Sport Sponsorship Management
INTRODUCTION
The business of sport sponsorship has grown into a global, interconnected market. If anything, growing significance of unconventional broadcasting platforms particularly digital media; increasing overlap between sport, business and media; emergence of innovative marketing models – all has contributed to a greater need for sport sponsorship management in an increasingly complex sport landscape. In contrast to more conventional sport sponsorship agreements, more innovative approaches are being adopted to capture, if not enhance, brand awareness in customer mind (as will be shown by an illustrative sponsorship strategy adopted by Nike). The case for marketing branding strategies in sport sponsorship remains, however, outside current paper's focus. Instead, present purposes are more basic. Specifically, main focus is on fundamental concepts in sport sponsorship namely, intellectual property, trademarks, sport sponsorship contracts and key areas of a sport sponsorship agreement as well as an illustrative example of an effective sport sponsorship program. Thus, by offering basic definitions and conceptualizations, a better understanding of sport sponsorship should, hopefully, ensue. This area in sport business experiences, in fact, dramatic changes across a host of sport, business and media functions. Notably, in lieu of more conventional models aimed at measuring viability of an event, venue or players for sponsorship, e.g. a measure of consumer attitude about a sports event as per sponsor-event fit, sponsor's perceived sincerity, sponsor's perceived ubiquity, and consumer's attitude toward sponsor (Speed & Thompson, 2000), more developed approaches to sport sponsorship are emerging including, for a example, a network approach to agreements (Olkkonen, 2001). This approach adopt an interorganizational perspective by which a sponsor-sponsored agreement is governed for effectiveness based not on conventional marketing channel context but, more significantly, on different network actors a sponsored party brings in to a sponsorship agreement (Olkkonen). Thus, in appraising a potential sponsored party's viability for a sponsorship opportunity, a sponsoring party should analyze a sponsored party's ability to muster different actors (and hence capabilities) into a sponsorship agreement – all to brand enhancement, particularly during a world event or long-range agreement (as will be shown in Nike's illustrative example). Still, for current purposes, only brief reference is made to appropriate conceptual frameworks as basic concepts in sport sponsorship are explained. This paper aims, hence, to describe and assess key concepts and practical uses in sport sponsorship namely, intellectual property rights, trademarks, sport contracts including key areas in addition to an illustrative example.
The paper is made up of five sections: (1) Intellectual Property Rights & Practical Uses, (2) Trademarks & Practical Uses, (3) Sport Sponsorship Contracts, Practical Uses & Key Areas, (4) Nike: Effective U.S. Women’s National Team Sponsorship, and (5) Conclusion. The Intellectual Property Rights & Practical Uses section explores sub-concepts and basic definitions as well as practical uses of intellectual property in sport sponsorship context. The Trademarks & Practical Uses section explains main concepts pertaining to associated commercial brands as well as practical uses in sport sponsorship context. The Sport Sponsorship Contracts, Practical Uses & Key Areas section details contractual obligations, provisions and nature of sport sponsorship contracts. The Nike: Effective U.S. Women’s National Team Sponsorship section is a case example representing key successes in adopting effective sponsorship strategies. The Conclusion section wraps up argument and offers insights.
INTELLECTUAL PROPERTY RIGHTS & PRACTICAL USES
The growing complexity in sponsorship programs and overlapping interests across sport, business and media has emphasized intellectual property as a particularly significant legal issue necessary not only for protecting existing and potential rights but also, probably more significantly, sustaining business. If anything, sport sponsorship involves a broad range of rights negotiated between sponsoring and sponsored parties. Clearly stated rights are apt to protect negotiated rights. Unsurprisingly, safeguards are emphasized in literature against unacceptable, if not illegal, practices (depending on legal and political context) including ambushing (Crompton, 2007). (By "ambushing" is meant a practice by which a company not in an official, legal commitment to a sponsored party but associates her brand in a sport events giving a false impression of being an (official) sponsor (Crompton).)
In order to protect intellectual property rights, World Intellectual Property Organization (WIPO) specifies certain concepts of basic intellectual property rights in a sport sponsorship context. According to WIPO,
Sport shows intellectual property (IP) in action. Patents encourage technological advances that result in better sporting equipment. Trademarks, brands and designs contribute to the distinct identity of events, teams and their gear. Copyright-related rights generate the revenues needed for broadcasters to invest in the costly undertaking of broadcasting sports events to fans all over the world. IP rights are the basis of licensing and merchandising agreements that earn revenues to support development of the sports industry. (Sport and Intellectual Property, n.d.)
Thus, intellectual property rights are attributes distinguishing a product and/or a service in a sponsorship agreement in comparison to products and/or services offered by a different (competing) sponsor. These attributes are, moreover, significant not only for proper product and/or service distinguishment buts also, more significantly, to protect a product and/or service at stake. The above reference to intellectual property rights points out, interestingly, to a number of legal protections. Specially, a sport product and/or service may be subject to a host of intellectual property rights including, but are not limited to, patent (a right protecting innovation used in product and/or service development), design (a right protecting specifications of a product and/or service as regards shape, size, color, etc), trademark (a branding right protecting a product's and/or service's reputation), and copyright (a right protecting artwork and/or audiovisual creations used to promote a product and/or service) (Sport and Intellectual Property). There are also media rights (discussed in further detail very shortly.) That is, in broadcasting a sport event, sponsorship parties need to negotiate, if anything, revenue-sharing rights ensuing from broadcasting a sport event, on- and/or offline.
The practicalities of intellectual property are, indeed, broad. Notably, intellectual property rights offer (or should) legal safeguards against unauthorized use of symbols, emblems and event names under respective trade mark laws, protection of designs, digital media rights against online piracy and, not least, sale of broadcasting rights including sale of sport events (Pina, 2014). The growing business of on-demand and live streaming and broadcasting has, moreover, made media rights a particularly critical issue in negotiating sponsorship rights. If unduly protected, broadcasting rights could lead to major losses in revenue-sharing agreements as more and more events are pirated by individual fans and competitors. The globalization of sport events (mediated by live satellite broadcasting and cross-border media business agreements, mergers and acquisitions) has, indeed, made broadcasting rights one critical – if not, most critical – component in sport sponsorship negotiations and agreements.
TRADEMARKS & PRACTICAL USES
Trademarks refer, as noted, to branding rights a sponsor party has in order to safeguard against possible reputation damage caused by, for example, a counterfeit brand name falsely associated with an original product and/or service. Trademarks represent, notably, another important component of sport sponsorship agreements. Being an intellectual property right, a trademark is subject to legal protections, if any, in specific jurisdictions where a brand has specific value to specific customer segments. Typically, global sport clothing brands, for example, enjoy a worldwide brand reputation. This very reputation is challenged, however, in different jurisdictions since not all countries offer proper legal protections against trademark infringements, let alone having an intellectual property legal framework at all.
The practical uses of trademarks are numerous. If anything, trademarks offer a sponsor of a sponsoring event exclusive use of trademarks, name marks connected to a sport event ("Sponsorship Agreements in Sport," n.d.). In return, a sponsored party and/or an event organizer should ensure stipulated rights in sponsorship agreement are maintained ("Sponsorship Agreements in Sport"). This could involve activities as registering trademarks, taking legal actions against violators, marinating brand activation (as will be shown shortly) and, not least, maintaining a healthy sponsor-sponsored relationship in order to sustain business and enhance brand equity.
SPORT SPONSORSHIP CONTRACTS, PRACTICAL USES & KEY AREAS
The sport sponsorship contract is complex. The growing complexity in sponsorship contracts is attributed, in part, to growing overlaps between sport, business and media. For example, in broadcasting a sport event, parties to a sponsorship contract are faced by complex broadcasting options and challenges including for example, online on-demand sales, live streaming rights and differentiated on- and offline broadcasting agreements (e.g. exclusive online broadcasting rights and shared offline broadcasting rights). The list of (now) negotiable provisions and conditions can extend endlessly. For current purposes, however, key areas in a sport sponsorship agreement should include: (a) Benefits and Stipulations, (b) Revenues and Stipulations, (c) Trademarks, (d) Exclusive Rights, (e) Renewal, and (f) Termination ("Sponsorship Agreements in Sport").
The Benefits and Stipulations section refers to benefits (not necessarily cash but could include brand enhancement) parties to a sponsorship accrue based on contact as well as potential changes in benefits. The Revenues and Stipulations section includes revenue-sharing brackets as well as potential changes in shares. The Trademarks section details specifics of trademark protection and management. The Exclusive Rights section is a specific section including specific stipulations about exclusive use and/or management of certain products and/or services under contract. The Renewal section entitles one or both parties to contract period extension. The Termination section specifies conditions and provisions by which a sponsorship contract is deemed null.
Two areas are of particular interest in sport sponsorship: merchandising and broadcasting. Merchandising is one major revenue source for sport companies. Thus, particular attention is paid to how merchandising programs are developed to manage licensing opportunities across different product and/or service category (Pina). In order to safeguard against reputation damage, licensors need, moreover, ensure proper management and oversight of licensing programs under contract (Pina). Secondly, event and press conference broadcasting rights are, conventionally and effectively, licensed to clubs since club-player employment relationship mandates capturing, reproducing and broadcasting of a player's activity during training, games and press conferences (Pina).
NIKE: EFFECTIVE U.S. WOMEN’S NATIONAL TEAM SPONSORSHIP
The case for an effective sponsorship program is complex. Indeed, measuring how effective a sponsorship scheme is not always decided by a cash-only basis (Kilroy, 2013); or, measured by specific metrics as cost per reach (i.e. number of people exposed to sponsorship in person, TV, radio and print), unaided awareness per reach (i.e. activation processes by which sponsorship is promoted), sales/margin per dollar spent (i.e. using qualitative marketing measures and isolating impact of sponsorships and marketing and sales activities), long-term brand attributes (i.e. brand attributes each sponsorship property supports) and indirect benefit (e.g. hosting executives by advertisers at sponsored events) (Jacobs, Jain & Surana, 2014). Instead, Fisher (2014) identifies five working strategies (applied in case example discussed very shortly): (a) Align Sports Sponsorship with Existing Strategy and Objectives, (B) Determine the Right Sponsorship Event to Reach Your Ideal Consumers, (C) Reach Your Ideal Audience in the Most Efficient Way, (D) Ensure Sponsorship Activities Influence Consumers’ Perceptions at the Event, and Beyond, and (E) Maximise Sponsorship Investment to Drive Business Growth, and Evaluate Sponsorship Success.
For Nike, official sponsor of U.S. Women’s National Team, beating Adidas – an established global competitor and official sponsor of FIFA, event organizer – during 2015 Women’s World Cup – is a case in point in effective sport sponsorship (Roberts, 2015).
CONCLSUION
The growing complexity in sport business has made sponsorship arrangements a multi-actor effort. Given how much money is at stake, intellectual property has gained an increasing significance as a benchmark by which rights of sponsorship parties are protected and maintained. Further, as broadcasting and merchandising activities grow in significance in recent years (largely due to online platforms enabling more commercial and broadcasting activities), sponsorship agreements have come to incorporate more complex provisions on revenue-sharing, broadcasting rights and exclusive rights. The U.S. Women National Team – Nike sponsorship program represents an ideal example on a non-costly sponsorship activity (i.e. social media management during a sport event) can help not only enhance a sponsor's image but also drive business growth.
The outcomes for sport sponsorship programs can be further extended by implementing effective sponsoring activities. Notably, by emphasizing sponsorship activation via branding and marketing functions (e.g. offering giveaways and hosting customers and sponsored executives at event venue), sponsors are better able to enhance brand image well beyond one sport event. Also, by reviewing sponsorship partnerships and diversifying sponsorship portfolio, sponsors would be able to spread sponsorship risk based on one event or player.
REFERNCES
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Fisher, P. (2014). Going For Gold: Five Strategies to Win at Sports Marketing. Nielsen, November [Online]. Available from: http://www.nielsen.com/content/dam/nielsenglobal/apac/docs/reports/2014/Nielsen-Sports-Sponsorship-Whitepaper-November-2014.pdf [Accessed: 7th January, 2016]
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