Shirt sponsorship in sport is big business and brands have long been more than happy to pay huge sums of money to secure a spot on a club’s jersey. Shirt sponsorship agreements are exceptionally lucrative for Europe’s biggest clubs evidenced by Chelsea’s pulling power in managing to increase their sponsorship income from £18million with Samsung to £40million with Yokohama Rubber and Manchester United’s deal with Chevrolet which is worth £53million, the most expensive in football. This article picks out some of the more unique features of such agreements.
Performance based payouts
In addition to a standard sponsorship fee many agreements between club and sponsor may include further payments based on performance. The exact criteria as to when a bonus will be paid out by the sponsor to the club will naturally vary depending on the determined success and stature of the club in question. Typically a large club with a recent history of winning trophies will negotiate a clause within the agreement that defines a payout on winning, for example, the FA Cup or the Premier League. Other clubs may wish to scale down the criteria for a bonus to include criteria such as qualifying for the group stages of the Champions League or Europa League. Should any of the criteria be met then sponsors will typically be obliged to pay the bonus within 30 days of receiving an invoice from the club.
While for the most part standard contract termination rights will be inserted into the agreement there are a number of unique rights which sponsors and clubs will include. The value of the Premier League and exposure it can give to sponsors means relegation from the top flight can cause these factors to drop considerably. Consequently this means many agreements now feature relegation clauses where a sponsor is within its’ rights to terminate the contract should the club be relegated, even if an agreement has been renegotiated partway through the season. This is an important feature in safeguarding against any potential losses the sponsor could face.
Increasingly agreements are now including clauses relating to reputation and image. These types of clauses have been staple now in the wake of a number of high-profile controversies involving athletes. For a more detailed insight into reputation issues in sports sponsorship please consider reading the Law in Sport article on the subject.
Rights over players and staff
Agreements will typically allow sponsors to use the club’s players and staff to promote their brand. It is best practice for a club to outline the limitations on these personal appearances, be it a limited number of appearances, a select number of players and staff or both. Talented and high-profile players will always be an alluring advertisement tool for sponsors and clubs will want to ensure that such players are available for match preparation and sponsors are not creating unnecessary distractions or hurdles. Clubs may also typically include a limitation on the duration of these events.
Any imagery rights, be it from personal appearances or images taken during matches, will always be subject to the club approval. This is absolutely vital in ensuring that anything produced from the sponsor is in line with the club’s vision and direction.
Shirt sponsors will typically be entitled to further advertising opportunities with the club. Advertising boarding is perhaps the most common example however sponsors can, and have, place their branding on interview backdrops, the electronic scoreboard and players tunnel. While these opportunities will always increase the sponsorship fee it is still a valuable part of the contract where sponsors can negotiate a number of extras that can really create a cohesive marketing campaign.
Shirt sponsorship agreements will always have distinct features to them which are simply not seen in any other sector, Therefore both clubs, sponsors and their advisors should ensure that meticulous details are considered before agreeing to any deal. Sponsors will always look to cash in on a clubs success but this shouldn’t come at the expense of the club losing control over how they operate on a day-to-day basis.