Football and Gambling – a match made in heaven, or a marriage of convenience?
Premier League newcomers Hull City announcement last week that they have signed Kenyan betting operator, SportPesa, as their primary shirt sponsor for the 2016/17 season. This has taken the total number of teams that will advertise gambling operators on their shirts to ten, half of the teams in the league. No single industry has ever been more dominant in shirt sponsorships in the Premier League era. Is this an anomaly, or a trend set to continue in the coming years? And what does this mean for both the gambling industry and football clubs?
In order to understand the current situation, it is important to look back at how the relationship between gambling operators and football clubs has developed over the history of the Premier League.
The first instance of a gambling operator appearing on a Premier League shirt was at the beginning of the 2002/03 season when Fulham FC signed a deal with a local operator with big plans, Betfair. On the signing of the deal, Betfair CEO Edward Wray commented:
'Fulham's achievement in the last few years of coming from the lower divisions to compete with the Premiership's biggest clubs makes it a perfect fit with Betfair, and we are delighted to have completed this deal. Both Fulham and Betfair have been prepared to throw down the gauntlet to more established organisations in the last two years, and in partnership with each other we believe we will be the names to watch in the future.'
Despite the deal only lasting one year, the exposure that Betfair received, undoubtedly helped bring the brand to the attention of the general betting public, as opposed to a narrower horse racing centric customer base that existed at the time. Furthermore, the deal showed other predominantly remote operators that football sponsorship was a viable avenue for brand growth.
The graph below shows the progression of shirt sponsors by industry through the history of the Premier League (there were 22 teams in the league for the first three years at which point it was reduced to 20). The early years saw a dominance by electronics and alcohol companies, with telecommunications entering the league at the turn of the century. Gambling, travel and financial services have taken up that dominance since c. 2006.
The following table shows a simple gambling v non-gambling version of the above. The coming season sees half of the league adorning gambling sponsors.
If there was any doubt as to the exposure that gambling operators (as a group) will receive, it is worth highlighting that of the 380 games that will be played in the upcoming season, only 90 will be played out with two teams that don’t have a gambling sponsor. 200 of the games will have one team with a gambling sponsor, and 90 with both teams. In total c. 76% of matches will have at least one gambling sponsor.
At the beginning of the decade, there was a high presence of gambling operators in the Spanish and Italian top divisions, most notably with BWin’s sponsorship of two European giants, AC Milan and Real Madrid, both with a huge international TV footprint. Since then, the presence in both countries has decreased to zero.
Similar to the English Premier League, the English Championship has seen a big rise in gambling sponsorships for the coming season, going from two in 2015/16 to seven in 2016/17. This coincides with increased TV exposure, with more games being covered on Sky Sports. The Championship also presents a much lower cost of sponsorship, with a possibility of any given team reaching the Premier League the year after. In Scotland, both Rangers and Celtic will wear shirts with gambling sponsors for the first time (32Red and Dafabet respectively).
Why is sponsoring a Premier League shirt such an attractive option?
Up until SportPesa’s deal, all previous Premier League sponsorships had been with operators with their primary businesses facing into Europe and Asia. SportPesa claim to be Africa’s largest bookmaker with little business elsewhere, so this poses the question of exactly why operators are focusing so heavily on the Premier League.
There are three main reasons as to why gambling operators partner with football clubs:
Direct activation – using the partnership to directly acquire customers from a team’s fan base
Brand exposure – giving visibility of the company, within the context of football both within the UK and internationally
Brand trust – giving credibility to a company through the association with an established football club
It would be overly simplistic to suggest that any operator has only one of the above motives, however there appears to be a regional skew. With the exception of Bet365’s deal with Stoke City (with the company and club having much deeper links), the established UK facing operators have avoided shirt sponsorships. The UK facing operators that have signed such deals, tend to be smaller, disruptive new entrants to the UK market, or more established brands that are not historically associated with football. These companies therefore have a blend of the three listed reasons.
Non-UK facing operators, accounting for approximately half of the historical deals, tend to be more established companies that appear to be using sponsorships to advertise into their local audience (the Premier League has an estimated potential audience of 4.7 billion people). Asian operators for example have used LED perimeter boarding in local languages, displaying Asian handicap markets, which clearly demonstrates their intention within the UK market.
One reason for this approach, is due to restrictive advertising rules involving gambling in these regions. Advertising internationally with a window into the local market, circumvents any such restriction.
Why are these deals attractive for the clubs?
In the late 70s and throughout the 80s sponsorship deals were typically with local or national businesses. The start of the Premier League in the early 90s, with the additional international exposure that that brought, resulted in a shift towards national and multi-national businesses. With the league now undoubtedly the number one league in the world in terms or revenue and TV exposure, cost of sponsorship has increased significantly.
This increase in cost has meant that many industries have started to shy away. However the boom in TV exposure has coincided with the growth of the online betting and gaming industry, with the two fitting together well due to nearly perfect overlap in user demographics. Compared to other industries, gambling companies are better suited to track the direct impact of any such deal, therefore leading to renewals or potentially higher fees when success is proven.
However, despite the worldwide exposure of every Premier League team, there are some which command even higher fees for sponsorship, due to the strength of their brand, and the additional international reach that is gained by playing in the UEFA Champions League. This split is perfectly highlighted in the odds for next year’s Premier League winner, with only one of the top ten having a gambling sponsor (West Ham & Betway), with Middlesbrough the only team in the bottom half of the list with a non-gambling sponsor (Ramsdens). This skew results in the chances of any of the ten gambling sponsored teams winning the league to be 40/1!
For these ‘premium’ Premier League teams, the cost of sponsorship ranges between £10m to £50m per year, a fee that is too high for the vast majority of gambling operators, but within range for multi-national companies such as Chevrolet, Standard Chartered, Etihad Airways and Fly Emirates. In comparison, football clubs outside the ‘premium’ group command fees of £1m to £5m per year. Sponsors of the ‘premium’ clubs benefit from association with the clubs themselves, whereas sponsors of the ‘non-premium’ clubs benefit from association with the league and its exposure.
While it is simple to suggest that clubs will deal with whichever company will pay the most, there are many examples of clubs that don’t want such an obvious and direct association with the betting and gaming industry for reasons of social responsibility.
What happens in the future?
In the short term, it is likely that we will see a continuation of the dominance in shirt sponsorship by gambling operators in the Premier League. It is possible that the number increases from 10, but it seems hugely unlikely that it will go much higher due to the fees involved in sponsoring ‘premium’ clubs.
It is likely that we see an even higher number of Championship teams with gambling operator sponsors as the prize for that team’s promotion is so high. In fact, we may see more examples of individual operators signing multiple-club deals in the Championship, in order to effectively hedge the chance of promotion, as well as increasing immediate exposure.
We may see an effect from the Premier League TV broadcast deal which is due to give every team an ongoing boost in revenue from this season. Cost of sponsorship may go up as a direct result, however the increased financial security of all teams will reduce the reliance on shirt sponsorship revenue, and potentially give clubs the opportunity to pick sponsors more in line with their brand, likely reducing gambling sponsorships due to social responsibility policies.
In the long term, it is nearly impossible to forecast, as there are too many variables involved. Regulatory changes in regions such as China, India and the US will play a significant role going forward, as would any changes to the profile of worldwide TV exposure.
Currently, football clubs and gambling operators have much in common, so commercial links are mutually beneficial. Should this change, a major shift away from gambling and towards a new booming industry is likely.