Sports Sponsorships and the Rules of the Game: Key Legal and Regulatory Aspects

June 23, 2023

In recent decades, sports sponsorships, along with marketing, have become one of the most effective and popular strategies chosen by companies to increase their visibility and strengthen their brand identity.

Think of the Coca-Cola logo during the Olympics or the Adidas one on the Italian national football team’s jerseys.

Just like every great game, sports sponsorships and marketing have rules to respect.

Today we tackle the legal aspects of these partnerships together.

Contractual Scope: More than a Simple Agreement

Starting a sports sponsorship usually involves drafting a sponsorship contract.

This contract must be carefully drafted to protect both parties.

Specifically, it should include provisions related to image rights, performance obligations, exclusivity clauses, penalties for non-compliance, etc.

For example, recall the case of Nike and Michael Jordan: a well-defined contract allowed Nike to create an entire product line around Jordan’s image, becoming a sportswear giant.

Image Rights in Sponsorships: A Goal to Reach

One of the most delicate aspects of sports sponsorships concerns the use of image rights.

In many cases, sponsorship contracts require that the athlete grants the sponsoring company the right to use their image to promote products or services. However, the improper use of this can lead to litigation.

In 2007, for example, basketball star Kareem Abdul-Jabbar sued General Motors for unauthorized use of his name and image in an ad campaign.

Sponsorships and Exclusivity Clauses: A Delicate Balance

Exclusivity clauses can represent a minefield.

These clauses prevent athletes from signing sponsorship contracts with competitors of the sponsoring company.

A famous example involved Michael Phelps in 2012, who was forced to apologize to his sponsor, Kellogg’s, after being photographed eating cereal from another brand.

However, these clauses must be well balanced so as not to excessively limit the athlete’s freedom.

Sponsorships and Ambush Marketing: An Offensive to Block

Ambush marketing is a strategy used by companies trying to associate their brand with an event without paying sponsorship rights.

During the 2010 FIFA World Cup, the Bavaria brewery orchestrated an ambush marketing campaign that involved 36 women in orange miniskirts, thus attracting the attention of the media and gaining global visibility.

FIFA responded with legal actions, highlighting the importance of protecting the rights of their official sponsors.

Advertising Standards: Not Everything is Permitted

In the field of sports sponsorships, it is essential to respect advertising standards.

In 2005, giant Philip Morris had to conclude its sponsorship relationship with the Ferrari Formula 1 team due to European regulations prohibiting tobacco advertising.

Similarly, companies must be careful with deceptive advertising and unproven claims about their products.

Every Great Game Has Its Rules

Despite numerous legal and regulatory challenges, sports sponsorships and marketing remain valuable strategies for companies worldwide.

Through careful planning, a solid understanding of laws, and the development of detailed and precise contracts, companies can successfully navigate the dynamic world of sports sponsorships.

Even if the game may seem complicated, with the right moves, it is definitely worth it.