Too often, we see sponsors not ensuring that their assets and benefits provided in their agreement can perform to fit their needs. Many times, this occurs simply because the sponsor doesn’t ask enough specific questions of the property.
In this blog, we will offer practical advice as to how planning ahead during the negotiation can help you avoid some of the pitfalls that both brands and properties run into when it comes to sponsorship assets and benefits.
There are circumstances when a or property may not have full control over their facility. You see this in league-level or national federation deals, including motorsports, college sports post–seasons, and concert venues. When the does not have full control of the facility, there may be times when there are legacy agreements the facility may have with partners that can carry over into all events held at the facility.
This carry-over can mandate that a new sponsor is not allowed to cover or block the existing facility partners’ assets. There have been several occasions of “Conflicting Fit” partners being forced to share space because of facility agreements. Personally, I have dealt with this issue in the Insurance, Banking and Cellular categories. If you are a sponsor, you need to ask questions about what assets can be passed through or not.
Food & Beverage
Similar to league-level deals referenced above, facility agreements with F&B partners can limit a food and beverage sponsor’s ability to activate. An example of this is an Energy Drink looking to sponsor a race series. The series can sell that entitlement cannot force every track to make them the exclusive partner. Sometimes, they can force the exclusivity, but it requires an additional agreement with each track’s concession provider.
Whether you are looking to sample or sell, you are going to be cutting into the profits of that the concession partner. The same type of issue can occur when QSR’s wish to provide samples inside a facility. Options to avoid this issue can be to moving sampling to the facility exterior where the current partner may not have the rights or negotiating a side agreement with the vendor.
Hospitality & Tickets
Depending on the event, tickets and hospitality can be gold (The Masters) or used as toss-in assets to try show more value. One thing a sponsor must keep in mind when they are sponsoring an event is what the internal demand will be for the hospitality elements offered. They need to understand this during the negotiation phase or beware the dreaded internal in-fighting over the few assets that you have.
If you have one suite of 20 people and 500 tickets, how will you take care of your customers and employers and at what level? The 500 tickets need to break down by level and location, so your fulfillment team can have an understanding on whether the locations will work for your guests. Also, you need to know if you have any way of using the 500 tickets. The suite can bring a slew of different questions. Can you decorate it? Is F&B separate? If you are an F&B brand can you bring your products into the suite?
This is an issue that is becoming more important by the day for both sponsors and . If you plan to bring in your own cause marketing agenda into a sponsorship you need to be aligned from both sides. Today, it is more likely that both partners will already have a CSR or ESR program that they promote on a consistent basis. Just like co-sponsors there are times when cause marketing partners are conflicting as well.
This isn’t meant to be a negative towards charities in any way, but all charities are fighting over the same donation dollars. Making sure you can activate your cause marketing campaign has to be understood from day 1. Can you promote the relationship utilizing logo, tickets, digital ads, social etc.? Any benefit offered in the agreement can they be passed through to your charitable partner.
When sponsors are not aware of the pitfalls above, it can cause unneeded internal stress and resentment while working with the property. There is an adage that there is always room for asking one more question. This is always true when you are on the sales side and just as important when you are on the buy side. When you see sponsorship assets and benefits, remember to ask one more question and dig into any potential hurdles you may face.
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