Getting the right sponsor: Howay to Wonga

Sponsorship is big business. Get it right and a sponsorship deal can not only generate significant revenue and increase brand awareness, but also create a unique partnership. Get it wrong and the potential consequences are far-reaching.

The recent news that Wonga, the payday loans company, has agreed to remove its logo from Newcastle United Football Club’s (NUFC) children’s kit illustrates how important it is to get the relationship right in the first place. The four year sponsorship deal worth £24 million attracted controversy from the start with fan groups and debt campaigners calling for the club to drop the firm, which has been criticised for its aggressive lending practices.

The NUFC player, Papiss CissĂ©, initially refused to wear the branded strip, claiming that it was contrary to his religious beliefs, before relenting having been publicly exposed gambling in a casino. Pressure increased when Wonga was fined for offering unaffordable loans to consumers and, earlier this year, forced to pay £2.6 million in compensation after chasing customers who were in arrears with fake legal letters to pressure them into making payment. The sponsorship of NUFC by Wonga raises questions about how appropriate the partnership was; in particular whether it was suitable for NUFC’s junior teams to be associated with.

Before entering into a sponsorship arrangement there are a number of key considerations for each side: 

  • The sponsor will want to ensure that the sports rights holder (eg, club or player) it sponsors is successful, that it has a positive reputation and a, preferably high-profile, public image. 
  • That the type of products or services that the sponsor offers are targeted at the same audience to whom the sports rights holder appeals. 
  • That the sports rights holder’s values are consistent with the sponsor’s own brand and business objectives.

The sports rights holder receiving the sponsorship will be looking primarily at the financial package on offer and any other benefits the sponsor may be offering, eg, free products/services or attendance at events. The sports rights holder will also be looking to raise its own profile and therefore will only want to endorse a sponsor with whom it is happy to be associated and that has sufficient status to promote the individual/organisation.

For a successful sponsorship the parties must have a set of common objectives and a shared strategy. Each party’s brand must complement the other and be aimed at the same target audience and values.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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