brand sponsorship agreement can allow you to leverage your sporting career by getting paid to promote goods and services. Each brand will have different conditions and requirements for sponsoring athletes. Additionally, larger brands will likely want greater control over your public appearances and social media activity to ensure that their brand image is maintained. You must fully understand your obligations under the arrangement and be aware of the benefits you will receive. This article will explain the most important provisions you should consider in your athlete sponsorship agreement.

1. What Do You Need to Provide to the Sponsor?

A brand will approach you with a sponsorship opportunity for the purpose of promoting their products and services. This means you will be required to provide something of value to the sponsor. Your services may include:

  • wearing their merchandise; 
  • attending photoshoots;
  • posting photos on social media; and
  • attending certain events and conferences. 

You might have to participate in a certain amount of promotional appearances in connection with the brand each year.

2. How Much Will You Be Paid? 

To ensure that you benefit from the sponsorship arrangement, you should clearly establish what you will receive in return for promoting the brand. You should consider whether they will provide you with:

  • money;
  • clothing; or 
  • specific services.

You should also determine how and when the brand will pay you. For instance, you could receive payment for:

  • every game;
  • one season; or
  • a fixed period. 

For example, your athlete sponsorship agreement may stipulate that the brand will provide you with clothing over one year, with a payment of $500,000 to be paid in a lump sum at the end of the contract term.

You must also consider the length of the agreement and whether it is ongoing or can be automatically renewed. 

Your payments may also depend upon your athletic results throughout the agreement period. The sponsorship agreement should outline this in an attached schedule. Additionally, you may receive bonuses depending on: 

  • awards received; 
  • goals scored; or 
  • receiving first place in a competition. 

These are things you will have to negotiate with the other party before entering into a sponsorship agreement.

3. Does Exclusivity Bind You? 

Your sponsor may prevent you from wearing competing sporting apparel brands. They might even want to restrict you from wearing brands in the same industry. 

For example, exclusivity could prohibit an athlete sponsored by Puma from wearing any goods produced by direct competitors, such as Nike, Reebok and Adidas. 

Alternatively, they may allow you to wear other sporting brands, except when you are competing in sporting events or competitions.

You should check your sponsorship agreement for an exclusivity clause and ensure that you understand the obligations it creates. Otherwise, you may unknowingly breach your contract by collaborating with another brand. This could tarnish your reputation and lead to serious legal issues.

4. Can You Terminate the Agreement?

You should understand how you can terminate the agreement should the sponsor fail to meet their obligations. 

For instance, you want to ensure you have the right to terminate the agreement if the sponsor:

  • fails to pay you;
  • uses your name or image without permission; or
  • demands greater control over you.

On the other hand, you need to be aware that the sponsor can terminate the agreement if you fail to meet the conditions placed on you. There could be provisions for termination if you: 

  • behave in a way that brings their brand into disrepute;
  • fall below a certain amount of followers on social media; or
  • fail to meet a reasonable performance standard.

5. How Can You Represent Their Brand?

Your athlete sponsorship agreement will outline how you can use the brand’s intellectual property (IP). 

IP refers to someone’s legal rights over creative work that they have produced. This can include any kind of content, such as:

  • photographs;
  • graphics;
  • designs;
  • literary work; and
  • music.

The brand you are working with owns the IP to their name, logo, slogan and any other identifying marks of their brand. They may licence their brand to you so that you can use their branding. This might include guidelines that specify how you should position their logo in certain images that you post.

6. What is the Dispute Resolution Procedure?

Fees and payments are a common cause of disputes in many commercial arrangements. Should an issue arise, it can be useful to have a provision outlining the dispute resolution procedure in your sponsorship agreement. This will assist you and the sponsor to attempt to come to a resolution before proceeding to further legal action.

7. How Will You Be Engaged?

If you are receiving a reasonable amount of money from your sponsorship, you may want to consider setting up a business structure. The way tax affects different business structures will factor into your decision. It is important to first speak with your accountant about tax implications and determine what may be the best solution for you.

Key Takeaways

When entering into a sponsorship agreement, it is essential to consider:

  • what value you will provide to the sponsor;
  • how and when you will be paid;
  • whether you are bound by exclusivity or can promote competing brands;
  • how to terminate the contract should the sponsor fail to meet its obligations;
  • issues of IP; and
  • whether setting up a business structure will be beneficial.

If you would like assistance reviewing your sponsorship agreement, contact LegalVision’s contract lawyers today on 1300 544 755 or fill out the form on this page. 

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