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Valuation of Sponsorship Opportunities in Sports

By Matthew B. Efird

Over the past decade, NASCAR race teams have become increasingly more reliant on securing sponsorships to offset the continually escalating costs of running a competitive racing program. As NASCAR's popularity has continued to grow, many companies are intrigued by the possibility of reaching a fan base and audience that is large, both in numbers and geographic reach, and according to research, extremely loyal to the sport's sponsors in its purchasing habits. The key threshold question for an interested company is what will be the cost of involvement in the sport?

Valuation of a sponsorship opportunity is much more art than science and it is important that a lawyer involved in the negotiation of a sponsorship agreement understand how the various factors interrelate. While this article focuses on the factors affecting the valuation of a sponsorship opportunity with a NASCAR race team, most of the factors can be applied to sponsorship opportunities in other sports as well.

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