Sports sponsorship - a look at the issues

So another London marathon has just taken place with all the highs and lows and a fond farewell to Paula Radcliffe – sport is emotional and draws large crowds, and as such, has become big business.  I attended a webinar on sports sponsorship last week, which provided an overview of some of the main issues to consider in sponsorship arrangements.  The  presenters were Jonathan Crystal of Goldsmiths Chambers and Craig Giles of Bird & Bird LLP.

Jonathan kicked off the seminar by discussing the differences between sponsorship, endorsement and merchandising.  Sponsorship is supporting a person or event, by providing finance or providing products or services.  Endorsement is approval or association with a product or service.  Merchandising is exploiting articles/images etc which have become famous.

He reminded participants that character rights are not recognised in English law, although they can be controlled through other causes of action such as the law of passing off.  He also considered the importance of goodwill, which has been recognised by the courts over the years as a significant element in business.

He also gave the common sense (but often forgotten) advice to ensure that you understand what is underpinning the contract – that is, what do the parties actually want to get out of it – what benefits are they looking for?

Craig reviewed the regulatory environment.  There is no stand-alone sponsorship law but lots of different rules of law from different areas including for example the law on trade marks.  In addition, there are broadcasting rules, and in the UK, the Committee of Advertising Practice broadcast and non-broadcast codes which are regulated by the Advertising Standards Authority.  It is also important to bear in mind the rules of the various competitions, or sporting federations – eg there could be a veto on certain sponsors, or strict rules about kit.  There can be conflicts between personal and club team or national team sponsorship.  And finally, it is important to consider sector-specific rules such as those affecting tobacco, gambling and alcohol.

Jonathan also reviewed exclusivity – there are often lots of sponsors with a hierarchy, with a general or product category and there will be exclusivity within a certain product hierarchy, eg it would be unusual for both Coca-Cola and Pepsi to have an involvement with the same event.  He also considered the thorny problem of ambush marketing, which has been a recurrent problem since the 1980s.

Craig then considered particular clauses in sponsorship agreements that can cause controversy , eg dealing with morality or damage to reputation, eg taking illegal drugs; failure to deliver rights by the rights-holder or failure to pay or provide products by the sponsor.

What issues have you encountered when drafting sponsorship agreements? Please let us know.

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