Hey Brands! You Hold All The Cards
These uncertain times have enacted a fundamental shift in leverage at the negotiating table between property and corporation
The NFL marches on. 22 NBA teams will resume play in Orlando Florida. The NHL has plans for 24 teams to take the ice in two locations – likely Las Vegas and one other. The MLB remains a mystery. Sports fans rejoice that some of our most treasured entertainment will soon be returning to our television sets and streaming devices.
However, the altered state in which these properties will start and/or resume their 2020 seasons – caused from the COVID-19 global pandemic – means that many corporations will not receive their share of value from the properties that they have made long-term investments with.
We recently posted that teams and leagues need to view their corporate partners as they would their best friends. In this time of need, many businesses are struggling to make ends meet. Publicly traded companies are watching their stocks fluctuate violently, causing a ripple effect in their ability to raise funds otherwise. SMBs have been hit hard as state restrictions curb consumer spending and limit their ability to move product and services. These businesses have a story to tell and while it may not be the original asset line item that they signed on for, professional sport properties have an audience that will listen. They can help tell those stories.
That said, it often comes down to dollars and cents. Any good contract clearly spells out the Win-Win for both sides. “In exchange for X, you receive Y” only works when you value Y at or above what you value X.
In most cases [read: NBA and NHL], teams will not be playing in their home stadiums and arenas, where brands have spent millions to have their logo(s) plastered on the walls. In cases where home field advantage may still be a thing [hello, NFL!] the overwhelming likelihood is that the number of fans admitted will either be limited or nonexistent.
With this new normal there is a make good required of properties for the loss of eyeballs and customer touchpoints they would otherwise receive. While many contracts do include a force majeure clause removing or limiting both parties’ liability for “unforeseeable circumstances”, there still needs to be an honest effort to maintain their partner base for the long-term. Without that, you have no goodwill in your win-win relationship. That is not a partnership, that is being taken advantage of.
If you are a brand and interested in a free contract consultation with our group, we would love to share best practices and market insights we have learned from many conversations with teams, leagues, and properties.