“I was outraged!” “It beggars belief!” “It’s ridiculous!”1 These are just a few of the comments heard in connection with a controversial clause in Neymar’s contract with the Saudi Arabia-based Al Hilal soccer club, which he signed in August 2023. It provided for a payment of approximately $500,000 for each Instagram post promoting Saudi Arabia... In stark contrast, other observers applauded this initiative, viewing Neymar as the harbinger of an era in which sports talent would finally be valued for its true worth. Even before he’d laced up his cleats for his new team, Neymar was already shining a warm spotlight on the Saudi kingdom. At a press conference on September 7, 2023, the Brazilian forward cheekily likened France’s League 1, in which he used to play (it is ranked the fifth-best soccer league in the world) to Saudi Arabia’s (ranked 36th): “Considering all the big names in this League, this championship may well be better than League 1.”2 Needless to say, his comment sparked a tidal wave of reactions. For comparison purposes, Major League Soccer (MLS), CF Montreal’s home league, is ranked #29 in the world. Thriving on competition, passion and adrenalin, the sports world is fertile ground for sponsorship agreements. These arrangements serve as strategic alliances that capture the essence of contemporary sports and transcend the limits of the games involved. In our last two articles, we took a look at issues surrounding the naming of sports teams, followed by agreements governing the naming of stadiums and arenas. This time around, we will delve into the topic of sponsorship agreements. In addition to defining what they are, we will focus on how these agreements are used and structured, including their objectives and associated risks. WHAT ARE SPONSORSHIP AGREEMENTS? Sponsorship agreements, also known as sponsorship deals, are commercial agreements entered into by a beneficiary (an organization, individual or event) and a sponsor (a company or brand). As a general rule, these agreements provide financial compensation, goods and/or services in return for visibility, promotional impact or the sponsor’s association with the beneficiary. To be sure, such deals are not exclusive to the sports world. However, sports have definitely played a key role in how these agreements have evolved, transforming them into tools at the forefront of commercial progress. In this article, we will focus on how these agreements are used in the sports world. THE POWER OF SPONSORSHIP AGREEMENTS In essence, sponsorship agreements enable a sponsor to benefit from the exposure, fame and/or positive image associated with an athlete. At the same time, they may allow athletes to boost their own visibility and develop their own brands in partnership with the sponsor. The film Air, initially released in cinemas in 2023 and now exclusively available on the Prime Video streaming platform, depicts the dynamic of sponsorship agreements. It retraces the origins of the emblematic partnership between Nike and basketball legend Michael Jordan, which ended up redefining how athletes approach business partnerships. The Nike partnership gave rise to Air Jordan, the world-famous line of basketball shoes, marking an initial milestone in the history of sponsorship deals. In April 1985, the first series of Air Jordans came onto the market (see Figure 2); Nike was aiming for $3 million in sales over an initial three-year period. However, by the end of the first year alone, sales topped an impressive $126 million. In 2022, it was reported that Michael Jordan had earned between $150 million and $256 million just from his contract with Nike. KEY OBJECTIVES OF SPONSORSHIP AGREEMENTS FOR ATHLETES Main objective: financial gain Quite often, the main objective is financial gain. In addition to Michael Jordan, other star athletes have signed agreements with Nike. LeBron James’ and Cristiano Ronaldo’ own deals with Nike are reportedly valued at US$1 billion. Meanwhile, Argentina’s Lionel Messi, the eight-time Ballon d’Or winner, entered into a similar agreement with the brand Adidas. The case of Michael Jordan, however, is unique insofar as a family of strong and distinctive brands was developed, including Air Jordan and various logos representing Michael Jordan playing basketball. This brand family is owned by Nike, although it is inherently linked to the athlete reaping its benefits. In Quebec, tennis player Félix Auger-Aliassime, a victim of his recent success, signed agreements with Dior and Renault in early 2023 as these companies added their names to his existing list of sponsors, which included Adidas. The compensation paid by these brands has not been disclosed, but Félix is now displaying the Renault logo on his T-shirts—even more prominently than the brand of the T-shirt itself.   Objective: enhanced reputation and greater credibility Reputation and credibility are vitally important in the sports world. Teaming up with a reputable sponsor can boost an athlete’s credibility in the eyes of fans, the media, potential partners and other teams. As with naming rights agreements, upholding the same values and selecting the right sponsor are the key to these agreements. Consider Félix Auger-Aliassime’s remarks after signing his deal with Renault: “I’m proud to be associated with Renault because we share the same ambitions and values […].”3 Chelsea FC, which competes in England’s Premier League, kicked off its 2023-204 season without its main sponsor. In addition, there was no corporate logo displayed on the front of the players’ jerseys, even though that has become the norm in the soccer world. In fact, Chelsea had signed an agreement with Stake.com, an online casino that describes itself as a pioneer in the area of crypto sports betting. As soon as the deal was announced, fans made their displeasure known: Chelsea Supporters’ Trust, which serves as the voice of the team’s fans, declared: “We understand CFC’s desire to maximise revenue streams across the whole club. Whilst we accept that will happen, it must not take place at the expense of the club’s values.”4 Chelsea thus terminated the agreement but appears to have found a new partner, the US-based technology company Infinite Athlete. That deal is valued at around $66 million per year. Objective: an equitable relationship between the parties (student athletes) For some athletes, sponsorship agreements are also a way to establish an equitable relationship between all parties, ensuring that they do not lose out on any benefits derived from their name, image or likeness. This is certainly the case for student athletes competing in the American university system, particularly the National Collegiate Athletic Association (NCAA). In June 2021, the US Supreme Court ruled that the NCAA was not legally authorized to limit payments related to students’ education. This gave rise to what are known as “NIL deals”(name, image, and likeness). Student athletes are now entitled to enter into sponsorship agreements covering their name, image and likeness (the latter term refers to any representations of the athlete, whether in videogames, cartoons, etc.). The champion of NIL deals is undoubtedly Olivia Dunne, a gymnast at Louisiana State University. She is one of the first student athletes to become a millionaire thanks to these deals; she is certainly the best known (Figure 6). Her arrangements with brands such as American Eagle, Forever 21 and Vuori have generated more than $4.7 million. She ranks third in earnings in the list of athletes with NIL deals, just behind quarterback Arch Manning at $5.1 million (nephew of former football players Peyton and Eli Manning) and basketball player Bronny James at $9.7 million (son of LeBron James). Will we ever see NIL deals for student athletes in Quebec? KEY OBJECTIVES FOR SPONSORS As far as sponsors are concerned, their objectives are usually quite similar. They hope to obtain greater visibility and promotion by linking their brand, products or services to a famous professional athlete. This may entail significant media exposure while targeting a specific segment of the public. This was what lululemon had in mind when it partnered with Connor Bedard, the most recent #1 draft choice in the National Hockey League (NHL). The company, which started out selling yoga wear, is now reaching out to hockey fans in a bid to strengthen its reputation as a top-of-the-line sports apparel retailer. In the run-up to the NHL draft, the name of Connor Bedard—a once-in-a-generation talent—was on everyone’s lips. His endorsement deal with lululemon was announced a few days before the draft, thanks in part to a video in which he said: “If I make this shot, I’ll join lululemon as their newest ambassador.” He then executed a perfect shot, adding a dramatic note to the announcement (Video 1). Video 1: Announcement marking the sponsorship agreement between lululemon and Connor Bedard. Following the partnership announcement, Connor Bedard said: “Being from Vancouver, I’ve been a fan of lululemon for as long as I can remember. The gear is so comfortable, stylish, and great for training.”5 Since the company was founded in Vancouver, it is understandable that this partnership is seeking to capitalize on a shared sense of belonging. Obviously, sponsors are also seeking to boost their sales or profitability via increased exposure and visibility derived from a sponsorship deal. Gaining access to a specific target audience heavily engaged in the athlete’s chosen sport can be a major selling point. HOW SPONSORSHIP AGREEMENTS ARE STRUCTURED As regards structure, sponsorship agreements differ in terms of the breadth and scope of the visibility being sought. Structure of local sponsorship agreements Local sponsorship agreements are entered into when: A local company decides to fund an athlete or a sports event. A company sponsors a local athlete or a local sports organization. A local sponsorship agreement does not necessarily mean a smaller-scale deal. RBC’s and Air Canada’s sponsorship arrangements, under which their respective logos are featured on Montreal Canadiens jerseys, are examples of local agreements. Structure of national or international sponsorship agreements Seeking much more extensive visibility, national or international sponsorship agreements are typically larger-scale initiatives. More sophisticated and with farther-reaching ramifications, these types of agreements must also take into account issues spanning multiple jurisdictions. Compensation structure In certain major agreements, the athlete’s financial compensation structure may vary widely. Fixed and pre-determined compensation is typically the norm. Understandably, agreements in which a trademark linked to an athlete is used for a specific product line may include royalties or tiers (thresholds) associated with the products’ commercial performance. Duration impacts the structure of sponsorship agreements Sponsorship agreements also vary in terms of their duration. A company may decide to sponsor an athlete for a lengthy period or for a one-time event or competition. On September 13 2023, the new Professional Women’s Hockey League (PWHL) announced its very first sponsor: Canadian Tire Corporation (CTC). Strictly speaking, this is an international agreement because the PWHL operates in both Canada and the US. At the time, Sarah Nurse, a forward with PWHL Toronto, said: “Through numerous conversations with their key leaders, it has always been clear that [CTC was] committed to supporting a women’s hockey league. It is no surprise that CTC is an inaugural partner now that we have launched the PWHL. With our shared values and vision, I know that CTC will continue to put women’s hockey at the forefront”6. RISKS OF SPONSORSHIP AGREEMENTS: WHAT YOU NEED TO KNOW There are also a number of risks associated with signing a sponsorship agreement. Professional athletes are continually being placed under a microscope. Everything they do has a potential impact on their sponsors. Morality clause Consider the case of golfer Tiger Woods, who was embroiled in a personal scandal back in 2010 that left his reputation in tatters. Seeking to avoid being associated with this loss of reputation, various companies and organizations terminated their deals with him (Table 1). Table 1: List of sponsors that terminated or continued their involvement with Tiger Woods in the wake of his scandal. Today, Nike and Upper Deck are still associated with Tiger Woods, along with 10 new sponsors. To enable the parties to terminate agreements easily and at no charge should any situations akin to that of Tiger Woods arise, sponsorship agreements typically include a morality clause (also known as a “morals clause”). Morality clauses impose “good conduct” obligations on athletes and stipulate that if they engage in any actions that could tarnish or harm their own reputation or that of their sponsor, the sponsor has the right to suspend or unilaterally terminate the agreement. It was thanks to this clause that Gatorade and Gillette, to take only two examples, ended their agreements with Tiger Woods. The first morality clause in the sports world was included in the employment contract of Babe Ruth, the renowned baseball player with the New York Yankees in the 1920s. Reciprocal clause One might think that certain athletes would prefer to have a reciprocal clause in place enabling them to cut ties with any sponsor whose reputation is marred by scandal (inhumane work conditions, pollution, financial wrongdoing, etc.). Although less frequent, these clauses could still prove useful, especially now that society is calling on the corporate world to conduct itself more ethically. On the credit side of the ledger, an athlete who stands out positively off the playing field may end up attracting new sponsors. On September 24, 2023, the pop singer Taylor Swift was spotted at a Kansas City Chiefs game, cheering on tight end Travis Kelce (Figure 9). Given Taylor Swift’s unprecedented levels of public adulation, Travis Kelce saw his social networks explode with 500,000 more followers; sales of his jerseys soared by 400% in less than a week. Sponsors are well known for appreciating the value of athletes associated with another celebrity, e.g. Tom Brady and Gisele Bündchen, or David and Victoria Beckham. Kelce, who is already pocketing $3 million annually from his sponsorships, now has the door wide open for some shiny new deals. Conclusion All in all, sponsorship agreements play a pivotal role in the sports world. Above and beyond the financial benefits they generate, they reflect the values and identity of the partners involved. Transcending transactional considerations, these deals have turned into alliances that stimulate growth, emotional engagement and long-term viability. They embody shared passions for sports and an ongoing quest for excellence. As the sports world evolves and new opportunities emerge, we should continue to question how these agreements align with our collective values. In the future, these partnerships will not just be a critical component of commercial strategies; they will also be statements of principle. And they will continue to shape how sports are lived, perceived and experienced. Chronique de Ray Lalonde, August 16, 2023 Link. Ouest-France, Neymar: “Peut-être que le championnat d’Arabie saoudite est meilleur que la Ligue 1”, September 8, 2023 Link. QMI Agency, Nouvelle alliance entre Félix Auger-Aliassime et Renault, TVA Sports, January 25, 2023 Link. Ryan Dabbs, Why don't Chelsea have a sponsor for their new kit?, FourFourTwo, July 19, 2023 Link. Matt Carlson, Conor Bedard signs… with lululemon, The Hockey News, June 28, 2023 Link. News release, Professional Women’s Hockey League, Canadian Tire Corporation joins the PWHL with a landmark multi-year agreement, September 13, 2023 Link.

Two Montréal landmarks have proudly hosted some of the city’s most memorable sporting events. The Olympic Stadium (Figure 1) and the IGA Stadium, which have been and remain quintessential in our sporting history, are in need of renovations so that sports fans can continue to “raise the roof” for years to come. Figure 1: The Olympic Stadium: A prominent feature of the Montréal skyline. These stadiums may be iconic, but the issues with their roofing systems—or lack thereof—have plagued the Montréal news for over 30 years. It is estimated that installing a retractable roof over the centre court at IGA stadium could cost $70 million, and replacing the Olympic Stadium’s roof and support ring, no less than $870 million.1 These projects may be considered priorities,2 but the skyrocketing construction and renovation costs are already causing a stir.3 And to make matters worse, the problem will not be solved definitively, as the lifespan of the new Olympic Stadium roof is estimated at 50 years.4 These projects are just the tip of the iceberg when it comes to our sports infrastructure. According to the Minister responsible for Sport, Recreation and Outdoors, Isabelle Charest, “This is a huge endeavour. A good part of the infrastructure could use some work and revamping. And in some cases, we need new infrastructure, period.”5 In other words, the needs are varied and many. Investing in charming small, local skating rinks, multi-purpose municipal sports facilities and even towering stadiums used by professional sports leagues is essential to fostering physical well-being and keeping the population healthy ... or simply entertained. Mindful of the importance of physical activity as well as voters’ appreciation for sports, the Quebec government invested $300 million in the Programme d’aide financière aux infrastructures récréatives, sportives et de plein air (PAFIRSPA, financial aid program for recreational, sporting and outdoor activity infrastructure).6 One component of this program provides financing for up to two-thirds of the cost of renovating, upgrading, building or developing sports and recreational facilities, up to a maximum amount of $20 million per project. Applicants seeking financing from the program had to submit their applications by December 5, 2023. While the PAFIRSPA may seem ambitious, the projects it covers are obviously far less expensive than modern professional sports arenas, which have become true engineering and technological marvels over the years. The cost of building Tottenham Hotspur Stadium in London in 2019, for instance, has been estimated at £1.1 billion,7 which itself is a pittance compared to the US$5.5 billion needed to build the SoFi Stadium in Los Angeles, where the football teams Rams and the Chargers have been playing since 2023.8 As in most situations, money matters when it comes to sports infrastructure. A winning financing strategy is not everything—it’s the only thing. In this first instalment of our series of articles on sports law, we will focus on sports infrastructure financing and examine what lies beneath the surface, as we begin to uncover the challenges, strategies and issues. The Rules of the Game Sports infrastructure financing lies at the crossroads of the entertainment business and the public interest, and it differs from other types of financing in a number of ways. On one hand, the public’s ever-growing appetite for sporting events over the years has spawned numerous colossal projects requiring financing packages similar to those for public or industrial infrastructure projects of the same scale. On the other, the economic benefits and social impact of projects of various sizes often warrant the use of public funds, and the involvement of local communities may be imperative in the case of facilities where utility takes precedence over profitability. In addition, a wide range of financing mechanisms can be used, depending not only on the sums involved, but also on the identity of the infrastructure owners. For the purposes of this article, we will consider financing in relation to three types of ownership: (i) wholly private, (ii) public and private, and (iii) wholly public. We will be taking a closer look at specific financing options and associated issues in our next sports law article. Wholly Private Ownership Financing This refers to infrastructure owned by a private entity and operated by a private administrator, which may or may not be the same entity. One example is the Bell Centre (Figure 3), privately owned by Groupe CH, which is in turn owned by the Molson family and other investors. Figure 3: The 2022 National Hockey League Draft was held at the Bell Centre. This type of ownership usually involves wholly private financing, with the owner injecting the funds required to carry out the desired work. According to media reports, the owner of the Bell Centre invested $100 million in 2015 to renovate it.9 This amount came from Groupe CH and its investors alone. Needless to say, with this type of ownership, any kind of financing is possible, including shareholder equity investment, the issuance of bonds to private subscribers and all forms of bank debt. Combining several of these options is not at all uncommon. In the case of debt financing in particular, making lenders feel as comfortable as possible can be a challenge, and the magnitude of this challenge will depend on the amounts involved. Just how profitable a project will be hinges on whether it can be completed at the agreed-upon cost and whether it will be a commercial success once completed. Generally speaking, using a project’s assets as collateral will not be enough to get lenders on board, and they will require other forms of security, such as shareholder guarantees, fixed-price or capped construction contracts, or the involvement of subordinated lenders. When economic spinoffs are expected to benefit the community, public authorities can also be called upon to guarantee part of the loan repayment or offer various forms of public funding, including forgivable loans, thus reducing the risk assumed by lenders. Efforts to reduce the risk incurred by lenders should, in theory, result in significantly lower financial costs, or in some cases, in obtaining the required financing. Other projects rely on government procurement. Olympique Lyonnais became the first French professional soccer club to be listed on the stock exchange in 2007, when the club’s shares were put up for sale on the Euronext market in Paris. The funds raised in this way were put towards the club’s development projects, including the financing of its new stadium, which opened in January 2016. This financing package consisted of a combination of equity (including proceeds from stock issues), bank loans, traditional bonds and mandatory convertibles.10 Other supplementary yet substantial financing arrangements, such as naming rights agreements, may be used to enhance financing packages. Under such an agreement, a company can acquire naming rights to an arena for a predetermined period, generally between 3 and 20 years, in consideration of a substantial sum of money. In 2017, Scotiabank agreed to pay $800 million over 20 years to rename the building that houses the Toronto Maple Leafs hockey club the “Scotiabank Arena.”11 In addition to renaming facilities, it is possible to sell perimeter advertising or solicit individual donors to purchase a plaque bearing their name at the entrance to a field, in rows or in the bleachers. Read our latest bulletin on this topic Promoters’ financial models are routinely enhanced by other creative revenue streams, including catering concessions, box rental agreements or preferred memberships, parking spaces, boutiques and advertising. Other sources of income include leasing agreements for various uses of the facilities. Some manufacturers in the sports field construction industry even offer financing packages whereby the purchase and installation can be paid for in monthly, quarterly or annual installments, thus reducing the amount of debt or investment required. Signing the relevant contracts before building or renovating the facilities improves the financing package for the project and increases its chances of success. Public ownership financing Ownership of infrastructure by a public entity, regardless of whether it is operated by a private entity or not, can have a significant bearing on the options available and the type of financing selected. Public and private ownership involves an owner from the public sector and a private administrator. The Videotron Centre in Québec City (Figure 4), home of the Québec Remparts hockey club of the Quebec Maritimes Junior Hockey League, is an example of this type of ownership. It is owned by Québec City and managed by Quebecor Media. Figure 4: The Videotron Centre in Québec City, inaugurated on September 8, 2015. Generally speaking, infrastructure owned and operated in this way is financed jointly using public and private funds. Although the Videotron Centre has not required major renovation work so far, the initial construction of the stadium is an example of public-private financing. It cost a total of $370 million to build. A sum of $185 million came from the Quebec government, and $15.4 million from J’ai ma place, an organization set up specifically to finance the Videotron Centre using funds from the Quebec population. Québec City provided the remaining $169.6 million, which included the $33 million that Quebecor Media paid in 2015 to acquire naming rights (which was transferred to its subsidiary Videotron for an undisclosed sum), $50 million in cash and $86.3 million in the form of a bank loan. Public ownership means that the sports infrastructure is owned and administered by one or more public entities. In such cases, standard-sized infrastructure can generally be financed entirely using public funds. This is where Quebec’s PAFIRSPA, mentioned above, comes in. For more costly projects, including a public entity in the ownership group—be it public and private or wholly public—opens the door to a range of options. In the United States, this includes using municipal taxes or issuing municipal bonds to finance infrastructure. Construction of the Barclays Center in Brooklyn, New York, which began in 2010 and was completed in 2012, was financed in part by tax-exempt municipal bonds issued by the Brooklyn Arena Local Development Corporation, an entity formed by an agency of the State of New York for financing purposes.12 Nearly 500 million U.S. dollars were raised, covering a significant portion of the arena’s construction costs, as part of a larger redevelopment effort known as Pacific Park Brooklyn (formerly Atlantic Yards). The Barclays Center is now home to the Brooklyn Nets basketball team of the National Basketball Association. We will conclude our overview with a few words on public-private partnerships (PPPs), which are particularly well suited to high-cost infrastructure projects. Under a PPP, the government or another public entity partners with a private company to develop a public infrastructure or services project. PPPs combine the resources, expertise and capabilities of the public and private sectors to deliver projects that benefit the community. PPPs take many different forms and can cover a wide range of activities, from project design and construction to operation and, in some cases, financing. In the design-build-finance (DBF) model, for example, the PPP includes the design, construction and financing of the infrastructure. Bidders participating in the call for proposals must include a project financing package in their proposal. The private company ultimately selected for the project will be responsible for both the design and construction, as well as the initial or ongoing financing of the project. Bidders must therefore negotiate with financial institutions before being awarded the construction contract in order to include a financing package in their proposal. These financial institutions will then closely monitor how the loaned funds are used and how the project is managed. The private company selected at the end of the call for proposals must therefore make undertakings both to the public authority and to its lenders concerning deadlines, construction costs and financing costs as soon as the contract is awarded. This is why the DBF model generally allows for greater efficiency in executing projects, certainty over construction costs and better management of financial risks. One example is the Stade de France, a stadium that can accommodate 81,338 spectators in a football or rugby configuration and was built for the 1998 FIFA World Cup in France. It is located in Saint-Denis, Seine-Saint-Denis, and is owned by the French government, which awarded a 30-year concession contract expiring in 2025 to the Vinci-Bouygues consortium, as part of a scheme almost identical to today’s PPP schemes. Conclusion The investments required for certain multipurpose amphitheatres and other sports facilities are comparable to those for transport infrastructure, energy projects or industrial plants. This, of course, means that sports infrastructure projects can also rely on a similar set of financing packages, along with a few additional ones specific to sports, such as sponsorship advertising in all its forms. Public authorities are more likely to get involved in projects that include ownership by a public entity or have a major social impact. This opens the door to a wide range of financing packages, tailored to each project’s specific needs. Having now covered the basics, we look forward to examining some of these packages in greater detail in future articles. Zacharie Goudreault, Le toit fixe proposé pour le Stade olympique déchire les experts, link TVA Sports, Stade IGA : le toit doit être une priorité pour Montréal selon Legault, Le journal de Québec, August 13, 2023, link Philippe Teisceira-Lessard, Le cauchemar continue, La Presse, July 27, 2023, link Goudreault, op. cit. Gabriel Côté, Québec investit 300 M$ pour les infrastructures sportives, Le journal de Québec, June 19, 2023, link link link Christopher Palmeri, Rams Owner Stan Kroenke Debuts His $5.5 Billion Dream Stadium, Bloomberg, September 10, 2020, link Maxime Bergeron, 100 millions investis au Centre Bell, La Presse, October 14, 2015, link Bouclage du financement du stade des Lumières, Décideurs, August 7, 2013, link link; Pete Evans, Scotiabank pays big for arena naming rights, but did it break the bank?, CBC News, September 4, 2017, link link

Although the more nostalgic among us were recently celebrating the announcement of a third film (and sequel) of In a galaxy near you (Dans une galaxie près de chez vous), a sci-fi series on Quebec TV, sports fans might be disappointed if the arena near them ever ends up being renamed. In the first instalment of our series of articles on sports law, we examined various issues surrounding team branding. We would now like to focus on the naming of stadiums, arenas and our favourite sports venues, which often feature corporate names or trademarks. In a press release dated August 15, 2023, the Montreal Canadiens announced that their training centre, previously known as the Bell Sports Complex, would be renamed the CN Sports Complex. The reasons for this change have to do with naming rights agreements. These agreements stem from a “marriage of values” for commercial purposes between two brands that share a number of clearly defined objectives. In this article, we will answer two fundamental questions: how do these agreements work and what are the objectives? Defining a naming rights agreement A naming rights agreement is a contract between a company and an operator or owner of a venue, building, event or facility. Under such agreements, a company obtains the exclusive right to name a venue, building, event or facility by making royalty payments or providing other benefits. This enhances the company’s visibility because its name or brand is now associated with the venue, building, event or facility. In return, the owning or operating entity is paid a royalty that helps to support its activities or boost its profitability. Naming rights agreements are commonly used for naming stadiums, arenas and sporting events. It should be noted that naming rights agreements are different from sponsorship agreements. A sponsorship agreement is another type of arrangement under which a company can obtain visibility associated with an event. For example, the Royal Bank of Canada entered into a sponsorship agreement with the Montreal Canadiens to display its logo on the team’s jerseys. One of the main differences between sponsorship agreements and naming rights agreements is their duration. A sponsorship agreement has a shorter term (usually 3 to 5 years), whereas a naming rights agreement may run from 5 to 20 years, sometimes longer. An ever-growing market Underscoring the importance of naming rights agreements, over 90% of the teams in North America’s five largest professional sports leagues have signed one: In Europe, the most popular sport by far is soccer. The status of naming rights agreements in European soccer is not comparable to the North American situation, but everything indicates that their popularity will continue to rise in the coming years: What are the primary objectives of naming rights agreements? Although most North American sports teams have entered into naming rights agreements, the frequency with which stadiums or sports venues are renamed remains low due to the long-term nature of these arrangements. Companies are prepared to invest considerable sums in these agreements. There are various reasons for this, including the desire to partner with an organization that shares certain values, or to reap the benefits of a unique financial tool, or to consolidate business interests or gain a foothold in a given market. In 2017, the Air Canada Centre, which hosts the Toronto Maple Leafs (NHL) as well as the Toronto Raptors (NBA), was renamed the Scotiabank Arena. Under this agreement, Scotiabank will reportedly pay $40 million annually over 20 years to maintain the new name. At the time, this was a record amount. But the new (publicly disclosed) record is now held by the Crypto.com Arena, formerly known as the Staples Center, home to two NBA teams (LA Lakers and LA Clippers), together with the LA Kings (NHL). In 2021, Crypto.com agreed to pay approximately $50 million annually for 20 years. In addition to the recent CN Sports Complex name change, Uniprix Stadium,which hosts the Omnium National Bank tennis tournament, became IGA Stadium back in 2018. When the IGA Stadium agreement was concluded, Eugène Lapierre, Senior Vice-President at Tennis Canada, offered this assessment: “IGA attaches a good deal of importance to healthy eating, while for our part, we’re working hard to develop tennis in Canada. Our objectives are in sync.”1 Similarly, France Margaret Bélanger, President, Sports and Entertainment of Groupe CH, confirmed this marriage of values between the Montreal Canadiens and CN: “CN is not only a world leader in transportation, but also an iconic Canadian company which, like the Canadiens, has been based in Montreal for over a century.”2 It is clear that these companies were carefully selected on the basis of “common ground”, which implies a sharing of values between them and the operators of the IGA Stadium and the CN Sports Complex. Choosing the right partner: a key strategic issue Choosing the right company whose name or brand will be publicly displayed is essential. An owner or operator will want to avoid any association with a company whose identity is incompatible or whose values are not in alignment. Several examples of dubious partnership choices spring to mind: The Chicago White Sox’s baseball stadium changed its name from U.S. Cellular Field to Guaranteed Rate Field in 2016. This change sparked controversy, drawing ridicule from the public. The problem was that the White Sox are a high-profile brand, known throughout the sports world and enjoying immense prestige. In contrast, Guaranteed Rate was a local company, unknown to many baseball fans, and was simply unable to bear the weight of a storied franchise such as the White Sox. The social networks lit up at the time, adding to Guaranteed Rate’s visibility. The company certainly achieved its objective of “getting its name out there”! Away from the sports realm, another relevant example is the Toronto Transit Commission (TTC), which operates that city’s mass transit system. In April 2023, the TTC announced that it wanted to look into the possibility of selling the rights to name train or subway stations – an idea that it had initially announced in 2011. The outcry was immediate: “This will turn the TTC into a joke”, said Rami Tabello, a representative of the Toronto Public Space Initiative. “It's going to turn our civic identity and put a price tag on it. We need to say that our city is not for sale.”3 Just imagine the conductor’s announcement: “Next stop, Pepsi Station”! Structuring a naming rights agreement Although the parties to naming rights agreements are free to negotiate their own terms and conditions, certain provisions should be included to ensure a good long-term relationship. A naming rights agreement should be comprehensive and detailed enough to enable both parties to “uncouple” quickly and easily if a disturbing or controversial event occurs that could have an adverse impact on their brand image or reputation. As a general rule, such agreements include a termination clause in case one party defaults or is in breach of contract. It is therefore important to clearly identify what constitutes a default or a breach of contract. Along with the digital boards, certain spaces on the ice of hockey rinks or advertising on helmets, crests or jerseys, the rights stemming from a naming agreement are valuable assets that can be monetized by means of various financial instruments. Not only can these agreements be monetized as soon as they are signed, but they can also be transferred for a consideration to a third party, such as an alternative investor. Hence the importance of ensuring that naming rights agreements are flexible and transferable, thereby facilitating third-party transfers and monetization. As an additional type of financial instrument, naming rights agreements provide immediate access to cash flows. Intellectual property and trademark rights: what precautions should be taken? Naming rights agreements often facilitate the creation of new intellectual property linked to the joint use of brands. According to trademark law, the owner of a brand must, and is generally assumed to, exercise control over the products and services associated with the brand. In addition, when a new form of use extends to new services stemming from a naming rights agreement, it is advisable to verify whether the brand’s trademarking is sufficient or should be extended. Here is another point to consider: when the naming rights agreement expires, the chosen partner must not have permanently acquired rights to the brand. These agreements, therefore, must carefully circumscribe property rights as well as the terms and conditions governing intellectual property. It is also important to outline the civil liability arising from use of the brand. Considerations include compensating the brand owner for the partner’s use of the brand and, conversely, compensating the partner in the event that the brand infringes third-party-owned intellectual property. In any event, the brand owner cannot stand idly by if the user goes beyond what is permitted in the agreement (this would amount to breach of contract). North America and Europe: two different realities Naming rights agreements generate significant revenues for sports teams. A team unable to find the right partner may find itself at a disadvantage vis-à-vis other competitors in its league or even compared to other sports. This is the daunting reality facing a number of European soccer clubs, which are having a harder time finding partner companies for naming rights agreements than sports teams are in North America. One British example involves London-based Tottenham Hotspur, which has been unable to find a co-contractor to enter into a naming rights agreement for its new stadium since 2019. The team is now in serious financial difficulty and is attempting to host events other than soccer (concerts, boxing, NFL games, etc.) to make up for its revenue shortfall. In Europe, naming rights agreements are not as widespread as they are in North America. This is primarily due to the fans’ reaction. In Europe, soccer boasts a tradition-steeped history: fans tend to be opposed to change or to the idea of “selling” an iconic stadium to a company. On the other side of the Atlantic, marketing icons are often linked to companies that have signed naming rights agreements. To understand this phenomenon, consider the city of Pittsburgh and the Steelers’ football stadium, which was named Heinz Field for over 20 years under an agreement involving (unsurprisingly) the Heinz company. The stadium was also home to two gigantic Heinz ketchup bottles mounted atop the scoreboard: The Heinz agreement expired and the facility was renamed Acrisure Stadium in July 2022; the ketchup bottles were removed. Steelers fans were soon calling for the ketchup bottles to be brought back—in their eyes, the gigantic bottles were an emblem of the team. Art Rooney II, the team’s legendary owner, acceded to the fans’ demands earlier this year: one of the bottles was reinstalled above a gate outside the stadium. It should be noted that the Heinz company was founded in Pittsburgh in 1869 by Henry J. Heinz; it is still headquartered there. In Pittsburgh, the Heinz family is both emblematic and iconic. For local residents, Heinz is much more than a brand of ketchup or a food processing company: it is a key part of their history and culture, interwoven with the social fabric. The Heinz ketchup bottles towering over the football stadium were not just a marketing ploy; they were also a cherished symbol for the community and the city of Pittsburgh. Conclusion Unbeknownst to many of us, the impacts of naming rights agreements can be felt discreetly in our day-to-day lives. In addition to being a vehicle for conveying emotions and exerting an influence on our experience of certain events and places, these agreements drive our emotional attachment to certain sports properties. Pierre Durocher, Le stadium Jarry change de nom, Le Journal de Montréal, April 16, 2018 (https://www.journaldemontreal.com/2018/04/16/le-stadium-uniprix-devient-le-stadium-iga). Montreal Canadiens, Montreal Canadiens' practice facility to be named CN Sports Complex, media release, August 15, 2023 (https://www.nhl.com/canadiens/news/montreal-canadiens-practice-facility-to-be-named-cn-sports-complex-345595466). CBC News, TTC deal opens door to station naming rights, July 6, 2011 (https://www.cbc.ca/news/canada/toronto/ttc-deal-opens-door-to-station-naming-rights-1.1023460).

Choosing the name of a sports team can be a perilous exercise. In addition to representing certain values, names are supposed to fire up the fan base and motivate the athletes themselves. It must sometimes meet with the approval of major sponsors. But when sports teams are companies seeking to profit commercially from the use of their brand, legal considerations also come into play. Team names are typically linked to the organization of sports events for which tickets are sold. They may also be associated with products such as caps or jerseys that fans take pride in wearing. In these respects, the team’s name is a trademark and does not only serves to differentiate a team from its competitors but can also help to fill a company’s coffers. Team names are often associated with logos that also embody certain values. Logos may incorporate various design features, in addition to the team name, and often displayed on a wide range of products. Trademarks in sports has given rise to various problems, as seen in the examples below. Trademark Confusion Do you remember when the Canadian Football League was home to the Saskatchewan Roughriders as well as the Ottawa Rough Riders? This type of situation is far from ideal when watching a game and from the point of view of trademarks, it is to be avoided, since it will probably be impossible for at least one of the two teams to register its trademark. Remember that trademark registrations generally grants national exclusivity. Similar nominal trademarks, however, are quite common among sports teams, particularly when different sports are involved. Examples include the New York Rangers (hockey) and the Texas Rangers (baseball), or the Florida Panthers (hockey) and the Carolina Panthers (football). This form of “nominal coexistence” might prevent one team from registering its trademark, especially if the description of the other team’s products and services is wide-ranging. For instance, if the description of the services provided by the first team to register its trademark includes the presentation of sports events or the sale of jerseys, without specifying the associated sport, there would then be a risk of confusion from the legal point of view between the two nominal trademarks.  To register as a design mark which includes both the team’s name and a logo can sometimes resolve this problem if the teams’ logos are substantially different from each other. However, this will be ineffective if the design mark primarily consists of the team’s name. In that case, the Intellectual Property Office will consider the logo along with any accompanying text to assess the likelihood of confusion. A logo that does not include the team’s name is often easier to register, provided that it is different from the logos of other existing teams. The case of teams with the same name playing the same sport in different leagues is more complicated. Such situations often arise with minor league and major league hockey teams that have the same name. No problem arises when the minor league team is owned by the same business interests, since it is then easy to conclude a licensing agreement between the two and consolidate trademark ownership to only one company. On the other hand, such situations might also stem from a random choice of name or an unconscious desire to be associated with a major league team. At the very least, teams with the same name should consider signing a coexistence agreement. For example, on January 10, 2018, the U.S. Army’s parachute team, nicknamed the Golden Knights, filed a notice of opposition with the United States Trademark Trial and Appeal Board (TTAB) calling for the rejection of the trademark registration application filed by the NHL’s Vegas Golden Knights. Both teams ending up signing a coexistence agreement: the risk of confusion between them was perhaps more limited given the very different nature of their activities. In addition, team trademarks should aim to be distinctive and should not be limited to generic descriptions of the sport or the place where the team is based. Socially unacceptable trademarks Although they may be registered and legally valid from an intellectual property perspective, team logos or names may, however, be socially unacceptable. The notion of social acceptability actually evolves over time. Some trademarks that were used for years are no longer acceptable today. (Come to think of it, were they ever?) Take trademarks like Aunt Jemima or Uncle Ben’s, which, following decades of commercial use, were renamed to be less offensive. In the world of sports, one only has to think back to the former Cleveland Indians and their logo featuring “Chief Wahoo”. In the face of social pressure, the team dropped its logo and became the Cleveland Guardians. The same phenomenon has been observed in Canada: The Edmonton Eskimos, of CFL fame, became the Edmonton Elks after the organization acknowledged that its name could be offensive to the Inuit and other Indigenous peoples of Canada. In 2019, McGill University changed the name of its varsity sports teams from the Redmen to the Redbirds. This decision followed a referendum in which 78.8% of participating students voted in favour of the name change. In 2020, the Ahuntsic College Indians became the Eagles following a student vote. To protect their trademarks, sports teams must take into account evolving standards of social acceptability. Trademarks that avoid racial or discriminatory stereotypes are more likely to “stand the test of time”. One might wonder how much longer certain team names will last. In the NFL, the Kansas City Chiefs and the Minnesota Vikings both have names that play on stereotypes that have been contested for years. In the NHL, the same questions arise for the Chicago Blackhawks. While various communities are calling for a new name and logo, others insist that the name pays tribute to a real-life Native American. In Major League Baseball, the Atlanta Braves have faced similar scrutiny and social pressure. Team nicknames created by fans Certain team names were created by the fans themselves, not by the owners or the organizations involved. Take, for example, the “Habs” (Montreal Canadiens), the “Als” (Montreal Alouettes) or “Nos Amours” (former Montreal Expos). Are these nicknames the intellectual property of the fans that invented them? In fact, a number of these nicknames have been successfully trademarked in Canada: “Habs” has been a registered trademark since 2003 for entertainment services and since 2007 for merchandise such as clothing and other promotional items. “Als” has been a registered trademark since 2014 for all promotional items and entertainment services. “Barça”, the nickname of Barcelona’s professional soccer club (officially FC Barcelona), has been a registered trademark in Canada since 2022 for all promotional products. However, the French nicknames “Nos Amours” (Montreal Expos) and “La Sainte-Flanelle” (Montreal Canadiens) have not yet been trademarked in Canada, although applications for “Tricolore Sports” and “Bleu Blanc Rouge” were recently filed by the Montreal Canadiens. The issue that arises stems from sports teams taking the opportunity to trademark and protect nicknames that became distinctive thanks to widespread use by fans.  Trademarks linked to a sponsor Sports teams might wish to adopt a name and /or a trademark that pays tribute to their owner or a major sponsor. One example that comes to mind is the Anaheim Mighty Ducks (now the Anaheim Ducks), which were originally named after the Disney-owned film franchise. This situation is not problematic per se since two separate companies were involved. However, things can get tricky if relations with sponsors become tense or if they decide to withdraw their sponsorship. For that reason, an agreement should be in place setting out the sponsor’s trademark rights and, if the sponsorship comes to an end, how quickly the team has to change its name and trademarks. Departing sponsors should also be prevented from interfering in the management of the team. Teams should also reserve the right to change their names and trademarks for various reasons, including reputational risk. And if a sponsor sells sports equipment or other team-related products, teams should ensure that they can sell their own promotional products without infringing the sponsor’s trademark. If not contractually regulated, such situations could even affect the validity of the sponsor’s registered trademarks since the sponsor would not exercise adequate control over the trademark. The issues outlined above might not just affect the company’s image, but could also prevent it from adequately protecting its trademark. A registered trademark ensures nationwide protection; it may also cover multiple countries if applications are filed outside Canada. Above all, trademark registration provides a greater degree of legal certainty. This also greatly facilitates intervention against malicious actors seeking to counterfeit—and profit from—registered trademark and, in many cases, serves to block imports of counterfeit merchandise. From the outset, sports teams that wish to profit commercially from their brand should check at the outset whether it can be registered as a nominal and/or design trademark. If it cannot, they are advised to work closely with their legal teams and trademark agents to find an alternative name or logos that are not affected by the above-mentioned issues.