Tour Sponsorship Deals – Maximizing the Benefits and Minimizing the Problems

by Mike Milom on November 1st, 2009

During BMI’s presentation to Kris Kristofferson of its 2009 Icon Award, Willie Nelson thanked BMI for supporting Kris, Willie and many writer/artists of their generation in their early years and noted that when he and Kris were struggling to survive as writers and artists, they thought BMI stood for “Big Money Instantly”. Unfortunately, large performing rights advances for new artists are history and the days when most new artists can cover their essential living expenses with publishing and record company advances are over. The current industry business model requires that most artists find several sources of support to sustain themselves even after signing a major label recording agreement.

Fortunately, as developing artists’ need for multiple sources of development period revenue increased, many companies recognized the commercial benefit and relatively low cost of associating their products or brands with a developing artist rather than waiting until the artist becomes a superstar. While the availability of financial or promotional support from sponsors is a welcome change for developing artists, tour sponsorships and co-branding opportunities present special problems and risks for an artist. However, artists and managers can secure greater financial and promotional benefits from a sponsor relationship by considering a few basic issues and concerns.

Do Your Homework. Analyze the unique value that the proposed sponsorship relationship brings to the sponsor and what the sponsor can do that will most benefit the artist. The most successful and lasting sponsor relationships are those in which each party achieves its goals for the relationship. An artist or manager should show up at the first meeting with the sponsor’s representative having an understanding of the sponsor’s past music related sponsorships, including the successes and failures of those projects, the sponsor’s products or brand family, sponsor’s marketing style and the sponsor’s target markets and demographic. If the artist’s management is prepared to present options to the sponsor’s representatives which reflect that knowledge, the artist is much more likely to secure the highest level of benefit from the sponsorship deal and establish a long term sponsor relationship.

Understand What The Artist Can and Cannot Deliver. Every artist has physical, personal, logistic, contractual and financial limitations which must be considered when negotiating a sponsorship agreement. An honest analysis of those limitations and the ability to address the sponsor’s requests early in the discussions is essential to a successful relationship and can prevent a sponsor from getting excited about elements that the artist or management can’t deliver. Some of the most common issues to be considered are discussed below.

1. Venue Limitations. Can the artist provide on-stage or concert hall signage, on-stage promotional video for the sponsor’s product or venue concourse activation opportunities? If so, what will the cost be and who will be responsible for those costs and handling the logistics? Are the sponsor’s requirements consistent with customary venue requirements and potentially conflicting venue sponsor restrictions?
2. Tickets / Meet and Greets. Sponsor’s consistently request more free tickets and meet and greet slots than an artist can accommodate. When an artist is in an opening position, there are significant limitations on comp tickets, space available backstage and the number of people who can be accommodated at meet and greets.
3. Promotional Content. Sponsors typically request exclusive rights or special access to an artist’s image, videos, songs and recordings– each of which are subject to artist’s contracts with others. Whose consent will be necessary to provide the content requested by the sponsor? Are they likely to consent and, if so, what they will want in return?
4. Sponsorship Contract. In addition to existing restrictions on the rights an artist can grant the sponsor, artist’s representatives must understand how the sponsorship contract may affect the artist in the future. Will the contract prevent artist from taking advantage of future opportunities? As an example, the “fine print” in the product exclusivity clause of a beer sponsorship agreement may prevent artist’s endorsement of a soft drink product or even a snack product of a company that also markets a bottled water product. Sponsorship agreements are drafted in broad terms to protect the sponsor and it is the responsibility of artist’s support team to assure that the contract restrictions and other terms are reasonable and consistent with the sponsorship benefits to be received by the artist.
5. Artist’s Time Commitment. In addition to the time commitment for meet and greets with sponsor’s clients at concerts, sponsors usually want an artist to participate in media announcements, production of print and electronic media advertising materials (usually in LA or New York), appearances at in-store events or at dealer conventions and special visits with promotional contest winners. Collectively, these activities may require more of the artist’s time than is available. The artist and management must be proactive in determining which sponsor requests can be accommodated without over committing the artist. If the artist commits to more than he or she can actually deliver, it’s very likely that both the artist and the sponsor will be unhappy with the experience.
6. Management and Staff Commitments. In addition to the artist’s time, every element of the artist’s obligation to the sponsor places an additional burden on artist’s support team and can increase artist’s costs for staff, transportation, legal, accounting and other elements — all of which must be considered during the negotiation of the proposed agreement.

Thoughtful analysis of all of the elements of a proposed sponsorship, proactive and creative proposals from artists’ representatives and assuring that both artists and sponsors have realistic expectations in advance of the tour launch will help artists derive maximum benefits from tour sponsorships.

First published in Music Row Magazine, www.musicrow.com.