Naming-Rights Deal Must Strike Balance for Sponsor, Property
By: Mark S. Biskamp With the cost of new sports facilities, such as Cowboys Stadium topping $1 billion, the price being asked for naming rights is also increasing. A naming-rights agreement involves a delicate balance between a facility owner and a potential sponsor. The facility owner needs to maximize revenue by selling the naming rights while preserving as many rights as possible to sell to other sponsors. The naming-rights sponsor will be paying significant fees and will want as many rights as possible. Naming-rights agreements are also typically lengthy agreements that must account for changing circumstances over time. Understanding key provisions in naming-rights agreements helps in negotiating the most favorable deal. Who Can Sell What Rights? The project documents relating to the development of the sports facility need to be reviewed in order to determine which entity can grant naming rights as well as any limitations on such rights. An entity affiliated with the team that plays at the venue may have been created to lease the facility and be able to grant naming rights but not other rights in relation to the team. As a result, the sponsor may require that other parties join the naming-rights agreement or enter into other licensing arrangements in order to provide the sponsor the full bundle of rights it needs. The sponsor will want to make sure that the project documents actually bind the team to play its home games in the new facility and prevent the team from relocating during the term of the naming-rights agreement. The sponsor may also want covenants requiring compliance with the project documents and preventing modification in a manner adverse to the sponsor’s rights under the agreement. TO READ MORE, CLICK THE PDF ICON BELOW: View as PDF |