Sponsorship issues in Essendon doping investigation

The widely reported issues relating to alleged misuse of supplements by the Essendon Football Club raise several important legal issues, particularly around employment law and sponsors rights.

Essendon has a number of sponsors. Without all the information available, including whether or not banned substances were administered under the auspices of the club, it is impossible to be definitive about the potential consequences should it be found to have facilitated the misuse of substances.

Club sponsors are likely to have a look at their contract if there appears to have been any wrongdoing by the club. Sponsor contracts are likely to contain clauses which:

  • allow the sponsor to terminate the contract with the club in the event the club (or its agents) engage in conduct likely to damage or bring into disrepute the name, image or reputation of the sponsor;
  • compel the club to refund a part of the sponsorship payments made by the sponsor in the event of breach; or
  • entitle the club to bonus payments in the event certain benchmarks are reached.

The first two clauses speak for themselves. If any bonus payments have been paid (eg based on the club’s ladder position or crowd attendances) then the sponsor may be able to claim a refund on the basis that they were paid on the basis of fraud.