Successful Brand Sponsorships Require Collaboration With Legal

The Bottom Line

• Companies looking to maximize brand sponsorship investments should plan carefully around content distribution, rights clearance, and integration across media platforms.
• Early, informed collaboration between legal, commercial, branding, and marketing teams helps align sponsorship contract rights with business strategy.
• It’s essential to future-proof sponsorship investments, especially for deals that span multiple seasons.

As sports markets expand through diversified fandoms, sports-betting legalization, and new digital channels, brand sponsorships have become both more valuable—exceeding $60 billion in 2024—and more complex. Companies seeking to maximize their sponsorship investments in today’s evolving marketplace face a range of legal and commercial considerations.

Anheuser-Busch InBev’s sponsorship of the 2026 FIFA World Cup with Michelob Ultra; Red Bull’s acquisitions of teams across soccer, Formula 1, and winter sports; and legal changes paving the way for name, image, and likeness deals for colleges show that companies are committing substantial amounts of money to partnerships promising significant marketing impact and brand visibility.

This all leads to greater risk, however, and the proliferation of media channels demands careful planning around content distribution, rights clearance, and cross-platform integration. Recent high-profile incidents—such as Paris Saint-Germain’s termination of its Pernod Ricard sponsorship within three days of announcement due to regional rivalry sensitivities between Paris and Marseille—underscore the critical importance of careful contracting to mitigate both anticipated and unanticipated risks.

Aligning Cross-Functional Teams

Successful sponsorship deals require close partnership among commercial, branding, marketing, and legal teams to help maximize brand impact while managing contractual complexities.

This extends to defining sponsorship rights that align with brand strategy. If a brand appears on a courtside board during a match, for example, does that include halftime or overtime?

If the brand targets Gen Z consumers, social media rights may outweigh traditional media rights. Asking the right questions helps legal teams better collaborate with commercial, branding, and marketing teams, particularly as bidding processes get more competitive. Such processes demand careful choices about what to negotiate upfront and which risks to accept.

By partnering closely with commercial, branding, and marketing teams on past pain points and future goals, legal teams add commercial value in prioritizing the right issues and crafting appropriate frameworks.

Maximizing Sponsorship Value

Exclusivity protection. Unlike other advertising forms, exclusivity allows a brand to create a unique association with a beloved sports property, fostering positive sentiment among fans. If competitors could claim similar connections, it would dilute sponsorship value.

Sponsor exclusivity is typically limited to product categories, which creates tension between sponsors seeking broader scope for greater protection and rights holders preferring narrower categories to maximize inventory value. For example, separating domestic and international airline categories allows for two separate partnerships that could bolster a rights holder’s revenue compared with granting blanket exclusivity to a single sponsor.

Conversely, an automotive sponsor might seek a broad exclusive category that extends beyond passenger vehicles to electric scooters, ride-sharing, and autonomous vehicles, protecting against shifting consumer preferences or emerging categories and competitors during the sponsorship term.

A sponsor may seek protections outside of its exclusive category. For example, high-value sponsors typically don’t want their key rivals associated with the same event in any capacity even if the rival agrees to limit its event-related promotional activities to products outside the exclusive category. This is because the rival’s mere presence can dilute the association between the high-value sponsor and the event. A mechanism for the sponsor to swap out or add restricted competitors and brands can provide additional coverage over time.

Importance of preeminence. To ensure premium treatment, defining sponsorship tier levels and what each tier receives may be helpful. For example, what does “official [product category] sponsor” mean compared with “presenting sponsor” or “title sponsor”?

Depending on context, the naming itself may be critical to a sponsor’s preeminence. Understanding available tiers and potentially restricting rights holders from introducing (or allowing associated third parties to introduce) new tiers can help protect sponsorship value.

As general protection, sponsors can include most-favored-nation provisions ensuring they receive at least the same treatment as other sponsors in similar or inferior tiers, both substantively (types and extent of existing and new sponsorship rights) and procedurally (enforcement level against third-party infringers and competitor encroachment).

Examples of such protection may include access to performance data such as viewership and social media impressions, allowing sponsors to optimize how they exercise their rights, and advance notice of new sponsorship inventory with the right to exploit such inventory.

Address rights outside of your partner’s control. Many sponsorship rights depend on third parties—broadcasters, stadium owners, or individual teams or players with potentially conflicting sponsorships—beyond the rights holder’s direct control.

Identifying these dependencies upfront and building in mechanisms requiring the rights holder to conduct diligence, disclose existing third-party rights, and actively enforce the sponsor’s exclusivity against external parties can help protect against dilution.

If an important sponsorship right depends on third parties, allocating the risk of third-party dependency to the rights holder upfront through a refund, “make good,” or indemnity can provide additional protection while fostering collaboration to minimize risks.

Brand activation assistance and ambush marketing protection. Sponsorship rights are only as valuable as the sponsor’s ability to activate them effectively. Defining how rights holders will assist with brand activation—such as designated personnel, content creation support, and streamlined approval procedures—can help maximize sponsorship value.

Protection against ambush marketing—which is when non-sponsors create unauthorized associations with the sponsored event to capture marketing value without paying—is just as important. Because rights holders often hold relationships with the event, broadcasters, and venue, requiring rights holders to actively monitor and police ambush marketing, with specific remedies if it fails to protect the sponsor’s exclusivity, can be effective.

Non-disparagement and morals clauses. Reputational harm ranks among the most serious risks in brand sponsorships. Non-disparagement and morals clauses restrict parties from making statements or engaging in conduct that could damage the other’s reputation and can cover the companies themselves as well as their products, brands, and even the broader product category or industry. Beyond prohibitions, these clauses can establish affirmative obligations for coordinated communication and proactive incident management.

It’s important to define triggering events when negotiating these clauses. Will the standard be objective, such as criminal convictions, the filing of a third-party complaint or lawsuit, or government enforcement action? Or will the standard be subjective, such as conduct that a reasonable customer might associate negatively with the brand, regardless of whether the allegations are true? If a social media post by an employee of the rights holder discussing accusations against the sponsor goes viral, it may be too late for damage control even if the accusations prove false.

Establishing clear decision-making and oversight frameworks before crises occur—including protocols for who speaks during controversies, joint statement processes, and crisis communication approvals—can help prevent minor issues from escalating.

Remedies and Recourse

Make goods. When sponsorship rights can’t be delivered to the sponsor because of unforeseen issues, make goods of comparable value can preserve marketing impact and salvage the relationship. Such commercial remedies may be more palatable to rights holders, for whom funding certainty is a key consideration. Defining make goods with specificity regarding nature and replacement commercial value can help avoid disputes.

Financial remedies. Pro rata refunds or fee reductions for undelivered rights are straightforward but often difficult to implement without appropriate ways of calculating refund or reduction amounts. While parties may need to rely on general good-faith discussions, specifying amounts for major sponsorship rights (for example, if title sponsorship naming rights aren’t delivered, that warrants a specified reduction) or maintaining a pre-incident record on associated value can provide clarity.

Structuring payments in installments with some portion scheduled after the event or season can simplify refunds and fee reductions, as the sponsor can reduce future payments rather than clawing back money already transferred. However, sponsorship payments are often key to funding rights-holder operations, which may require upfront payment.

Credits for future seasons or events or additional opportunities can be effective if the relationship remains viable—providing remedies for past failures and incentivizing future collaboration and strengthening the partnership—but they provide little comfort if the sponsored property has permanently lost value or the sponsor seeks to exit entirely.

Other remedies. Sponsors sometimes find non-compensatory remedies to be particularly important. For example, it can be beneficial to the sponsor for the parties to share joint public statements during crises to clarify the sponsor’s position and the rights holder’s support or advocacy with regulators or government officials for exceptions from regulatory or legal requirements. This also can be less burdensome to the rights holder than make goods or financial compensation.

Termination is often a last resort, because both the sponsor and the rights holder heavily invest in making the partnership work. Termination also can severely damage both parties’ reputations and competitiveness in future sponsorship markets. While escalation mechanisms and confidential arbitration can help resolve disputes privately, the public disappearance of brand sponsorship signals a relationship’s end regardless of confidentiality.

Beyond Game Day

Future-proofing is essential, especially for longer-term brand sponsorships spanning multiple seasons or cycles. Rights holders—teams, leagues, or event organizations that control commercial rights to the property—may organize additional events, partner with new media channels, and adopt or adapt to new technologies such as augmented or virtual reality, artificial intelligence-generated content, and nonfungible tokens.

Sponsors can capitalize on emerging opportunities and address dilution risks by building in coverage and governance mechanisms for potential opportunities and changes to sponsored events, including relocations, format modifications, and force majeure events—such as the Covid-19 pandemic. This could include structuring either the automatic expansion of rights for certain material opportunities (for example, with pre-negotiated fee adjustments) or rights of first refusal, first offer, or exclusivity periods to secure first access before rights are offered to competitors.

Sponsors also may negotiate the right to substitute a different brand from the sponsor’s portfolio, providing flexibility to maximize investment value across changing circumstances—shifting to a newly acquired or lesser-known brand that would benefit from sports marketing exposure, or protecting sponsorship value if developments make a particular brand inappropriate for continued association.

Long-term sponsorship value often depends on continuity. Brand association requires years to build in consumers’ minds, and constantly changing sponsors can dilute messaging and the impact of extensive marketing campaigns. Sponsors may seek a right of first refusal—or at least a right of first offer or first negotiation—for a meaningful opportunity to extend the partnership. If the sponsor has leverage and seeks more certainty in an extension, specifying parameters based on current arrangements can provide added security.

For continuity, sponsors may also negotiate post-term use rights (such as archival use, inventory sell-off periods, and historical references) and consider requiring rights holders to acknowledge these rights in subsequent sponsor agreements to avoid exclusivity disputes.

These rights may be particularly relevant in industries where a sponsor’s competitors are known to pursue megabrand exclusive sponsorship deals. These provisions often trigger years in advance of the next sponsored sporting event because marketing teams need preparation time and sports leagues seek funding certainty—so it’s never too early to start planning.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Matthew Goodman is a partner in Sullivan & Cromwell’s mergers and acquisitions group representing clients in domestic and international M&A and private equity transactions, and corporate governance matters.

Rachel Yu is a partner in Sullivan & Cromwell’s general practice group concentrating on transactional work involving complex technology, intellectual property, artificial intelligence, and cybersecurity issues.

Richard Le Page is a partner in Sullivan & Cromwell’s general practice group representing clients in the real estate and sports and entertainment industries on corporate and transactional matters.

Sullivan & Cromwell associates KJ Lim and Sabrina Macklai contributed to this article.

Sullivan & Cromwell represented Anheuser-Busch InBev in connection with its sponsorship of the 2026 FIFA World Cup.

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