This weekend Australia has seen what is known by many as “The Festival of the Boot”.
The festival kicked off on Saturday when much of the nation watched the Australian Football League (AFL) Grand Final between the Western Bulldogs and the Sydney Swans, with the Western Bulldogs emerging the winner.
The Festival of the Boot continued on Sunday with the National Rugby League (NRL) Grand Final between the Cronulla Sharks and the Melbourne Storm, with the Sharks emerging the winner.
For my American friends, think of a weekend containing both the Super Bowl and the Stanley Cup and for my European friends, think of a weekend containing the Premier League grand final and the Ashes.
While for most of us this is an excuse to throw another shrimp on the barbie (hello USA friends!) or more likely some snags and steaks and maybe a lamb roast, for the sponsors of the relevant AFL and NRL leagues and the teams in the finals, this is their most important and most valuable weekend of the year.
Key sponsorship legal issues
So how does a sponsor, make sure they get bang for their buck? When setting out to sponsor a league or a team (or conversely looking to take on a sponsor), what are some of the key legal issues that should be considered?
Are you dealing with the right party?
As a starting point, sponsors must ensure that the party they are dealing with has the relevant rights to offer. The rights available at a whole of league level, differ to those able to be offered by teams which again differ from those able to be offered by the players themselves.
As a starting point it is important to understand which entities or persons own which rights. A rights audit is a useful tool to employ. A rights audit looks at what rights the relevant entity has to offer, what the legal status of those rights is, whether the entity owns the rights or has licence rights only and whether the entity has the legal ability to offer those rights to the sponsor.
Different levels will be able to provide different rights. For example, the relevant league such as the AFL or NRL are the entities able to offer broadcast rights while the league itself, a team or sometimes the venue itself may be able to provide signage rights. Usually a team will be able to offer signage rights at its home ground, but not at other grounds.
Who owns the rights or IP?
It is important to look at ownership and rights to use the IP rights being offered, especially the team brands. You might think that the premiership winning Western Bulldogs would own their Western Bulldogs trade marks; however a simple trade mark search reveals the trade marks are owned by the AFL itself. As such in dealing with the Bulldogs in a sponsorship deal, a potential sponsor would want to determine what licence rights the Bulldogs is able to offer to the use of their logo and associated IP, given that IP is owned by the AFL.
Are you the only sponsor?
Unlikely! These days it is usual to see a swathe of sponsors for most leagues and teams, so unless you are the only sponsor (and have a contractual right saying so), the level of your sponsorship, whether it is exclusive or not, whether your competitors can also be sponsors and what other lesser or higher sponsors are allowed must be specified.
If you are to be the naming rights sponsor, then the sponsorship contract must spell out in detail what that gives the sponsor. What is the specific name? In what font and format is it used? How is it used and where? Must it always be used in full? (preferably!) The list goes on.
If you are a major sponsor, how many other major sponsors are there? Are you the number one major sponsor or are you all first amongst equals? Do you get your company logo on the left hand upper chest of the jersey in a huge format or is it hidden away on the socks?
Do you get your signage at the grounds midfield or hidden away in a corner?
These and many other specifics need to be considered upfront and specified in the sponsorship agreement. The better the signage, whether on the field or on the players, the more costly the real estate!
Imagine you are a major electricity retailer sponsoring a team. Do you want to see your major electricity competitor sponsoring the team elsewhere on the uniform or at the grounds? Indeed not! A prohibition on the team taking on sponsorship from a competitor (and the definition of who is and isn’t a competitor is a very important issue) is a key provision a potential sponsor should insist on.
What happens if your competitor sponsors the league as a whole or is a personal sponsor of one of the players? How these competing sponsorships interact must also be considered, but is a topic for a separate blog in itself.
This won’t stop ambush marketing (ever seen a Coke advertisement during the ad break when the game is sponsored by Pepsi?), but it will if correctly drafted, stop a competitor cutting your grass in relation to the specific sponsorship at hand.
There are many other issues to consider in sponsorship agreements. Stayed tuned for part two of this blog which will cover off issues including :
What is the duration of the sponsorship?
What are the performance criteria if any?
What are the exit mechanisms?
What is the territory? (by geography and type of media)
What is the fee structure?
What if it all goes wrong?
Tune in tomorrow…