OPTIONS TO RENEW, MATCHING RIGHTS AND RIGHTS OF FIRST REFUSAL IN SPORTS MARKETING AGREEMENTS UNDER EU COMPETITION LAW

 

In the world of sports marketing, longevity can be a precious commodity. Sponsors seek to secure long-term visibility, whilst rights holders aim to maintain valuable partnerships. It is no surprise, therefore, that many sports marketing agreements feature familiar clauses such as options to renew, matching rights, and rights of first refusal (ROFR). These provisions can offer stability and predictability, but under EU competition law, they can also raise red flags.

When do these clauses serve legitimate business interests, and when might they unjustifiably restrict competition? As is so often the case in competition law, the answer lies in the detail.

In sports marketing agreements, several contractual mechanisms are commonly used to manage continuity and future negotiations.

An option to renew enables one or both parties, although often only the rights holder, to extend the duration of the agreement, and frequently on pre-agreed terms.

Closely related is the right of first refusal (ROFR), which grants a party, typically the existing party, the opportunity to accept a new offer before the rights holder is free to contract with a third party.

Finally, matching rights serve a similar function, allowing the existing party to match the financial and other key terms of a competing offer in order to retain the rights in question.

These mechanisms are widespread in sponsorship and endorsement agreements, and for good reason. They reward loyalty, provide certainty for future planning, protect commercial investments, and reduce the time and cost of renegotiation. However, they may also, whether by design or by effect, dampen competitive dynamics in the market.

From the standpoint of EU competition law, such clauses are assessed under Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), which prohibits agreements that restrict competition, whether by limiting market access, fixing prices, or segmenting markets along territorial lines. While options to renew, rights of first refusal, and matching rights do not automatically constitute a restriction by object, they may nonetheless give rise to anti-competitive effects in certain contexts.

These effects might include, for instance, the foreclosure of the market to rival sponsors, who find themselves unable to bid meaningfully for rights that are effectively locked in. They may also discourage third parties from making serious offers in the first place, knowing that any deal could simply be matched by an existing party. In some cases, such clauses can even facilitate informal collusion or create de facto long-term exclusivity arrangements that limit competition without an explicit agreement to that effect.

That said, Article 101(3) TFEU provides a framework for exemption. Where a clause contributes to improving the production or distribution of goods or services, fosters technical or economic progress, and allows consumers a fair share of the resulting benefit, all without going further than necessary or eliminating competition altogether, it may be deemed lawful.

Ultimately, the assessment is fact-specific and requires a careful balancing of interests. Relevant factors include:

• the market power of the parties involved;
• the economic value of the rights at stake;
• the duration and scope of the clause; and
• the degree of competitive constraint in the relevant market.

No single element is determinative; context is everything.

Recent case law offers valuable insight into how these clauses are viewed by the courts and why their drafting deserves careful attention.

In the dispute between Rangers FC and Sports Direct, [2021] EWCA Civ 790, the English Court of Appeal  was asked to rule on a retail agreement in which Sports Direct held matching rights. When Rangers sought to engage a new commercial partner without properly observing those rights, the court sided firmly with Sports Direct. The message was clear: where matching clauses are unambiguous and contractually enforceable, courts are willing to uphold them strictly. Rights holders must, therefore, exercise caution before concluding alternative deals, especially where incumbent partners have been granted priority.

A different nuance emerged in the case between Nike and Liverpool FC, [2019] EWHC 2837 (Comm). Here, the Commercial Court of the English High Court was asked to interpret what it meant for Nike to “match” a competing sponsorship offer. Was it enough to equal the financial value, or did other elements, such as global distribution capabilities or brand exposure, also come into play? The case highlighted the complexity of applying matching rights in practice and served as a timely reminder that vague or loosely defined clauses can generate significant uncertainty, friction, and even litigation.

What, then, does good practice look like when negotiating these provisions in sports marketing agreements?

First and foremost, precision is key. Parties should clearly define what types of offers can be matched, the process by which rights are exercised, and the exact scope and timing of any renewal or matching period.

Secondly, proportionality matters. Any clause that restricts future dealings should be justified by a legitimate commercial aim, such as protecting a significant upfront investment, and must go no further than necessary to achieve that aim.

Duration should also be carefully calibrated. Clauses that lock in rights over extended periods may raise concerns under EU competition law, particularly where they limit market access for others without sufficient justification.

Finally, transparency should not be overlooked. Establishing clear procedures for notifying offers, responding to third-party interest, and documenting the exercise of any rights can significantly reduce the risk of disputes later down the line.

In conclusion, options to renew, matching rights and rights of first refusal, and  are not inherently anti-competitive. When used appropriately, they reflect sound commercial reasoning and can support long-term stability in partnerships that are often central to the business of sport.

However, as the cases involving Rangers and Nike make clear, these clauses must be handled with care. The question under EU competition law is not whether they exist, but whether they are proportionate, justified, and crafted in a way that does not unduly distort competition.

In a sector as commercially significant, and as closely scrutinised, as sports marketing, getting the balance right is essential. Vague wording, disproportionate restrictions, or excessive durations may turn a useful commercial tool into a legal risk.

In essence, careful drafting and specialist legal advice are not optional: they are indispensable in all cases!

We act in sports marketing cases, including the legal issues mentioned in this Post, and further information is available from Dr Estelle Ivanova and Prof Dr Ian Blackshaw by emailing them at ivanova@valloni.ch and blackshaw@valloni.ch respectively.