Drafting a sports sponsorship contract? Think small print
Risk of ’guerrilla marketing’ is always in the mind of a sponsor
Brand owners will try to ensure that they fully leverage their ability to make money or to otherwise benefit from sponsorship opportunities. On the other hand, sponsors often want exclusivity. Sponsors do not find their brand sitting alongside a competitor brand in relation to the same sponsorship opportunity. Often the brand owner will split up sponsorship opportunities into various categories. A lot of time and effort is spent detailing and scoping out the exclusive nature of sponsorship arrangements.
The risk of ambush or guerrilla marketing is always in the mind of a sponsor. Where time and investment is put into an exclusive sponsorship deal, the sponsor will not want to find that a competitor successfully diverts the attention of the target audience away from the sponsor. Often, as part of the contract, the sponsor will oblige the brand owner to take legal action to defend and police the sponsor’s rights secured as part of the contract.
As a sponsor, it is very important to ensure that it secures all the rights that it needs to fulfil its marketing plans. Even some of the big brands do not think this aspect through fully. In 2012 Samsung found itself embroiled in a legal dispute with various athletes in respect of its Olympic Genome Project, a media campaign allowing people to identify their links to famous Olympians via Facebook. Samsung did secure the all-important sponsorship rights from the International Olympic Committee regarding use of the Olympic brand, but did not seek permission to use athletes’ images from athletes; it consequently found itself in court.
Sponsorship agreements must anticipate that sponsors often need to take quick and public steps to disassociate themselves from a brand which has been damaged. Sponsors generally secure a right to terminate deals when certain trigger events occur. Lance Armstrong lost eight sponsors (including Nike and Trek) in less than 12 hours during October 2012 when news about drug-taking hit the headlines. It is important, when drafting sponsorship agreements, to think about all the eventualities. It is also not unusual for brand owners to seek termination rights for similar reasons.
To prevent sponsorship deals making bad press, brand owners and sponsors alike need to think carefully about what their contract contains, and what might happen in the course of the relationship. They should take the time to put the foundation stone, a thoughtful sponsorship contract, in place.
Deirdre Kilroy is a partner in Dublin law firm LK Shields