A note of caution for sports agents, introducers and intermediaries: beware the implied “effective cause” term
The recent decision of the High Court in Winlink Marketing Limited v Liverpool Football Club  EWHC 2271 may have long lasting consequences for agents and intermediaries in facilitating and introducing parties to high-value sponsorship deals.
In a judgment handed down on 14 September 2020, HHJ Pelling QC dismissed Winlink’s claim for £1.125m in commission said to be owed to them by Liverpool FC under an introduction agreement dating back to October 2013. Winlink claimed that their introduction of BetVictor Limited to Liverpool FC in 2013 caused the parties to enter into a sponsorship agreement in 2016 worth £15m. Dismissing Winlink’s claim, it was held that the introduction agreement was subject to an “effective cause” term and that Winlink’s introduction in 2013 was not an “effective cause” of the sponsorship deal that materialised almost three years later.
Winlink is an intermediary. It introduces sports rights holders to commercial entities willing to sponsor them. HHJ Pelling QC compared the business to that of an estate agent: much as an estate agent is retained by a property vendor to find a purchaser using its contacts and other marketing skills, entities such as Winlink are retained by sporting rights holders to find sponsors. Sponsorship can take a number of different forms. The sums involved can be substantial.
On 1 October 2013, Winlink entered into an introduction agreement with Liverpool FC. The agreement suggested that Winlink would be paid commission if, following an introduction with a potential sponsor, a “Relevant Contract” ensued. A “Relevant Contract” was defined as any agreement entered into “during the Introduction Period”. The length of that period was not defined. In December 2013, Winlink introduced Liverpool FC to BetVictor. The introduction led to discussions between Winlink and Liverpool FC concerning a potential three-year sponsorship deal. Despite those discussions continuing between 2013 and 2015, no deal transpired.
In 2016, Liverpool FC and BetVictor entered into a £5million three-year sponsorship agreement.
Winlink argued that it was an “effective cause” of BetVictor entering into the 2016 sponsorship deal and was therefore entitled to commission from Liverpool FC under the 2013 introducer agreement.
By the end of the trial in June 2020, Liverpool FC relied on two defences:
- The 2016 sponsorship agreement had been entered into after the expiry of the Introduction Period specified in the introduction agreement; and
- The introduction agreement was subject to an implied term that required Winlink to be an effective cause of the sponsorship agreement, and Winlink was not an effective cause of the sponsorship agreement.
Dismissing Winlink’s claim, HHJ Pelling QC held that the introduction agreement was either to be construed as, or subject to an implied term, requiring any introduction by Winlink to be an effective cause of the sponsorship agreement. He found that it was necessary to imply such a term in order to give the agreement business efficacy, without which it would lack commercial or practical coherence.
It was held that Winlink’s introduction was not an effective cause of the 2016 sponsorship agreement. What was proposed in 2016 was a “completely fresh basis of dealing” when compared with what was discussed in 2013. It was of an entirely different magnitude to the transactions contemplated in 2014 and 2015. In 2016, the proposal was for a “principal global sponsorship arrangement”. It involved not merely the advertisement of each match for a short period on LED hoardings but a full spread of exposure on almost everything generated by Liverpool FC other than the first team shirt. By 2016, BetVictor’s owner had changed, its CEO had changed, and the transaction owed its genesis to a long-standing commercial relationship between Ms Valentino, Liverpool FC’s new marketing executive, and Mr Meinrad, BetVictor’s new CEO. It owed nothing to Winlink’s introduction of Liverpool FC to BetVictor in 2013. It was not an “effective cause” of the sponsorship deal. Accordingly, Winlink was not entitled to any commission.
Where an introduction agreement has no “effective cause” term, the court may construe or imply one if it is necessary for the agreement to make commercial or practical sense.
The decision highlights the need for contractual certainty if parties are to protect their commercial interests and avoid future disputes over commission in highly lucrative deals.
 Winlink Marketing Limited v Liverpool Football Club  EWHC 2271 at 
 Winlink Marketing Limited v Liverpool Football Club  EWHC 2271 at