Naming Rights to Sports Stadiums: the key legal issues
Match Day ticket sales increasingly constitute a smaller part of a sports club’s income. Attracting commercial income is now a key priority. As such clubs are looking to sell naming rights to the very ground they use as a key income generation tool.
Set out below is a note explaining what is likely to be included in a contract for the sale of such rights. However it is by no means an exhaustive list!!
Length of the agreement
Clearly the agreement must state the term of the arrangement. The Sponsor however should negotiate a right of first refusal upon expiry of the term albeit that the Club will want the Sponsor to match or exceed any other third party offer received.
Locations of Sponsor’s name and logos
The agreement should set out precisely where the Sponsor’s name and logos are to be attached to the exterior and interior of the stadium. The Sponsor will want to ensure that such signage is highly prominent to television cameras. The Sponsor’s package is highly likely to include rights to advertising on perimeter boards and the inclusion of the Sponsor’s name and logos on tickets, club programmes and other Club communications. Of particular importance will be a link to the Sponsor’s website on the Club’s official website.
The Sponsor will want to ensure close control of its name and logos and may well want to include colour specifications within the agreement to ensure correct replication.
The Sponsor will want to ensure that the Club does not grant sponsorships to competitors; particularly conflicting sponsorships within the stadium.
It hardly needs to be said that these will be central to any agreement!! The stadium owner will be looking for as much cash up front as possible with increased payments payable in the event of success such as promotion or a cup win or more television coverage than forecasted. The Sponsor will want payments by instalments with reduced payments in the event of relegation or loss of key television coverage.
Sponsor’s other benefits
Typically the Sponsor will want more “bang for his buck” than just their name in key locations around the stadium. The following may well be part of the items up for negotiation:-
Use of the stadium owner’s name and logo in the Sponsor’s literature and advertisements; The use of one or more executive boxes and/or a certain number of free tickets to allow the Sponsor to offer corporate hospitality to its clients Free advertising in the match day programmes and/or stadium owner’s website; The right to use the stadium owner’s database of supporters for marketing purposes (subject always to compliance with Data Protection legislation); Depending on the Sponsor’s goods or services they may want to be the sole source of supply to the stadium owner.
Either party may want the right to terminate the agreement quickly in a number of situations. These include:-
Insolvency of the other; Breach of the agreement; If the actions of one party are likely to damage the other’s reputation. So for instance the Sponsor may wish to terminate if the stadium owner is found to have bribed league officials or cheated its way to success. The stadium owner may want to terminate of it finds out the Sponsor uses child labour or has become embroiled in corruption. Such morality clauses are often the subject of a detailed article in their own right!! The sponsor may want to terminate early if the sponsored club is relegated or loses key media rights. Clearly as sporting success cannot be guaranteed the club will not be keen to include such clauses as it may well have spent or ear-marked the Sponsor’s payments for other causes.
As you will appreciate this note only really gives a snapshot of some of the key terms usually included. A bespoke agreement, carefully negotiated, is essential to protect both parties and minimise dispute moving forward.
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