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A leading sports lawyer has warned the NRL and their clubs face the prospect of sponsors walking away in droves during the coronavirus pandemic.
Sponsorship represents the second biggest form of revenue for each of the 16 clubs following NRL grants, and is worth millions in apparel, player partnerships and hospitality streams.
A working group has been set up by the NRL and clubs to combat the issue.
But Brisbane-based sports lawyer Tim Fuller from Gadens warned sponsors would be within their rights to stop paying clubs, particularly if the 2020 competition does not resume.
“I think we’re going to see terminations in the days ahead, weeks to come,” Fuller warned.
“They probably would be prepared to basically comply with their obligations under the contract as long as there’s light at the end of the tunnel.
“Otherwise they’re going to walk away in droves.
“The NRL have got to walk their way through with all these sponsors.
“The next few days will be fascinating because there is potential for sponsors to leave en masse, and that’ll leave a huge hole in club and game funds.”
Fuller said most sponsorship contracts would centre around the 24 games for each club, or the full 25 rounds plus finals.
It’s understood the NRL’s major sponsor Telstra is in discussions with a number of sporting codes in relation to the impacts of the virus on the regular season and the agreements they have in place.
Third-party player deals could also fall over if the game’s stars are unable to fulfil their obligations.
Staff at clubs have spent this week trying to find ways to keep sponsors involved and offer them some kind of exposure during the suspension.
The Wests Tigers announced on Thursday they would stream video games against their respective opponents each week, with players wearing club merchandise.
Other clubs were also looking at social media activations and streamed interviews that would still show players in team kit with sponsors displayed.
Fuller said one option for the league and its clubs was to offer sweeteners to companies to stay on.
“There could be some sort of negotiation between the sponsor and the game where there might be an extension of the sponsorship agreement,” Fuller said.
“Say for example Telstra’s contract was due to terminate or expire this year, they might get an extension on that and be contracted for the next 18 months.”
Other concerns for clubs could be if the corporate partners fell into financial trouble, with most companies set to feel the pinch of the virus and economic slowdown.