Introduction:
Sports manifests a sense of belonging and national pride it; also creates loyalty in people. Sports also have an impact on various areas, such as promoting different brands. Considering; the health of individuals specifically, sports play a role in achieving maximum physical fitness. Apart from that, it also generates income for the country. Considering; the health of individuals specifically, sports play an important role in achieving maximum physical fitness. Apart from that, it also generates income for the country. Currently, India is also engaged, with many international events and championships. But even after so many prospects, India lacks concrete legislation in sports, which does not mean that Indians do not hold sporting events or participate in such events internationally. A sporting[1] event experiences a high level of collaborations and participation in the form of sponsoring, advertising, etc., as these play an important; role in the overall financing of the event. Therefore, in this article, we are going to look into one of the most significant factors in sports law i.e. sponsorship and the impact of sponsorship in sports law. Since they involve a lot of money, they involve various legal compliance and complications.
Sponsorships in Sports
Every sporting event requires an optimal amount and a real source of funding to run smoothly and, this is where sponsorship comes in. A sponsor is a person or entity that provides funds for a specific event to gain exposure and credibility in a specific industry, improve public image, and build prestige through promotional practices and marketing. A wide range of events, from the lowest level of an event, such as school or college level basketball tournament that would have a politician as a sponsor, or a sports shop that sponsors high-level tournaments. Above all, the quality of sponsorship increases with the increasing expenses. To make the same thing clear, in a top league of sporting events compared to a lean school tournament, the most important, brands and units are their sponsors, such as Nike, Reliance, and so on.
The reason a sponsor decides to sponsor an event is that the company wants to promote its brand and get it known in the market. As sports have a large number of; fans and are very much followed, across the country, brands tend to use sports as an important source of their advertising strategy. Sports have been influential in deriving exposure to various sponsors, especially through advertisement. For instance, in the Indian Premier League (“IPL”), a 20-20 cricket league in India, there is an ongoing trend of promoting brands by having their brand names printed on the jerseys; of players.
The viewers are made aware of some brands that are unknown through such advertisements. It is seen that some brands like Ambuja Cement, Aditya Birla, and DLF gained popularity due to the nature of such advertisements by printing their logos on jerseys of the players in sports events.
It is, therefore, quite obvious; that sponsoring and advertising correspond and are interdependent.
Modes of Sponsorship in Sports
Event Sponsorship
The most popular sporting events or leagues, such as the Indian Premier League (“IPL”), the Indian Super League (“ISL”), the English Premier League (“EPL”), and the National Basketball Association (“NBA”), and so on require big sponsors to finance their events, it is essential to have large sponsors without whom they, cannot be mastered. For example, Hero Motor Corporation is an Indian multinational motorcycle and scooter manufacturer based in New Delhi, India, and Dream 11, an Indian fantasy sports platform, are the sponsors of ISL, Barclays are the sponsors of the EPL, and so on. Technically speaking, these brands are event sponsors for these leagues, where they sponsor the respective league and are advertised alongside the league titles, for example, Dream 11 IPL or Hero ISL. These sponsors are also referred to as the main sponsors of the event. In addition to the main sponsorship, there are other sponsors for the sporting event, such as media partners, digital broadcast partners, time-out partners.
Venue/Stadium Sponsorship
Each team or franchisee has a home stadium where most of their games are played. Many stadiums, especially outside of India, are named after a specific brand. For example, the home stadium of Arsenal Football Club is called Emirates Stadium and, the home stadium and the home stadium of Manchester City are called the Etihad Stadium. These brands are, established club sponsors, but apart from that, they pay a significant surcharge to the respective clubs to get the naming rights for this stadium. A place that all viewers visit and talk about, brand sponsorship[2] frequently is advertised and gains public attention and fame.
Kit/Jersey Sponsorship
Famous and top-notch teams in all sports are sponsored; by big brands like Nike, Adidas, which make jerseys, training jerseys, kits, and the like. For example, the sponsor of the Manchester United jersey is Adidas, and apart from that, Chevrolet and Aon sponsored the club to put their logo on the team jersey. Last year the BCCI announced that MPL Sports was the official kit sponsor for the Indian Cricket team. This is considered to be one of the best forms of sponsorship and promotion as jerseys are worn by players are worth a lot of money and, even replicas of such products are popular as fans dream of wearing the team jersey while supporting the team. Hence, the merchandise sale of such goods is often colossal.
Athlete Sponsorship
People tend to chase a particular sports person or an athlete and that is why these athletes have a tremendous impact. Therefore, the big brands work with and sponsor such athletes to get the public’s attention. An American multinational company like Nike that specializes in the manufacture, marketing, and sale of shoes, apparel, etc, pays star athletes a lot of money and it is through their promotion that the brand becomes more famous.
Ambush Marketing in Sports
Ambush Marketing is a strategy used by a competing brand to ambush an event sponsored by a specific rival brand. When a brand has sponsored an event, they just expect complete advertising or coverage of their brands in its entirety. The rival brands use strategic techniques to get public attention and advertise, even though they are not an official sponsor of that particular event. This act fundamentally leads to the infringement of the trademarks and other intellectual property associated with the event. It is illegal; and; can even lead to the owner suing the infringer according to the respective I.P laws. Therefore, this tactic is the result of an improved strategy, and therefore a brand will do it in an indirect way that the activity being performed is insufficient to claim the violation. A famous example of ambush marketing is the London 2012 Olympics where Panasonic was the official electronic partner and another headphones brand, Beats, gave athletes unmistakably free headphones and; some of the athletes were seen wearing those headphones during the Olympics.
Another strategy is if a player like Ronaldo who wears Nike shoes is playing in a league sponsored by a Nike rival, however, Nike has paid Ronaldo to use his Nike shoes during the match and the camera captured him tying his shoes and Nike can ambush the event and promote their brand where the event is sponsored by Nike’s competitor. But the relevant question is, can such an activity, or rather co-optation, be allowed? For example, Virat Kohli is a publicist for MRF tiles and also represented J.K tiles while playing for Royal Challengers Bangalore. Therefore, through their branding ambassador agreements, players like Ronaldo and Kohli, and others take into account the fact that they would carry merchandise of a competing brand, and the clause in such agreements limit that accordingly. It is therefore essential for athletes to have a smart sports attorney who is well adapted to the legal framework of sports.
Cases involving an issue of “Ambush Marketing” in Sports
In ICC Development (International) Ltd.v. Arvee Enterprises & Anr[3], the ICC submitted a petition against the non-sponsors Arvee Enterprises and Evergreen Service Station against the commercialization of offering tickets as prizes with the tagline of the ICC along with the mascot of World Cup 2003. The ICC stated that it was the organizer of the event and that it and the associated partner would henceforth; be entitled to the rights to sell tickets. The Delhi High Court observed that; there were limited “ambush marketing” laws for trademark or copyright infringement.
The court further stated that the denial of copyright infringement should be included, in the scope of “commercial speech” protected by the right to freedom of expression under Article 19 of the Indian Constitution. The court also added that the restriction of “fair competition and freedom of expression” is prerogative and such measures can be implemented in the formulation of the law by the legislature. In another case of ICC Development (International) Ltd. v. Ever Green Service Station & Anr[4], the Delhi High Court held that inanimate creatures did not have the right to publicity and henceforth any kind of effort to take away the publicity to the organizer (inanimate) violates the fundamental rights principles as mentioned in the Constitution of India.
The “ambush marketing” issue remains a threat to the organizers as India falls short of any kind of legislation or regulation to address the problems of ambush marketing. Various nations around the world have enacted their laws to curb marketing from ambush. India needs to pass appropriate laws to address the problem, as it will host several international sporting events in the future.
Legal Requirements for Sponsorship in Sports Events
As there is no standardized approach for sponsorship[5] and the current law is inadequate, the Indian judiciary and other authorities have faced difficulties in resolving disputes in the context of alternative dispute resolution procedures. Therefore, the Sports Sponsorship contracts; must be made in a manner where the brand avails maximum benefits, it also allows the contract to be terminated on certain triggering events, etc. In general, these contracts should be compared to license agreements, which are also innominate contracts, since sports sponsorship contracts contain the transfer rights of intangible goods, such as signs, logos, etc. Hence, contracts must be made from a perspective that takes into account all possible outcomes, both positive and negative.
A well-versed Sports Lawyer; will make sure to check the conditions and to; integrate them into contracts that offer advantages and benefits, as well as adequately taking into account all possible negative consequences and offering maximum protection against damage that has occurred. The said lawyer must be up to date with the latest laws and guidelines regardless of which country the lawyer is practicing. Some important legal aspects to consider are:
- Termination Clauses: This clause is essential and must be provided, for as many times sponsoring is based on representations and warranties, and if either party fails to meet its obligations, termination must be an available remedy. Just because a team has a certain start player and is distracting when that start leaves the team. This could be potentially harmful to the player/ team.
- Duration: Another important factor is the duration of the contract. Many contracts in the past had devastating effects due to certain uncertainties regarding the duration of the contract.
- Exclusivity Clause: This term assures the sponsor that other third parties or even the sponsor are discussing more the specific sponsorship in question, thus making it exclusive.
Conclusion
Sports is a huge and attractive industry. In a country like India, it is one of the fastest-growing industries and is; considered to be probably, one of the largest sports industries in the world. At the international level, it shows how there is; enormous and visible growth in this area, sports law has started to develop as a separate entity. Even in the new era; of a pandemic, countries have prioritized sports leagues and sanctioned their continuation only because of the rewarding revenues they generate. At this rate; of growth, it is unprecedented that the number and quality of sponsors will increase and, through that advertising, will also move into another dimension.
References:
[1] Jon Walters & George Willis, Sponsorship & Data Trends in Sport: Legal Issues for Sponsors & Right Holders, LAWINSPORT (Apr. 20, 2015), http://www.lawsport.com/topics/item/sponsorship-data-trends-in-sport-legal-issues-for-sponsors-right-holders
[2] Ryan James, Sponsoring and Advertising in Sports Law, THE BLAWQ (Jan. 4, 2021), https://theblawq.com/sponsoring-and-advertising-in-sports-law/
[3] ICC Development (International) Ltd. v. Arvee Enterprises & Anr, 2003 VIIAD Delhi 405, 2003 (26) PTC 245 Del, 2004 (1) RAJ 10.
[4] ICC Development (International) Ltd. v. Ever Green Service Station & Anr, 2003 IIAD Delhi 707, 102 (2003) DLT 723, 2003 (26) PTC 228 Del, 2003 (1) RAJ 426.
[5] Kyriakos Constantinou, The Legal Perspective of A Sponsorship Agreement in Sports, MONDAQ (Aug. 03, 2018), https://www.mondaq.com/cyprus/sport/724760/the-legal-perspective-of-a-sponsorship-agreement-in-sports
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