122021Apr

Sporting Event Sponsorship Agreement

Brands and companies from different sectors (. B for example, betting companies, beverages, telecommunications, etc.) seek sports sponsorship as an important marketing tool to link and promote its values, products or services to events, teams and athletes. However, for some of these categories of sponsors, 2020 is a blow and significant losses are expected, such as airlines, public travel agencies or even betting companies. Reports on sponsorship are mixed: some suggest that Covid-19 will not affect current sponsors, but only how their rights are activated; While other reports are much more pessimistic. So far, sponsors have patiently and tacitly requested discounts or refunds of sponsorship funds from their sponsors. However, it is only a matter of time before such requirements are put on the table and, therefore, commercial and legal discussions begin. From a legal point of view, Spanish contract law (civil law) offers the sponsor mechanisms for adapting the financial terms of the sponsorship contract, which could range from moderation of sponsorship fees to early termination of the contract. In other countries, such as the United States or the United Kingdom (common law), the scope of the concept of force majeure and court jurisprudence is essential. Regardless of jurisdiction or country, it is necessary to review the sponsorship agreement and understand the spirit of such an agreement in order to assess a successful potential claim of the sponsor or to defend the sponsor against the claims. Regardless of the country, sport or size of the competition (national or international), the last three months have seen a continuous postponement of temporary postponements or total cancellations of leagues, competitions and other events. There is no doubt that the impact of Covid-19 in the sports industry is enormous from a social and economic point of view in the United States and Spain. Overall, creativity, flexibility and cooperation in negotiating sponsorship agreements in the context of COVID-19 should be a key element.

In this landscape, a rights holder will always be interested in entering into new contracts and safeguarding future revenue streams. A sponsor will strive to protect its investment and ensure that it can use sponsorship opportunities with the confidence that the risks associated with the coronavirus pandemic will be adequately managed to provide optimal value for money. To do so, parties need to consider more creative contractual measures to regulate the agreement and structure operations so that they are agile and safer. In summary, despite the short-term negative effects of Covid-19 in the sports industry, it is advisable to reanalysis the contract and the overall sponsorship situation and make a decision on the basis of a medium- and long-term strategy for both parties.