Should a Sponsor Pay for Extended Benefits?

Should a Sponsor Pay for Extended Benefits?You’re a sponsor. You sponsor a team that has just got into the finals/playoffs. The team enacts the contract clause that states you either have to pay additional money to extend your sponsorship benefits through the finals, or they will withdraw benefits (cover your signage, withdraw ticket and hospitality privileges, etc) until after the season.

This is fair, right? I mean, you did sign a contract with those provisions, so it’s not like they sprung this on you.

But what if you’ve stuck with that team through eight dismal seasons in a row, falling fan numbers, television coverage down the gurgler, and half-empty corporate boxes because your customers aren’t that interested in seeing the team lose again. What if the team finally has a great season and makes it into the finals? How would you feel if that team finally, FINALLY turned around, and then asked for extra cash to extend the sponsorship?

Yeah, I wouldn’t be impressed, either.

Advice to rightsholders

To rightsholders reading this, just because you can enact a clause to extract more cash from a sponsor doesn’t mean you always should. Sometimes, the right thing to do is to recognise the loyalty of your longest-term sponsors. Sometimes, the right thing to do is show your appreciation to sponsors who have continued to believe in the value of the team, even when the team wasn’t delivering. Sometimes, the right thing to do is to extend those benefits to sponsors who have weathered a scandal and stayed with you. Sometimes, the right thing to do is extend those benefits to sponsors that you know haven’t been serviced well (along with a commitment to do better).

Advice to sponsors

For sponsors, if you believe a partner is gouging you for extended benefits that you believe you’ve earned (or there are signs they might gouge you), there are a few strategies that can restore some equity.

  • If you’re on renewal with a partner where you have lived through poor performance or scandal, you should try to negotiate a withdrawal of that clause for the next contract. Your position should be that you’ve supported them when a lot of other sponsors would have bailed, and you expect some recognition for that.
  • If you’re mid-contract, and asked to pay for extended benefits, you should make your position crystal clear. The marketing platform in which you initially invested has not lived up to its billing, and even though that platform has been extended now, the value to you is still sitting clearly in the negative. Tell them that your expectation is that they will extend those benefits to you at no charge.
  • Contact some of the other sponsors that are in the same boat, and arrange a meeting with all of them and senior management of the partner. If they realise it’s not just one sponsor having a whinge, but a number of sponsors who are rightly aggrieved, they may pull their heads in.
  • If the partner digs in, make it very clear that this will heavily colour your decision at renewal time, that you have a lot of options in where to invest that money, and you’re not going to re-sign with a partner that takes you for granted. If need be, and the sponsorship is sizeable enough, this message could come from a senior executive. I would also let the other key sponsors know that you’ve taken that position, as that may urge them to be more vocal, as well.

I am not advocating that sponsors turn into hyper-demanding sponzillas, but you shouldn’t be taken for granted, either. There really are a lot of options, and most of them won’t treat you like that.

Need more assistance?

You may also be interested in my white papers,  “Last Generation Sponsorship Redux” and “Disruptive Sponsorship: Like Disruptive Marketing, Only Better“. Want to build your sponsorship skills and strategies fast? I’ve got comprehensive online sponsorship training for both sponsors and rightsholders. Get the details and links to course outlines and reviews here.

Rightsholders, for all you need to know about sponsorship sales and servicing, you may want to get a copy of The Sponsorship Seeker’s Toolkit 4th Edition.

If you need professional assistance with sponsorship, I offer sponsorship consulting and strategy sessions, sponsorship training, and sponsorship coaching. I also offer a comprehensive Sponsorship Systems Design service for large, diverse, and/or decentralised organisations.

Please feel free to drop me a line to discuss.

© Kim Skildum-Reid. All rights reserved. To enquire about republishing or distribution, please see the blog and white paper reprints page.

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