Sponsorship Agreements- how to make them work for you
It’s sponsorship season (at least in the Premier League it is). The time of the year when sales teams and agencies are hard at work trying to secure the best sponsorship deals for the next football season. Having secured the deal they approach their lawyer for the sponsorship agreement.
Businesses want more from their sponsorship deal and the overall relationship – quite rightly so given sponsorship payments are on the up. Whether you are the Sponsor (giving over money or equivalent for the your brand to be advertised) or Sponsoree (giving away the sponsorship rights) and whether you have an individual or business deal here’s how to flex those sponsorship agreements to get the most out of them:
Get your lawyer on board early
Sales personnel have a different focus and pressure around the deal with a focus on the financial value and the inventory (the list of sponsorship rights). Get your lawyer involved as early on as possible (ideally pre-negotiations) as they will help flesh out additional questions and issues for negotiation discussions.
For example, when are the sponsorship payments to be made, due diligence on the prospective Sponsor (i.e. can they pay up). Your lawyer can also check if the business you are speaking to is part of a group of companies, if so, do they even own the sponsorship rights you want.
Involving your lawyer quickly can avoid delays and even the deal collapsing later on. It can also help place you in the best negotiating position as you will have an understanding of all the issues to be thrashed out with the other party before negotiating starts.
Inventory: clear and outside the box
A clear inventory list with exactly the sponsorship rights you want and/or are able to give is key to a successful agreement. Ensure commercially it will work in practice (i.e. can the Sponsoree can actually deliver the sponsorship rights). Consider ethics too, will the sponsorship rights and Sponsoree brand have negative connotations or, contradict your own brand? Are your values well aligned?
Don’t forget to capture social media related rights too (your tweets, Instagram posts and YouTube videos) these are prized assets nowadays. If you are looking at sharing customer data be weary of data protection consents and make sure you both have adequate procedures in place before promising this.
If you are Sponsor, ensure the inventory will reach and achieve the desired results, ultimately why are you sponsoring, is this to generate business, to get your name out there, to target a specific audience or, all of the above?
Be as creative as you can and think outside the box. To get noticed think of new ways to advertise your brand so your inventory stands out against other sponsors (if this is what you want). The highest valued inventory is not necessarily the best inventory. If you are Sponsoree, bespoke the inventory to the brand in question and don’t make your lists a one size fits all.
Lock in and break free
How are you locked in (i.e. exclusivity periods) and how you might get out if the relationship is not working. Whilst this might be a perfect and exciting deal now, things can turn sour unexpectedly so plan for this.
If the Sponsor or Sponsoree takes on a competitor brand of yours, would you still be keen to work with one another?
What if the relationship is a huge success or one brands becomes increasingly prominent in the marketplace? Have you put into the agreement renewal options/arrangements?
Outside the agreement
Take a birds-eye view of the commercial deal, how else might the Sponsor/Sponsoree assist your business? Have you considered all their business has to offer?
Whether it’s training for your staff, a discount for your employees (as part of their benefits package), products or additional services, see if there are any bolt-ons that you can help each other with. This could be as simple as general business or strategic advice.
Fast-forward yourself from the here and now. What rights will be available in 3 years time and what might the sponsorship relationship look like then.
There may be rights which are as of yet unavailable but may become available in the near future (i.e. the recent announcement on footballers shirt sleeves becoming available for sponsorship). If you are the Sponsor you want to ensure you get first pick of these and reserve any potential rights in your agreement upfront.
Give thought to any additional rights you want triggered on certain events happening for example, the club reaches the final of a competition and additional rights become available. As Sponsoree do you want additional payment on the trigger of this event?
To make a genuine sponsorship arrangement work you need a genuine relationship. Formalising steps for this in the agreement can help, you can appoint a specific employee from each party to meet regularly to make this happen. You can use the these meet-ups to discuss what is and is not working for both parties and amend the agreement if necessary.
There is nothing worse then having a sponsorship agreement in place with no relationship behind it or no desire to genuinely make it work from both parties.
If using an an agent to help secure the deal put in place an agency agreement before the work commences to avoid disagreements and agree commission payments upfront.
Would you like our help with your individual/business sponsorship agreement (whatever the industry) or even your agency agreement, let’s get talking .