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What Is a Sponsorship Contract?

Athletic teams often wear the logo of their sponsor on their uniforms.
Sponsorship contracts often make large music festivals or weekly music series possible.
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  • Written By: Elise Czajkowski
  • Edited By: Susan Barwick
  • Images By: Us Embassy, Moreno Novello
  • Last Modified Date: 19 November 2014
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A sponsorship contract is a legal document in which a person or entity agrees to support another party's events or activities. This sponsorship can refer to direct financial support or the provision of goods or services. Ideally, sponsorships are beneficial for all parties involved.

The amount of money or kinds of services to be provided and the timetable for this support are dealt with in the sponsorship contract. It also sets out how the sponsor will be featured by the party being sponsored. Sometimes, a contract requires that the sponsored party not accept any other sponsors who are direct competitors of the sponsor.

There are many reasons for entering into a sponsorship contract. The person, group, or event being sponsored often needs funds that cannot be raised in another way or requires some money up front. In other cases, they require donated items.

An athlete may enter into a sponsorship contract with a company that produces products used in that sport. A professional golfer may be sponsored by a maker of golf clubs, while a professional snowboarder might by sponsored by makers of winter sports gear. These athletes then use the products of the sponsors, wear logos of the companies, and appear in promotions and commercials on behalf of the producer.

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In other circumstances, an event or series of events may be sponsored. For instance, a concert or concert series may have a sponsorship contract with a beer company that provides necessary funding for the events before tickets can be sold. The company's logo then appears on posters and other advertisements. Often, that company's beer will be the only type of beer available for purchase at the events.

Sometimes, a group has an ongoing sponsorship contract with a provider for general, non-specific needs. Non-profit groups like museums, libraries, and public broadcasting may receive sponsorship to help cover the basic costs of operation. In the case of fundraising and other charity events, goods, such as a sound system, or services, such as catering, may be provided.

The primary benefit of sponsorship for the sponsor is the exposure of their name or brand. In the case of athletes or musicians, the sponsor hopes to associate their company and brand with a certain person, thereby attracting the fans of that person to their product. In the case of sponsorship contracts with non-profits, a sponsor will be publicly recognized for supporting these organizations, casting that sponsor in a benevolent light.

In some cases, a sponsorship contract allows a person or company naming rights to a place or event. Many sports stadiums and arenas have sold naming rights to major companies, as have certain major sporting events and concerts. This allows the sponsor's name to be used every time the venue or event is named, providing further exposure for the brand.

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