With a number of international sporting events taking place over the next few weeks, new sponsorship deals have been dominating the headlines, including; the video platform giant, TikTok, sponsoring the Women's Six Nations 2022, political controversy with the corporate sponsors for the Beijing Winter Olympics 2022, Manchester United unofficially unveiling that blockchain platform Tezos will sponsor their training kit and FC Barcelona's potentially lucrative kit sponsorship agreement with music streaming platform, Spotify.
From corporate giants to independent businesses, many entities (and individuals) in the hospitality and leisure industry are prepared to pay increasingly large amounts of money to have their products and/or services associated with, for example, individual athletes, clubs/teams, venues, sporting, music, and charity events.
Whether the intention to enter into a sponsorship agreement is to provide financial support, raise brand awareness, promote a corporate image/message, or launch new products/services, obligations will be placed on the sponsor in return for the rights granted to them by the sponsored party.
There are many forms of sponsorship, including multi-sponsor format arrangements, official supplier agreements, broadcasting agreements, merchandising agreements and endorsement agreements. Aside from the standard terms such as duration, fees, termination rights, intellectual property, and warranties to be provided by each party, a sponsor will need to consider the scope of their rights, the level of exclusivity they require and whether any renewal rights will be given to them.
A sponsor should ensure that sufficient obligations are placed on the sponsored party, for example, to organise and promote the event and ensure it is high quality, to protect the reputation of the brand and to control and prevent the phenomenon of ambush marketing. Similarly, a sponsored party will want to place obligations on the sponsor such as to supply the products/services, to ensure the sponsor has the necessary insurance (e.g. product liability and advertising liability insurance), and, if required, assists with the prevention of ambush marketing or attempts of counterfeiting.
It's important to note that generally, there is no proprietary right in an event, although an exception was made for the London 2012 Olympics and Paralympic Games under the London Olympic Games and Paralympic Games Act 2006. Therefore, it is crucial for both the sponsoring party and the sponsor to understand their position and protections afforded to them and their commercial interests under sector-specific rights and legislation.
If you have any more questions or would like more information regarding sponsorship agreements, you can contact our Hospitality and Leisure Team below for further information.