Sponsor conflicts in football - the pitfalls of pre-season tours

Published 12 August 2013

Pepsi and Coca-Cola logos

The issue of conflicting sponsors is one I come across quite frequently in my practice and extends to all sports where commercial rights have been bought and sold. The latest example of this involved Manchester United on their preseason tour in Australia (see article here). This shows how important it is to correctly manage the interplay between major sponsors and for clubs (especially those on tour) to do their due diligence in a thorough manner. 

Many people will pick this story up and place it within the “commercialisation of sport” debate on the basis that it should not be right that the staging of a football match is threatened by monetary interests. A very valid (if rather sensationalist) view, but one that omits to reference the huge and somewhat irrevocable role that sponsorship monies now play in top level sport. Acquisition of rights for money naturally brings with it restrictions, and unsurprisingly, that usually includes avoiding any situation where it appears that a competing brand also has some form of commercial arrangement with the sponsored party. Contractually, it may be incumbent on the sponsored party to ensure that the rights are not diminished in any way, for example through restrictions on association with defined competitors, or some form of reputational clause. 

Football has had a number of high profile sponsor conflict issues in recent memory. If, for example, you wonder why the world’s two leading sportswear manufacturers have not used exact images of Andres Iniesta’s 2010 World Cup winning goal in their advertising to date, then you need look no further than the fact that he wore the boots of one manufacturer whilst wearing the kit of another. First-world problems perhaps, but the dilution of sponsorship value is not to be underestimated. As you might expect, the issue of conflicting sponsors in football mostly occurs as a by-product of the player/club relationship, rather than between two different clubs. The Premier League model player contract (Form 26) contains provisions which obliges players to take part in official club events and promotional activities and attempts to anticipate how that should interact with the player’s own private endorsements. The position ought to be that when on club business a player wears club and club sponsored clothing (excluding boots or goalkeeping gloves) and outside of this the player is free to fulfil their own commercial arrangements. Reality, inevitably, is slightly less helpful – consider where a sports brand sponsors a club and uses the club images as part of the brand’s advertising campaign (as it might freely be entitled to do) and how this then conflicts with the personal endorsement deals of those club players contracted to other sports brands. Only a team photo? Well imagine the effect of a known world-wide brand ambassador appearing in a trophy winning team shot used as part of a direct competitor’s advertising campaign (minus the endorsing brand’s products) and one can see how damaging this practice can be. That is not to say that it does not occur, and resolving the ensuing brand v brand dispute is not easy whichever party one acts for (especially as in some cases neither the club nor the player will actually be in breach of contract) especially as whilst consumer perception is all important, it is notoriously difficult to quantify.    

The Manchester United example from the link is actually slightly different and, at least from a legal and commercial perspective, easier to justify. Whilst the match in question took place before the deal with Pepsi was announced, it was presumably during the time that negotiations for the deal were coming to a head. Acknowledging that we don’t know the terms of the Pepsi deal or any pre-deal negotiations, it is certainly likely that Manchester United would have been under few (if any) legal obligations to Pepsi in terms of associating with competing brands. Like any commercial arrangement then, and especially those where being “seen” to be on board with the deal is as important as the actual terms, in my view this episode simply reflects a desire to successfully conclude an important partnership for Manchester United the business and is probably best viewed in that context, rather than any wider debate on monetisation of sport. The terms of the deal have not been announced in full, although we do know that it is restricted to the Asia-Pacific region. That the club was unwilling to show any association with a competing brand even outside of the territory of the deal suggests that the financials involved are significant and it is not surprising that the commercial team were unwilling to jeopardise completion of the deal.

Pre-season tours are a challenge for football clubs, not least in terms of the increased exposure to new markets and prevalence of different rules around marketing and promotion, however one wonders whether this particular story might have been avoided with a little relevant forethought. Organising a pre-season tour for a club like Manchester United is a lengthy (and, one would imagine, costly) exercise. If (as in this case) it is a major commercial concern as to the identity of the host club, stadium or association’s sponsors, then necessarily a big part of the organisational process ought to be taken up with a due diligence exercise on the identity of the sponsors and the likelihood of a clash. At least then clubs can give themselves the best chance of appeasing sponsors, associations and visiting fans alike – arguably as much of a commercial “must have” as getting the cash on board in the first place. Simple stuff, but something that appears to have been overlooked in this case, and particularly embarrassing given Manchester United’s attendance at the same stadium three days previously. 

Of course, the other view is that this was a special case and largely unavoidable. The pre-season, non-competitive nature of the match in question meant that Manchester United had a far greater influence, or potential influence at least, over the method of staging of the game (contrast this with their usual competitive away matches during the regular season). Couple this with the looming Pepsi deal and one begins to understand (but perhaps not agree with) why this episode played out as it did.

I would be interested to know your thoughts or experiences on these issues and whether you feel that the sponsorship landscape for certain sports is becoming so saturated that this is likely to be a recurring issue.

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