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Not just a logo on a t-shirt - sponsoring esports

Esports sponsorship agreements have all the hallmarks of traditional sports business deals. Rights holders – whether players, teams, tournament organisers or games publishers – and sponsors face the same key issues as their offline equivalents: exclusivity, territory, limiting liability and payment.

But intellectual property (IP) rights in esports pose uniquely complex challenges. The global scope and interplay of various creators means that esports sponsorship agreements are on another level when it comes to IP warranties and indemnities, along with approval processes for IP use.

Why sponsor esports?

Despite the high prize money, entry prices for sponsors in esports can still be relatively low. This means esports sponsorship agreements appeal to a wide range of companies – from established brands to newcomers who, like the young gamers they look to sponsor, are just starting their professional gaming adventures. Like classic sports such as football or basketball, esports attracts companies across all industries, from manufacturers of hardware and games to lifestyle and automotive companies.

Esports offers an array of sponsorship options to companies keen to gain exposure to an ever-growing number of (especially young) esports fans. Advertising in esports goes far beyond placing a logo on a gamer’s t-shirt. It offers sponsors a significantly higher degree of individualisation than they could ever achieve in regular sports. Depending on the financial power of the sponsor, they might choose to either sponsor gamers, their teams (or both) – or put their name to an entire championship.

Sponsoring options for young and established brands

Young gamers are continuously looking for sponsors, driven by the high costs of competing at the highest levels. Building a League of Legends team, for example, requires a long-term commitment of around EUR 50,000 a quarter. Individual players who have only recently entered the esports market can still establish themselves as leading players, which is why sponsoring gamers, teams or both is especially attractive for young companies that do not have the financial power to fund an entire league. Just as company names in football have become part of the club name, esports teams carry names such as Samsung Galaxy or SK Telecom T1.

Esports sponsorship is on the rise. In January 2017, Audi Denmark and the Danish CS:GO Team Astralis announced a sponsorship agreement that saw Audi invest around EUR 670,000 in the project. The Astralis jerseys were equipped with an Audi logo, Audi banners and pop-up advertising featured on the Astralis website, and a social media campaign was launched. The sponsorship income of esports teams is not yet in the same league as football clubs, but the trend is clear and fast.

Companies with the means to make a bigger bang may choose to fund an entire championship or league. Pringles made headlines with its sponsorship of the 2017 ESL Championship, which included the distribution of personalised esports team boxes to the 20,000 spectators at ESL One Hamburg.

IP and trademark deals – what to look out for

As a rights holder, having the right trademark registrations in place in the applicable territory is key. Because esports is a global game, sponsors should take care to ensure their protection is sufficiently robust in the main territories before entering the deal. 

A sponsor may want to own all the IP rights associated with the content created during the sponsorship. This is particularly evident in streamer sponsorship agreements, where sponsors will want to own the content in which its IP or product is being used so that it can potentially use the video for promotional purposes later. But this is far from straightforward. Publishers own the underlying IP in their games. The licensing arrangements under which tournament organisers, teams and players are permitted to use games, and the position as to who owns copyright in broadcast material (among other things), varies significantly from case to case. In streamer sponsorship deals, this equates to essentially owning the content of someone’s stream for the duration of the sponsorship agreement. Sponsees should be aware that granting this type of control to a sponsor would be problematic because it would effectively eliminate many of the rights the streamer had in the content of their stream, and their potential monetisation of the stream.

Rising to the challenge

Winning at esports sponsorship is a multi-layered challenge – for rights holders, sponsors, players, teams, tournaments and service providers. In a rising market the incentives to produce innovative solutions are clear.


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Authors

Picture of Saskia Leopold
Saskia Leopold
Attorney-at-Law
Vienna