The recent ANA Advertising Law one-day conference held at Katten's New York office featured current trends in sports marketing featuring sports and sports facilities partner Daniel Render and executive vice president of business and chief legal officer of BSE Global. A panel discussion on legal trends was held. Jeff Gewirtz. BSE Global owns the Brooklyn Nets, New York Liberty, and Barclays Center.
Throughout their discussion, Daniel and Jeff discuss how sponsorships and partnerships for sports leagues, teams, and events continue to evolve, as well as the key legal issues leagues and teams need to consider as brands invest in sports. We considered this. Meanwhile, the venue. Daniel and Jeff specifically noted the following important considerations:
Understand different perspectives: It is important to understand both the brand and league/team/venue perspectives when negotiating sports marketing deals to ensure the needs and expectations of all parties are met and the deal is completed in an efficient manner. is.
Business back opportunities: “Business-back opportunities” are a huge motivator for brands to engage with sports venues. These opportunities may include, for example, the opportunity to offer branded beverages, to have its IT systems used, or to have its credit card sold as the preferred mode of transaction at the league/team or venue.
Community engagement: Sports sponsorship is more than just advertising; it's also about fostering community bonding and support. The brand's chief marketing officer only wants advertising agency-generated marketing campaigns to organically generate the goodwill associated with sponsorship of professional sports teams that have a tremendous track record and have fostered a lot of local pride. If you rely on , you may face challenges. For example, if a local bank wants to emphasize its ties to the community, connecting with a local team can be a great way to organically emphasize the bank's place in the community. In larger markets, you can also demonstrate your brand's prestige by partnering with powerful teams and venues.
Sponsorship Alliance Complexity: Brands need to understand the unique legal issues associated with different types of sponsorship alliances, from global (such as the Olympic Games) to local/regional (local professional sports teams). For venues, naming rights sponsorships are typically the most important source of sponsorship revenue. When a venue is built and developed, naming rights sponsors are usually the first sponsors to come in. Category exclusivity is of paramount importance to naming rights sponsors, including protection from “ambush marketing” and other forms of exclusivity infringement. Meanwhile, teams/venues are striving to be flexible by piecing together categories and sponsorship inventory across as many sponsors as possible to increase revenue opportunities. These considerations are further complicated when the ownership and management of a venue is different from the owners of the teams playing at that venue, as the sponsorship and financial incentives for those owners are different.
Please note that there is an important difference between Sponsorship Alliances and Direct Athlete Support Alliances. Despite their affiliation with the league, athletes typically have autonomy over deals with brands related to patches, manufacturer logos, shoes, etc., and profits from those associations.
Clear agreement: For sports leagues/teams/venues, clear drafting of exclusivity rules and related exceptions is required to avoid unintentionally inhibiting future revenue generation opportunities. The level of specificity in sponsorship deals has increased significantly over the past 5-10 years as leagues/teams/venues have focused on revenue maximization opportunities, particularly in complex categories such as water, alcoholic beverages, and credit cards. Improved. and is often fragmented and negotiated.
In addition to the importance of the contract language itself, contracts help set the parties' expectations for a relationship that is often set to last over a long period of time under various management regimes. If a league/team/venue sells a category to one sponsor and does not pay attention to the legal language of the contract, even on favorable terms, its ability to generate future revenue may be unduly inhibited. there is.
Category exclusivity and exclusivity exceptions: Not only does the contract need to be clear about what is included in a particular category, it also needs to specify what is included. isn't it I fall into that category. It may also be helpful to include examples of third parties that fall under these exceptions. A clear draft allows teams/venues to continue selling sponsorships to other sponsors with a clear understanding of the rules of the road.
As an example, if a sponsor receives the right to be the venue's exclusive credit card provider, does this include debit cards? Also, does this depend on the venue's ability to accept a variety of payment methods within the venue? Teams/venues retain the ability to factually explain to fans that other payment methods are accepted without being confused with an attempt to undermine the exclusive protection of official credit card sponsors. need to do it. In scenarios where a new sponsor's category may overlap with an existing sponsor's category, the new sponsor is typically notified of this overlap. The existing sponsorship agreement will then be recognized as an exception to the exclusivity granted to the new sponsor.
Brand recognition: When negotiating category exclusivity, it's also important to consider brand awareness and how the public understands your brand's meaning. In many cases, especially when it comes to exclusivity restrictions, it is important to understand how the brand itself is represented and understood. For legal practitioners, understanding the business of a brand and the business of a league/team/venue is paramount.
League rule changes: All sponsorships of professional sports teams must comply with applicable league rules. The contract should address how unexpected changes to league rules that affect sponsorship will be handled. This typically includes the team agreeing to provide comparable exchange benefits, refunds, or termination rights if such changes limit the sponsor's ability to receive the full expected value of sponsorship fees. included. If the originally planned benefit cannot be provided, teams/vendors prefer to provide alternative benefits as a remedy whenever possible. However, brands may consider obtaining termination rights if sponsors are unable to receive the basic sponsorship benefits they negotiated, such as if a key aspect of the sponsorship category is banned.
Morality clause: Sponsors typically try to include morality clauses to protect the sponsor's reputation. Leagues/teams/venues typically resist offering these provisions, or at least seek to limit their potential impact, given the high profile of their teams and their players.
Force Majeure and “Most Favored Nation” Clauses: These provisions have become even more important in the wake of COVID-19. A force majeure clause governs the respective rights of the parties in the event that the Sponsor Benefits are not provided to the Sponsor due to circumstances beyond the parties' control. This most commonly occurs when matches are lost or are played without spectators due to natural disasters, epidemics, or work stoppages. Similar to league rule changes, if a force majeure event limits a sponsor's ability to receive the full expected value of sponsorship fees, remedies typically include the team/arena providing equivalent exchange benefits, refunds, or termination rights. This includes agreeing to. Again, if the originally planned benefit cannot be provided, teams/vendors prefer to provide alternative benefits as a remedy whenever possible. Brands often seek to suspend sponsorship payments during a force majeure event, but teams and venues seek to receive continued payments and may choose to “liquidate” if necessary after the force majeure event ends. To do.
