Simon Rines from IMR Publications has kindly allowed us to reproduce the following extract from their new Sports Sponsorship Report, which seems to confirm our earlier findings about the importance of addressing Ambush Marketing at sports events:
Recent incidents or allegations involving the Pakistan cricket team, Wayne Rooney and cricketer Kevin Pietersen amongst others might well have caused sponsors to give further thought to their sponsorship contracts. So far most sponsors have stood by those that they have endorsed, although sports goods manufacturer BoomBoom has suspended its sponsorship of Pakistan cricketer Mohammad Amir following the allegations of match-fixing in the Test series. A new report, Sports Sponsorship & the Law, published by IMR Publications, shows that the need for clarity in morality clauses is stronger than ever if sponsors are to minimise the impact on their brand of the bad publicity that often comes with allegations of misconduct of one kind of another. “Sponsors need to be very clear about what type of behaviour they consider might damage their brand,” says report editor Stefan Fabien.
Warren Phelops of K&L Gates LLP, who contributed the morality clause section of the report, points out that there are further complex issues that both sponsors and rights holders need to be aware of. “Behaviour that can be considered to be morally dubious, yet not illegal, or which is alleged, but unproven can be a grey area. This is particularly so where the contract simply states that such behaviour must cause damage to reputation before it comes within the scope of the clause.”
Care also needs to be taken that sponsors’ rights are not inadvertently waived. “Should action not be taken quickly, or not taken in response to an earlier similar indiscretion, then it might be reasonable to assume such inaction results from the behaviour not affecting brand reputation.” says Phelops.
Even in cases where the morality clauses appear watertight, it can be possible for the sponsor to find it lacks protection. “Many athletes choose to conduct their sponsorship deals through personal service companies (usually for tax purposes) rather than in an individual capacity,” says Phelps. “Where this happens, the contract’s morality clauses must cover the individual rather than the company.”
The report also emphasises the need for sponsors to ensure that contracts are specific to the relationship, rather than use templates. “The terms that would be appropriate to one athlete might not be so to another,” says Fabien. “For example, a footballer losing his temper and perhaps being sent off in a match could be very different to a tennis or snooker player acting in a similar manner. When Andy Roddick verbally abused a line judge in the US Open, it made headline news in sports pages around the world. Footballers, however, harangue match officials almost as a matter of course. It is therefore important for sponsors to be very clear about what behaviour is acceptable to them and also to evaluate what would be damaging to their brand.”
The Full report can be accessed at: http://www.imrpublications.com/