Axiata Arena : new dawn in Stadium Naming Rights in Malaysia #SportsLaw
Alongside the
growth of the sports industry in recent times, there has been a trend for
corporations and individuals of means to invest in sport stadiums through
naming rights, a form of collaboration between two parties resulting in a
company name being synonymous with a sporting team for a set period of time in
exchange for a financial payment.
England
has the 02 Arena while Shanghai has the Mercedes Benz Arena. Now, Malaysia has its
very own multi-sport stadium, the Axiata Arena. Axiata Group Berhad has secured
the exclusive sponsorship to work jointly with the Malaysia Stadium Corporation
(Perbadanan Stadium Malaysia) on the redevelopment, modernisation as well as
the rebranding of the Putra Indoor Stadium to Axiata Arena, making a mark in history as Malaysia’s first
corporate named stadium.
A 10-year
agreement worth RM55 million between the Malaysia Stadium Corporation and
Axiata Group Berhad has been reached. The Malaysia Stadium Corporation will
continue to be responsible for the maintenance while other upgrades will be to
the extent of which Axiata had agreed upon as per the terms and conditions of
the agreement.
According
to the Youth and Sports Minister Yang Berhormat Khairy Jamaluddin during the Media
Launch of Axiata Arena on 16 January 2017, finer details of the agreement are
being worked on and YB also hopes that the stadium will have an impact in
promoting Kuala Lumpur as a sports hub in the region. He said, “fans can now fully focus on supporting their
team and this new development will ensure the ultimate fan experience”. YB Khairy further added that the Axiata Arena
will be the crown-jewel for the redevelopment of Bukit Jalil Sports Complex
which will be known as KL Sports City by July 2017. Sports like badminton can
be observed in this arena as this venue will be used as the main stadium for
various sporting events during the 29th SEA Games and 9th
ASEAN Para games this August.
Besides
adding a nice ring to the refurbished stadium (AA - ‘Axiata Arena’), Axiata
Group Berhad is also one of the largest Asian telecommunication companies, operating
in Malaysia under the brand name ‘Celcom’, which is no foreign name to
Malaysians. As Tan Sri Jamaludin Ibrahim had stated in the recent Axiata Arena
press conference, Axiata wishes to “step
up further to the next level of branding (as well as) help the government in
the area of sports and be a part of the process (to boost Axiata Arena to the
international stage)”, on par with world renowned stadiums such as Alliance
Stadium in Germany and Etihad Stadium in United Kingdom. Needless to say, brand
awareness is particularly important in the competitive telecommunications
industry. Axiata will be able to build upon their community image and establish
greater local creditability and acceptance as a result of being a party to the
first Naming Rights Agreement in Malaysia. This was in fact the main reason for
Emirates Airlines’ decision to sponsor Arsenal FC’s stadium back in 2009. The
agreement proved to be a good investment when Emirates’ sales sky-rocketed past
expectations since the agreement came into effect. Axiata’s representatives
also mentioned that the agreement would give them a better presence against
their competitors. The Malaysia Stadium Corporation also notes that the Naming Rights
Agreement will ensure a stable financial backing for the advancement of Axiata
Arena’s facilities in preparation for the SEA Games in August this year.
As with
any agreement or contract, the success of the partnership lies not only in
headlines and exposure but more importantly, in the details which are
considered when drafting the agreement itself. This is
where lawyers go through lengthy discussions and negotiations until a final
agreement with terms which are favourable to both parties is achieved.
Based
on the images shared during the Media Launch of Axiata Arena, it looks like Axiata’s
logo will be displayed on the outside of the stadium (as seen in the picture
above), but Axiata will most likely also request for their logo to be displayed
inside the stadium – on the perimeter boards, on the roof and all other
prominent positions – and if so, should thereby include such right in the
agreement. On the same note, Axiata may also obtain a licence for the relevant
Intellectual Property rights in order to use the stadium/arena’s footage (still
and moving) and players or crowds in the company’s own advertisements. Another
important aspect of the agreement is the protection of the exclusive rights to
use the brand and the avoidance of detraction of the brand. Elements such as
colours used on logos/words when on ground or
on tickets is vital for maximum benefit and thereby may be included in a
schedule as part of the agreement.
Deciding
on an appropriate payment mechanism is another aspect within lawyers’
jurisdiction. Be it a lump sum payment upfront, lump sum payment with ongoing
annual payments, yearly payments, yearly payments with a bonus for success, or
payment with additional payment in kind; the payment structure for the agreed
RM55 million is dependent upon the situation of Axiata Arena, such as whether
or not a larger lump sum payment upfront would be necessary to aid in the
upgrading work.
As a
final consideration, both parties should include a specific termination right
in the agreement as a precaution should the mutually beneficial circumstance
change. The Malaysia Stadium Corporation will want to ensure that they can
terminate the agreement if or when Axiata defaults on its payment, while Axiata
may want to terminate the agreement in the event of Axiata Arena’s failure to
achieve success. The Malaysia Stadium Corporation may also wish to include the
right to terminate the agreement where there is a higher offer from an
alternative sponsor. Although it is seemingly unfair to Axiata, such clause may
be agreed upon the sponsor being granted
the right of first refusal or an assurance that the Malaysia Stadium
Corporation’s right to terminate may only become effective within the last two
years of the agreement.
While
not being a favourite idea to all, the reality is an old and inadequate stadium
may remain status quo without the influx of a sponsor’s money. As YB Khairy
Jamaluddin noted in the recent Axiata Arena Media Launch, “the average Malaysian would term Bukit Jalil as the nation’s sporting
stadium but it does not reflect that. (People) get out as soon as possible
because there is nothing to do there”. Conversely, sponsors are always
looking to maximise their brand awareness through high profile institutions.
Hearing Axiata’s name repeatedly over the television, radio, internet and
newspapers alongside the SEA Games and ASEAN Paralympic Games this year is
definitely an attractive upside.
Looks like it will turn out to be a win-win
situation for both parties after all.
By: Richard Wee, Lesley
Lim, Vincent Lim*
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