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What Will 2020’s Impact Be on Sponsorship Agreements?

Anecdotally, there seems to be near universal agreement that sponsorship contracts going forward will include requirements that the rights holder ensure any venues to which the public or a sponsor’s private guests are invited meet all public health and safety guidelines, regulations or standards for mitigating the spread of pathogens.

At this early juncture, the only other relevant conversations I have had regarding specific deal elements have focused on force majeure, cancellation and termination clauses.

There seems to be general agreement that sponsorship contracts should become more specific about whether a pandemic constitutes an “Act of God” and go into greater detail about damages and remedies for cancelled events or interrupted seasons. In particular, sponsorship agreements should do a better job of spelling out the implications of timing on sponsorship value, e.g., losing an entire season vs merely a small percentage of games.

And although the concept of “makegoods” is not as easily applied in sponsorship as in advertising, sponsorship contracts could at the least address the idea of extending benefits, contract terms, etc. as a potential remedy in lieu of termination upon cancellation of events.

And of course, everyone is asking what can sponsors or rights holders do in the current environment to get the most out of their sponsorships?

Among the answers at the top of my list: De-prioritize the live event as the focus of sponsorship. The pandemic is likely to spur a necessary shift in the way marketers approach sponsorship. It will accelerate the move that forward-thinking sponsors and rights holders have already made to viewing their partnerships in a much more holistic manner.

Sports and entertainment will always be a live events business. But even before COVID-19 dramatically—and perhaps permanently—altered what a live event looks like, smart marketers recognized that limiting the scope of sponsorship to events ignored many of the most beneficial elements of the relationship between rights holders and their fans, followers, participants, etc.

These sponsors and rightsholders—while not ignoring assets such as on-site activation, hospitality and others integral to the live attendance experience—have moved beyond those interactions to exploit the relationship between fans and their favorite teams, artists, etc. through myriad other ways, especially by taking advantage of digital technologies.

We can think of this shift as similar to the pivot that media advertising has made from buying ad time or space to buying audiences.

Sponsors that want to see better returns from their activations and other leveraging must urge their rights-holder partners to become not just digital and social content engines, but to do a much better job of mining the rich trove of data they have on ticket holders, merchandise buyers, fan club members, social media followers, etc. to inform and improve those activations.

If rights holders can meld their physical and digital assets to deliver not only unparalleled experiences, but also deep insights and the ability to measure impact, sponsorships will add incremental value far beyond what is earned from game-day activities.

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