32 - Mediation in sports disputes: how parties can shape their own dispute resolution
Back from his one-month suspension for his breach of the FA’s anti-doping regulations, full of optimism and purpose, Mills was sharply brought back to reality when he learnt that his lucrative sponsorship deal with Fleet Feet (a premier sports footwear and apparel brand) was in jeopardy.
Executives at Fleet Feet were extremely concerned that Mills’ escapades would have a negative impact on the brand’s reputation by association with the player. This was especially the case given that he was a key brand ambassador for Fleet Feet and it had pushed a big marketing campaign (involving Mills) during the pandemic – “Living healthy lives. Together” – which promoted mental and physical wellbeing for its customers.
Fleet Feet pulled their ad campaign with him and publicly announced that:
“We have suspended our ‘Living healthy lives. Together’ campaign with Mills with immediate effect, in light of his recent drug misuse and consequent playing ban. Fleet Feet will consider its options and will make no further comment at this stage”
What were the relevant terms of the contract?
Fleet Feet wrote to Mills’ lawyers, withholding payments due in respect of the ad campaign and reserved its right to terminate the sponsorship agreement (which had two years remaining) in reliance on the following clauses:
“[…]
7.3.1
during the Term, the Athlete will not:
7.3.1.1
use any drugs which are illegal or prohibited by any applicable laws, rules or regulations of any sports federation, national sports organisation or international sports organisation having jurisdiction over the Athlete; and
7.1.3.2
make any defamatory or derogatory statements about, or take part in any activities which are or might reasonably be perceived to be derogatory of or detrimental to the reputation of, Fleet Feet or the Game.
[…]
9.3
Either party shall be entitled to terminate this Agreement immediately on giving written notice to the other in the event that:
9.3.1
the other party commits a material breach of this Agreement which, in the case of a breach capable of remedy, is not remedied within 14 days of being required to do so; […]
12.1
This Agreement will be governed and construed in accordance with the laws of England and Wales and the parties hereby submit to the exclusive jurisdiction of the English Court.”
What were Mills’ options going forward?
Mills was furious. He felt badly let down by Fleet Feet, who knew how important the mental and physical health campaign was to him, given his recent bouts of depression following the death of a close family member earlier this year.
Mills instructed a solicitor for advice on the matter, and made clear that he wanted to fight this one out with Fleet Feet in court, as he felt like there was an important principle at stake.
A letter of claim, setting out Mills’ potential case, was sent to Fleet Feet. The letter demanded the sum of £200,000 plus VAT which was due to him for the services provided for the “Living healthy lives. Together” ad campaign, which had already been running successfully for 3 months. The following points were put forward by Mills’ solicitor:
Mills had duly provided the personal appearances necessary to produce the ad campaign, which launched 3 months ago and had received great press exposure. Fleet Feet were not entitled under the contract to withhold this payment.
While “drugs” were referred to in Clause 7.3.1.1 of the contract, the intention of the parties was to provide for termination in the event of use of performance enhancing drugs (which he did not use). The FA’s approach to social drugs under its regulations is more lenient than in respect of performance enhancing drugs and this is an important consideration when considering whether his drugs misuse was a material breach of the contract.
The onus would be on Fleet Feet to show that its brand has been detrimentally impacted, given the background to Mills’ doping ban (and the general sympathy felt for him).
The sanction received by Mills was not a severe one and does not warrant a termination of the wider sponsorship agreement.
Two months later, with both parties entrenched in their respective positions, Mills demanded that his solicitor prepare the relevant court documents to issue legal proceedings against Fleet Feet.
His solicitor pointed out to Mills that actually Fleet Feet had offered mediation as a way to try and resolve matters amicably.
While Fleet Feet had been advised that the merits of its case for withholding payment and termination of the contract were good, the Managing Director did really value Mills as a brand ambassador, as she considered him relatable to their target audience. Making clear that she did not condone drug use in any shape or form, she appreciated that Mills had struggled with his mental health and she was willing to explore mediation to see whether there was any scope for the parties to rebuild their relationship, rather than face a very public and costly court case.
Fleet Feet also had time to test the impact of Mills’ actions with certain focus groups and, as a result, did have some concerns about whether recent events had actually been “detrimental to the reputation of Fleet Feet”.
Both sides weighed up the advantages of mediation. These are summarised here, which is a helpful guide to mediation. Each party ultimately agreed that an attempt to resolve the dispute by way of mediation was in their respective interests.
What was the outcome at the Mills / Fleet Feet mediation?
The initial joint meeting with the mediator, in which each side sets out its position, was an emotional one from Mills’ perspective. When reading out his statement, he told the Managing Director that he was disappointed how the brand had handled this issue, especially given that his recent use of recreational drugs was a mistake and spurred on by “a bad moment in his life”.
The Managing Director responded to Mills in a firm manner. It was explained to him that the incident did have negative consequences for the brand and that, while sympathetic to his story, it cannot be business as usual without any consequences.
The parties left the room and agreed to see whether a resolution could be found. The mediator then spent time with Mills to understand what his motivations were and what resolution he was looking for. The mediator then went to Fleet Feet’s room and relayed these points to Fleet Feet and sought to establish Fleet Feet’s drivers for settlement.
Over the course of the day, the mediator shuttled between the two rooms, narrowing the key issues to be resolved until the parties were in a position to formulate a potential way in which the relationship could be rectified.
Ultimately, the Managing Director was convinced that Mills’ story around why he made the mistake of taking recreational drugs was a powerful one. Mills also understood the impact that his actions had had on Fleet Feet.
Had this matter gone to court or arbitration, the parties would have been divested of the determination of the outcome of this dispute, which would have been in the hands of a judge or tribunal. Conversely, with mediation, the parties remained front and centre of the process and with the assistance of an independent third party (i.e. the mediator), they were able to be quite inventive and effectively re-negotiate the terms of their own ongoing relationship.
The company agreed that it would enter into a revised agreement with Mills, the key terms of which would be set out in a settlement agreement, to cover the remaining period of time from the original contract, provided that:
Mills would not seek to recover the monies due for the ad campaign “Living healthy Lives. Together”.
In return for this concession, Fleet Feet agreed to continue its relationship with Mills.
Mills’ remuneration under the original contract was to be reduced by 20%.
He agreed to film an interview for the brand’s mental health campaign: “Talking mental health. Don’t be afraid to speak out”.
Further information
Click here to find out more on mediation in sports disputes.