Is sports sponsorship just for the good times?

11th February 2022

Corporate sponsorship is something which is now synonymous with almost all areas of sport; as a minimum, it can offer both parties a significant financial boost. Whether it is funds for a team to be able to sign new players or a company increasing their customer base due to the association with the sport/club, it can have huge advantages for all.

During these times of significant mutual benefit, parties rarely turn their minds to the end of their relationship, but this is a key area that should be considered before entering into any such agreement. Where an association can be positive, a single online post or misconduct allegation alone can cause this to change immediately; even if there is simply a change in the lifestyle of a sportsperson, this can be enough for a sponsor to seek to cancel their sponsorship relationship.

As solicitors, one of the first questions we are usually faced with is a version of “Can they cancel the sponsorship simply based on an allegation?”. The answer is, simply, that it depends upon what terms were agreed within the original sponsorship agreement.

Whilst some sportspeople and clubs may be told that their sponsorship agreements are in a set format and cannot be varied, the basis under which the agreement can be cancelled should be scrutinised carefully. If it is not balanced or fit for purpose, this can be the basis for its redrafting.

Often people feel they can rely on assurances of support given early in their relationship, but these contracts will almost certainly set out that any representations or statements that pre-date it being signed are not included within the agreement or to be relied upon.

When reviewing these clauses, anyone entering into an agreement should at least consider:

  • what the potential is for allegations to be made against them
  • what mechanisms there are already within their own agreements with their club in terms of how allegations will be handled
  • both the potential positives and negatives that could occur in their professional career and whether these are being allowed for
  • whether legal advice is obtained before signing any agreement.

As with any contract, the hope is that no party needs to terminate their agreement or seek remedies for breach. But reviewing the terms once the event has occurred does little to assist those in need – by then it can often be too late.

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