Internet & Social Media Law Blog
Every year professional sports franchises introduce new marketing tactics and sponsorship models to increase their revenue streams—new gear, new placements for logos in stadiums/arenas and on jerseys, not to mention an array of online engagement opportunities. As the concept of the Metaverse becomes more established in the minds of fans, there is, not surprisingly, a good deal of buzz about this futuristic environment. But even as professional sports franchises announce their own forays into the Metaverse, organizations around the world would do well to consider how this bifurcation of the sporting experience (viewing the venue in person vs. in the Metaverse) creates a whole new world of marketing revenue streams.
The Potential
Imagine your favorite sports venue. Think of the tens (if not hundreds) of thousands of people who are exposed to sponsorship content while at the stadium. Then consider how many physical signs and screens with rotating promotions are at the site. But now, what about the Metaverse? As sports teams bring their venues into the Metaverse, do the marketing materials have to come along, too? Or, can an entirely different range of companies be featured in a Metaverse stadium? Alternatively, if a sponsor in the “physical” stadium wants to continue the relationship in the Metaverse, should it have to pay more, especially given how many more people will be potentially exposed to that branding? And what about territorial considerations? Will an organization want the flexibility (if the technology allows it) to create regionally targeted advertisements?
The addition of virtual counterparts to real-world venues—which itself need not be limited to a single reflection of the physical location—stands to expand sponsorship opportunities exponentially; organizations would do well to start laying the groundwork now to maximize the revenue streams later.
Who Knows How Far the Sponsorship Goes?
The foundational consideration is whether sports teams want the same sponsors to carry over from the physical to the Metaverse. If the answer is yes, then the follow-on conversations with sponsors will be pricing focused—after all, sponsors should not be featured in two places for the price of one. If the answer is no, the conversations are admittedly trickier, as contracts come back up for negotiation an organization will have to be more careful about describing how far the sponsorship extends. Keep in mind that any territorial considerations will be a driver of price as well (and any geolocation limitations may affect where content will be available).
Regardless how thick the flurry of buzz words or how raging the hype, when it comes to the emerging shape of the Metaverse, much of how this will all work out is still unknown. Practically speaking, that means now is not the time to rush out, speak with sponsors and start drawing up contracts. Instead, it’s the perfect time to huddle up with the business, legal and marketing arms of the organization and begin laying out long-term sponsorship (and contracting) strategies. Here are a few items to consider:
Physical vs. Metaverse: Is the goal to have current sponsors sign on for the physical venue and the Metaverse venue? If yes, what increase in fees would an organization be looking for in the event the sponsor wants their logo and branding shown in both places? If the answer is no, how is this bifurcation going to be broached with the supplier?
Survey Your Sponsorship Contracts Now: Especially if an organization is looking to have new sponsors in the Metaverse, start canvasing contracts now to get a sense of how current sponsorship contracts may complicate things. For example, how broadly is the sponsorship defined? Is X company the official “Game Day Beverage Sponsor” of your team, or the “Stadium Beverage Sponsor.” If the former, the sponsor has a stronger argument that their sponsorship isn’t tied to a physical location. But also look at how placement of branding is described, are there specifics about the type of signage that will be provided? In conjunction with reviewing sponsorship contracts, organizations should review their trademark license agreements to understand how ads/brands/logos may be replicated in the Metaverse. Ensuring IP protections are in place (and contractual limitations are followed) will help protect an organization as it (and its content) enters the Metaverse. Remember, regulators’ understanding of the Metaverse is going to evolve over time, so continue to monitor how laws will affect an organization’s operations in the Metaverse. For example, as different jurisdictions attempt to exert influence over the Metaverse, advertising compliance requirements may evolve.
Upcoming Contracts: If there are sponsorship contracts under negotiation or coming up for renewal soon and an organization isn’t ready to broach the Metaverse conversation yet, consider how you can ensure the contract maximizes your flexibility in the future. For example, a shorter term means an organization is more agile to adjust as its understanding of the Metaverse evolves. Clearly describing the relationship relative to the physical venue will also provide flexibility to address the Metaverse later.
With so many unknowns, it would be a daunting task for a business to try to draft a Metaverse-ready contract by itself. So don’t. Instead, consult with attorneys who are familiar with technology contracts and considerations. As contractual nuances surrounding the Metaverse continue to develop, businesses would be well-advised to get ahead in understanding legal and financial implications on their business. In particular, organizations that consider future implications for their current sponsorship contracts will be well positioned to maximize sponsorship revenue down the road. At the end of the day, sponsors want to be protected just like organizations and venues do. Thinking about these protections now can facilitate those first exciting steps into the Metaverse.
RELATED ARTICLES
Buying Real Estate in the Metaverse: Wallets, Fees and Terms of Service
Second ’Verse, Same as the First: Advertising, Influencing and Disclosure in the Metaverse