Do Performance-related Rebates or Make-goods Make Sense for Sponsorships?
Posted: 8/11/2009 9:50:48 AM by
Diane Knoepke | with 1 comments
You probably saw the news reports about the 24 thrill seekers who got stuck on the Invertigo roller coaster at California’s Great America Theme Park in Santa Clara on Monday. After I watched some coverage and let the wave of sympathetic nausea wash over me, I started to think about how situations like this impact sponsors. According to cagreatamerica.com, Coca-Cola and Almaden Press are currently Official Partners of the theme park.
Most partnership contracts have the minimum liability clauses to protect sponsors from any forthcoming lawsuits. But in a pay-for-performance world, at what point should a performance-related rebate or make-goods take effect? This may be an unpopular question, as it is certainly not something properties want to think about. How does one anticipate, let alone prevent, such things from happening? As California Division of Occupational Safety and Health spokeswoman Erika Monterroza said of the coaster, “These are machines and they do break down” (Source: Contra Costa Times).
Yet if the value of the sponsorship temporarily decreases—due to lost on-site sales, decreases in attendance, and/or intangible factors like negative press coverage—what should be done?
No single answer will do. I am not necessarily suggesting that Great America Theme Park owes Coke some cash. What I am suggesting is that this is a perfect example of the types of conversations properties and sponsors need to insist on having during the negotiation process. Get your “worst-case-scenario” team member around the negotiation table and think of all of the things that could happen and discuss them. Before the ink goes on the contract. Much better to have those expectations (and consequences) agreed upon upfront for a seamless resolution later.
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Filed under: negotiating, sponsorship ROI, theme parks, contracts