Just signed a sponsorship agreement! Now what did you sign exactly?

This is the first in a series of guest posts by Nick Poggenklaas, who is a sports lawyer at Van Diepen Van Der Kroef Law Firm

Nick Poggenklaas, Van Diepen Van Der Kroef

Did your esports team just sign a sponsorship agreement? Great! 

Now did you really know what you were signing? Was the agreement checked by a specialised lawyer? Or were you, your teammates and the sponsor acting in good faith when you signed the contract?

Don’t worry if your answers to these questions are ‘no’, ‘no’ and ‘yes’. Next time you’re entering into a sponsorship agreement you can approach it differently.

The importance of great contracts in esports has already been established by Lydia Mitrevski. A few weeks back Lydia Mitrevski wrote an excellent article for ESI called “Esports contracts: The Good, The Bad, and The Ugly”. Mitrevski pointed out that, as a general rule but more specifically for the world of esports, it’s important to agree contracts before working with someone. This is not only the case for esports players and their teams or organisations, but also when you or your team is entering into a sponsorship agreement. After all, there may be a lot of money involved.

Many legal battles are fought over poor sponsorship agreements. It’s important to clearly stipulate what your team can offer the sponsor, how you and your teammates should act, what the sponsor should do for you, when you and your sponsor must fulfill their obligations laid down in the contract and what the consequences are if either of the parties doesn’t live up to their end of deal. When you and your sponsor clearly stipulate what is expected from each of you, this will help to avoid problems in the future.

Next to being very specific in the sponsorship contract one should always look out for their sponsors. In this context I would like to point out the phenomena called ‘ambush marketing’. Ambush marketing is a marketing strategy in which an advertiser “ambushes” an event to compete for exposure against competing advertisers. This happened for example at the FIFA World Cup in South Africa. A significant number of Dutch female supporters wore dresses promoting the beer brand ‘Bavaria’ to football matches, while ‘Budweiser’ was the official sponsor of the event.

“How can you make sure your esports event is not subject to so-called ‘ambush marketing’?”

Your sponsor won’t be happy when competing advertisers are present on the esports event he or she sponsored. We can assume that your sponsor paid you a lot of money after all, while the party applying ambush marketing strategies keeps all its money in its pocket.  How can you make sure your esports event is not subject to so-called ‘ambush marketing’?

Sadly you can’t avoid all ambush marketing actions, but it’s a positive and sensible move to consider this phenomena. Sometimes intellectual property laws or consumer laws can be sufficient to provide for the protection your sponsor requires and needs. Other times you need more out-of-the-box solutions. You could for example introduce a dress code when hosting an esports event in order to protect the brand of your sponsor. If such agreements are part of the deal, lay it down in the contract.

“It’s also of great importance to stipulate in a contract when the contract ends and what happens when it does”

Avoid any miscommunication with your sponsor.

If you make a contract, don’t only stipulate what you and your sponsor need to do while the contract is in force. It’s also of great importance to stipulate in a contract when the contract ends and what happens when it does. Is your team free to sign a new contract with any other sponsor? Or are you not allowed to enter a sponsorship agreement with a sponsor which is operating in the same line of work as your previous sponsor? Can your sponsor extend the contract when it wishes to? And what happens when – even if you tried everything to avoid miscommunication – there is a dispute about the sponsorship agreement? What laws do apply? And which judge is competent to deal with the matter at hand?

A sponsorship agreement can be concluded orally, but I would always recommend to stipulate one’s obligations as clear as possible in a written contract. This will help to prevent miscommunication with your sponsor which, on its own turn, will help to avoid future problems. And when stakes are high? Bring in a specialised lawyer.

This is the first in a series of guest posts on the legal challenges and issues currently at play in the esports industry.

Any questions you can reach out to Nick at [email protected]