The Complete Guide to Multiyear Sponsorship Agreements
When you hear of brands like Red Bull or Coca-Cola being involved with various sports for decades, it’s easy to think that the only reason those kinds of extended deals happen is that they’re multi-billion-dollar companies with huge name recognition.
If that were the case, then every household name brand would have more sponsors than they know what to do with! Some do and some don’t, so that’s definitely not the common denominator here.
What it boils down to is a very simple thing: quality service. I know, who would have thunk it, right?
If you keep giving a sponsor what they want, then they’ll be happy to work with you again.
Of course, it’s a little more nuanced than that, which you’re about to see. This extensive, highly detailed guide will leave no stone unturned so you can begin negotiating for more multiyear sponsorship agreements!
The Benefits of Multiyear Sponsorship Agreements
First, why should you take the time to negotiate for a multiyear sponsorship deal? Are they really that beneficial?
I think that after you read through the information in this section, you’ll agree that yes, they are!
Answers the Age-Old Sponsorship Question – “Are We Going to Work Together Again?”
Sponsorship does not have to be like a first date where you’re afraid of putting your cards on the table, yet you’d be surprised by how many sponsorship seekers treat it as exactly that.
They feel sheepish asking the sponsor about the idea of working together again, so they let it go right after the event.
After all, why bombard the sponsor with more heavy decisions right after your event, program, or opportunity wraps up? It was stressful enough getting to this point.
So then weeks pass, then months. By that point, time has told you that no, you’re not going to work with that sponsor again, at least not for this coming year.
The sponsor has likely already spent their sponsorship budget for the year, leaving you up the creek without a paddle.
When you have the moxy to negotiate for a multiyear sponsorship deal, then you don’t have to play the awkward game of waiting to ask for a sponsorship at a time that seems ideal.
You know that you have the sponsor for not only this year but the next two or three or five or more years as well.
Helps You More Efficiently Plan Your Event Budget
As soon as your event, program, or opportunity wraps up, if you’re certain that you’ll do it all again next year, then it’s time to begin planning.
Yes, that’s right, you can start the day after your event.
One of the biggest considerations in getting your event off the ground is budget.
You need to calculate how much money your company or organization can afford to funnel into the event and then figure out how big the gap is.
Then you need to decide how you can bridge that gap. That’s usually through cash sponsors.
Since you already have at least one sponsor who you know will sign on again for the next year, then you have your X amount of money that will go toward their event and their Y share.
It’s so much easier to budget from there!
You May Need Fewer Sponsors
Another excellent part of working with multiyear sponsors is that if they are indeed filling in a significant portion of your event budget with their funding, you can cut down on the number of other sponsors you need to find.
Well, cash sponsors at least!
You can and still should seek media sponsors and maybe some in-kind sponsors. Since your budget came together so easily this time around, you might be feeling extra motivated!
Saves You Considerable Time
Let’s assume that you do cut down on your number of sponsors since you have a multiyear sponsor.
The less you have to go through the sponsorship process, the more time you’ll have.
This time can go towards so many useful avenues.
You can work on coming up with even better assets and activations for your multiyear sponsor to prove your value this year is even better than the year prior.
You can also work on your event with less interrupting you, making the event as fantastic as it can be.
Allows You to Promote Your Event Big Right Out of the Gate
When you find a sponsor late in the game, it’s a huge load off your shoulders, but you also don’t get as much time to promote your involvement with the sponsor as you could have.
Since you know that your multiyear sponsor will work with you again, from the moment you promote the next event, program, or opportunity on your calendar, you can do so with their inclusion.
You may get more free press for your efforts, and your ticket sales could increase as well!
Does Every Sponsor Have to Be a Multiyear Sponsor?
As advantageous as multi-year sponsorship arrangements can be, there’s no need for every single sponsor you ever work with to be your partner for years to come.
Some just won’t want to, and in other cases, you’d prefer for them not to be.
Here are some situations in which pairing with the same sponsor again isn’t the best course of action.
Your Sponsor Seemed Iffy When You Broached the Subject
Unless your sponsor is vehemently saying yes, let’s work together again, then you should take every other response as a no.
Your sponsor knows what you’re capable of by now. You can and will only continue to improve as you take their feedback and incorporate it, but if they weren’t thrilled with what you brought to the table and don’t want to wait around to see if you can get better, then so be it.
Trying to force a lukewarm sponsor into sticking around isn’t going to work. If they’re not feeling it for any reason, then they’re not feeling it.
Your Audience Wasn’t as Excited about the Sponsor as You Thought
One of the primary reasons that you selected the sponsor you did was because you believed your audience would be over the moon about this sponsor.
After your event though, you realized that your audience didn’t go as gaga as you were hoping for.
It’s worth taking the time to figure out why that is to avoid the same missteps in the future.
Did the sponsor not brand themselves clearly enough? Are their products or services too expensive for your audience?
While it’s good to know what types of sponsors to focus more on for next time, in the interim, let this one sponsor go.
If your audience didn’t care all that much the first year, it seems unlikely that they will next year.
You’re About to Make a Major Brand Change and Could Shift Audiences
Another instance in which a multiyear sponsorship deal might not be the right move is if your company or organization is on the cusp of a major change.
For instance, are you about to rework your brand from scratch? If so, then your current core audience might not be the same audience you’ll target with your new brand identity.
Your sponsor might not fit in.
The Most Common Multi Year Sponsorship Agreement Mistakes
I’m sure you’re probably quite gung-ho by this point at the thought of striking a multiyear sponsorship arrangement, am I right?
Well, don’t let your enthusiasm blind you and make you susceptible to the following mistakes that I see sponsorship seekers make all the time.
Assuming a Deal Is a Multiyear Deal
Unless you and your sponsor specifically sit down and discuss a multiyear arrangement, then you cannot assume the deal is for more than one year or one event, program, or opportunity.
The information is going to be printed as clear as day in your contract.
You can always negotiate for a multiyear arrangement at this time or after you deliver at your event, but until that happens, do not go about your business believing that you’re working with the sponsor for another year.
You will be in for a rude awakening later.
Months from now, when you call the sponsor, they’ll tell you that you two never agreed to a multiyear deal. It’s probably too late for you to lock in such a deal now.
You could possibly negotiate to work with the sponsor again next year if you’re quick enough on the draw, but in the meantime, you have to let them go.
If you had written this sponsor into your event budget, you’re going to be in big trouble. You’re now missing thousands of dollars, perhaps even tens of thousands, that you thought were a guarantee.
You’ll have to scramble to find another sponsor in short order and hope you can make the budget for your event.
If you don’t and the clock is ticking steadily down, then you’ll have to downsize your event. This will result in reduced attendance and will probably hurt the reputation of your event.
Not Negotiating for More Money
As I said before, a sponsor knows what you’re capable of once you two work together. You can continue to improve your efficiency and become an even better partner but doing that shouldn’t come with the same base rate of pay.
You should agree to take the payment part of the arrangement year by year. If you can continue to deliver more and more to the sponsor, then you should be compensated accordingly.
If you hit a plateau after a while and you can’t possibly offer the sponsor more than what you already have, then the rate should stay stable one year after another or only slightly increase.
Not Producing a Fulfillment Report
This last mistake is huge!
A sponsorship fulfillment report is so many things. It’s proof that you achieved milestones, as you’ll have photos of the event, website traffic, social media stats, and other data that show where growth occurred.
You’ll also list all your deliverables and how well you delivered on them, which proves your value to the sponsor.
The report is a great chance to ask for feedback too. You can then use this feedback to become the best partner you can be for next year.
A sponsor isn’t necessarily expecting a fulfillment report out of you. It doesn’t hurt your relationship per se not to include one, but you should anyway.
How to Make Your Single-Year Arrangements into Multi Year Sponsorship Agreements
If you have a few sponsorships under your belt but all have declined to work together again, or you let some good opportunities slip through the cracks, I want to help you change that.
So how do you take those single-year deals and shift them into multi year sponsorship arrangements? Here are the steps to follow.
Define What “Multiyear” Look Like to You
Those decades-long sponsorship arrangements are not created overnight. They also aren’t negotiated for all at once.
Rather, those kinds of deals are borne from years of proven quality and reliability.
If you sit down with a sponsor whom you worked with last year and ask for a 10-year deal, even if you did a great job last year, they’re not going to agree.
It’s just too hard to look into one’s crystal ball and guess what’s coming around the bend. I mean, no one saw a pandemic coming.
Plus, after one year of proven service, you’re asking for another nine years is a bit of a tricky proposition for the sponsor.
Sure, you delivered well enough during Year One, but what if it was just a fluke? What if the next several years go poorly, and now this sponsor is locked into a deal with you?
There are ways out for the sponsor of course (there always are), but that’s not a route that anyone wants to take unless they have to.
Instead, what you should do is negotiate for a shorter term initially instead of putting the pressure on the sponsor to give up potentially a really great deal or sign on for way longer than they’re comfortable with.
Three years is a good term to start with.
Talk Over Last Year’s Event
You’ll remember that earlier I talked about the importance of the fulfillment report for a lot of reasons.
One of those is setting up a time to talk with your sponsor about what went right during the event and what went wrong.
You want to have this conversation after your sponsor has had time to look over the report, and you want to produce the fulfillment report within two days to a week after your event.
It’s not only that the event is fresh in everyone’s minds when you’re barely removed from it.
Sponsors are busy people. You want to sit them down and get the ball rolling for renegotiation ideally as soon as possible.
You don’t want to be left out in the cold because your sponsor has no room in the budget, right? So time is truly of the essence.
Chatting over last year’s event is your chance to begin thinking of how you can plan this upcoming event to be worth the additional money that you’re going to ask for.
There will be parts of your event that the sponsor absolutely loved just as there are parts that they absolutely hated. Pay attention to which is which but try not to take any of it too terribly personally.
Put Together Sample Assets and Activations
Once you’re back in your office with your feedback from the fulfillment report meeting, it’s time to put together what your sponsor said and see what you can do with that information.
Create some sample activations and assets. You’re not selling them to the sponsor at this point, as it’s a little early for that yet, but just keeping them in your back pocket.
When the time is right, you might unveil these ideas to your sponsor to prove that you were listening to their feedback and that you’re dedicated to actively implementing what they said to work better together.
Discuss Next Year
Before too much time elapses from your feedback meeting, get in touch with the sponsor. You don’t need a formal meeting here, just a quick phone call or even a Zoom chat.
When you two meet up, the goal is to begin getting the ball rolling for renegotiating.
First, ask them point-blank if they’re interested in working together again.
Your sponsor, if they do want to work with you, will say yes.
Beware of any response that isn’t yes. As I’ve talked about many, many times on the blog, sponsors are not always honest. They will lie to avoid conflict or to get out of a situation they’re uncomfortable with.
If the sponsor says “maybe,” you can follow that up with some questions. For instance, you might ask, “when do you think you’ll know for sure?” or “who else needs to be involved to help you make the decision?”
What if they’re still waffling? Then forget it, they’re trying to wriggle free.
If your sponsor does tell you that they’re interested in working together again, then now is a good time to broach the subject of a multiyear arrangement.
Tell them that you were thinking that a longer-term contract would be more conducive to both of you and then explain your reasoning behind that.
Hopefully, your sponsor will express their interest in a longer-term deal.
If you get a maybe this time, don’t necessarily write the sponsor off entirely. They very well have to talk to other decision-makers in their company before they can agree to a multiyear deal.
However, if several days go by and you don’t hear anything, be sure to follow up. If they still seem wishy-washy even at that point, then it’s probably a no-go.
The last step of the process is the hardest, and that’s negotiation.
First, you and the sponsor have to negotiate the duration of the deal.
As I mentioned earlier, three years is a good amount of time to propose in the beginning.
It’s enough time for both parties to reap the benefits of consistency without either one of you feeling locked into a deal that might be a little too long.
You also have to negotiate money.
You’ll recall that one of the biggest mistakes that sponsorship seekers make when entering multi year deals is accepting the same amount of money as last year or somehow even less.
You want your sponsorship deals to be profitable. If you’re earning less than last year, let alone three times over, your event might have a larger sum of money overall, but not nearly as large as it could have been.
Rather than just ballpark it or copy some number you heard from the Internet, you should know what I’m going to tell you to do.
That’s right, value your assets.
Those loose ideas you had post-event should have by this point morphed into something stabler and readier to use.
Value those assets and activations. They should collectively be worth more than last year.
If they’re not, then you need to rethink what you’re offering your sponsor, as it might not be as high-value as you had originally perceived.
When both parties are pleased with the negotiations, then it’s time to put everything into writing in an official contract.
I always recommend hiring a lawyer to go over the contract with you to ensure you understand the whole thing and that you get a fair deal.
Multiyear sponsorship arrangements are advantageous for both sponsorship seekers and sponsors.
You’ll have more money going toward your budget and more time to use for marketing, building better assets, and planning a sterling event.
Although bringing up the topic of a multiyear deal can be daunting, it’s worth doing. Don’t wait for your sponsor to mention it, and certainly don’t assume that one year of working with a sponsor is automatically going to be several.
ABOUT THE AUTHOR
Chris Baylis is the President and CEO of The Sponsorship Collective and a self-confessed sponsorship geek.
After several years as a sponsor (that’s right, the one investing the money!) Chris decided to cross over to the sponsorship sales side where he has personally closed tens of millions of dollars in sponsorship deals. Chris has been on the front lines of multi-million dollar sponsorship agreements and has built and coached teams to do the same.
Chris now spends his time working with clients to value their assets and build strategies that drive sales. An accomplished speaker and international consultant, Chris has helped his clients raise millions in sponsorship dollars.