|That sound you heard on Monday was the popping of champagne corks as the US Supreme Court ruled to strike down the law that made sports betting illegal in the US outside the state of Nevada.Technically, the ruling doesn’t legalise sports betting in itself but it does allow each state to legalise it if they so wish.|
Not surprisingly, most states so wish.
New Jersey brought the case to the Supreme Court in the first place so you will be able to place a bet there within a couple of weeks. Four other states passed pre-emptive legislation legalising sports betting in anticipation of this ruling, while a further 14 have already introduced bills to their legislature. Within a year or two, this will be a tidal wave that will cover the whole country — with the probable exception of Utah and Hawaii.
However, those champagne bottles weren’t being opened to celebrate any sense of justice being done. This was all about the money. Frankly, other than the illegal, underground bookmakers who are currently feeding the (significant) gambling habit of Americans, it is hard to think of anyone who won’t benefit from an enormous commercial windfall.
First and foremost, the individual states are now able to collect tax on the profits of an industry that some people estimate to be worth at least $400bn (£296.4bn) per year.
Bookmakers are the next obvious beneficiaries with over £1.5bn added to the market values of British betting firms immediately after the ruling was made public. Shares in Paddy Power Betfair soared by over 12 per cent. Meanwhile companies like DraftKings and Fan Duel, who currently navigate a loophole in the legislation with their daily fantasy propositions, already have an active database of 10m people who like to stake money on sports predictions.
The major sports leagues and their teams are chilling their champagne flutes as well. Ironically, they were fighting against the ruling, arguing instead for a Federal solution rather than a state-by-state one. But that technicality notwithstanding, Mark Cuban, the outspoken owner of the Dallas Mavericks NBA team has gone on record saying that this ruling will double the franchise value of all teams in the major US sports leagues.
Even if the - frankly preposterous - one per cent “integrity fee” that the leagues are proposing doesn’t come to pass, there are multiple ways that the leagues and teams will benefit commercially. People are significantly more likely to watch more minutes of more games when they have money on it, so that increased viewership will be reflected in the rights fees. Sports data will become the oil in the engine of the industry so expect to see significantly more deals like US Soccer’s $1.5bn deal with STATSports and Sportradar’s exclusive deal with the NFL.
Even more significantly, the ruling has also opened up a gigantic new sponsorship category. Gambling companies now account for a staggering 45 per cent of Premier League shirt sponsorships and completely dominate the commercial breaks as they compete to be front of mind in the “moment of truth” when the bet is placed. That is worth a lot of money to betting companies and they have shown a willingness to pay for it. Let the land grab commence.
But the biggest winner of all will be those responsible gamblers around the country, who no longer have to go underground to unregulated, dark markets. They will now have access to transparent odds, payouts on their winning bets will be guaranteed and there will be a route to legal recourse if necessary. Contrary to some who argue that an explosion of betting might lead to more corruption, almost all evidence suggests that this increased transparency will decrease the opportunity to manipulate the markets as irregular betting patterns become easier to identify.
Of course, there is a long way to go and there are likely to be plenty of bumps in the road before this all plays out. But the genie is out of the bottle and sports marketing in the US will never be the same again.
That’s something you can bet your mortgage on.
|The headline of the release that accompanied LA’s budget talked about “No Surprises”. And I wasn’t surprised that the estimate of $1.93 billion was, by LA’s admission, conservative. That’s what Olympic bids always do when it comes to sponsorship forecasts. But I was surprised at just how conservative it was – in my view overly conservative.To put this into context.The US is the world's largest advertising and sports marketing economy, and in turn its media and brands are by far the biggest investors in Olympic media and sponsorships.|
So I was expecting to see LA estimate the biggest-ever domestic sponsorship Games revenue.
But that's not how it played out.
Yes, the LA estimate would be a record for any completed Games to date. But even allowing for price elasticity of demand, having already signed 15 Tier One and 27 Tier Two partners, Tokyo 2020 appears to have already generated well over $2 billion from domestic sponsorship given its rate card of $128 million and $51 million respectively for Tier One and Tier Two deals.
So that's the new benchmark, from an ad market that's 25% the size of that of the US.
Another benchmark. The LA estimate is less than double London 2012’s final total of just over $1 billion, which was generated by a much, much smaller ad market - 12% of the size of the US - in the teeth of a recession.
When Tokyo won the right to stage the 2020 Games, I predicted that it could reach $2 billion of domestic sponsorship revenue. If LA wins the race for 2024, I believe that over $2 billion is a certainty and $3 billion highly likely.
I suspect that the two other models LA used would have reflected a similar scenario.
But LA didn’t need to run the risk of over-promising and under-delivering. A conservative $1.93 billion works for LA’s no risk budget, and even at the lower end of the scale, still comfortably eclipses the $1.086 billion from domestic sponsorship estimated by Paris, its chief rival in the 2024 race.
No surprise. No surprises.
|There's golf, and there's the Ryder Cup. Like nothing else in golf, it dominates the headlines, courts controversy, ignites social media, and draws in millions of non-fans. So how did what started as a low-key exhibition match in the 1920s, and which was dying by the 1970s, become a sports marketing phenomenon?Re-invention|
The Ryder Cup heralded a trend which has shaped modern sport: the creation of new and re-imagined formats. Consider for example the huge success and influence of the Rugby World Cup (born in the 80s), football’s Premier League and Champions League (the 90s), cricket’s Twenty20 and IPL, and most recently eSports. And there are many more.
So it was with the Ryder Cup. Following years of predictable and overwhelming US victories over a hopelessly outmatched GB & Ireland team, by 1977 the event was on its last legs. But from 1979, at the inspired suggestion of Jack Nicklaus, GB & Ireland became a European team to make the matches more competitive. And the rest, as they say is history.
Three players, who will all cast giant shadows over this Ryder Cup, stand apart for their marketing impact on golf: the recently-passed Arnold Palmer, who with Mark McCormack as his salesman, led golf into the TV era and made it a big business; Tiger Woods, the sport’s first truly global icon whose impact was only truly felt after his disgrace and withdrawal; and Seve Ballesteros, who transformed the image and appeal of European golf in general and the Ryder Cup in particular.
When Nicklaus made his suggestion, Seve was the inspiration. Seve duly became the talisman of the new European team and inspired its first game-changing victories over the US in the 80s. Brilliant, charismatic and fiercely competitive - especially against the US players and galleries who he perceived as having slighted him early in his career - Ballesteros was, above all, the catalyst for the Ryder Cup phenomenon.
Less Is More
One of modern sport’s biggest problems is that there’s too much of it. Football, rugby, tennis, cricket and golf have all over-supplied the marketplace, leading to numerous negative on- and off-field consequences. This has increasingly worked to the Ryder Cup’s advantage. It doesn’t come around very often, but when it does, we can’t wait. Less is more.
Above all, one thing makes the Ryder Cup unique, and uniquely powerful as a sports marketing platform: it’s Europe versus the USA. This happens nowhere else in major sport. Nowhere else in major sport does Europe compete under one banner, uniting hundreds of millions of fans. And it’s easy to forget that sport in the USA is a primarily a domestic affair: the dominant US team sports are all contested internally. As a sporting nation, the USA rarely ventures outside its borders onto the world stage. So when it does, it’s rare, and it’s a big deal. And this year, owing to Brexit, this particular aspect of the Ryder Cup story is even deeper.
The Ryder Cup is entirely unlike the golf that we see week-in, week-out, all year. Tournament golf is selfish: the Ryder Cup is selfless. It’s not about individuals playing for a title and multi-million-dollar purses. It’s about teams, about playing as part of the team, about winning for the team, and – that extreme rarity in big sport - not about money – the players aren’t paid to appear in the Ryder Cup. And this works and appeals in a way that tournament golf simply doesn’t. It gives the fans a team to support, and that in turn makes it bigger, more emotional, and easier to buy into than tournament golf - remember, worldwide, it’s team sport that rules. It makes heroes and villains out of players who, ordinarily, we don’t passionately support or oppose in their tournament identities. And most importantly, it works because it demands of the players something different, something other, something somehow better.
It may not like it, but the fact is that sport thrives on controversy. Controversy creates today’s stories, history’s legends, and tomorrow’s fans. Controversy sells. And since the Ryder Cup was re-invented in 1979, and the contest became as close and as fierce as anything that sport can offer, controversy has never been far away: indeed, it’s become part of the event’s DNA and its global appeal, part of why we look forward to it, part of what we expect from it. Golf’s traditionalists might not like it, but that controversy is another element that sets the Ryder Cup apart, and gives it an appeal way beyond golf’s normal fan base and media footprint.
We regularly tune into marquee events hoping to see something special, only to be disappointed. But since its re-invention, the Ryder Cup has never disappointed. Every event since 1979 has produced unforgettable, defining moments that have entered the sporting – not just golfing – pantheon. And this isn’t about serendipity: it’s the inevitable result of the contest being re-invented to become even and unpredictable, blending perfectly with a format which is guaranteed to produce moments that win – or lose – the match. The Ryder Cup is a perfect sports marketing template.
Synergy is working with Standard Life Investments, the first Worldwide Partner of the Ryder Cup.
|In this year’s NBA All Stars game in Toronto, there was one towering difference on the court. It had nothing to do with what the players were doing with the ball, but everything to do with what they were wearing. On their jerseys, for the first time, there was a brand logo – Kia.|
|Let’s put this in proportion: at 3.25 inches by 1.6 inches it’s barely noticeable in comparison with the logos on MLS or European sports jerseys, but it’s the barrier it crosses that’s significant. There can be no doubt that this is the NBA putting feelers out for what Commissioner Adam Silver talked about back in 2014 when he said: “We know what the value is to advertisers…to be able to show fans in-game branding.”|
The math is simple – the average MLS jersey goes for around $3–3.5m dollars a year, but for commercial departments from the leading “big four league” teams in the US, I would imagine that there have been some envious glances across the pond to Manchester United’s deal with American car company Chevrolet at $75m a year.
Whilst the NBA have been joined by the NHL (whose Commissioner described jersey sponsorship as “coming and happening”), the MLB and NFL have been certainly more lukewarm. There are obvious logistical issues around it.
First, with a league’s collective bargaining agreements there needs to be consensus and balance as to whether it’s sold centrally or as per the European sports model, team by team. And secondly, the objection of broadcasters concerned about potential conflict and lost revenue.
The real question here is not whether this will indeed happen in the USA (I believe it’s inevitable over the next few years in NBA and NHL, at the very least), but rather whether it will impact negatively for consumers. And moreover, will brands here in America learn the lessons from the decades of good, bad and ugly jersey sponsorships in the past to influence the future?
So do consumers care…and, in particular, the Millennial consumer?
At Synergy, we’ve long been frustrated by the lack of real understanding and insight on the way Millennials engage with and view sports – both now and in the future. There are countless myths that have been built across the demographic, some of which are wrong and many of which can skew the way brands and rightsholders build campaigns. At the end of 2015, we undertook a bespoke and comprehensive piece of research with our sister agency, The Intelligence Group, around both Millennial and Generation X attitudes towards sports, sponsors and the future of sports engagement, with findings featured throughout Now, New & Next 2016.
The survey (3,145 consumers in America with 66% 18–34-year-olds and 34% 35–54-year-olds) specifically examined the potential impact of jersey sponsorship among the audience.
In short – they don’t see it as an issue. The rise of European soccer, MLS and WNBA has made jersey logos a more acceptable part of the viewing experience for the Millennial sports fan. The research highlights that 27% of Millennials think jersey sponsorship is “very appropriate” (higher than Gen Xers), whilst, tellingly, more Gen Xers than Millennials think it’s better for brands to be in the ad break or break bumpers.
History also shows that team success soon overcomes fans’ commercial objections. FC Barcelona – whose motto is famously “More than a Club” – held out for decades against commercial shirt sponsorship by featuring Unicef on the front of their jersey (at no charge), before replacing the global charity with sponsorship from the Qatar Foundation for a then record $40m a year.
|Whilst there was a clear media backlash, it didn’t last long when a team with significantly increased resources went on to lift the UEFA Champions League. So if it helps your team produce a great spectacle, most fans soon overlook the logo.|
Critically, fans soon discover that a brand appearing on their shirt will not affect their “fanship.” Indeed, more than being just a benign presence, fans may even come to see a jersey sponsor as a positive force for good, with the brand actively enhancing this very fanship. Another reason why this front-and-center asset can be so powerful.
As a jersey sponsor you have a responsibility, since your logo becomes part of the history of the team. Famous jerseys down the ages of European sports are identifiable due to the brand logo on the front of them – the brand locked forever, in the very midst of that trophy-lifting moment. The same applied off the pitch, where through the replica shirt market, fans of all ages wear your brand on a daily basis.
You cannot be edited out – be that in the live moment, or the subsequent media coverage: your brand is indelibly stencilled into that moment of history (for good or bad).
This responsibility means that you must understand and tap into the players, the fans, the culture and the tone of the team.
Lessons Learned for the Future
So what lessons can brands considering jersey sponsorship here in the US learn to ensure this doesn’t become just a glorified media buy?
1 UP CLOSE AND PERSONAL
2 IN-GAME, EVERYWHERE
3 CONNECT WITH THE PLAYERS TO RESONATE RICHLY
Again, with players controlling their own IP and the restrictive contracts they can have with teams in the US on its usage, brands need to be savvy enough to work in harmony with the players. Additional agreements with them are a must, especially in relation to their social feeds. Take, for example, the starting line-up for the Cleveland Cavaliers, which has a combined Twitter and Facebook following of 58m, versus the team’s official feeds of just over 5m.
LeBron’s Twitter following alone is nearly as big as that of all the other teams in the league combined.
|4 DISRUPTIVE THINKING PAYS|
Don’t be afraid to innovate or have fun with it – when Intel signed a jersey deal with FC Barcelona they literally turned the traditional model inside out by putting their Intel branding on the inside of the jersey. Some brands have handed over the space to a charity that they back for key matches – something that usually attracts positive sentiment.
5 THINK LOCAL AND ACT GLOBAL
|Jersey sponsorship will happen here in the US, and fans will accept it. Leagues and brands, however, must look past the jersey as simply prime estate, instead seeing it as a chance to help share the very beating heart of the team.|
Respect this, enhance it and tap into the fan culture, and it’s among the most powerful assets in a sponsorship arsenal. Get it wrong and it’s an expensive – and very public – mistake.
This blog comes from Synergy’s Now, New & Next sponsorship and entertainment outlook for 2016, which can be viewed in full here.
|NEW YORK – November 2, 2015– Engine Group, the global marketing services network, today announced the U.S. launch of Synergy, its award-winning sports marketing and sponsorship agency. Based out of Engine Group’s New York office, Synergy U.S. will be led by Dominic Curran, who has been named CEO. Curran, the former Global Sport Director for Bacardi, will report to Rick Eiserman, North American CEO at Engine Group.|
Synergy’s U.S. offering will adopt the brand-facing model integrating strategy, creative, digital, experiential marketing and public relations that has made it a leading sports sponsorship agency in the U.K. Headed by CEO Tim Crow, Synergy works worldwide with clients including BMW, Coca-Cola, Emirates and MasterCard on global marquee sporting events such as the FIFA World Cup, the Olympic Games, and the Rugby World Cup. Standard Life Investments, Worldwide Partner of the Ryder Cup, will be on board as a launch client of the new U.S. office.
“The agency landscape around sports marketing is ripe for disruption in the U.S. and Dominic is the perfect person to lead that charge,” said Eiserman. “Brands are frustrated by the lack of media neutrality in the U.S. and the obsession with paid media thinking and rights. Synergy’s approach is to create powerful campaign ideas that have ability to play out across all media, with digital at the core."
Crow added: “A big part of our success stems from the fact that we are neutral brand-facing specialists and guarantee our clients no conflicts of interest – we create strategies, partnerships and campaigns solely for brands. That’s always been core to our offering and we’ll be replicating that model for brands in the U.S.”
Synergy’s move to the U.S. marks the first time the agency has opened an office outside the U.K. Since its inception more than 30 years ago, Synergy has won some of the industry’s most prestigious awards, including recently being named Agency of the Year at the Sport Industry Awards in London.
“I am thrilled to bring Synergy’s differentiated model to U.S. marketplace,” said Curran. “We’ll be diving right in, helping Standard Life Investments activate at the Ryder Cup next year. I’m looking forward to building an agency with the right expertise and creativity for brands and fans in the connected era.”
Engine Group recently announced the U.S. launch of customer engagement agency Partners Andrews Aldridge in September, and the expansion of digitally-led agency Deep Focus to London and Los Angeles. The network is growing rapidly following its acquisition by Lake Capital in August 2014, with more than 2,000 employees across the U.S., UK and Asia.
Synergy is dedicated to creating the world’s most innovative and effective sponsorships for brands. Founded in 1984, and with offices in London and New York, Synergy works worldwide from strategy to delivery for clients, including BMW, Capital One, Coca-Cola, Emirates, Guinness, MasterCard, Standard Life Investments and more. For more information, visit synergy.global.
ABOUT ENGINE GROUP
Engine Group is a global marketing services network of specialist communication agencies that transforms brands through its unique collaborative culture and business approach. The individual agency brands within the network cover the vast range of marketing services including strategy, digital marketing, social media, advertising, public relations, and content creation and production. With operating hubs in the UK, North America and Asia, the agencies within the network include WCRS, MHP Communications, Trailer Park, ORC International, Partners Andrews Aldridge, Deep Focus, Synergy, Calling Brands, Mischief, Fuel, Transform and Slice. The group’s client portfolio range from top brands such as Unilever, Santander and Kimberly-Clark to all the major entertainment studios including Warner Bros., Disney and 20th Century Fox. More information is available at enginegroup.com.
*Microassets Ltd. is the world-leading provider of small ‘features’ within a bigger sponsorship asset, including content, giveaways, challenges, stats and in-game moments than can be sold to a Presenting Partner.
On a recent trip to New York, Tim Crow and I had the pleasure of going to Madison Square Garden to watch the New York Knicks take on the Indiana Pacers. Anyone who has followed the NBA this year knew that we were unlikely to witness a basketball masterclass or a win for the home team. Rather, we were going for a first-hand experience of US sports marketing and sponsorship activation. And where better than in one of the world’s most iconic sporting venues?
We certainly got more than we bargained for. Here’s what we found (and I promise I’m not making any of this up):
We couldn’t quite believe the sheer intensity of the brand bombardment that we had just experienced. But when we told one US sports marketing veteran about it, his response was simple: “Welcome to America!”
Really? Is this the direction that sports marketing in the US is heading? Is the Madison Square Garden a template for the future or a relic of the past? Will the future just be an endless collection of semi-meaningless assets like “The FedEx Air and Ground Players of the Week” (NFL), “The Dominos #DomiNoNos” (MLB) and “The Dunkin Donuts Dunks of the Week” (actually that last one doesn’t exist, but it probably should)?
The appeal of this model for rightsholders is obvious. It’s about carving up rights into smaller and smaller pieces and creating saleable “micro-assets” out of thin air – basically money for old rope. Who can’t see the appeal of that? But that’s only if you see sponsorship as a zero-sum game – a transaction rather than a true partnership.
The best way for rightsholders to create more value for themselves is by focusing on creating more value for their sponsors, and then figuring out ways to tap into that incremental value; not by coming up with more and more things to sell them. And the plain truth is that this model isn’t particularly good at creating value for the sponsors.
First and foremost, and at an incredibly basic level, with 16 different brands all vying for a bit of attention at this particular event, there are simply too many brands present without enough whitespace between them. The problem isn’t the number of brands per se, but the fact that they are all basically doing the same thing (sticking their name on a particular feature), meaning that none of them are really memorable. Without scrolling up, try to remember who the presenting partner of the mega T-shirt machine was, or what Terra Vegetable Chips sponsored.
Great sponsorship needs a Big Idea: a powerful insight that connects the brand to the audience via the asset they are sponsoring, and an activation campaign which brings that Big Idea to life through different channels, over time and in new and interesting ways. But frankly, it’s really hard to see how any of the items on the list above connect to a bigger, more meaningful insight or are part of a broader, more engaging activation programme.
Sure, there are some obvious connections like the fact that the ‘drive of the game’ was being presented by a car company or that the two assets involving children are presented by a brand of chewy sweets. In fact, I’m pretty certain that someone, somewhere has come up with a logical justification for all of them (“We dance on Norwegian Cruise Line Ships so we should sponsor Dance Like a Champion”; “Trees for Threes rhymes with PWC” etc.)…but, in truth, none of them help to tell a meaningful and compelling brand story that the audience cares about. Because, to do that, you have to go beyond the obvious.
Also, it was hard to see how any of the activity we saw in the building was part of a broader campaign. Clearly, Sprite’s Latin Night was part of a bigger NBA-wide sponsorship property, but nothing happened on the night to give it that sense. Is there a PR or social media component to Douglas Elliman’s celebrity spotting? Do Chase have a campaign around helping people make better decisions which their sponsorship of the video review brings to life? Do Delta use stats in any of their other marketing communications?
If the answer to all these questions is “no”, then what’s the point of even doing them? The fact is that none of these “micro-assets” are big enough to stand on their own, so if they aren’t part of a bigger campaign, they are just tactical media buys that reach the 18,000 people inside Madison Square Garden.
Surely that’s no template for the future.