The sponsorship contract in sports: key aspects

The sponsorship contract in sports: key aspects, commercial expert at CECA MAGÁN Abogados
18 Apr 2024

Table of contents

Not all brands and products are suitable for a particular athlete or sports entity, nor can all athletes represent any product or service in the market.  It seems obvious, but it is the key to sponsorship.

The identification of brands and products with the athlete, his activity and profile are key to the success of sponsorship contracts in the world of sport, even more so.

In this article we would like to highlight the key aspects that should be taken into account when preparing and negotiating a sponsorship contract in the world of sport. All this, with the aim of avoiding possible discussions and a potential future conflict between the signatories. 

- The sponsor and the sponsored party in the sponsorship agreement

Any sponsorship contract not only has an economic purpose, but also serves to create added value and an exponential increase in the image and brand of both parties: sponsor and sponsored. 

Through the interrelation of their products, brands and distinctive signs, there is a common purpose of reinforcing the presence in the sectorial market to which they are addressed, to that target audience and appearance in the audiovisual media. 

To this end, from the perspective of the sporting event, sports entity or “Sponsored” athlete, it is very important to define well the sector and the products of the potential Sponsor that we want to represent our brand and be the spokesperson of our distinctive signs. 

From the point of view of the “Sponsor”, it is also key to bear in mind that the specific sports activity or the specific professional athlete must add value to the brand and develop values that identify with the company's philosophy.

To avoid future problems, it is highly advisable to clearly and concisely define in the sponsorship agreement itself how the athlete or sports entity assigns its brand and/or image rights to the Sponsor for its exploitation in the market, its territorial scope, as well as what complementary services related to the Sponsorship, if any, the athlete or sports entity is willing to perform in favor of the Sponsor. This will prevent the failure of the expectations created by the parties in the sponsorship contract, as has happened on many occasions for both parties.

- The duration of the sponsorship contract

Likewise, special mention should be made of the duration of the assignment of trademark and/or image rights, specifically the way to exploit, if applicable, the trademark and image of the athlete or sports entity once the contract has been terminated.

The possible limitations on the use of the trademark and/or image rights of the athlete, the specification of the complementary services to be provided to the Sponsor such as press releases, presence in social networks, public appearances representing the Sponsor, advertising events and media must be included in the sponsorship contract. 

Although this type of legal relationship usually involves marketing and communication professionals who can contribute their experience in the development of all these considerations, it is advisable to specify the number of impacts in the different media, specify the content of the interviews, whether or not any media is vetoed, or if so, delimit if there is any aspect or issue that both the athlete or sports entity and the brand prefer not to be treated; also the presence of the athlete or sports entity in public appearances, advertising and communication events.

- Exclusive or non-exclusive sponsorship contracts 

Another essential element of the sponsorship contract refers to the regulation of exclusivity in the sector and, especially, of the products on which the image and brand of the athlete or sporting event is to be used as a claim. 

All this is for an adequate and organized exploitation of the brand and image of the sportsman or sports event and the correct development of the marketing and communication campaign of the company and the products of the Sponsor. 

By specifying the sector and, where appropriate, excluding other sectors and/or certain products from the object of the sponsorship, it allows the sportsperson or sports entity to exploit its brand without limitation in other sectors and/or certain types of products and to generate a multiplier effect in the exploitation of its image and brand. This is the case of well-known sportsmen and women, such as Rafael Nadal, Pau Gasol, Fernando Alonso or Carolina Marín, to cite a few examples, whose image is associated with sponsorships of many corporate brands, but from different sectors over a specific time. 

On the Sponsor's side, ensuring exclusivity in the sponsorship contract in the sector and/or in the advertising of specific products that are integrated with the image and brand of the sportsman or sports entity, ensures a privileged position over its competitors and allows it to develop promotional campaigns with total legal certainty.

- The economic consideration in the sponsorship agreement

On the other hand, the regulation of the economic consideration, if it includes variable concepts, in whole or in part, must be drafted using an objective procedure that avoids confusion between the parties. 

It is common to include in sponsorship contracts a variable remuneration linked to specific objectives achieved, either by the athlete himself/herself as a result of his/her sporting activity, such as success in certain sporting competitions, or by the execution and development of the sponsorship contract and the results obtained by the sponsoring company or the sale of certain products linked to the brand and image of the athlete or the sporting entity. 

Sometimes the variable consideration clauses are complex, including sales formulas and ratios that can be difficult to interpret during the execution of the contract. In the case of variable consideration, the simplification and objectivity of the stipulations governing the variable consideration will allow the parties to be clear and concise in the application of the criteria on which the variability of the consideration is based. 

In addition, the remuneration usually includes the contribution in certain products developed by the Sponsor that include the athlete's brand and/or image, either for promotional or personal use.     

- Grounds for cancellation of a sponsorship agreement

In sponsorship contracts, the correct regulation of the possible use of the trademark and image rights of the athlete or the sports entity once the contract has been terminated is particularly important, both for its future use and for its correct exploitation.

It is in the interest of the athlete that the Sponsor ceases the use and exploitation of its trademark and image rights, once the contract has been terminated for whatever reason, but this is not always possible, especially with respect to those actions carried out in the digital world. The use of the athlete's trademark and image rights in promotional actions in certain social networks and applications, nowadays indispensable for a correct diffusion of a brand, makes the elimination of its diffusion very difficult.

It is common to regulate exclusions to the cessation of the use of the trademark and the image of the athlete, at least with respect to actions carried out in the digital world or also to regulate transition periods from the termination of the contract for the cessation of the use of the trademark and the image rights of the athlete. In these cases, it is advisable to have defined in the Sponsorship Contract itself the transitional period in which the use of the brand and the image of the athlete or sports entity will be able to be used and in what way, its territorial scope, those promotional actions that will last in time and those that must be eliminated from the market in any case.

Our lawyers are experts in the elaboration of sponsorship contracts for companies and sports entities, as well as for sportsmen and women who require a treatment that knows first hand the peculiarity of these contracts. If you need more information, do not hesitate to contact us here.

Jacobo Ollero

Partner of the commercial area

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