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Brand sponsorship deals: pitfalls for marketers to avoid

30 Mar

Nobody wants to consider crisis scenarios when creating a new partnership but it will protect both sides in the long run. LawyerMatthew Pryke lists the top issues brands should plan for

Wembley StadiumEE and Wembley Stadium create the latest big sponsorship deal. Thankfully it keeps its name, rather than becoming the EE Wembley Stadium. Photograph: Lewis Whyld/AP

The FA this week announced a ‘ground breaking partnership’ between Wembley Stadium and mobile network EE – the first sponsorship deal Wembley Stadium has ever entered into. The deal heralds the beginning of a multi-million pound investment in its technological infrastructure in a bid to make Wembley the most connected stadium in the world – all exciting stuff.

Sponsorship tie ups can prove a golden opportunity for companies to leverage their own brand against a complementary brand, yet there are some potential pitfalls that should be considered before brands ‘jump into bed’ with each other.

Damage to your brand by association?

Brand marketers have enough on their plates ensuring their own company’s brand isn’t subject to attack, but these risks are multiplied when you extend that susceptibility to potential harm to another company. In some crisis situations, the impact of a scandal affecting one side of a sponsorship agreement can quickly ripple through to the other brand – just look at the Lance Armstrong doping scandal.

Sportswear company Skins brought a claim against cycling’s governing body Union Cycliste Internationale in the wake of the scandal, arguing that the damage to their brand by association totalled in the region of two million dollars.

And of course it can work the other way in sporting sponsorship deals too – mobile networks like EE can be susceptible to widespread customer dissatisfaction if their network goes down – the Blackberry network failure in October 2011 being a case in point.

Nobody wants to consider crisis scenarios when entering into an exciting new partnership, but negotiations that take into account these potential issues can help guard against a relationship quickly turning sour and former partners slugging it out in an ugly courtroom battle.

Rebrand headaches?

The FA was quick to point out that the iconic name of the Wembley Stadium would remain intact when it announced the EE deal, highlighting the importance of each side retaining what is dearest to them when entering into a new partnership.

Any rebranding that comes with a new partnership inevitably throws up the questions; are we getting an equal showing in the new brand, does the rebrand maintain our company values, are we infringing any other brands in the process?

Legal issues will quickly raise their heads if these points are not carefully negotiated as part of the deal – leaving the rebrand to chance could well prove a recipe for disaster. Again to avoid litigation in the long run, these issues need to be hammered out and included in the paperwork before any deal is agreed to.

Hands off my IP

Talk of multi-million pound investment in technological infrastructure will prick the ears of the movers and shakers in the sports and technology industries alike but as any partnership looks to create an innovative new product or system, questions over which party owns the intellectual property of this exciting new technology and the associated brand identities quickly bubble to the surface.

When shaping these arrangements provisions must address key areas such as sector exclusivity, rights activation, brand protection, rights of renewal and termination and the all-important payment structuring if sponsorship partners are to create mutually beneficial arrangements.

Sponsorship partnerships between sporting organisations and companies can raise some thorny legal issues that could prove a real stumbling block for brand marketers down the line. Brand marketers should remember that working through these issues at the contract stage can help maintain a harmonious partnership which protects the return on investment for both brands in the long run.

Matthew Pryke is a commercial partner who specialises in advising the sports and leisure sector at law firm Hamlins LLP

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