When player and fan behaviour cost a sports sponsorship
Like any contract, a sports sponsorship agreement governs the rights and obligations of the parties to the contract – the sponsor and the sporting entity (sporting body, club, or athlete).
But, what happens when a third-party, such as a team’s player or a club’s fans, behaves in a way that causes concern for the sponsor?
This issue unfortunately occurs fairly often, as has been recently highlighted by the actions of a single sponsor in regards to its sponsorship of two clubs in two different sporting codes in Australia: NRMA Insurance and the Western Sydney Wanderers (A-League football) and the Brisbane Broncos (NRL). Though, interestingly, the sponsor has dealt with the issues in different ways:
- Work with the club and manage expectations, or
- Walk away at the end of the current term.
This Australian-based insurance company is the current jersey sponsor for the A-League’s Western Sydney Wanderers and the NRL’s Brisbane Broncos. Both clubs have experienced some recent media attention in relation to poor behaviour, which NRMA Insurance has had to address, though handling each matter quite differently.
NRMA Insurance has spoken out in relation to the Bronco’s handling of its recruitment and support of 22 year-old player, Matthew Lodge. Lodge was arrested for various crimes after a drunken rampage in New York City in 2015. While the player escaped significant jail time following on from the criminal trial, he was handed a US$1.2 million damages debt after the matter was later heard in a New York civil case.
The issue, and the negative media focus, centred upon the player’s reported lack of a personal apology to his victims and lack of making any payments towards the court ordered damages amount.
In this case, the sponsor, perhaps understanding its role and leverage in this matter, has voiced its concerns publicly (see the ‘SMH’ story here). This has in turn partly resulted in the sponsored entity, the Brisbane Broncos, working with the NRL and the player to make steps to ensure that the player’s victims start to receive the damages payment.
Here, the sponsor has acted in a very positive way, using its commercial arrangement with the sports club, to help to effect a positive outcome.
Obviously, a sporting club has an agreement with its players, through which it can exert influence to achieve such an outcome, as well as having its own resources to effect positive change.
Western Sydney Wanderers
Contrasting the nature of the relationship between a sporting club and its contracted players, the issues involving the sponsor and the Western Sydney Wanderers are different and have been dealt with differently by NRMA Insurance.
The issues here are different due to the fact that it has been the fans (or rather, a very, very small but highly visible group of “fans”) who have reportedly created the concern for the sponsor.
As has been reported at length, the Western Sydney Wanderers have had fan behaviour incidents – most visibly the lighting of flares at games. This and other anti-social conduct appears to have now resulted in NRMA Insurance not seeking to extend its sponsorship of the club past this current A-League season, as reported here.
Admittedly, this may all be speculation as NRMA Insurance haven’t publicly cited this as the reason for not renewing its sponsorship of the club. But, if the speculation is founded, this highlights what is a real risk for sponsors of sporting clubs; undesirable fan behaviour and a club’s (in)ability to control it, thus causing a flow-on effect for a sponsor’s brand and its reputation.
Unlike the example of a club’s player’s behaviour, a club has no agreement with its fans outside of a club membership – anyone can turn up to a club game (so long as they haven’t been banned by the venue?), or a venue where the game is being televised or promoted, and claim to be a fan. Arguments may be made that a club and its fans have a “contract”, but this may be a more romantic way to view the relationship, and in any event, it wouldn’t be legally enforceable.
As such, the club, short of banning the person or persons, have very little real direct and effective leverage over the fan, and so have little effect over the concerning and risky behaviour. The league has handed down very severe punishments to the club, but this obviously fails to deter those wanting to behave in a certain way.
In this case, if we believe the speculation as to the link between fan behaviour and a decision to not renew a sponsorship agreement, it’s easier for the sponsor to walk away at the end of the term of the sponsorship. Walking away is perhaps also seen to be taking a positive stand against the issue at a very general level, thus in-turn being a positive for the brand.
Other sponsors have dealt with similar issues in very different ways, being to terminate sponsorship agreements. This is obviously a risky move to take, and should be considered in great detail, certainly with legal advice, before taking.
One recent example here was the Infinity Group Australia sponsorship of the Cronulla-Sutherland Sharks and the Sydney Roosters in the NRL (see story here). After Roosters players and the Sharks Chairman were involved in separate recreational drug matters off the field in 2017, the sponsor elected to terminate its agreements with both clubs.
The Sharks reportedly came to an amicable settlement with Infinity Group Australia.
The Roosters, however, signalled that they had commenced legal proceedings against the sponsor (see story here), presumably for breach of contract? A directions hearing was to be held in August 2017, but the matter doesn’t seem to appear in current Court Lists by the Supreme Court of NSW or District Court of NSW.
Interestingly, Infinity Group had form in terminating sponsorship agreement with Rugby League clubs, having terminated its previous agreement with the Parramatta Eels. This may go towards an argument by the Roosters legal representatives that the sponsor walked into the agreement with its eyes wide open and that any morals clause in the agreement would need to be held to a very high standard of conduct prior to any trigger being pulled?
I do not act in this matter and, without any reported decisions or judgement, I am merely applying my own observations based upon my own experience here.
As always, we will be watching that space.
To discuss sports sponsorship agreements, negotiations, or concerns, speak to Mat Jessep on +61 2 8007 4747 or email email@example.com