Anna Sowerby writes in City AM about the implications for sponsorship agreements when sporting events are cancelled

The risk of major sporting events being postponed, relocated or cancelled, is an increasingly relevant consideration for brands investing in event-related sponsorship rights. Disruption to planned Formula 1 races in the Middle East has highlighted the commercial consequences of calendar changes and venue relocations.

Questions over cancelled or relocated events place greater scrutiny on the contractual protections available to sponsors, particularly where unforeseen events prevent sponsors from receiving the rights and exposure for which they contracted. 

The scope of contractual provisions can be critical, for instance if an event proceeds in a different location rather than being cancelled altogether. Sponsors may face reduced commercial value if a race is moved to a market that is less important to their business, making remedies such as rescheduled opportunities, replacement rights or pro-rated refunds increasingly significant. 

Additional protections, including termination rights, insurance arrangements and controls over public communications, may also help sponsors manage the financial and reputational risks associated with unexpected disruption to major sporting events. 

Anna Sowerby, Associate in our Commercial team, writes in City AM:

Sponsors caught by this sudden change in circumstance immediately jump to ask one question: ‘Does our sponsorship agreement adequately cover us in this situation?’

Since the Covid-19 pandemic, 'change of circumstance' have become a key provision in many contracts, particularly in sponsorship agreements and are no longer just a ‘nice-to-have’. In the context of a sponsorship agreement, these clauses are designed to include a mechanism to ensure that the sponsor has an appropriate remedy in place, in the event of a change of circumstance that prevents sponsorship rights being exercised. 

Read the full article in City AM here.