddy version of a bench memo for you, the judges of public opinion, to base your findings.
Symmonds has been a dominant U.S. 800-meter runner for several years, winning six U.S. titles, earning two Olympic berths and winning the silver medal at the 2013 IAAF World Championships in Moscow. He is sponsored by Brooks and, last August, was left off the World Championships team in Beijing for refusing to sign the USATF code of conduct that would have required him to wear the Nike-branded Team USA uniform at team functions, including non-competition functions. Symmonds, who would have defended his 2013 world championship silver medal, said he wouldn’t sign the agreement absent specific language protecting his right to wear Brooks apparel during non-competition functions. Symmonds proclaimed that it was beyond USATF’s rights to require athletes to wear Nike-branded apparel outside of competition and, now, with his current legal action, he’s backing up his prior stance in relation to non-apparel and non-equipment promotions.
(To protest what he calls the absurdity of the rules, Symmonds recently auctioned off space on his right shoulder for advertising space. The winning bid of $21,800 was made by T-Mobile CEO John Legere, and Symmonds has said he’ll sport a temporary tattoo of the T-Mobile logo this summer, but cover it up with tape while he’s competing.)
Run Gum is represented in this lawsuit by antitrust lawyer Michael Hausfeld, counsel for former UCLA basketball star Ed O’Bannon against the NCAA in a fight with the collegiate monopoly alleged to deprive athletes of a revenue share by limiting the use of the athletes’ names, images and likenesses. That suit was successful at the trial and appellate levels, where judges held the NCAA had violated antitrust laws.
Run Gum Complaint
Run Gum’s complaint seeks to overturn rules that allow only companies registered with USATF and the USOC, i.e., apparel and equipment manufacturers, to display logos on athletes’ apparel or equipment during and outside of competition. That prohibition deprives Run Gum of the right to promote its product through temporary tattoos like the ones that adorned Symmonds’ guns when he won the 800 qualifier last year.
The Run Gum complaint states: “By jointly agreeing and conspiring to restrict and limit the ‘Advertising’ that appears on athletes’ bodies at the Olympic Trials to only pre-approved manufacturers of athletic apparel and equipment, defendants USATF and USOC starve athletes of myriad sponsorship opportunities—and exclude scores of sponsors from the marketplace…” Run Gum takes issue with the Trials. The company isn’t challenging the policy as it applies to the Olympic Games.
Run Gum argues that such restraint is per se illegal under Section 1 of the Sherman Act and that athletes competing in the Trials will receive less in sponsorship than they would in a competitive market. “Moreover, as a result of the restraint, Run Gum and other would-be sponsors have received and/or will receive less revenue (as well as less good will, less brand loyalty, and less consumer attention) because of their categorical and anticompetitive exclusion from the Olympic Trials.”
USATF’s official sponsors are featured during the NBC television coverage and include Nike, BMW, Hershey, Visa, Rosetta Stone and the University of Phoenix. Team USA and USATF are sponsored exclusively by Nike and, accordingly, Team USA athletes are compelled to wear Nike-branded competitive apparel at Team USA events. The contract with Nike runs through 2040.
But it isn’t the single-sponsor exclusivity that Run Gum’s lawsuit challenges. Rather, it is USATF and the USOC’s categorical exclusion of individual-athlete sponsors by business type at the Olympic Trials. Run Gum objects to the way that USATF applies its Olympic Trails Uniform Advertising and Logo Regulations under Rule 50 of the Olympic Charter to disqualify athletes who wear uniforms that bear any commercial identification or promotional material of any kind, commercial or noncommercial. According to Run Gum’s complaint, the anticompetitive exclusion of non-apparel and non-equipment sponsors “lacks any legitimate business justification or pro-competitive effects.”
Run Gum was founded by Symmonds and running coach Sam Lapray. It is described in the complaint as “compressed functional chewing gum that contains a proprietary mix of caffeine, taurine, and b vitamins. Popular among runners, Run Gum provides a zero-calorie alternative to coffee or energy drinks for athletes who want to optimize their performance without ingesting liquids.” If you think of Run Gum along the lines of Red Bull you can appreciate that it is largely a marketing campaign. Can you imagine Red Bull gaining its success without the company’s incredible, all-encompassing promotional campaigns?
“Absent the anticompetitive restrictions at issue in this action, non-apparel and non-equipment sponsors including Run Gum would sponsor individual athletes at the Olympic Trials in exchange for exposure at the Olympic Trials, subject to the same generally applicable size, quantity, and placement restrictions that currently govern apparel and equipment manufacturer ‘Advertising.’” This would, according to Run Gum, result in higher returns for the athletes, excluded sponsors and the sport of track and field.
But would it?
USATF and USOC
In late February, the defendants in Run Gum’s lawsuit filed motions to dismiss Run Gum’s lawsuit, citing the Ted Stevens Olympic and Amateur Sports Act and claiming immunity. In its motion, the USOC asserts that “Run Gum seeks to free ride on the USOC’s activities and to appropriate for its own commercial purposes the brand, goodwill, and popular audience of the Olympic Trials.” And, further, that the “effort lacks any legal support, and it threatens the ability of the USOC to deliver on its mission.”
In addition, the defendants argue that Run Gum’s suit fails to state a claim under antitrust law by failing to allege they conspired to violate antitrust laws and that the Olympic qualifier, held once every four years, is not a properly defined market. USATF’s motion contends that “Run Gum’s desire to free ride on the Olympic name through ‘ambush’ advertising at a single event does not an antitrust claim make.”
If the District Court allows Run Gum’s case to progress to trial, it is easy to see that the defendants will argue basic economic theory. USATF and the USOC are quasi-governmental bodies beholden to outside financing from sponsors in order to fulfill their roles in governing, overseeing, supervising, hosting, organizing, funding, officiating and delegating the Olympic Trials.
In their official capacities under Olympic and Amateur Sports Act, the defendants serve in bureaucratic capacities to provide a service akin to a state tollway. The administration is subsidized by exclusive contracts, awarded to the highest bidders, for gas stations and restaurants that are functional monopolies at the pull-outs. It is the exclusive nature of those contracts that drives up their value and the gas and restaurant bidders would pay far less if the tollways allowed seemingly non-competing gum shops to set up at the exits. Pretty soon the tollway would look like a NASCAR vehicle, plastered with commercial and promotional campaigns.
Stirring the Pot
Run Gum’s suit kicks up a lot of dust and the Federal Court in Eugene, “Track Town USA,” will have to make a relatively quick ruling on at least a preliminary restraining order that might allow athletes to promote their non-apparel sponsors at the Olympic Trials while it decides to make the order a permanent one. The legal challenge begs the question of whether USATF and the USOC could survive without the exclusivity that Run Gum is fighting.
And the suit makes for some head scratching as to whether the restraint on uniform promotional material, “commercial or noncommercial,” is a violation of the First Amendment: should there be a ban on religious jewelry that dangles off the chests of many a track and field athlete? What about flashy spikes, hair styles, fingernails? What about the political protests? And are the days of trying to protect the amateur status of the Olympics so passé that we should just concede to the professionalism of athletics and properly fund our athletes?
About The Author:
It’s actually easy to chase Adam W. Chase because, as a guy who just hit 50 and run more than 150 marathons and ultra-distance races, he’s self-admittedly rather slow. Adam writes a little faster and also serves as President of the American Trail Running Association and works as a lawyer in Boulder, Colo. He was recently inducted into the Colorado Running Hall of Fame.