Making the Most of Football Sponsorship Deals
Sponsors need to think about how the brand should be represented and define requirements, for example, for the size of the logo, taking particular account of what is or is not facing the camera.
The life cycle of the current shirt design is also important. This has an impact on the number of shirts sold and worn by fans. There will likely be a number of changes over the life of the sponsorship, and it’s important to consider what happens to unused stock after an agreement ends.
Sponsors should also consider the extent to which they need a club to cooperate in activating their business partnership, including the role of any brand ambassadors for the sponsor company or club. It is essential to ensure that these services can be called upon when activating rights under the agreement.
There should be clarity on the precise rights granted, linked to a detailed understanding of a venue, how each competition works and what benefits are or could be awarded.
Negotiating a sponsorship deal involves various contractual considerations. The agreement may need to be renegotiated at some point, so the agreement should provide as much certainty and clarity as possible about the process. There could be an option included to extend the contract at the sponsor’s option, as well as a contractual right to match competing offers to secure sponsorship rights which are clearly defined to withstand disputes.
Payments can be tied to club success. Termination rights may be tied to failure if they effectively reduce the value of the sponsorship to a nominal amount.
Where possible, corporate sponsors should ensure that the value earned for the amount paid is understood and defined. In doing so, the contract will reflect the best way for the sponsors to protect their interests in the event that certain rights are not granted.
The contract should include an obligation for the club to procure services from its players, management or officers to improve the sponsorship deal – and to disclose any issues with its ability to do so.
During negotiations, care should be taken to determine who bears which activation costs.
Football clubs are subject to many external forces. A sponsorship agreement should provide for what happens if a rights holder breaches national, UEFA or FIFA regulations, and to what extent.
Given the fluid state of finances and rights within the industry, sponsors should be aware of potential changes to how a club or league can sell rights and how this could impact the value of the sponsorship. . For example, the impact if a league moves to a model where individual clubs sell their own rights, or the introduction of private equity into the sale of rights, rather than the current model prevalent in UK football where rights are sold centrally by the leagues.
Given the increasing focus on environmental, social and governance (ESG) issues, sponsors could also consider tying the contract to benchmark ESG provisions. Consideration should also be given to doing the same with respect to other criteria, such as those relating to diversity and inclusion.
Sponsors should also consider the potential monetary implications of a transaction and how, if at all, to mitigate any risk.
Finally, it is important that sponsors know what data they can use to build their relationship with the club. The contract should then reflect the rights the company has to access and use this information, either through the club or through direct access to customers.
Sponsors and football clubs stand to gain from stronger relationships where these issues are considered from the outset.