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Marketing and Sponsorship

Sponsorship Agreements With Troubled Brands Pose Problems For Espanyol, Everton

A "spate of troubled sponsorship deals in Europe is causing headaches" for some of the world's top football clubs, according to Margot Patrick of the WALL STREET JOURNAL. La Liga side Espanyol cut a deal worth around $45M with Power8 last year that "put the unknown technology company's name on its stadium in Barcelona and logo on team shirts." Power8's name "already appeared on lighted stadium advertising" of EPL club Everton. Police in Taiwan now allege Power8 "used the sponsorships to lure hundreds of investors in Asia into buying shares in the company before disappearing with their money." Emails to Power8 officials "bounced back, and a message on its website says operations are temporarily suspended." Espanyol says Power8 is "overdue on its sponsorship payments and has started legal action." An Everton spokesperson declined to comment. Houchih Kuo, a lawyer in Taiwan who is representing some of the investors, said, "The Power8 name was placed next to other big companies on the websites of the football clubs, so people thought it was another international brand." Once "almost solely" the domain of airlines, car makers and other household brands, European football sponsorship is "attracting smaller companies that are harder to vet" and may have "little in the way of operating history, people in the sports sponsorship industry say." Three more English football teams were "left in the lurch earlier this year" when the U.K. gambling license of their sponsor, betting company 666BET, was suspended as part of a tax fraud and money laundering investigation. Sports Media Gaming Ltd. CEO Stephen Pearson said, "Sports sponsorship lets companies get credibility by aligning with well-established sports brands." Andy Korman, a sports law partner at Couchmans LLP, said that clubs "may grow wary about signing lesser known sponsors after the recent incidents." But he said that partnerships with new online brands are bringing in "needed revenue" (WSJ, 10/10).

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