A guide to key legal issues for sponsors and right-holders operating in the UAE

The sports market in the United Arab Emirates (UAE) is already big and it continues to grow along with projections for the broader Middle East.¹ Repucom aptly referred to the “emerging giants” of the region in terms of the sports sponsorship space² and, while we are all familiar with the dramatic growth of UAE-based entities such as Emirates Airlines and Etihad Airways as market leaders engaging in sponsorship of international sporting properties and events both in the UAE and indeed across a broad range of international markets, increasingly, we are also seeing the UAE play host to major sporting events and setting standards of excellence in staging competitions ranging from horse racing to motorsports, golf, tennis, cricket and numerous points in between.³ Unsurprisingly, a growing number of foreign businesses are seeking to tap into the commercial opportunities for brand association provided by the dynamic UAE marketplace.

This article examines some of the key legal issues rights holders and sponsors – both current and potential – should be considering when seeking to optimise their commercial benefits in connection with sporting events in the UAE. The market is growing and parties on both sides of the table are increasingly finding that a solid understanding of the UAE’s legal framework aids in creating short to medium term commercial benefits while developing opportunities for medium to long-term prospects.

A developing market with a growing need for legal protection

In addition to the leading corporate entities seeking top tier sponsorship of global events, which will always anchor a major sponsorship market, we are also seeing diversification as a sure sign that the market is developing. This can be challenging for sponsors new to the market who, while eager to develop relationships may be hesitant to invest significantly in new events that cannot yet demonstrate significant year-on-year growth, let alone satisfy management with bankable ROI and layered data as to target demographics. Such concerns are common in this market and sponsorship agreements can be negotiated and drafted to address these factors. For example, where markets with more established events may tend to address such concerns with termination triggers, the inclusion of liberal options for renewal or more dynamic review and escalation clauses based on reporting schedules can provide flexibility to increase or decrease investment based on event performance parameters or targets. Such contractual measures can reduce sponsor risk while increasing the shared commitment to the success of an event, which can pay dividends in the long term by allowing for the development of a collaborative relationship over time, something highly valued in a market that is all too familiar with short-term profit taking.