The importance of paperwork

With the Middle East becoming increasingly popular for sports events and other entertainment programmes, it is important to understand the rights and privileges that sponsors can enjoy. It is also imperative to put these down on paper so that all parties are aware of their rights. Lara Haidar of The Rights Lawyers takes a look at the importance of putting sponsorship deals down in writing.

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By  Lara Haidar Published  October 30, 2005

I|~|larabigg.jpg|~|Lara Haidar.|~|Anyone who has been reading our monthly legal column in this magazine will already be aware of the importance and benefit of putting in place a properly drafted contract in any business arrangement. Sponsorship deals are no exception to the rule. With the advent of many sports events, and the upcoming Sports City and Sportex exhibitions, which are set to attract more foreign investors to the country, sponsorship deals are becoming increasingly important in both Dubai as well as the entire region. More and more sponsorship deals are happening here in the UAE. Emirates Airlines, for instance, recently announced that it was sponsoring the Arsenal football team’s shirts and other things for the next eight years (sponsorship of the shirts alone will amount to US $8.8 million per year). Then there was the recently announced Bonyan Group’s sponsorship of the UAE’s first football team and the United Group Holdings coming in as main support sponsor for the team (in addition to their existing sponsorship of the volleyball and handball teams). There was also the Green Can company sponsoring many of the recent and more high profile music events in the UAE. With more companies, organisations and competitors seeking and negotiating sponsorship deals, the need for sponsorship contracts has become more commonplace. So what should go into a sponsorship contract? Basically, the contract should include everything that the parties agree on (all the commercial terms), and specifically, who is going to do what, when, for how much and how long, and what is going to happen to the intellectual property rights (including particularly copyright and trade marks). ||**||II|~||~||~|Some of the key issues to consider are: * Term — How long are the contractual obligations supposed to last for? A year is a pretty common term, but it could also be shorter e.g. seasonal or bound by the length and duration of the sports event, or longer. Is it automatically renewable (e.g. for further seasons) and negotiable? * Termination — How can the contract be terminated? By mutual agreement, unilateral will or only for cause? What termination procedures should be followed? And what happens when the job is done? Think about promotional material, an end to the other party using any of the intellectual property rights (most importantly the brand) and any compensation payments to be paid on termination. * Use of Intellectual Property Rights — This should be defined very carefully in relation to scope of use (how exactly can the other party use your trade mark, and where, in which mediums), territory and duration. If there is an official phrasing that should be adopted, like for instance ‘the official sponsor of the event/championship’, that should be specified in the contract. * Advertising and Promotion — What advertising and promotion is to be done, and who gets to approve the content of these and make sure they comply with legal and regulatory provisions in place? And what are the approval mechanisms? This is especially important as it ties into issues of liability and determines who eventually pays damages in the case of illegal, infringing or illicit content for example. Equally important is specifying the deadlines on delivery of the advertising and promotional material, including the format, size and other technical specifications. ||**||III|~||~||~|* Sponsor benefits — The agreement should specify in as much detail as possible all the ways that the sponsor will get publicity at on site events, shows, on the internet, on banners, saddle pads, shirts, blankets, stall guards and jackets. Will the sponsor be given tickets or other benefits? * Exclusivity — Is the sponsor granted exclusivity in any area or medium? * And of course, money! Who pays what, when and to whom? Specific consideration should be given to upfront payments, commissions and percentages. With regards to the sponsor, compensation may also include products and prizes. Finally, what happens if things go wrong? What are the dispute resolution mechanisms and procedures and is there a way of avoiding unnecessary litigation? These are some of the broad issues that should be considered but there are others that are relevant as well. Basically, if you agree to a term or condition, it should be included in the agreement. And remember, the contract is your friend. It is there to determine your rights and obligations, but also to protect your interests. What kind of agreement you put forward (and the level of detail in sponsor benefits) may also affect the credibility of the sponsorship proposition you are pitching (or having pitched at you!) and which company is finally awarded the sponsorship deal. More information on The Rights Lawyers is available on the web site, ||**||

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