Investment vs Sponsorship

Many of us confuse sponsorship of a golfer with providing financial assistance for a golfer. Let's make it clear, sponsorship and investment are two totally different arrangements which should be understood carefully.

To make the point, you never hear a bank "sponsor" a person when they provide a home mortage to that person. Rather a bank provides "financing" in the form of a financial instrument called a home mortgage.

The word "sponsor" should be used when a golfer is provided money to endorse a product or play their equipment. The golfer can then in turn use that money from his or her sponsorship agreement to fund his or her professional golf dreams. A sponsor pays the golfer money and the golfer provides a service in return for being compensated accordingly. The service which the golfer provides in return for the compensation can be in the form of marketing or endorsements. It does not entail the golfer paying money in return for being compensated. That sponsorship agreement has nothing in the contract about where that money can be spent in terms of the golfer's "operations".

Whereas, when a person provides money to help a golfer with funding operating expenses, that is a financial "investment". The "investment" agreement will have erms which dictate where funds can be spent as it relates to the golfer's operations.

An investment agreement has pay back terms since the investors want to know the exact terms of how they have a chance to recover their investment in monetary terms. Sponsorship agreements do not have monetary "return" terms as the company in which the golfer enters into the agreement with has non-monetary goals for the amount of money they are compensating the golfer. They have ideas outside of the terms within the agreement about how they will benefit from paying the golfer money.

Both sponsorship and investment agreements are similar in that most have date terms of when the agreement ends or when the milestones should be achieved.

They are the same in that both have terms of what services each party should provide in order to be in compliance with the agreement. And terms what to do if one of the parties is not in compliance for what their responsibilities are as it relates to the agreements.

As well, in general, the type of agreement between the parties involved will determine which types of laws govern the contract. Security laws govern a financial (investment) agreement. A sponsorship agreement is governed mainly by corporate law. Security laws are more strict and defined as compared to the general corporate laws.

Here are specific definitions of each:

investment (the act of investing | investing): to commit (money or capital) in order to gain a financial returnlaying out money or capital with the expectation of profit. (source: dictionary.com)

sponsorship (the act of sponsoring | sponsoring): One that finances a project or an event carried out by another person or group, especially a business enterprise that pays for radio or television programming in return for advertising time. (source: dictionary.com)

Note how the definition of sponsorship relates to advertising and not specifically for funding operations.

To conclude, and reiterate, we should not use the word "sponsor" for when a golfer is provided funds for playing professional golf. Rather, we should use the words "investment" or "financial backing" when investors or financial institutions provide funds for a golfer's endeavors to play professional golf.