The Devil is in the Detail - Contract Negotiations

Nov. 16, 2012 - PRLog -- There is a drive towards increasing professionalisation within the world of sports PR (http://www.ensltd.com/sports-pr-agency), marketing and sponsorship as well as agency which has developed over the past decade.
This has led to an increased focus on the minutiae within contract negotiation; an absolute necessity when you consider some of the recent evidence. In early August Manchester United was reported to have broken the world record for a shirt sponsorship deal signing a seven year, £357m agreement with Chevrolet. Meanwhile, Pricewaterhouse Coopers’ market report at the end of 2011 said that sponsorship was now only two or three years away from outstripping gate receipts as a source of income across all major sports.
With large amounts of money at stake the potential for disputes is significant with disagreements over what each side hopes and expects to receive thrown into sharp focus. Wayne Rooney’s case against his former agents Proactive illustrates the tension between the sides when the terms of the deal – in that case the length of an agency contract – can raise questions about restraint of trade. Five and ten year deals are not uncommon in sports sponsorship and when one party is tied to a long deal the same question has to be asked as to whether the contract is reasonable and enforceable.
Disputes are often the result of insufficient business planning from one or both of the parties and often happen because of a lack of vision, attention to detail and communication. It’s all about measuring performance and success (metrics) and placing a value on that achievement so if you take for example the sponsorship of a player by a brand or the contract he or she has with a club, milestone payments will have to be considered carefully; how will that player be remunerated for scoring winning goals or tries, becoming player of the season and so on? David Casement QC provided legal advice (http://www.thesportsreputationgroup.com/legal-advice) for Charlie Adam in his dispute with his then club Blackpool who argued, wrongly, that Charlie was entitled to a bonus if they stayed in the Championship but not if (as happened) they were promoted to the Premier League!
Conversely the club will have expectations of its own, such as the player’s or brand’s promotional responsibilities and any potentially competing duties they may have. The awarding party’s expectations of a player’s behaviour when under contract has also been placed under the spotlight recently by the actions of players accused of racism on the pitch. Also, sponsors have to ensure they are not embarrassed and a well planned contract will include a “non-embarrassment clause” to this effect which should allow for termination and/or a claw back of money in the event of the need for crisis management (http://www.thesportsreputationgroup.com/crisis-management).  The hope is that sponsors will bring pressure to bear on clubs to ensure that players conduct does not damage the brand.