The sporting landscape has never been more valuable to or challenging for sponsors. High profile sports teams and athletes continue to appeal to marketers as a great way to increase brand awareness, however this is not without its challenges. As high-profile sporting integrity issues over the past 18 months have shown, sometimes a sponsor may find the market value of a relationship is not what was originally hoped for or intended. In these situations the challenge for sponsors is to include adequate protection in their sponsorship arrangements to ensure the intended value of the deal is preserved, particularly where this lasts for a longer period of time. In acting for sponsors, we often include contractual mechanisms which are designed to rebalance the financial dynamics of the deal in the event of poor performance by the rights owner or, as we are now seeing, events which call into question the integrity of the rights owner and, by proxy, their sponsors. Clarification on the law surrounding the drafting of penalty clauses has somewhat assisted in this process from a draftsman’s perspective, and helps to give sponsors additional leverage.
For athletes and teams, attracting appropriate sponsor investment remains a major task for all but the highest profile rights owners. Sponsorship has always been about return on investment (whether quantifiable or otherwise), however increasing market pressures and the fragmentation of audiences across a wider range of media means that sponsors are, more than ever before, looking for a value-add proposition from their sponsorship arrangements. We often see how this plays out from a contractual perspective, and this usually translates into a higher level of engagement between talent and sponsor in order to justify the overall investment.
An interesting time for parties on each side of this equation therefore, and a set of issues on which we are well placed to help – if you would like to discuss further, then please contact Charles Maurice, Senior Associate in the Commercial team here at Stevens & Bolton LLP. Charles has also taken a more detailed look at the challenges facing sponsors over the past twelve months in his contributed section of the lawinsport.com Sports Law Yearbook 2015/16 – UK, Ireland and EU, and this publication is now available for download here.