Keep in mind that we do live in a very “sue happy” climate throughout this country these days. Even the smallest problem can often turn into a day in court.
Courts all over the Country have recognized that sports are a huge advertising platform for brands, products and services. Those courts have also been consistent in saying that if sponsors cannot limit their liability exposure to suits for injuries then they simply will not continue to sponsor events, arenas, tracks& teams.
The cases involving whether a sponsor is liable by putting their name or brand on a potential sponsorship, facility , or event have looked very closely at the degree of control that the sponsor has. These Courts have looked at how active or passive a sponsor is in the teams, the facilities, or the events management and operation. The greater the degree of control, the more likely the sponsor will be held liable. In cases where Courts have held the sponsor liable the Courts have essentially stated that there was a “partnership”, and “partners” are liable for the others partners mistakes in many instances. (Rationale like this from various Courts may deem the term “marketing partner” to not be used any longer when referring to a sponsor). In this regard THE SPONSOR could be found to be in partnership with THE TEAM if an injured party were to file suit. I trust that major companies have significantly high insurance coverage, but what about a local ballpark team who has a local business as their sponsor? Neither may have substantial insurance coverage, if any insurance at all.
Ownership in a team (even partial ownership) is another area the Courts look to decide if a sponsor can be held liable for the injuries caused by a tea. Some potential sponsors have partial or full ownership in their teams, and that single factor could be used to determine liability in the case of injuries. With bigger sponsorships (money), we seem to be seeing more and more sponsors becoming partners in their teams wanting to have more control how their brand is marketed and how the money is being spent.
If the sponsor has naming rights, contributes funds for the operation, uses its colors and brands, but does not have any input in the decision making for the team or the event operations and management, it is less likely for a Court to hold them liable. In that instance they are a “pure sponsor”. However, as the sponsor makes decisions about management, personnel, and team functions on an operational level, the more likely they are to be held liable. It’s yet to be seen if something such as a sponsor making a decision on what player the team hires is enough of an operational decision to make a sponsor liable. To date, no cases have been decided on that issue.
The degree of control the sponsor has over the team or the event may be the determining factor as to whether they are a “pure sponsor” and not liable, or whether they have become a “partner” or “joint venturer” and therefore liable. The greater the degree of control the sponsor has, the more likely they could be held liable in the case of injuries.
There is no way to know if or when a sponsor is liable; there are too many fact scenarios and too many nuances in each State’s laws to know for sure. There are ways you can protect your sponsor to make it less likely they can be held liable, and you should be frank and candid if asked that question. Here are a few ways to minimize losing the sponsor prospect who may be worried about their liability:
1) Provide for liability issues in your sponsorship agreement outlining that the sponsor has no ownership, control or say in the management, planning, or operation of the team or event.
2) Provide a liability insurance “Rider” that protects the sponsor from suits in case an injury occurs from the team or event. A “Rider” “Excess” or “Umbrella Policy” can usually be added to insurance coverage for a small additional premium.
3) Consult with and receive an opinion letter from your attorney who has researched sponsorship liability in your State(s). This may involve several state’s law research if you are a team in a multi state traveling series, or a promoter who holds events in different states;
4) Know the basic legal principles of the State(s) you are playing events in so that you can discuss these issues with a sponsorship prospect without sounding evasive. ( You don’t have to have law school training, but you should have a basic understanding of the legal concepts ; its part of your background search and due diligence necessary when seeking sponsorship).
5) Have releases that have been provided by the softball park, promoter, or your insurance company on hand so a copy can be provided to the sponsor when the question arises. (This will show the sponsor prospect that you are professional and businesslike)
6) Take the necessary steps to make sure the sponsor does not exercise that degree of control over the team or event necessary to make them a “partner” or “joint venture”. In short, keep them out of management and operational decisions.
7) Run a professional organization with knowledgeable and properly trained employees and staff. The more professionally run your organization is, the less likely a mistake that causes someone an injury is to occur.
This is a little something I found and used in the past.
