Manchester City F.C. has become the first Premier League team to announce an official sleeve partner for the start of the 2017/2018 season.
With the value of sleeve space estimated to be worth 15-20% of a Premier League club’s front-of-shirt sponsorship, it seems it will only be a matter of time until other teams follow suit. For example, it has been reported that a sleeve sponsor could be worth nearly £10m to Manchester United who currently make £47m a year from Chevrolet.
The announcement is a timely reminder of the importance of carefully negotiating sponsorship agreements and considering the value of any agreements already in place.
Clubs will need to identify whether existing agreements contain any problematic clauses for such sleeve sponsorship opportunities, for instance exclusivity arrangements. Such clauses may prevent clubs from selling jersey space to companies in the same sector as their front-of-shirt sponsor or, in the extreme, to any other potential sponsor at all. In this scenario, teams may need to bargain with current sponsors if they wish to make space on their shirt sleeves and, in this regard, it may be worth considering notice and termination provisions. It is also a reminder, when clubs are negotiating new sponsorships agreements, to have a keen eye on exclusivity clauses as they may close the door to the opportunity for further advertising income.
On the other hand for sponsors, does having a sleeve sponsor dilute the value of your front-of-shirt sponsorship? Sponsors too might be considering their positions, and appropriate contractual protections, in the event other clubs pursue such sleeve sponsorships. Thus clubs should consider the effect that introducing a new commercial partner will have on existing close associations. In some cases, it may have potential to jeopardise the relationship. An example could be a club whose front-of-shirt sponsor also has stadium naming rights.
According to the former commercial director of Tottenham, sleeve deals could be the start of a new focus on commercialising previously ignored inventory as the growth of broadcast rights value slows. With this in mind, teams will want to ensure flexibility in their commercial arrangements with existing sponsors.
It is clear that the appetite for utilising the international coverage of the Premier League continues to grow. Next season it will be in the form of shirt sleeves sponsor. In the future, we may see new opportunities arise such as back-of-shirt deals (which already exist in Spain). Clubs will need to be commercially savvy to ensure they are able to take advantage of these opportunities.
The RPC team is particularly experienced in contentious and non-contentious matters involving football sponsorship (both kit and shirt sponsorships) and supply agreements. For more information please contact Joseph Byrne or Andrew Crystal.