Sports sponsorship: a $97 billion industry powered by trade marks

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It’s a bold statement, but according to Statista, the global sports sponsorship market was estimated to be worth over US$97 billion in 2022 and is expected to grow substantially over the next five years. Sponsoring sports events provides companies with an opportunity to market their brands and products to millions of consumers around the world, including territories in which they may not be actively focusing their existing marketing efforts.

But why claim that trade marks and sport’s sponsorship have a symbiotic relationship? Because each and every one of those brands has a robust and extensive trade mark protection strategy in place.

There are several different types of sports sponsorship, including:

  1. Individual sponsorships – This is where an individual may, for example, appear in adverts for a sponsor or may use equipment produced by the sponsor. One of the most well-known individual sponsorships is the partnership between the basketball player Michael Jordan and Nike, which led to the creation of the iconic Air Jordan trainers.
  2. Team sponsorships – Many sports teams have a title sponsor, which will be a key partner and will often feature prominently on the team’s kit or equipment. For example, Arsenal FC’s title sponsor is the airline Emirates. Emirates feature on the front of Arsenal’s kit and the company also holds the naming rights for Arsenal’s stadium.
  3. Event sponsorships – Sports tournaments will often have a number of sponsors, which help the events generate revenue in exchange for international exposure. For example, the Wimbledon Tennis Championships has a number of official partners including Slazenger (official ball provider), Ralph Lauren (official outfitter) and Evian (official water).

These sponsorship deals are reliant on suitably protected trade mark rights as the party being sponsored will want confirmation that the relevant trade mark protection is in place, to ensure that they do not become liable for trade mark infringement in the event any issues arise. They will also want confirmation that the sponsor is the owner of the trade marks and has the necessary authority to grant the party being sponsored the right to use the trade marks.

Therefore, it is important for businesses to ensure that they have the appropriate registered trade mark protection in place when entering into sponsorship agreements as well as, of course, ensuring that they consider other aspects such as the extent, duration and cost of the sponsorship. For example, the parties will need to consider where the sponsor’s brand will be used, who will be responsible for any enforcement action, and whether the sponsor can continue to use the trade marks after the sponsorship agreement is concluded, among other factors.

One sport in which sponsorships are particularly relevant is Formula 1 (F1), which enjoys an estimated global audience of 445 million viewers. However, funding a successful F1 team is eye-wateringly expensive, so teams rely heavily on sponsorships for a substantial part of their annual budget. While most people watch F1 due to an interest in the sport or in the technical aspects of the cars, the money generated as a result of sponsorships, advertising and branding in F1 has been a major factor in enabling global reach.

Most of the teams have a title sponsor, which accounts for the majority of the branding on the cars, with other partners often being granted space for their logos on other key areas of the car such as the rear wing or the nose.

In addition to financial benefits to the F1 teams, competing in F1 can also reap significant rewards for the owners of each team. For example, it has been reported that the Mercedes’ F1 team brings Mercedes-Benz, the luxury vehicle company, about US$3 billion in terms of marketing exposure and benefit; and the Mercedes-Benz brand has almost doubled in value from US$32 billion in 2013 to US$56 billion in 2022. Similarly, the energy drink company Red Bull has invested around US$2.3 billion into competing in F1 through Red Bull Racing, which creates US$300 million in annual brand exposure. This has generated over US$5 billion in brand exposure since the drinks company entered the sport in 2005.

It is evident that F1, as a sport, puts a strong emphasis on trade mark protection, with the Formula One Group’s licensing company holding over 80 active trade mark registrations in the UK alone. This policy of focusing on trade mark protection has clearly been effective, as F1 is reaping the financial benefits from merchandising and licensing deals. It also attracts sponsorships from some of the largest companies in the world who, in addition to achieving exposure for their brands, will want to be associated with F1 due to the emphasis placed on brands and brand protection.

It is important for businesses that engage in sponsorship activities to ensure that their trade mark registrations provide them with protection in relation to these activities, by covering the relevant classes when filing for their trade marks. For example, services for the provision of financial sponsorship are covered by Class 36 of the Nice Classification.

Barker Brettell has a dedicated automotive sector group that is passionate about helping achieve the right trade mark protection for your brand. If you would like to continue the conversation, please contact the author, or your usual Barker Brettell trade mark attorney.

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