When Sponsorship Rights Stop Protecting The Brand

A sponsorship may cover broadcast exposure, category exclusivity and association with the event. Two days before the event, a regulatory restriction makes the sponsor’s product difficult to advertise, while the rights holder continues to expect payment.The sponsor may therefore be paying for rights it can no longer use. The immediate question is whether the contract permits payment to be suspended, alternative rights to be provided or the arrangement to be terminated.

Suppose a regulatory direction restricts advertising for a title sponsor’s financial product category two days before a major televised tournament. The broadcaster refuses to carry the sponsor’s branding, while the rights holder continues to demand the remaining fee. The contract contains no change-in-law suspension provision and its 30-day cure period extends beyond the tournament. Sponsorship agreements should instead address payment milestones, brand protection and the parties’ rights when the promised exposure is