By acquiring intellectual property (IP) rights and then using them strategically, sports organizations and other rights owners can protect and increase their income-generating potential. Holders of IP rights, such as patents, trademarks and copyright, can license these rights to others in return for payment. Licenses grant rights without transferring ownership of the intellectual property – for example, for use of technology, for publishing and entertainment purposes, or for merchandising and use of trademarks.
A trademark license underpins all merchandising programmes. It defines the relationship between the owner of a trademark (licensor) and the producer of the goods or services to which the mark is to be affixed (the licensee). While licensors are not involved in the manufacturing of the products, for their reputation’s sake they must ensure that licensees maintain the quality of the product bearing their trademark.
Similarly, a technology license may be a useful option for companies involved in the development of sports-related equipment. Companies rely more and more on improved technology to obtain a competitive advantage. Technology licenses can be used both to “license in” technologies developed by other companies or to earn additional income by “licensing out” home-grown technologies. Licensing and merchandising within the sports industry provide rights holders with enormous strategic, marketing and earning potential.
Licensing and merchandising:
- allow fans to indulge their passion for a sporting event
- enable fans to support the event
- offer fans authentic official licensed products
(Photo: Kallerna, 2010)
Companies seeking to promote their brand, build their reputation and develop deeper customer relationships often team up with a sporting organization or associate themselves closely with a sporting event. This offers them massive exposure as the millions of fans and viewers who tune into sports events across the globe see the brands in question many hundreds of times.
Flagship sporting events, such as the Olympic Games, which capture the imagination, stir the emotions and inflame the passions of fans across the globe, are extremely effective international corporate marketing platforms from which a company can create awareness, enhance its image and foster goodwill. For example:
FIFA World Cup™
FIFA’s approach to sponsorship offers its partners a multitude of ways to promote themselves and their products in conjunction with the FIFA World Cup™ and other FIFA events. The marketing rights are broad enough to include everything from grassroots initiatives to the names of the logos on signs captured on television during matches.
A three-tier sponsorship structure has FIFA Partners in the first tier, FIFA World Cup Sponsors in the second tier and National Supporters in the third tier for each FIFA event. The six FIFA Partners have the highest level of association with FIFA and all FIFA events, as well as playing a wider role in the development of football around the world.
FIFA World Cup Sponsors have rights to the FIFA Confederations Cup and the FIFA World Cup™ on a global basis. The main rights for a sponsor in this tier are brand association, the use of selected marketing assets and media exposure, as well as ticketing and hospitality offers for the events. Meanwhile, the National Supporter level allows companies with roots in the host country of each FIFA event to promote an association in the domestic market.
At each level of sponsorship, companies benefit from a range of exclusive and customized marketing opportunities to associate their brand with that of the FIFA World Cup™, both at and around the event. Moreover, FIFA offers wide product category exclusivity that allows each brand to distinguish itself from competing brands in its product category. Companies are able to use their marketing rights – in line with each company’s individual marketing strategy – to deliver a clear brand image to the public.
To make sure that sponsorship rights, and the event itself, are not undermined, FIFA and other organizers of sports events put in place a wide range of measures to combat what is known as “ambush marketing”. This can take a variety of forms, such as the unauthorized use of trademarks and logos, or publicity stunts designed to be captured by live sports broadcasts.
Also known as parasitic or guerrilla marketing, ambush marketing describes a business’ attempts to attach itself to a major sports event without paying sponsorship fees. As a result, the business gains the benefits of being associated with the goodwill and public excitement around the event for free. This damages the investment of genuine sponsors, and risks the organiser’s ability to fund the event.