Sponsorship deals are becoming more commonplace in the Equine Sports arena. Even so, we have a long way to go when compared to auto racing, for example. Today, athletes, local and national associations are seeking more corporate sponsorships on a regular basis. As more competitors and organizations are seeking, and obtaining sponsorship deals, the need for sponsorship contracts are becoming more commonplace. While the corporations' counsel will often draft the agreement, it is still helpful to understand the types of matters that may be covered in the agreement. The purpose of this article is to provide an overview of the subjects that may be covered in the agreement. Needless to say, this article cannot take the place of obtaining legal counsel, which I strongly recommend.
The agreement should begin by discussing the details of the relationship. What is the purpose for both parties? What are the mutual and underlying reasons that both parties want to enter into the agreement. For example, perhaps it is for an unique advertising promotional exposure opportunity. These "recitals" are not a term of the agreement, but are often contained in the "whereas" clauses, and serve to explain why the agreement and new relationship is taking place.
Generally the agreement will then cover the "terms" of the agreement. What follows is by no means an exhaustive list, nor do the terms need to be covered in any order:
- Term
- The term will cover the length of the agreement. One year is the most common term, but it can be as long as you agree. The term will also specify whether it ends automatically, is renewed automatically, or if notice needs to be given to end or renew the agreement.
- Termination
- How can the agreement be terminated? Will it be at will, for any reason, if either party wants to terminate it? Or will it be terminated only for cause? This section should also provide the procedure for termination, with details on where notices should be sent, and what needs to be in the notice.
- Use of Name, Trademark and Logo
- If either party is using the other party's name, logo or trademark, the agreement should give permission for the use of these marks, and specify rules regarding the same. If there is official phrasing that is to be adopted, like "the official feed supplier to the Association," it should be specified.
- Advertising and Promotion
- What advertising or promotion will be accomplished? I suggest that both parties have the opportunity to pre-approve all advertising and promotional pieces, and I include a provision for who needs to get the advertisement and how many days or weeks they get to approve it. The Agreement will usually cover where the advertisements will be placed, as well as size and other requirements. Press releases can also be covered, detailing how many at a minimum will be issued, by whom and to where.
Other Sponsor Benefits
- This sections can be quite long, and is often an opportunity to list all the ways that the sponsor will get publicity at on sight events, at shows, clinics, on the internet, on banners, on saddle pads, blankets, stall guards, jackets, etc. Will the sponsor be given tickets, tours of cross country courses? Awards luncheon tickets? Corporate appearances by the athlete? This section can cover items that were not covered in the advertising and promotion section,( or the two sections can be combined. ) The limits of this section are endless, and are really governed by how creative the athlete or organization gets in selling the corporation on the benefits of the sponsorship deal.
- Compensation
- What will the sponsor be paying, and when? Will it be cash? Will it include in kind compensation, such as product, prizes?
- Reports
- Sometimes a corporation will appreciate a quarterly, or semi-annual report that details what activities have been accomplished, and where promotion has been done. This kind of a report can be a nice tool for communicating to the corporation the promotional activities that have been accomplished.
- Miscellaneous
The agreement also needs to cover the legal provisions common in most formal agreements: indemnification, what state law governs the agreement, whether arbitration will be utilized for dispute resolution, and attorney's fees provision for the prevailing party in disputes, confidentiality to protect trade secrets of both parties, where notices should be sent, whether the agreement can be assigned, etc.
As our sport grows, so will the need for sponsorships to counter the growing costs of putting on events, and competing at the upper levels. Understanding the dollars and sense analysis that a corporation will undertake when considering a sponsorship deal will assist the deal seeker in being successful. A good contract, which shows a long list of sponsorship benefits, and presents a professional and organized appearance, can actually help sell the deal. As such, I recommend that those seeking this kind of deal understand the subject of the contract before they make the sales pitch. Most important, consult an attorney who is knowledgeable in negotiating and preparing this kind of contract.