When IP rights are on the sleeve: can a football sponsorship deal end in a zero-sum outcome?

A recent decision from the Milan court offers an interesting look at how sponsorship agreements are treated in football.

The case concerned a three-year sleeve sponsorship deal between a Cyprus-based online trading company and the company responsible for commercial partnerships for Inter Milan. The sponsor had secured a wide range of rights: use of the club’s trade marks and media content, visibility on LED boards and interview backdrops, and, most importantly, placement of its logo on the sleeve of the club’s match shirt.

The dispute began when the sponsor allegedly failed to make the agreed payments. Inter relied on an express termination clause in the contract and brought the agreement to an end.

The Court upheld that decision. It emphasised that sponsorship agreements are built on trust and reputation, given that one party is effectively licensing its image and brand value to the other. Because the parties had expressly agreed that non-payment would trigger termination, the Court did not need to consider whether the breach was sufficiently serious in the usual sense.

The sponsor had also tried to delay payments and reopen negotiations shortly after signing the deal. The Court rejected this argument, finding that there had been no substantial change in circumstances that could justify revisiting the agreed terms.

What makes the judgment particularly notable is the way the financial consequences were handled. The sponsor was entitled to recover the portion of the fee paid for the period after termination, but Inter was also entitled to damages for the profit lost during the 2020/21 season. As the club had secured a new sleeve sponsor for the following season, the damages were limited to that first year.

In the end, the two sums cancelled each other out, leaving neither party with anything further to pay.

The decision is a useful reminder of two points: first, the commercial value of these agreements often rests on the strength of the club’s trade marks and reputation; and second, once terms are agreed, one party cannot simply seek better commercial terms unless there has been a genuine and unforeseen change in circumstances.