As featured in the latest edition of Bowler magazine, published by Bowls Queensland.
Sponsorship can be an important source of revenue for clubs, helping fund everything from new equipment and facility upgrades to competitions and community programs. Equally, for businesses, sponsorship can provide valuable exposure and opportunities to build relationships with club members and the wider community.
However, an effective sponsorship arrangement should involve more than simply exchanging a financial contribution for a sign on the fence or logo on the clubhouse wall. Clubs should consider what they can realistically offer a sponsor, what those benefits are worth and how the arrangement can create value for both parties.
A well-drafted sponsorship agreement can help ensure those expectations are clearly understood from the outset. We have summarised some key considerations for clubs entering into sponsorship arrangements below.
Understanding What You Are Offering
Before approaching potential sponsors, clubs should identify the benefits they can offer and consider their commercial value. Clubs should also be realistic about what they can deliver, as failing to provide promised benefits can quickly undermine the relationship.
Benefits might include signage around the club, branding on uniforms, naming rights for competitions or facilities, advertising in newsletters, social media promotion, or opportunities for sponsors to engage with members.
Whatever is offered, the sponsorship agreement should clearly identify the benefits the sponsor will receive. For example, a promise to provide “advertising” or “promotion” without further detail may create uncertainty if the parties have different expectations about what that involves.
Cash or In-Kind Sponsorship?
Not every sponsorship needs to involve a cash payment. Businesses may instead provide goods or services to the club as an in-kind contribution. For example, a tradesperson might provide maintenance services, a supplier might provide equipment or a business might contribute towards the cost of an event or club improvement.
Where sponsorship is provided in-kind, the agreement should clearly describe what is being provided and, where appropriate, its agreed value.
Be Careful with Exclusivity
A sponsor may seek exclusivity within its industry. While this can make a sponsorship more attractive, it can also restrict a club’s ability to secure other sponsors. For example, granting one local real estate agency exclusive rights may prevent the club from accepting a later offer from another agency.
Clubs should consider whether exclusivity is justified by the value of the sponsorship and clearly define its scope. Rather than broadly excluding “competing sponsors”, the agreement should identify the specific businesses or categories to which the restriction applies.
Think About the Term
A longer agreement may provide certainty of funding but can also lock a club into an arrangement that becomes less commercially attractive over time. Equally, a sponsor investing in signage, uniforms or naming rights may want sufficient certainty to justify that investment.
The agreement should clearly specify its term, any renewal rights and, for longer arrangements, whether sponsorship fees or benefits will be reviewed over time.
Protecting Your Brand
Sponsorship generally involves each party allowing its name, logo or branding to be associated with the other. The agreement should establish how those materials can be used, whether approval is required before publication and what happens to signage and promotional material when the sponsorship ends.
Clubs should also consider reputational risk, as conduct by either party that attracts significant negative publicity may affect the other by association. The agreement should therefore include appropriate default and termination provisions, addressing what happens if either party breaches its obligations and whether the relationship can be ended where serious reputational issues arise.
Final Thoughts
A successful sponsorship should benefit both the club and sponsor. However, it is also important to remember that sponsorship agreements are commercial contracts and should be treated accordingly. Clear terms covering benefits, payments, exclusivity, branding, duration and termination can help avoid uncertainty and protect both parties if circumstances change.
If your club or business would like assistance preparing, reviewing or negotiating a sponsorship agreement, contact Matthew Bradford.
