The Ultimate Guide to Event Sponsorship Agreements

An Introduction to Event Sponsorship Agreements

An event sponsorship contract is a legally binding agreement between the organizers of an event and the sponsors who are supporting it. Its purpose is to clearly define the relationship between the two parties, including the expectations and obligations of each. This type of contract is crucial for complying with applicable laws and tax regulations, determining the rights and benefits that the sponsor is entitled to in exchange for its financial or logistical support, and laying out the terms for how the sponsor will be recognized throughout the event.
Typically , the contract also lays out the scope of the sponsorship including whether the sponsor is offering monetary or in-kind support, or both, and whether multiple sponsors are covered under the agreement. It can also specify the extent to which the sponsor’s name or logo will be featured on marketing materials, signage, and other promotional items at the event.
Since an event sponsorship contract can cover everything from naming rights to hospitality and travel obligations, it is important to take the time to carefully define the scope of the sponsorship rights and obligations in order to avoid any potential disagreements between the event organizers and the sponsors.

Core Components of a Sponsorship Agreement

To hold a successful event, both sides need to know what is expected from them, and this is spelled out in the contract. After negotiating the terms, make sure all provisions are included in the final document. Contracts should contain general terms and conditions, sponsorship benefits, deliverables, payment provisions, liability protections, a dispute resolution process and termination provisions. The contract should also contain indemnification language. Indemnification provides that the sponsor and/or the other sponsors (if there are multiple sponsors) will indemnify the event organizer against certain expenses or damages incurred by the organizer based on conduct of the sponsor or other sponsors. Standard contract clauses in sponsorship agreements should also contain intellectual property, governing law forum selection, notice and force majeure provisions.

Sponsorship Terms & Negotiation

As with any other contractual relationship, there should be negotiation of the agreement. Although not typically a "one size fits all" contract, each sponsored event presents the opportunity to include or exclude particular provisions based on the result of the negotiation. The goal is to craft an agreement that wins the interests and intentions of both the sponsor and the event organizer.
As it regards the sponsorship fees or consideration to be provided by the sponsor to the event organizer, negotiation should range from the maximum fee the event organizer would accept to the minimum fee the sponsor would be willing to pay. Any other alternative may leave one side or the other thinking it did not get the best deal.
Sponsorship fees typically range widely from a few hundred dollars to several thousand dollars (or more). Fees are based on many factors, including: the type and size of the event, the type of the sponsor, the types of exclusivity and rights offered by the organizer, pre- or post-event opportunities, geography, and availability of sponsors.
Generally, sponsors will negotiate for rights that offend the organizer less than those points on which the organizer feels strongly, or has likely made commitments to exhibitors and sponsors. Exhibit spaces can vary in price due to location, view, and other such characteristics. Some organizers, but not all, provide a list of rates, which the sponsor can use to determine what rights it feels strongly about obtaining in the agreement. However, there is relatively no uniformity as to the amount of these fees.
Other terms in the agreement are also subject to negotiation. Start times and break times may be manipulated to accommodate the needs of a sponsor. Length of the contract may or may not be subject to negotiation. Organizers may restrict the geographic field of influence to delineate the exclusive nature of the agreement, or sponsors may seek to have the field broadened to include a competing event. The sponsor may seek to limit its exposure to liability in certain situations and to include an indemnification agreement that protects the sponsor. Depending on the bargaining power of the parties, the agreement may include provisions regarding confidentiality, and assignment and change of control in order to prepare for future tenuous situations.
The foregoing strategies and tips are but a few of the points that should be considered by an event organizer negotiating with sponsors.

Legally Binding Sponsorship Agreements

Sponsorship contracts, like any other contract, are the topic of negotiation, and the starting point of a negotiation is usually the sponsor’s agreement. The sponsor may have their lawyer review the agreement, or he or she may sign the agreement "AS IS", in which case the terms of the agreement are non-negotiable. Of course, if you are the event organizer you want to avoid that scenario at all costs.
As the organizer, you want to hire a lawyer to draft the sponsorships agreement. Using an existing sponsorship agreement is common. For example, if you sponsor an event every year, you might want to use the same agreement your lawyer drafted the previous year. There is nothing wrong with doing that, but before you use an old agreement you or your lawyer drafted, you should check to make sure the agreement complies with current laws.
The laws relating to intellectual property, liability and even unfair or deceptive trade practices change from year to year. If it has been several years since you have used your old agreement, you should have your lawyer review the agreement and update any language that may no longer comply with recent laws.
If your sponsor wants to use an agreement they drafted, make sure your lawyer reviews the agreement before you sign it. Your sponsor’s using its own agreement puts you at a disadvantage, because at that point, the only terms that are negotiated are those your sponsor is willing to concede. Never blindly sign a contract.
In any event, here are some key issues to consider:
Intellectual Property Rights. Make sure that the terms of the agreement state that you own the intellectual property rights associated with the event. If you are permitting the sponsor to promote the event through the use of your trademarks, be sure to include terms in the agreement that give you the right to approve the use of your trademark.
Indemnification. Make sure the sponsor indemnifies you in case the sponsor’s obligations under the agreement harm a third party, for example by forcing you to infringe on a third party’s trademark or copyright.

Elements of a Sound Sponsorship Agreement

Whether you are the sponsor or an event organizer, the negotiation of an event sponsorship agreement can make or break the success of your sponsorship. The key to any successful contract is to align the goals of the parties with the objectives of the agreement. For example, the sponsor agreement for a 5k race might include clauses to coordinate the sponsor’s brand messaging with the promotion of the event. An agreement for the title sponsorship of a multi-day conference might establish an exclusive electronic billboard on the floor of the exhibit hall. Both of these scenarios help to ensure that the contract furthers the goals of the parties. However, sponsorship agreements often do not clearly articulate the obligations of the parties. This can leave parties guessing as to their responsibilities and obligations, which can be detrimental to fulfilling the terms of the agreement. Below are some essential best practices in drafting clear sponsorship contracts.
When it comes to sponsorship, the clear objective of a contract is to provide clarity on the performance of the sponsor’s obligations and benefits. That being said, the best practice to creating a clear contract is to start with clear objectives. Organizers that are looking for sponsors should work to develop a list of goals before drafting a sponsorship agreement . If the goals are coordinated and aligned with each other, the organization will be able to create a contract that is clear. In addition, when negotiating an agreement, make sure the terms of the agreement align with the goals that have been articulated. Are the sponsor’s benefits outlined in the agreement? Does the agreement appropriately illustrate the mechanisms for each party to perform their obligations? Are the positions for the parties on the same line in the agreement?
Another best practice is to ensure that every contract is readable. This can seem obvious, but it is important to keep in mind a few key factors that will make the contract clear and concise. First, it is essential that the contract includes definitions that clearly state what is included and what is not. A common example of a contractual definition is specifying that the word "Event" will only refer to the occurrence of the specific event. This is important because the same word could be interpreted differently in different parts of the contract if not defined properly. A second good practice is to restructure sentences so that they are not lengthy and convoluted. The clearer the sentence, the easier it will be to understand. Third, the document should be correctly organized so that each section is properly labeled. Lastly, insuring that the font of the agreement is readable and understandable can help with making the document clear.

Executing Sponsorship Agreements

After the event sponsorship contract has been signed, it is important to create a system of managing the various obligations throughout the term of the agreement. In addition to invoice and payment reminders, appropriate reminders should be created for various deliverables and timelines. These reminders can be in the form of calendar alerts that pop up throughout the term of the agreement. Should there be specific actions required by a third party such as providing logo files or bio information, these reminders can be set up to automatically email the third parties. Any breaches of the terms of the sponsorship contract should be dealt with in accordance with the terms outlined therein (i.e., material vs. technical breaches) as well as the dispute resolution mechanism provided for in the agreement.

Event Sponsorship Agreement Case Studies

The concept of sponsorship, in marketing terms, is neither new nor faddish. Its origins can likely be found in the early 19th century with the distribution of free tickets to attract attendees. This approach was expanded by lockout and Coca-Cola for the 1936 Berlin Olympics, with Betty Crocker taking this further by in 1939 with her personal appearance to present awards at a local Girl Scouts’ event. With music concerts and the Stanley Cup arrival of the Pintos in 1983, the basis of the sponsorship partnership gained commercial traction through naming rights of sports venues and title sponsorships of events. Regardless of the specific situation, one thing is clear: the benefits of sponsorship are manifold. Yet, they do not apply universally to all sponsor and sponsor relationships. What makes a good sponsorship contract? Time for some real-life examples on specific sponsorship contracts.
Case Study 1: The 2011 Canadian Association of Girlfriend Experiences (CAGE) Conference In September, 2011, CAGE hosted their annual event, with sponsorship by Delta Airlines and Thomson Tax and it featured workshops on culinary innovation, distinguishing entrees, and current trends that can help businesses drive customer loyalty. It featured speakers like: John Hawksworth from the UK-based PwC, who spoke about customer experiences, Mark Erwin from Sapphire Ventures who discussed B2B marketing, and Rite Aid’s Brian McIntyre, who set out how to capitalize on electronic marketing to increase customer loyalty. It is clear that both the conference and its sponsors understood their respective roles and the functions that they would play in the weeks and months following the conference to keep event attendees engaged with the event, and to ensure that the sponsors used their platform/people base to effectively target, based on the conference data collected, in the long term.
Case Study 2: The New York Clinical Laboratory Manager’s Association (NYCLMA) Fall Meeting In October, 2007, the NYCLMA hosted its fall meeting and conference. It was sponsored by Kodak; which presented on the second day topics around digitization within clinical laboratories, including strategies on implementing e-communication and updates on technology changes in medical imaging. Currently, Kodak continues their sponsorship of the conference; which has attracted similar sponsors since the 2007 event, including, but not limited to, Beacon Anatomic Pathology IT Services, Carestream Health, Geisinger Medical Laboratories , Master Lab Solutions, and XIFIN. As always, it is important to look at the value for money that is represented in these type sponsorship agreements and to consider not each party’s perceived ‘value’ but also whether the balance between dollars spent and benefits received is not only fair and reasonable but also consistent with market standards and developments. By using these types of strategic sponsorship arrangements, sophisticated buyers can achieve significant value through these arrangements.
Case Study 3: The National Medical Laboratory Professionals Week (NMLPW) 2012 and 2013 The 2012 conference was: sponsored by Master Lab Solutions who presented updates on digital solutions for clinical laboratories; Siemens Healthcare Diagnostics who presented on biomarkers and clinical outcomes; SmartLab Services who discussed lab efficiency and other laboratory-related services; and, ATCC who spoke about quality assurance and safety within clinical labs. The 2013 conference was sponsored by Beacon Anatomic Pathology IT Services. Beacon Anatomic specializes in digital pathology and medical imaging, providing management and other services to over 300 laboratories in the US and Canada. In addition, Siemens Healthcare Diagnostics sponsored the 2013 conference and presented on introduction to digital pathology and recent clinical applications in the U.S. and Canada. Data from these and other conferences suggests that the clinical laboratory market is in a continual state of development, with the last decade seeing a significant move towards alternative approaches to information sharing that are more accessible, and which rely upon highly complex systems and programs to centralize the transfer of information from clinical laboratories to health care facilities. By and large, many of the successful sponsorship contracts that we have seen have been rooted in the development of long-term partnerships that extend beyond the contractual commitments or span across multiple years and/or contracts. Based on our experience, if the event or project that the sponsors have an interest in is a one-off event, then it significantly constrains the ‘partnership’ opportunity, since the sponsor will only be able to invest in a limited number of events in any given period. However, if the sponsor has an interest in a long-term relationship, then the sponsorship contract can be used to secure significant returns and create partnerships that are mutually beneficial in many ways.