Nick Lewis and Ben Peppi, from JMW Solicitors – Sports Law Team in London – explain the many ways in which the golf sponsorship landscape is changing.
The golf sponsorship landscape is changing. At the event level, COVID-19 has significantly impacted the ability of sponsors to interact with fans and activate partnerships – a mainstay of professional events over the last 20 years.
Brands are now seeking new and innovative ways to digitally engage an increasingly international and younger audience. At the athlete level, 2020 has been a watershed moment for talent endorsement deals. Not because of a health pandemic, but because it has been the year in which sport and politics have once again come together in a way not seen since 1968.
With currently 75% of sponsorship revenue going to the top 20 players in the world rankings, the balance of power between golfers and commercial sponsors is shifting. With influencers gaining more of this market share it is important that the athletes fight back.
Golfers (as with all athletes) have stronger brands and more platforms than ever before to speak directly to their fans. While this can be incredibly powerful, used in the wrong way it can be expensive, both financially and reputationally, for the golfer and their commercial sponsors. Brands do not want to send the wrong message; they want to add value to a consumer’s lifestyle – customers find value in brands that enable them to be happy and reflect their views and attitudes.
At present a lot of the sponsorship agreements come from luxury brands, Sovereign Investment Funds and traditional Fast-Moving Consumer Goods (FMCG). With the ever-increasing social media environment, brands want to capitalise on the popularity of viral content, which provides visibility to large numbers of consumers and often the press. That said, an ill-conceived tweet or post can almost instantaneously lead to a media crisis.
At a corporate level there is an increasing amount of style guides for social media posts, and the more control the brand tries to have through the sponsorship arrangement and the less discretion the athlete has, the more risk there is that the relationship is characterised as one of employment, leading to tax and other statutory consequences.
It is important to make sure that the small print in the Sponsorship or Endorsement Agreement is clear and unambiguous. It is important to negotiate how the athlete might interact with others on social media, public appearances, their behaviour and how or when they make any statements, whether political, social justice or other.
With athletes covering up sponsorship logos or failing to turn-up to tournaments in order to send out a message they are potentially breaching their sponsorship or endorsement agreements. It will be important to the sponsoring companies that they avoid the negative publicity of bringing any Breach of Contract proceedings against an athlete taking a stance on a subject that is politically or socially sensitive, which is why it is important to have their Termination Rights clearly set out in any contracts. Never have the legalities of these agreements been more important.
Brands that can provide an authentic message that resembles the athletes desire to speak out on topical issues such as the environment, social responsibility, sustainability issues and equal rights are going to be much better placed to maximise their reach and resonate with the consumers they are targeting.
For decades since Tommie Smith and John Carlos raised a black-gloved fist at the Olympics, athletes have taken a quiet stance on causes and campaigns close to their heart. Then came Colin Kaepernick. And then came 2020. It has been the year in which the balance of power has shifted to the athlete, just look at the treatment provided to Lewis Hamilton (no disciplinary investigation undertaken by the FIA) and Naomi Osaka (pausing an entire WTA tournament for a day) by the Events Rights Holders. Athletes who, in the new digital era, carry a voice and following which enables them to support their ideals and enact change.
In golf, such a global sport, commercial sponsors will have to ensure that they respect the golfer’s autonomy or risk polarising the audience. Golfers are an extension of a brand’s value and talent endorsement, as it always has been, it will be crucial to grow the game in emerging markets – China, India, Brazil etc. Sponsors will be aware of this but the considerations for brands partnering with talent will no doubt have changed. Follower demographic will be important, but the character and views of the individual will be even more so.
Contacts:
Nick Lewis, Partner, Sports, Commercial and Healthcare Law; JMW Solicitors
D: 0203 002 5828 M: 07971 907 606; E: Nick.Lewis@jmw.co.uk
Ben Peppi, Head of Sport Services; JMW Solicitors
D: 0161 838 2712 M: 07925 641 549 E: ben.peppi@jmw.co.uk