Case study: the Shepherd+ Wedderburn Hockey Cups

A sponsorship deal was recently struck between the Scottish Hockey Union ("SHU")
and Shepherd+ Wedderburn ("S+W"), covering both the men's Scottish
Cup and the women's National League Cup tournaments. For SHU, this deal represented
an opportunity to develop the game at grass-roots level in Scotland, allowing
further investment in equipment and facilities. S+W were delighted to secure
a national sports sponsorship and in particular to be associated with a sport
which is known to attract a dedicated professional audience.

Kicking off

As is often the case with sponsorship deals, the key points of principle
were initially discussed and agreed between the respective Marketing
Directors of the rights holder (SHU) and the sponsor (S+W). SHU own the rights
in
relation
to the tournament, and have control of the spectator area. Funding is,
of course, a big issue for sporting bodies and SHU were looking to capitalise
on the value of these rights. S+W wanted to be headline/title sponsors
and
secure a package of sponsorship rights. Once agreement on the key commercial
points had been reached the task then was to incorporate what had been
agreed into a formal written contract, which had to be fleshed out to
cover all
commercial and legal issues. It was acknowledged by both parties that
during this process other issues would be introduced into negotiations as discussions
progressed.

Contract Hit List

The
Sponsorship package
Fringe benefits
Duration of contract
Cancellation
Payment

The Sponsorship Package

There are a few basic rights which sponsors invariably
look to secure. Beyond these sponsors should try to be as creative as possible
to ensure that
the deal gives their company/brand the ideal type and level of exposure.
Rights
holders should seek to ensure, if possible, that they grant "packages" of
rights to each sponsor – ensuring each package is narrowly defined
can be of benefit in maximising sponsorship revenues if there is more than
one sponsor.

What is included in each package will depend on the value of the sponsorship
and the particular commercial circumstances surrounding each deal, however
the following are examples of the types of rights that may be secured by a
sponsor.

S+W were granted the exclusive right to be appointed title sponsor
of the Tournament and it was agreed that the official title of the Tournament
would be the "Shepherd+ Wedderburn National Hockey Cups". Obtaining "exclusive" rights
is important for sponsors to ensure that no other parties are given equivalent
standing. Assurances should be sought from the rights holder that no other
sponsors will be granted an equivalent (or better!) package of rights. Rights
holders should be looking to package their rights and to sell different tiers
of rights to ensure revenue can be maximised.
All other sponsorship rights
were granted on an exclusive basis in relation to the Brand Category ("legal
firms in Scotland"). Here, SHU were
eager to ensure that, whilst S+W were given exclusive rights in their own
market sector, SHU were left with the ability to further exploit their
rights through
the appointment of other sponsors in different market sectors.
SHU remain
entitled to secure secondary sponsors/perimeter advertisers (subject
to the prior approval of S+W) so long as they are not competitors
of S+W. This
leaves the necessary flexibility for SHU to maximise funding whilst providing
S+W with all important control over brand association.
The Tournament
title and S+W's logo are to be featured prominently on all publicity
materials, news releases, SHU stationery and DVDs. From the
Sponsor's perspective,
it can be useful to provide for all uses of its logos and branding
to require to be pre-approved by the Sponsor.
The title and logo are also
to be displayed on the Cup Final issue of SHU's e-newsletter, all correspondence
and the SHU website – a link will
also be set up to S+W's website. "Hyperlinks" and other on-line methods
of exploiting brand associations are becoming increasingly common
in sponsorship arrangements. Consideration should also be given to on-line
content
and the
right to have sponsor created content on the rights holder's website
(and perhaps vice-versa).
The title and logo will feature on all match balls,
officials' shirts, corner flags and medals.
S+W have the right to display
advertising boards at the National Hockey Academy at Peffermill.
2 new
trophies have been commissioned by S+W to be awarded to the winning teams
and were specially designed by Scottish sculptor John McPhail.
S+W and
SHU did not discuss merchandising or TV rights issues in the context
of their sponsorship arrangement but these are issues
which should be addressed
at the contract negotiation stage if relevant to your deal.
It may be appropriate to secure sector exclusivity in any TV advertising slots
before during or
after a televised event, or simply to ensure that your branding
is within the key
camera shots to be used by the TV company covering the event.
In relation to merchandising, if the sponsor is to be permitted to use the
rights holder's
name and logo then a formal trade mark licence arrangement
should be discussed, and issues relating to product type and quality, product
liability and approvals
need to be discussed and agreed prior to production.

Fringe Benefits

Again, creativity is the name of the game. The possibilities
are endless and sponsors should explore all angles to ensure that brand exposure
is
maximised.
Fringe benefits can really be the icing on the cake in a deal. A few examples
of such benefits are given below.

S+W are to be represented in the presentation party on Cup Final Day.
S+W
have been allocated a number of tickets for the Cup Finals and 2 tables at
the Cup Finals Lunch – perfect for client entertainment!
S+W are entitled
to appoint an official photographer and to use photographs in any form
of media.

For sponsors who manufacture products, sales can
be maximised by ensuring that their product is featured in the promotional
material relating to
the event – as
the official drink of the event for example.

Duration

As far as the duration of the contract is concerned, the majority
of rights holders will be keen to obtain a degree of security of funding
by negotiating
as lengthy a term as possible. Sponsors, on the other hand, tend to be
looking for flexibility. It may be unwise to pledge funding for say a
10 year period
during which there is a risk that the event might dry up. On the flip
side, if the event really takes off a sponsor should ideally be in a position
to continue with their involvement. It can be useful to set down a specific
term with a right of renewal on expiry of that term.

The SHU contract is for the 2004/05 hockey season.
S+W were granted a right
of first refusal to negotiate a renewal of the deal.

Termination

It is important to consider the circumstances in which the parties
are to be permitted to terminate the agreement and those events which shall
trigger
immediate
termination. Unfortunately, things do not always run as smoothly as one
may have hoped and it makes sense to address this possibility at the outset.
Events
beyond the parties' control require careful consideration in the current
climate (political and environmental) – what happens if the pitch
is flooded?
Parties ought also to consider the consequences of termination – what
is to be done with surplus merchandise etc?

Payment

Sponsorship fees are often split before/after the event. For longer
term agreements, annual increases should be considered.