Sponsorship deals are bread and butter for many professional sports clubs and individual athletes. The Head of our Commercial Team, James Towler, and solicitors Emily Steed and Will Bates recently played a significant role in advising Leeds on its sponsorship agreements, including SBOTOP, Clipper Logistics, JD Sports, Hisense, VitalityHealth, VitalityLife, VitaltityCar, VitalityInvest, Bet 365, Utilita, EA Sports, eBuyer and LNT Group.
Here James looks at some of the key questions for both sides.
A sponsorship deal, however exciting it may be for those involved on the ground, is at heart a commercial deal like any other business transaction. Each party has something that interests the other and the only issue standing in the way is making sure that both parties agree on how they will benefit.
But paying attention to the detail is just as important as it would be in any other commercial transaction and getting the contract right can be complex because of the breadth and depth of possible permutations.
It is a straightforward enough proposition: one party has a brand of value and the other wishes to associate its brand with that in order to increase its own brand recognition to help it achieve its targets.
The sponsor wants its link with the club or individual to generate a favourable response from its markets and the sponsored brand wants to benefit financially. However, there are a great many more issues to consider for both parties.
In the case of football, a club being in the Premier League generates a hugely increased level of contact with the sponsor’s audience because the matches are broadcast, not only in the UK but across the world. This makes it the most valuable sporting league in the world.
But the value of the club also depends on its success so the way the cost of sponsorship is considered also needs to look at the variants of performance. Will the deal be different if the club is relegated in the next season or will it improve if it wins the league? Sponsors are savvy and will react to changing circumstances quickly so this needs to have some detailed consideration.
There are also external issues to consider, as readily highlighted by the current COVID-19 pandemic. What will the sponsor want to see happen if there continues to be no spectators allowed at games or, even worse, if football has to be cancelled altogether again in a complete lockdown? There is also an impact on some of the benefits a sponsor might expect, in terms of them and their guests being able to mix with players at events or in holding their own events at the stadium. What happens if this is not allowed under pandemic restrictions?
The club or individual involved also needs to establish whether the sponsor is an appropriate “fit” with its own values, with some markets not being considered appropriate.
Payment terms are also important, with the club needing to ensure the sponsor can afford its financial commitment over the agreed period to safeguard income.
None of these issues are insurmountable but do depend on reliable and good quality advice. Our own recent experience of working with Leeds United was made more difficult because the normal timescale concertinaed due to the overrun of the Championship season in the pandemic and the shorter than usual break before Leeds joined the Premier League but it certainly proved that if all parties have the will, there is certainly a way to achieve great deals!