Phil Parkinson, head of Commercial law at Blacks Solicitors
Brand associations in sport are particularly powerful, especially when it comes to clothing and kit sponsorship. Sponsorship deals can make or break a brand, and for athletes it can mean the difference between gathering more support from fans or receiving negative publicity.
Phil Parkinson, head of Commercial law at Blacks Solicitors, discusses the legal considerations that athletes, sponsors and clubs need to be aware of when it comes to brand association and sponsorship.
The benefits of sponsorship
Sponsorship deals with the right people not only generate positive association, but also create brand awareness which is of course one of the key objectives in any brand’s marketing strategy. Sponsorship deals can place a brand front of mind, both with current customers and in some cases, with entirely new audiences.
Sponsorship deals also create brand association which is beneficial for both the brand and athlete in the right circumstances. If an athlete is sponsored by a highly popular brand, the athlete will naturally become more popular and more likely to generate crowds at matches and other sporting events.
Sports across the spectrum are well known for utilising sponsorships and brand association to drive funding, raise awareness and create new opportunities. Ultimately a sponsorship generates a partnership which clubs, athletes and brands can benefit from.
For any brand who’s ready to sponsor an athlete, there are three key legal areas that can have significant implications if they’re not thought through.
The level of exclusivity is crucial. While exclusive sponsorships can generate a number of benefits, including the association of a particular kit with the sponsor, it can put the brand at risk of having to fund the kit entirely and make other payments that are specified in the contract.
Sponsors should ensure they have established brand registration and guidelines. Registering intellectual property will make any brand even stronger and ensure they are properly protected. Registering logos as trademarks for protection is a good example. Having a strong legal team to keep track of registrations and set up brand guidelines to ensure any logos and other branding are only being used in conjunction with its wishes is a good idea. It’s also important to make sure that any licensing of the IP is agreed and made in writing.
There are always risks when contracts are signed and sponsors should have legal protections in place. This includes caps on liability for a breach of obligations, and contractual clauses to cover if the brand can’t comply with an obligation due to something beyond its control.
While players can reap various benefits from brand association and sponsorship opportunities, there are a few things they need to consider.
Have they researched the brand? It’s really important that the brand has a track record of delivering on their promises, otherwise players can be left in a situation where the partnership comes to a messy end.
Once they’ve settled on the brand, make sure that any agreements are secured in writing. Agreements should include payment terms which make it clear what the brand is expecting the player to do and just as importantly, is there anything that they cannot do?
It’s also important to clarify if agreements can be entered into with other sponsors in the same area, or if the deal includes an exclusivity clause. If exclusivity is a key requisite, is the player being compensated correctly for the potential lost revenue that would have come from other sponsors?
And finally, secure tax advice from an expert and establish whether a separate company should be established to deal with image rights. Many famous athletes have done this.
Clubs should be careful of brand sponsorships and associations. They should make sure that their players only have a sponsor that represents their values to prevent negative PR associated with an unfitting sponsor.
Contract requirements are also crucial. Seek a licence for the intellectual property associated with the sponsor’s brand so that the club and athlete has the right to use it. If the sponsor breaches third party IP rights and this negatively impacts the club it’s important to seek indemnities. Ensure protections are in place in case obligations cannot be complied with due to factors beyond the club’s reasonable control.
For more information, please visit www.lawblacks.com/business/commercial-law