Peter James, Partner in our Commercial team reviews the issues to consider to make a sports sponsorship agreement a success.
This article is written from the point of view of the proposed sponsor for the sports sponsorship. The first key issue is to analyse why you are seeking the sponsorship opportunity – is it for a sound business reason, in terms of raising the profile of your business in the local community, regionally or nationally?
Another key issue is what “package” of sponsorship rights do you need to reach your objectives and what will it cost? In putting together your requirements for a sponsorship package, you need to bear in mind the rules of any governing body, since these may not permit the club to promote your company in the way you envisage.
Since the club is likely to include a provision that “all sponsorship rights not expressly granted to the sponsor are reserved to the club”, it is essential that the sponsor looks beyond the obvious and secures express rights to meet its objectives.
You will need to establish at an early stage if your sponsorship will be the main or only one, or if your sponsorship will be just ancillary to another main sponsor. A club may be reluctant to disclose details of other proposed or actual sponsors, but you need to establish whether a competitor or a
business which is inconsistent with your corporate aims is involved. A club may also want to impose restrictions so that you do not issue promotional items which conflict with the main business of other sponsors.
Once the principles of the deal have been established, time should be taken to consider the practicalities of ensuring the best exposure for your brand. For example, if you are paying for pitch side hoardings, will they be in sight lines of the media (particularly television camera positions)? Will you logo appear on the front of shirts or on the sides as well? Do the logo colours work with all changed strips used by the club? Does the sponsorship only apply to the first team or to all or some of the other teams which the club has? If the club produces programmes, can you secure a prominent position for your logo on the front cover and perhaps a free full page advert for your business in each edition?
In terms of the duration of the sponsorship deal, this can be something of a two edged sword. You might want to seek the security of a two or three year
deal, so that if the club does well, there is a degree of protection from greatly increased sponsorship fees. The down side with this is that the club may be relegated and the value of the sponsorship may be greatly reduced. A sensible approach would be to include an option for the sponsor to terminate and to include in the agreement a scale of increases and decreases in sponsorship fee, depending on the relative success or failure of the club. This would also need to cover reductions in sponsorship to cover such issues as the re-location of the club (since certain rights may have been negotiated with one specific stadium in mind), changes in regulation by a governing body and any material changes in the rules of a league or cup competition. (This could be linked to a series of bonus payments relating to success in leagues or cup competitions).
A difficult issue can be that of sponsorship rights away from official games. To what extent can the club members be required to wear clothing featuring the sponsor’s logo at press conferences, training camps and media events? There is likely to be cross over and even conflict with a number of competing interests. As referred to above, there may be controls imposed by governing bodies. There may also be conflict with personal sponsorship deals of individual players or even the manager.
This issue of potential conflict is also likely to arise if a sponsor seeks to secure personal appearances from the players and/or the manager. Any contractual wording will need to take into account competing commitments which players and others may have to other sponsors.
The sponsor will also be concerned about players and members of the management and coaching staff of the club and, in particular, whether their conduct could adversely affect the reputation of the sponsor. At a basic level, the sponsor will want the club to procure that no director, player or other employee of the club makes any statement which is defamatory or derogatory of the sponsor. The sponsor will also want an express right to terminate the agreement if the club (or any director, player or other employee) does something which adversely affects the image or reputation of the sponsor or brings it into disrepute. This could cover such matters as serious criminal convictions, drug or alcohol abuse or violent conduct.
Other issues which need to be considered include:
- Promotional material – on what materials will the club feature the sponsor’s logo and conversely, what use is the sponsor permitted to make of the club’s own logo (for example on promotional give-aways, on its website etc);
- Internet – can there be a link between the sponsor’s and the club’s websites? Will the club accept a sponsor’s page on the club’s website?
- Tickets and hospitality – How many tickets will the sponsor be entitled to
– both free and at a reduced price? What hospitality suites will the sponsor be able to use and at what cost?
- Use of facilities at the stadium – does the sponsor wish to reserve e use of the facilities on other than match days, such as for corporate training, seminars etc?
- Supply of products – Depending on the nature of the products or services, does the sponsor wish to have a sales kiosk or other means of selling its products and services, particularly on match days?
- Standard contractual provisions covering such issues as definitions, termination rights, consequences of termination, liability, prohibition on assignment by the club, confidentiality, notices, waiver, severance, variations and applicable law.
At the end of the day, it is in the interests of the sponsor and the club to produce a workable sports sponsorship agreement, based on the needs and objectives of both parties, which will have the best chance of securing long term benefits for the club and the sponsor.
Peter James, Commercial Partner, Gardner Leader LLP
Please note that this article is for general guidance on sports sponsorship and is not intended as a substitute for detailed legal advice on any specific sports sponsorship proposal.