Business

Sponsorship contracts key to good returns on parties

Legal Notes

Simone Bowie Jones

Wednesday, July 25, 2012    

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AS we approach the 50th anniversary of our Independence it would seem from the barrage of advertisements for parties that we are certainly focused on celebrating, even if the celebrations have little or nothing to do with our Independence. Entertainment is big business in Jamaica and the various parties that are held give rise to the mutually beneficial relationship between sponsors and party promoters. The provision of event sponsorship gives companies an avenue by which to increase brand awareness by supporting events that its target market finds attractive. The promoter, on the other hand, is able to fill budgetary gaps, hopefully able to offer more to its patrons and is ultimately more likely to make a profit. Whether your company has already signed on as a sponsor for "ATI Weekend", "Dream Weekend" or "SPF Weekend", or your marketing team is considering how to best allocate its budget for the next "party season", having a proper sponsorship agreement in place may be the best way to ensure that you get the full bang for your buck.

A sponsor may be the sole, lead, title or subsidiary sponsor of an event or the exclusive or official supplier of a particular product for the event. The extent of the promotional opportunities and public recognition in association with the event to which the sponsor is entitled will be determined by the level of sponsorship, that is, the amount being paid for the sponsorship or the quantity of product contributed. The sponsorship agreement should however clearly set out what the sponsor will be receiving in exchange for this payment or product contribution.

As regards promotional activities leading up to the event, the sponsorship agreement should state whether or not the promoter is required to include the sponsor's name, logo or trademark on promotional material such as flyers, in television or Web advertisements and/or name the sponsor in radio advertisements. The promoter should also be required to put a reasonable amount of effort into promoting the event, for instance by purchasing a minimum number of radio spots or having a dedicated social media presence. This is important as it ensures that the sponsor gets the full benefit of having its brand associated with the event to create brand impact. It also increases the likelihood that people will actually attend the event where the sponsor will usually undertake further branding activities.

Where a sponsor has authorised the use of its name, logo or trademark, the sponsor may wish to require final approval of promotional material before it is released. It will also be in the sponsor's best interest to ensure that the agreement puts the promoter on notice that the sponsorship arrangement will not give rise to the acquisition by the promoter of any of the sponsor's intellectual property rights.

It is also usually of fundamental importance to a sponsor that the sponsorship agreement contain an exclusivity clause, restricting the promoter, where possible, from entering into similar sponsorship arrangements for the same event with its direct competitors or even offering the products of its direct competitors at the event. For example, if Appleton were the title sponsor of an event, it may prohibit the promoter from engaging another alcoholic beverage company as a sponsor or the sale of that beverage company's products at the event.

The "day of" branding activities should also be outlined in the sponsorship agreement. The extent of the branding permitted at the actual event, much like the branding which forms part of the promotional material, is usually tied to the amount of the sponsorship payment or contribution. The agreement may allow a sponsor to erect perimeter advertising, set out the size and positioning of signage allocating prime spots such as the gate or bar area and/or allow for the erection of speciality tents. The agreement should also further detail whose responsibility it will be for the erection and removal of any signage or structure introduced by the sponsor and plainly state who will be responsible for any design or production costs. The sponsor should be able to insist on site visits or coordination to ensure its branding is appropriately placed and not obstructed by trees or worse yet the materials of another sponsor.

Where a sponsor agrees to provide a particular piece of equipment, such as a water slide, foam pit or mechanical bull, particularly where the sponsor may not be responsible for its installation and operation, well drafted disclaimers and limitations of liability must be included in the sponsorship agreement. Generally speaking, even in the absence of the provision of such equipment, indemnity provisions should be inserted in the agreement to the benefit of the sponsor and the sponsor may wish to require the promoter to take out adequate public liability insurance.

Some sponsors go further to contractually require promoters to have celebrities attend the event. This ensures a certain level of media coverage post-event.

When opting to sponsor concerts there are also a few other matters sponsors may wish to bear in mind. Very often entertainers forget that they may be charged under the Town and Communities Act for violating public peace by using expletives during performances. While it is the individual performer who will be charged with this offence and fined the princely sum of $1,000 or sentenced to imprisonment for a period not exceeding thirty days, it is the sponsor of the event who may feel the long-term backlash of the entertainer's behaviour. After all, the goal of event sponsorship is usually to have the public associate positive thoughts with a company's product. A precautionary step that a sponsor may take would be to require the promoter to include a clause in its agreements with the performers requiring them to refrain from using expletives and stipulate penalties for breach.

The sponsorship agreement should also impose a general obligation on the promoter to comply with all applicable laws and regulations pertaining to the holding of the event. Few sponsors actually understand what this entails. Promoters should, for example, acquire the appropriate liquor licence under the Spirit Licence Act and obtain permission from the superintendent of police to operate equipment to provide music in a public place in circumstances where the music is reasonably capable of disturbing persons under the Noise Abatement Act. Promoters should also comply with the relevant places of amusement regulations, such as the Kingston and St Andrew Corporation (Places of Amusement) Regulations which require anyone who wishes to operate a venue which is open to the public, whether for a fee or free of charge, for the purpose of entertainment, including a dance-hall, club, open air dance venue or festival in Kingston and St Andrew to obtain a licence from the Kingston and Saint Andrew Corporation.

This article touched on some of the basic points that should be captured in a sponsorship agreement for parties and concerts. These agreements can however be far more complex and a whole host of other issues must be addressed when dealing with the sponsorship of sporting and televised events. Regardless, getting proper legal advice when entering into a sponsorship arrangement may actually make the difference between getting the desired exposure for your brand and simply wasting your company's money.

Simone Bowie Jones is an Associate at Myers, Fletcher & Gordon and is a member of the firm's Commercial Department. Her practice areas include takeovers and mergers, securities, corporate finance, sports and entertainment law. She may be contacted at simone.bowie@mfg.com.jm or you may visit the firm's website at www.myersfletcher.com. This article is for general information purposes only and is not intended to constitute legal advice.

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