Challenges and advantages of the sports sponsorship contract

Published and translated by the firm Winter – Dávila & Associés
Paris, 15 February 2023

Author: Sarra GHEMAM

Admitted to the Paris Bar in 2018, Sarra Ghemam holds a Master 2 in International Business Law from the François Rabelais University of Tours, as well as a university diploma in personal data protection from the Panthéon-Assas University of Paris II.

Having practised for several years with Bonnier Saint-Felix in Paris, he now works with CS Avocats associés.

📍Versions of the article availables in others languages:

🇪🇸 Versión en Español
🇫🇷 Version Française            

Do you need lawyers in France? Do not hesitate to contact us!                                                                         

This article is aimed at all sportsmen and women, sports associations and sports structures in general, as well as all companies wishing to know a little more about the Sports Sponsorship Contract. Through Winter-Davila & Associés you will get the necessary advice anywhere in the world.

Are you an athlete, a team or a sports association looking for a way to finance your sports projects?

Are you a company or an association looking for a way to communicate and highlight your brand during events that bring people together? A sports sponsorship contract may be the solution.

THE SPONSORSHIP CONTRACT, AN INTERESTING LEGAL TOOL

First of all, a sports sponsorship contract is a contract whereby a company or an association called “Sponsor” finances a sporting activity in exchange for the promotion and advertising of its brand by an athlete, a team or a sports association called “Sponsored”.

The benefit offered by the Sponsor to the Sponsored Party does not systematically reside in the provision of financial means, but may also reside in the provision of a material contribution (such as equipment, race vehicles, etc.), or advice and technical assistance to the Sponsored Party.

YOU CAN ALSO READ: Football transfer and loan contracts in France and worldwide

In all cases, the drafting of a sports sponsorship contract will require the delimitation of the respective obligations of the parties and in particular the following elements

• The type of contribution made available to the sponsored party (financing, material, equipment);
• The obligations of the Sponsored Party with regard to the promotion of the Sponsor’s brand;
• The duration of the sponsorship contract and the conditions of termination, renewal, modification, etc..;
• The protection of the Sponsor’s intellectual property rights and the licence to use the brand for the Sponsor’s benefit;
• The exclusivity or non-exclusivity of the sponsorship;
• The specific insurance for this type of contract.

POINTS TO BE TAKEN INTO ACCOUNT BY THE SPONSOR*.

In addition, either before, during or after the sponsorship, certain points of interest should be brought to the attention of the Sponsor.

– Sponsorship does not entitle the sponsor to the sponsorship tax credit.

To the extent that a consideration is provided for in the Sponsorship contract, the Sponsor is not eligible for the sponsorship tax credit. However, he may consider deducting this expense as a deductible expense to the extent that this contract qualifies as “advertising expenditure”.

-Attention to the qualification of the Sponsor’s fee from a tax point of view.

Where the advantage offered by the Sponsor consists of financial means, the Sponsor receives, as a general rule, a remuneration proportional to its notoriety.

However, care must be taken if the Supporter is an employee of the Sponsor and the sporting event in question is an extension of the employee’s activity. Indeed, in this case, the fees received by the sponsored person may represent an additional salary and should be treated as such by the tax authorities.

On the other hand, in the absence of any link of subordination between the Sponsor and the Sponsored Person, the commission received by the Sponsored Person will fall under the regime of non-commercial benefits.

– Attention to the Sponsor’s brand protection

As a Sponsor, the athlete will be the representative of the brand for the duration of the organised sporting event.

It is therefore essential that the Sponsor foresees in the sponsorship contract, for example, how the Supporter is allowed to communicate about and promote the brand, in order to avoid a depreciation of the brand due to inappropriate behaviour of the Supporter.

*In most countries it works in this way, however it is necessary to know the fiscal particularities of the territory where the sponsorship will be given.

Example of a sports sponsorship contract on rugby players’ shirts.

POINTS TO BE TAKEN INTO ACCOUNT BY THE SPONSORED PARTY

– Attention to the presentation of the sponsorship dossier

The conclusion of a sponsorship contract is usually preceded by the presentation of a dossier, which should contain, in particular, the following elements

• The presentation of the project as a whole in a synthetic but clear, complete and attractive form;
• A presentation of the Sponsor with its achievements and sporting objectives for the future;
• An estimate of the budget with a proposal personalised and adapted to the Sponsor;
• Description of the media, media coverage and advertising space planned, etc;
• Contact details of the participants, the Sponsor’s team and the current associates.

-Attention should be paid to defining the financial means made available and/or the equipment and responsibility of each party.

The drafting of the sponsorship contract will also require a certain precision and vigilance on the part of the sponsored party regarding the amount of the consideration, the dates and means of payment, etc.

Similarly, as far as the equipment is concerned, it is important to be cautious on certain points, such as whether or not the Sponsor will be liable for any damage caused to the equipment. For example, in the event of a breakdown of a race car made available to the sponsored party by the sponsor, it will be necessary to define the responsibility of each party for the maintenance and repair of the damaged vehicle.

YOU CAN ALSO READ: Three things players need to know at the end of their contract

Conclusion

For the successful and satisfactory implementation of the sponsorship contract, as an essential contract for many sportsmen and women, it is necessary to have a minimum knowledge of the concept as well as of the structural elements of which it is composed.

In the context of globalisation, it is an important resource that must be understood with awareness of all the issues at stake, in order to promote fairness between the sponsor and the sponsored, in sporting, artistic and/or cultural events.

At Winter-Davila & Associés, we work with any member of the international sports movement (athletes, clubs, companies, etc.). In short, any reader interested in the Sports Sponsorship Contract can contact us to clear up any doubts, discuss experiences and ask for advice on the subject.

If you liked this  topic, we invite you to share the article, comment on it and also to visit the rest of publications in the social networks and platforms of  WDA

If you want advice related to the subject of the article, do not hesitate to contact us! (email: contact@wdassocies.com)

Original language of the article: French

LEGAL NOTICE: This article has been prepared for informational purposes only. It is not a substitute for legal advice directed to particular circumstances. You should not take or refrain from taking any legal action based on the information contained without first seeking professional, individualized advice based on your own circumstances. The hiring of a lawyer is an important decision that should not be based solely on advertisements.