Sports Law | QLD

The evolution of marketing and advertising in the commercial environment over the past 30 years has seen a huge transformation in the concept of sponsorship. The way companies reach consumers and the way sports stars brand themselves are both extremely important in the billion dollar world of advertising. Through an equitable exchange of funds and services or some form of rights, there are benefits for both parties involved in a sponsorship. In order to protect these rights, it is important to manage the terms of a sponsorship by way of a sponsorship agreement.

BENEFITS OF SPONSORSHIP

Sponsorships are essentially business agreements whereby a business will provide resources or funds to a club, sporting team or sporting individual in return for certain image rights. It is the image and personality of a sports person that the public associates with; therefore, the ability to exploit this image can allow businesses to derive separate income and help the business commercially.

Sponsoring a sports star or a sporting team can help to broaden the competitive edge of a company’s image, credibility and prestige. Whether it is a logo on a football, a sign in a stadium or a name on a jersey, sponsoring can give businesses the ability to lock out competitors and sway consumers in their favour for future sales.

For a sporting team or individual, sponsorship is an ideal way to obtain funding, equipment or specific goods or services that will offer opportunities that they may not have otherwise had.

Sponsorships can be prepackaged whereby the sponsor provides levels of benefits that are pre-determined; or alternatively they can be customized packages that are specific to the consumer and their marketing goals. They can also be based on the business providing services or products, rather than money. A sponsorship agreement is a way of effectively communicating the form that the sponsorship will take.

SPONSORSHIP AGREEMENTS

Given the different forms of sponsorship arrangements it is important to be aware of the objectives, rules and approach to a sponsorship.

In particular, it is certainly best practice for all parties to enter into a formal agreement where any form of sponsorship is involved irrespective of the monetary value.

CONSIDERATIONS FOR A SPONSORSHIP AGREEMENT

Like any form of legal agreement, it is imperative that each party knows their rights and responsibilities and where they stand. As is the case with many sponsorship arrangements, what initially appears to be a reasonably simple deal can become very intricate and complicated very quickly.

Important issues to consider and cover off when entering into a Sponsorship Agreement can include:

  • If the sponsored party is an individual, how they are able to contract with the sponsor, whether it be individually or through a specialized image and likeness entity;
  • What the sponsored party is required to do for the sponsor and what they are prohibited from doing;
  • The remuneration payable to the sponsored party and whether it be cash only, or a combination of cash and product etc;
  • Restrictions around other sponsors, types of marketing and ambush marketing;
  • Restrictions on use of intellectual property of the sponsor and the sponsored party; and
  • Exclusivity in a sponsor category or industry (e.g. an exclusive clothing sponsor or exclusive sponsor in the banking industry etc).

Sponsorship Agreements can take many forms, but however they are constructed, it is imperative that all aspects of the arrangement are included at the beginning of the arrangement when there are no disputes and all parties are getting along well.