What are US sports sponsorships actually worth?

There is an argument that regulated sports betting has come just in time for the major US sports leagues and professional franchises. Like the cavalry turning up in the nick of time, regulated sports betting and the fan engagement that goes with it has arrived just as sports consumers are turning off mass viewership of the major leagues. A recent report from the gaming and media analysts at Macquarie pointed out that sports viewership in the US was down significantly last year. Pandemic issues make comparisons potentially tricky, but it is still notable that NBA finals ratings fell 49% compared to 2019 and NHL Stanley Cup finals ratings were off by 61%. Even the NFL saw a decline with ratings in the first five weeks of the season down 13% year-on-year. The Macquarie team point to recent Nielsen ratings which show that since sport restarted late last year, ratings for all major sports are down 25% on average. “This is abnormal,” they note. “In a normal year, the ratings deviate just a few percentage points, and large swings like these are essentially unheard of.” Enter sports betting. The American Gaming Association (AGA) has been saying for years that betting boosts fan engagement, with surveys consistently showing that fans are more likely to watch an NFL game if they have a bet resting on it. The Macquarie team, meanwhile, pointed to a survey produced by Seton Hall University which shows that 90% of those aged between 18-29 would be more likely to watch a game if they had bet on it. “Leagues and teams know that sports betting adds an extra layer to engagement and the statistics back this up – bettors watch more often and for longer so the relationship is beneficial both ways,” says David Sargeant, a sports betting consultant.

Fully engaged

The rush to be associated with sporting events and teams in the US has its antecedents in Europe where the rollout of regulated online sports betting and gaming markets has generally been accompanied by sponsorship and market deals with clubs and, in some instance, leagues. But with that rollout either having stalled or in retreat, the focus is now very much on the US where the appetite for partnerships shows no signs of abating. It is rare for a week to go by without another deal being announced, either with a league or a team. The Macquarie report in January listed the partnerships at that point for the three of the leading US players. That showed DraftKings as having 16 either official or exclusive deals with either teams, leagues, venues or sporting personalities; BetMGM had 10 official and/or exclusive partnerships wrapped up at the time; and FanDuel had seven. From the leagues’ point of view, it’s a “positive sign” said Scott Kaufman-Ross, who leads the NBA’s fantasy and gaming department. “It demonstrates that the sports and gaming industries appreciate that legalised sports betting will be more successful if we are working together,” he says. “There is a lot we can bring to the table to make this market grow. The endorsement will make it clear who the legal operators are and differentiates them from the offshore competition and the data deals have benefits we all share.” That last point is crucial as far as the deals with the leagues are concerned. As Sargeant points out, for the leagues the official stamp is very important. The leagues have pushed operators to partner up with them since the first states opened up to sports betting, he suggests, and operators have “largely been happy to gain the credibility of top-tier brand association”. “Operators know that there are a small number of official league partnerships available, so demand is high, meeting the limited supply,” says Daniel Kustelski, founder and chief executive at free-to-play games producer Chalkline Sports. “Also, many of those operators are early movers in newly regulated states, and league partnerships present a clear opportunity to establish a strong, trustworthy brand association to many fans. Ultimately, the league partnerships can provide reach and awareness that feels timely and valuable to brands as they’re racing for market share.”

Team bonding

The same goes for individual team sponsorships. Another survey cited by Macquarie from Variety/Prodege showed that of the sports gamblers surveyed, 62% were most interested in betting on the team they support. It makes the rush to sign sponsorship deals entirely understandable. “The vast majority of sportsbook operators in the US are in a frenzy to capture sports fans,” says Aubrey Levy, vice-president of content and marketing at theScore, the one company which conversely has yet to sign any partnerships of this sort. “There is this rush to go upstream to get to them. There has been no shortage of deals and it validates the notion that people won’t necessarily transact only on a sportsbook – it is one element of the audience experience.” Levy says theScore playbook is “slightly different” in that it is trying to convert an existing sports audience to betting. “We somewhat have the audience through our media play, so the necessity is not that fierce for us,” he says. But for others in the space there is more clearly the need for brand definition in an increasingly competitive space and see sponsorships as the fast track to recognition. “For Betfred Sports, it’s really a branding exercise since we’re introducing the Betfred brand, which is very well known in the UK, to an American audience who generally don’t know who we are,” says Bryan Bennett, chief operating officer for Betfred USA Sports which recently signed deals with the Denver Broncos and Colorado Rockies for its debut in the state. “So yes, we feel that attaching the brand to a pro-sports franchise in local markets is a great way to immediately provide a big boost to our branding efforts.” Localisation is indeed a key factor. “The localised nature of sports betting in America can mean these targeted deals can be very attractive,” says Sargeant. “The market has born some very diverse team operator deals from multi-brand sponsorship deals, to exclusive sports betting omni-channel partnerships.” The Macquarie report detailed what is often involved in any partnership deal, from access to team trademarks and logos, access and naming rights to premium lounges, brand integration across all social media platforms and digital assets including live streams, in-game branding, video boards and signage, sponsorship activations at events, free-to-play content and VIP access.

Sporting calendar

Much of this will have been impossible due to disruption to sporting activities caused by the pandemic and hence the verdict on the worth of the deals will have to wait. “It’s too soon to tell,” says Bennett. “We’ve only just completed our first season with the Broncos and it was a non-traditional season to put it mildly. Our partnership calls for a heavy dose of gameday experience assets that clearly were not realised in 2020.” He adds that Betfred USA Sports hopes that later this year they will be able to activate customers on gameday as opposed to only hearing ads for the Broncos brand content on the radio. But he notes that sports sponsorships can’t do all the heavy lifting. “Even in 2020, we built a lot of our marketing plans on Broncos content, sponsoring pre-game shows and weekly shows on the radio, all designed to play up the ‘proud partner’ of the Denver Broncos tagline,” he adds. “We want customers to know that we’re partnering with their favourite team as we believe that then gives us license to ask for their business.”

The vast majority of sportsbook operators in the US are in a frenzy to capture sports fans – Aubrey Levy, theScore

But of course they aren’t the only ones. BetMGM and FanDuel are both also official betting partners with the Broncos and will be attempting to coax fans with the same pitch and this crowded field will make it difficult for each of their sportsbooks to achieve their marketing aims. “It is a very frothy market,” concludes Levy. “The teams see dollar signs but there are five to seven operators on (some of these) deals. How can their marketing be differentiated? How is that beneficial for every one of those partners? Yes, there is brand awareness but there is no original execution.” Keith McDonnell, consultant with KMI Gaming, says the results of the sponsorship frenzy will be known soon enough. “In the next two we absolutely will be able to see viable results from exclusive partnerships and which leagues and pro-teams perform best.” Meanwhile, Levy doesn’t see the pace slackening any time soon. “The pace of these deals won’t slow down and there are a lot more teams coming into the picture. The land-grab for exposure will continue and there is not a shortage of operators willing to spend.”