When COVID-19 hit, every aspect of the sports industry was impacted. With in-person events and games canceled, brand sponsors were left asking, “Where’s the value?” In this article, Advanced Media & Technology partner Seth Rose reflects on how the pandemic impacted sponsors in the sports industry and how Loeb is helping clients respond.
Seth represents many of the country’s most recognizable brands as well as advertising and digital agencies in all aspects of advertising, marketing and media. He works with Fortune 500 companies in a wide variety of industries, including sports and entertainment, technology, telecommunications, automotive, apparel, and quick-service restaurants, providing strategic counsel and transactional advice to help his clients implement brand and marketing campaigns and initiatives.
How has COVID-19 impacted this field? How are you helping clients respond to COVID-related issues?
During the first few months after COVID-19 first appeared, everyone was focused on force majeure clauses. We had countless clients reaching out to us and saying, “We are supposed to be sponsoring this sports team/league/event. What can we do now that everything has been shut down?” We spent a lot of time focusing on the specific contracts to see what the remedies were under those deals to ensure that our clients could get as much value as they signed up to get, in light of the pandemic and canceled events.
Prior to COVID, force majeure was typically considered boilerplate language that was often ignored or glossed over. In deals Loeb had negotiated, we had built-in provisions about unavailable benefits that would provide a “make-good” in the event that the sponsor could not get something promised in the contract. As a general rule, that would apply to force majeure events as well. But not every deal we worked on during COVID was a Loeb-negotiated deal, and we had to get creative with clients, often leaning on their partnerships with the property or organization they were sponsoring to come up with something equitable so that the client could feel like the sponsorship wasn’t a total loss. It could range from getting a make-good (some sort of online or virtual type of asset), to shifting or suspending payments, to completely “pausing” the deal, to extending the term.
For example, with one deal I worked on that had started before COVID, we pivoted and spent months solely negotiating COVID-related provisions because the deal was reliant on a lot of in-person experiences and activations. When a brand pays millions of dollars for a number of rights in a venue, but no one can come to the venue due to restrictions, the obvious question arises as to what the sponsor is getting out of that expenditure. So we explored reducing the payments as well as developing a creative formula/solution involving extending the sponsorship and looking to increased value as the country moves back to normal. It took a lot of time and compromise to get both sides to a comfortable place.
What does a sponsorships and brand integrations practice look like in a post-pandemic world?
Clients are much more focused on the “what ifs” than they used to be. Now a lot of attention is paid to questions like, what if this event gets canceled or is otherwise materially modified? What if a sports season gets adjusted? What if fan capacity in a stadium stays at or is moved to a reduced level? These types of considerations that were givens before COVID are no longer guaranteed. Clients are very focused on how they can get full value out of the deal if something goes wrong. So it is very important to be sure the client has a variety of remedies for situations that create a loss of value.
Additionally, sponsors are looking to enhance digital rights, activations and experiences. There had already been a big shift to digital, but post-pandemic, clients are finding a lot more value in this space. For example, I’ve seen brands push for certain virtual experiences and/or social media or mobile application integrations that can be leveraged to go along with standard broadcast and in-venue sponsorship rights.
Aside from the impacts of COVID-19, what are the major trends you’re watching?
We are starting to see clients pay more attention to purpose-driven marketing and tie-ins with brands. It’s interesting that during the pandemic, while we were dealing with a myriad of COVID-related issues, there were also many social justice and other types of causes that were becoming more prevalent at the same time. Some clients are now wanting to include those types of things as part of their deals.
We’re also seeing more contactless experiences being leveraged. For example, we’ve seen sports teams create completely touch-free experiences by ditching physical tickets, bag checks, and cash payments for concessions. Technology is becoming deeply embedded into the in-person fan experience. We’re also starting to see companies focus on developing mobile applications to enable integration and interaction between the fan and the sports team or the property, even if the person is not physically present at the game or event.
There has been a continued shift in focus to digital and social media as well. With social media platforms continuing to explode onto the scene, brands are seeking to develop sponsorship opportunities and branded integrations across these platforms.
What makes Loeb a leader in this space?
We represent all different sides and players in this field, including sports teams, physical properties, and numerous brands that are very active in the worldwide sponsorship space. That exposure enables us to understand the legal issues and help cut through the clutter to get a deal that makes sense for everyone, protects our clients, and is realistic for the marketplace. Our understanding of the industry from a 360-degree view, not just the one side we are advocating for, really sets Loeb apart from our peers in this space.
In the social media arena, we represent a number of platforms, so we are very familiar with what can be and has been done with them, and what works and what doesn’t work in this space.
What makes your practice unique and different?
The breadth of the types of deals I’ve done in the sponsorship space throughout my career sets me apart from the majority of those who are in this field. My colleagues and I work with some of the top names and most active companies in the sponsorship space, and our experience negotiating deals with major sports teams and leagues is virtually unrivaled. I have worked on hundreds of sponsorships of all sizes and shapes with every major U.S. sports league and dozens of teams within those leagues.
I take pride in possessing a deep understanding of my clients’ businesses and am committed to finding solutions to achieve their goals while minimizing risk. Coupling this with my sponsorship experience and deep knowledge of the advertising, marketing and media industries, as well as intellectual property, social media and technology, I am able to bring a unique perspective to my work.