Sponsorship: 5 Points to Consider Beforehand
Sponsorship deals can be a valuable source of income, products, services and/or profile especially where the sponsor’s offerings align with you personally.
Before entering into any deal it is important to consider the terms of the sponsorship agreement both from a legal and commercial perspective. Once an agreement has been signed it is difficult to change the terms, so you should always seek to negotiate the terms of the agreement before signing.
Imani Modahl is a trainee solicitor and World Athletics Athlete Representative. She has advised a number of athletes in relation to sponsorship deals.
Below are her top 5 points to consider before entering into a sponsorship agreement.
1. USE THE PEOPLE AROUND YOU
Ideally, you should have someone with experience acting on your behalf (i.e. an Athlete Representative). They will have experience of what is normally included in deals and how far to push negotiations. This will also take some of the pressure off you and will mean that you have someone in your corner that understands the commercial and legal realities of the deal.
If you are not able to have a professional on your side, you may want to share the draft agreement with your family, friends and/or coach. They may be able to provide input on where they realistically see your performance going in the foreseeable future which will help you when considering proposed amendments to the agreement. For example, your coach will have an idea of the level they expect you to be performing at which will help you to assess whether any performance based bonus clauses in the agreement are realistic.
2. FINANCIAL CLAUSES
Sponsorship deals will often provide base compensation and/or performance-based bonuses. You should review this as you may want to negotiate the figures and add additional performances that will result in bonus payments (and any caps on bonuses). It is also important to check the payment dates up front or instalments.
Usually, you are required to send an invoice to the sponsor. The time between you being required to invoice the sponsor and the payment being due is usually set out in the agreement. I have seen agreements where payments are a month or two after the invoice, it is important to be aware of this.
3. RIGHT OF FIRST REFUSAL
Usually, when your contract ends the sponsor will have the right of first refusal. The clause often says that if the sponsor agrees to match or exceed the offer of a potential sponsor, then you have to stick with them.
It is important to check when you can approach/speak to third party competitors (i.e. potential new sponsors) about sponsorship. Sponsorship deals often include a clause which says that you cannot discuss deals with potential new sponsors until a few months prior to the existing agreement coming to an end.
4. COMPETITOR BRANDS
Kit deals usually require that you exclusively wear and use the kit provided when in public or where you may be photographed (i.e. competition, training and interviews). In international competitions, you are of course required to wear the national kit, however you can wear the footwear of your kit sponsor.
Sponsorship deals often include a restriction on using competitor brands. Often, the agreement will include a schedule which sets out a list of competitor brands. If this is not included, it should be requested. This will allow you to be clear on your obligations. If the list of competitor brands is expansive and far reaching, you may seek to limit the scope to direct competitors.
The duration (term) of the contract should be carefully considered and discussed with your team. You may be offered a deal which will last for a few years, this certainty can be desirable, for example if you were to have a season where you didn’t perform as expected you would have the security of the existing contract.
The risk of entering into a shorter agreement is that your performance may not improve. However, if you expect your performance to significantly improve whilst under contract, you may want to enter into a shorter agreement so that you can re-negotiate a better deal sooner.