Football Sponsorships: A Great Tax Advantage for Businesses Now

June 10, 2024

Football is not only the most followed and most loved sport in the world.
It is a strategic opportunity for all companies looking to increase their visibility and gain significant tax benefits.
A global audience of millions of enthusiasts makes car and motorcycle racing unique marketing platforms.
But how can sponsorships turn into a profitable fiscal investment, capable of reducing taxable income and improving a company’s market position?

Reach and Visibility of Football

First, why do we consider football a powerful promotion tool for brands?

Because it attracts a vast audience worldwide, ensuring unparalleled visibility.

Events like the Champions League and the Premier League captivate the interest of hundreds of millions of people, both live and through digital and television channels.

This global reach translates into a concrete opportunity for companies to reach a massive audience and enter international markets.

Brand Value and Loyalty

Sponsoring in football also strengthens customer loyalty.

Tying your name to a successful club, athlete, or event reinforces the positive perception of the brand, fostering an emotional connection with the audience.

Market studies have shown that fans tend to favor brands that sponsor their favorite athlete, which increases purchase likelihood and loyalty.

Deduction of Sponsorship Expenses

One of the most attractive aspects of sports sponsorships is the possibility of achieving significant tax benefits.

Sponsorship expenses can be deducted from taxes as marketing expenses, reducing taxable income and the tax impact on the company.

Several countries allow these expenses to be fully deductible, provided they are justified and documented as necessary for promoting the business.

Amortization of Multi-Year Sponsorships

Additionally, multi-year sponsorships can be amortized over time, offering further tax benefits.

Companies can distribute costs over several fiscal periods, improving cash flow management.

A sponsorship of 5 million euros spread over five years, for example, will allow the deduction of 1 million per year, reducing the annual tax burden.

How to Structure an Effective Sponsorship in Football

Identifying the Target

The first step is to identify the most suitable club, athlete, or event.

To do this, ensure it aligns with your target audience.

A company selling luxury products might opt ​​for a club with a high-income fan base, while a consumer goods brand might opt ​​for a team with a middle-class one.

Contract Negotiation

Next, contract negotiations must consider several factors.

Including clauses that maximize brand visibility during events is essential.

For example, companies should negotiate for advertising space in stadiums, on players’ jerseys and during television broadcasts.

Sponsorship Activation

Co-branding operations and social media promotions are also indispensable.

Creating integrated marketing campaigns is crucial to fully exploit the exposure guaranteed by the sponsorship.

Using hashtags related to the sponsored subject, for example, generates significant engagement and amplifies the sponsorship’s impact.

Impact on Financial Statements and Accounting Tips

Accounting Treatment of Sponsorships

It is also crucial to properly record sponsorship expenses in the company’s financial statements.

Following local and international regulations ensures that tax deductions are correctly applied.

Expenses must be classified as marketing and advertising expenses and duly documented.

Consultation with Tax Experts

Consulting qualified tax advisors is essential to navigate complex tax regulations and maximize the benefits of sponsorships.

Competent advice will provide valuable insights on how to structure sponsorships, document expenses, and optimize tax deductions.

Challenges and Legal Considerations

Local and International Tax Regulations

Tax regulations vary from country to country.

To avoid penalties and maximize benefits, companies must be informed about local and international laws.

In some countries, sponsorship expenses are fully deductible, while in others, they are subject to limitations.

Risk Management

Sponsorships also carry legal and reputational risks.

Therefore, it is necessary to conduct thorough due diligence and establish solid contracts, ensuring that the sponsored entity is not involved in controversies or scandals.

Finally, it is important to include termination clauses that allow ending the sponsorship in case of non-compliant or harmful behavior for the brand’s reputation.

Why Investing in Football is a Strategic Advantage for Companies

In football, passion and marketing strategies intersect, significantly contributing to business growth.

Sponsoring a club, player, or event is a profitable investment that reduces taxable income and helps stand out in the market.

With expertise and knowledge of the sector, we will guide you through every step of the process, from selecting the most suitable team to contract stipulation and tax benefit optimization.

Contact us today to discover how we can help you leverage the opportunities of a football sponsorship.