Law firm Stevens & Bolton has created a checklist of the issues which a business should consider when entering into a contract for sponsorship of an event.
Sponsorship is a popular method of marketing a product or a brand, associating it with an event, which is often high profile. The sponsorship opportunity can confer 'preferred status' on the sponsor and with it, the right to certain privileges like corporate hospitality or free tickets.
1. Parties to the sponsorship agreement: Check whether the contracting party has the right to grant the sponsorship rights to the event and if necessary, obtain warranties to this effect.
2. Exclusivity/restrictive covenants: Is exclusivity being granted to the sponsor in respect of the event itself or a particular product area? Are there are any restrictions which the sponsor wishes to impose on its competitors who may also want to sponsor the event?
3. Sponsorship rights: The nature of the rights being granted needs to be clear and documented in writing. For example, as the sponsor of the event, does the sponsor have any specific rights, for example:
* official supplier to the event
* signage rights
* clothing rights
* the right to promote its own products at the event
* hospitality suite
* the right to place the sponsors brand name on programs and tickets
* whether the event will bear the sponsor's name
* broadcasting rights, (if any).
a) Term/option to renew: The term of the sponsorship agreement needs to be considered depending on whether the event is regular, e.g. an annual event, or a one-off. A sponsor may require an option to renew sponsorship or a right of first refusal to future events. Consideration should be given to the specific terms of those rights.
b) Fees: Consider whether the sponsorship fee will be paid as a one-off fee or in instalments. Instalments give better protection if the event is an on-going one or if the relationship is an unhappy one.
c) Tax: The tax implications of the sponsorship fee and of providing any promotional products to the event need to be considered. Especially if the event is an international one, as this may give rise to double taxation.
4. Intellectual Property Rights: Specific provisions should be included in the agreement as to where the sponsor's logo/trademark/name will be placed. A sponsor will need to ensure that its name/trademark brand are placed in an appropriate position only and that the sponsor has final approval as to its use. It will need to ensure that the event host or any third parties do not acquire any rights in its trademark/name or brand.
5. Obligations on the Event Organiser: Details should be included as to the times and dates of the event. Similarly, a list should be included as to who will be responsible for which parts of the event. The sponsor may require that the event organiser has insurance or grants it an indemnity if a claim is brought against the sponsor for any liabilities arising out of the event.
6. Regulatory Requirements: Depending on the type of event there may be regulatory issues to consider. For example sporting association requirements or broadcasting codes of practice.
7. Cancellation/postponement: Provisions need to be included in the agreement as to what will happen in the event of cancellation or postponement of the event, e.g. due to bad weather, lack of participation.
8. Competition law: Depending upon the restrictive covenants and exclusivity provisions, competition law advice may need to be taken.
This information is necessarily brief and is not intended to be an exhaustive statement of the law. It is essential that professional advice is sought before any decision is taken.