As with any commercial enterprise, major sporting events involve a number of important commercial relationships and require agreements to be put in place in order to operate successfully while minimising risks for those organising and participating in the event.
This article touches briefly on some of the key legal commercial considerations an event organiser will need to turn their mind to. This is a non-exhaustive list.
Sanctioned Events / Promoter Agreement
While some sporting events stand alone, most will be a part of a wider competition, series or tour and/or will be sanctioned by the national or international governing body of their relevant sport.
By way of example, the Australian Open is one of the ATP Tour's grand slam events and there will be a sanction/promoter agreement in place between the organiser of the Australian Open and the Association of Tennis Professionals governing the terms of that relationship.
An event sanctioned by the sport's relevant federation or other governing body gives the event immediate legitimacy. The New Zealand Rally is fighting hard to regain the sanctioned status that it previously enjoyed in 2012 as a round of the FIA World Rally Championship (WRC). Their campaign to be a round on the WRC in 2018, and now 2019 illustrates the significance that the affiliation and global exposure of the WRC as a whole has to the NZ event.
If your event is part of a tour, a wider series of events or officially sanctioned you will need to enter a sanction or promoter agreement. The terms that are included in such agreements are often vast, varied and detailed. As a promoter you will need to ensure that any obligations you are committing to are not inconsistent with any other commercial arrangements, including your agreement with the venue and sponsors.
Typically a promoter or sanction agreement will cover the following terms:
- Obligations of the event organiser including providing certain operational facilities required for a sanctioned level event. The standard of player facilities, health and safety requirements, tickets, hospitality packages will all be covered.
- Obligations of the governing body, including providing support to event, encouraging its athletes to participate and granting certain naming rights to the event.
- Sanction Fee – consideration for the benefits the event enjoys by being sanctioned.
- Intellectual Property – defining ownership and rights of use of each party's IP (name, logos etc).
- Rights granted to the event by the sanctioning entity, and those retained (such as broadcasting rights).
- The game, match or other sporting activity to be played in accordance with the rules of the governing body.
- Sponsorship – certain restrictions may be imposed in respect of sponsorship, particularly around event sponsors competing in same category with sponsors of the relevant overarching Tour, series or national / international governing body.
Sponsorship is a significant revenue stream for major sporting events and it can often be a delicate puzzle to piece together to ensure sponsor categories do not overlap, and you are not in breach of one sponsorship contract by granting a right to another sponsor, or even granting rights you do not have (i.e. those rights retained by the governing body in a sanction agreement).
Sponsorship agreements should be very prescriptive and not allow room for interpretation or any "grey areas". As with any other commercial agreement, both parties need to be clear regarding expectations, obligations and restrictions.
Key terms to consider for any sponsorship contract:
- Term – how long is sponsorship arrangement for and are there any rights to renew.
- Sponsorship fee – sponsorship can be either cash consideration and/or value-in-kind. If it is value-in-kind, ensure there is an agreed method for calculating such value or a pre-agreed value attributable to such non-cash contribution.
- Exclusivity – some sponsors may want exclusivity in their category of business – for example if Ford is a sponsor, it will not want Holden also having its brand somehow associated with the event.
- Benefits / rights of sponsor – set out the sponsor benefit package with sufficient detail so as to avoid disputes.
- Definition the intellectual property rights of both parties and any rights of use.
As well as representing the right of a holder to enter an event, the ticket is a common tool event organisers can employ to impose certain rules and restrictions on attendees. This is important both from an event management perspective, such as providing organisers a right to remove any spectators who are acting in a manner in breach of the event rules, and from a commercial perspective, enabling the event to protect the valuable commercial rights associated with it, restricting spectators in respect of filming action or taking photographs.
If restrictions regarding filming and photographing an event are not covered off in the ticketing terms and conditions, it can significantly impact the value of the commercial rights the event is granting to sponsors, broadcasters and accredited news organisations who are paying for right to take/publish/use photos and film/broadcast footage of the event.
Ticketing can also help protect events from being subject to ambush marketing, and exposing itself to a breach of contract with existing sponsors. Ticketing terms and conditions can incorporate the necessary prohibitions on spectators, for example a term that prohibits attendees wearing clothing or bringing to an event a sign with logos of competing sponsors.
TV production / broadcast rights
Generally, the sale broadcast rights is the largest source of revenue for a major sporting event. The event owner, or where relevant the sanctioning body, will want to slice and dice their media offering to maximise revenues across the plethora of platforms available to today's sports fans.
If an event is part of a tour, or series the sanctioning entity may have a wider broadcasting deal already in place that the event will form part of, and the event's share of such broadcast revenues should be dealt with in the promoter agreement terms.
Alternatively, where the sanction agreement provides that the event organiser is responsible for television production, or where it a standalone event, you will be looking at an agreement with a local host broadcaster (e.g. Sky Sports or TVNZ) to produce coverage of the event. The host broadcaster agreement will set out the production and outside broadcast requirements for the event, and will also need to clearly set out who will ultimately own the copyright that subsists in the coverage produced by the host broadcaster. Typically the event organiser will retain these rights in order to have the ability to on sell to the broadcasters in other territories around the world.
To read more about the best broadcast opportunities for your sporting event, please see my article on the topic here.
While there is no copyright in an event itself, copyright lies in all of the surrounding materials, names, slogans, logos, branding and broadcasts of an event.
Event organisers need to have clarity as to any copyright materials that they wish to use, whether they own those rights or are being licensed them. "Sports events organisers should ensure that all IP rights that are used in connection with the organisation of a sports event are cleared and fully licensed to prevent allegations of infringement, and to avoid having major planned events stalled by way of injunction orders issued by the courts." (Law Gazette 2009, Lau Kok Keng, Rajah & Tann LLP, Singapore)
Other commercial arrangements
Various suppliers will be required to stage a major sporting event, from food and beverage suppliers to merchandising, commercial agreements will need to be in place with every key supplier.
For larger scale events, "Invitations to Tender" should also be considered as this type of market competition compels suppliers to offer their best terms and enables the organiser to better consider their options.
You will also need to look at local laws and regulations, resource consent will likely be required and coordination regarding traffic management and parking will also need to be considered.
Event organisers must be aware and take pre-emptive action when it comes to protecting their legal position. Please contact our experts if you would like to discuss the legal needs of your sporting or other event.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.