News & Insights

Safeguarding your sponsorship deals

Safeguarding your sponsorship deals

For both brands and properties, the sign-off of a multi-year sponsorship deal is an incredibly fulfilling and exciting moment at the end of months of hard work and negotiations. From this point on it’s all plain sailing, and nothing can get in the way of making your new partnership the success it deserves to be, right? Wrong.

We hate to be the bearers of bad news, but sponsorships don’t always go to plan, and preparing for this prior to putting pen to paper will ensure that both parties are in the best shape possible to deal with any negative situations that may occur over the duration of the deal.

Having been involved in past sponsorship negotiations, and as members of the European Sponsorship Association, we are well versed in the importance of a robust contract. Here are our top tips on how to ensure you safeguard yourself from any potential unforeseen circumstances that may arise.

  • Much like writing a will, nobody likes to discuss the elephant in the room, but the possibility of either the property or the sponsor not being unable to meet its obligations needs to be discussed and covered in the sponsorship contract. It should clearly state that a party can terminate the sponsorship if the other party is in material breach of the agreement.
  • Include a ‘cure period’ within the contract so that termination may only occur if the defaulting party has, after receiving notice, had the opportunity to put rights its default.
  • In the case of issues involving solvency/insolvency/administration, the other party is entitled to terminate. The contract should state that termination in any of these circumstances will be ‘without prejudice’ to either party’s rights, meaning that either party will still be able to pursue the other, notwithstanding termination, for any claim arising as a result of the termination.
  • Beyond the possibility of termination you also need to carefully consider the impact and outcomes of this action. During the writing-up of a contract it is important to deliberate the confidentiality and practical aspects of bringing a sponsorship relationship to an end e.g. the destruction of promotional materials relating to the sponsorship.
  • Sometimes, one party’s understanding of its rights and obligations under a sponsorship contract may not always coincide with the understanding of the other party. A well drafted contract will bind the parties to an agreed procedure with the aim of resolving the dispute.

Of course, any sponsorship deal we undertake with any of our clients is entered with full confidence that the partnership will be a long-lasting and successful one. However, we’re also wise and mindful of the industry and that things don’t always go to plan, and quite often not due to the fault of either parties involved. Planning ahead and being aware of the potential pitfalls that may arise along the road will ensure that if a sponsorship comes to an early end, reputations and relationships face minimal negative impact.

Whether you’re new to sponsorship or just fancy a discussion about how you can make sure your sponsorship contract is FOOLPROOF, don’t be afraid to get in contact with us!