|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.
|As Ed Miliband stated, the 2015 General Election is set to be the ‘tightest for a generation’. With policy focus on heavyweight areas, and media attention revolving around the potential results and the resultant political permutations, you could be forgiven for growing weary of the wall-to-wall election coverage.|
However, there has been very little attention paid to the topic of Sport. It's clear the seductive vision of the Olympic legacy promised in the 2010 UK General Election has not been realised. London 2012 brought more Team GB medals than any other Games, but participation levels in the UK are still falling, and yet Sport has been sidelined in the 2015 party manifestos. Within the combined 327 pages of the Conservative, Labour and Liberal Democrat manifestos, there were collectively 23 sentences referencing the subject. Not only is this disappointing, but it also seems illogical considering the impact Sport can have on on other policy areas, not least as physical inactivity is said to be costing our national economy £8.2 billion a year...
We must therefore ask: what effect, if any, will the election have on the Sport and sponsorship industry? To find an answer, we pored over the party manifestos, and delved into the political news archives to establish which elements of pre-election party chatter around Sport would actually make it on to the election agenda.
A summary of the major points can be found in our infographic here
For a more detailed view of these key topics, please read on...
Funding cuts leave door open for brands
In the weeks leading up to the 2015 General Election, much of the rhetoric has focused on each party’s approach to reducing the UK’s vast deficit (£101.8bn in 2014 alone). This need for collective belt-tightening makes cuts inevitable. With parties keen to ensure focus on the heavyweight policy areas, such as Education, Housing and the NHS, Sport has taken a back seat.
The prospects for sports funding, especially at the grassroots end of the spectrum, are poor. Whilst this is a worrying trend, any funding shortfall could open opportunities for brands to bridge gaps to provide capital, manpower, facilities and amenities. Work like McDonald’s grassroots football campaign and Barclays' ‘Spaces for Sport’ programme have shown that brands can provide vital funding, equipment and coaching where there is a real need. With cuts to be made, and a prioritisation of welfare services, sponsors could play a key role in keeping Britons active.
Manifesto game plans show limited football focus
|MPs are often accused of politicising football, but parties have comfortably avoided any such accusations around this election, by barely including the national game in their manifestos at all. Following the February announcement of the new Premier League TV deal, worth £5.14 billion, leading politicians wasted no time in adding their two pennies, but Labour's manifesto was the only one to mention the subject.|
Miliband has pledged to ensure the Premier League delivers on its 1999 promise to invest 5% of its domestic and international television rights income into funding grassroots. Further, Labour look to mix pounds and passion with a proposal to enable accredited supporter trusts. The move would mean fans could hold their football club far more accountable by appointing and removing at least two of the directors, and purchasing shares when the club changes hands.
The trickle-down of funds from the new TV deal and the enhanced ability for fans to hold their clubs to account could mean an evolving role for brands. Sponsors' changing role within football can be seen in recent high-profile examples, including that of Ched Evans, where club partners successfully supported Oldham fans in their calls to cancel the signing the player following his previous jail sentence.
After their focus on 'Reclaiming The Nation's Game' at their 2014 conference, it was hoped that football may play a large part in the Liberal Democrats' manifesto, but there were discouragingly few references. One of the few sport-related pledges concerned an exploration of safe standing, a stance that is sure to please a number of fans. Given the popularity of such a policy among football supporters, it might be tempting for brands already involved in the sport to show their own support by influencing policy-makers on this topic.
Worrying times for alcohol, betting and fast food brands
|Alcohol, betting and high fat, salt and sugar (HFSS) brands would have been following the manifesto releases with a sense of trepidation, given the noise from major parties last year. Labour were most forthright in their views, referring to sponsorship of sports events by alcohol brands as 'potentially harmful' and calling for a debate on current rules. Their pre-election consultation on sport also included references to introducing a levy on betting companies, which could act as a new revenue stream for community sport. Additionally, a leaked document also proposed a 9pm watershed for TV adverts for unhealthy products that might appeal to youngsters – a policy mirrored by the SNP.|
However, upon manifesto releases, there was barely a mention of marketing restrictions in any of the aforementioned industries. This does not mean these policies have been forgotten, rather, they appear to have been temporarily sidelined, due to the focus on 'safer' traditional policy areas. Given the impact any fresh legislation could have on brand advertising and sponsorship approaches – as well as marketing budgets – companies and rightsholders in the firing line will have to keep their eyes open.
A lot to learn on school sport
|A minimum of 2 hours per week from Labour, £150 million investment a year from the Conservatives and half a day a week from the Greens. These are the manifesto pledges made by the parties on the subject of school sport. The immediate question is, of course, what on Earth do they all mean? Comparing these disparate units of measurement is an almost impossible task, and that’s before chucking in extra layers of confusion, such as Labour's rebuttal that the Conservatives' promise actually represents a reduction of current funding, when taking inflation into account.|
The lack of a substantial commitment by any party ensures that schools still remain fertile ground for sponsors, as Lloyds Bank National Schools Sports Week programme has shown, and brands that can best understand where funding gaps will arise, once the anointed party has implemented their policy, will be best placed to create fruitful partnerships.
Closing the gender gap
|The push for equality within sport, in terms of both participation and representation, is gathering pace, with FIFA’s No to Racism and Sport England’s ThisGirlCan campaigns being just two high-profile proof-points. But whilst all parties vocalise support for women’s sport when prompted, the Conservatives were the only party to clearly put pen to paper, pledging to push the number of women on national sports governing bodies to at least 25% by 2017. The Green Party included a more vague reference to ‘setting targets for participation by women’.|
The silence was particularly disappointing from Labour, who had put a primary focus on the subject within their pre-election sports consultation. Within the party's ‘More Sport For All’ document, there was even suggestion of a government fund incentivising commercial sponsorship of women’s sport.
Such silence presents sponsors with the opportunity to bridge the gap on gender policy. The profile of women’s sport is growing, but investment accounts for just 0.4% of the value of all the sponsorship deals and just 7% of total sports media coverage. As outlined in Synergy's NowNewNext article on the subject, brands can make a real difference within women's sport if their activity is grounded in appropriate insights. Savvy sponsors with existing partnerships stand to benefit the most. Our advice to the (right) brands not already engaged would be to get involved whilst you can.
Tories target American Sport
Increasingly popular in the UK, it was never going to be long before US sport landed on the political agenda. Referenced in the Conservative manifesto, David Cameron aspires to increase UK links with the major US sports, with a long-term view of franchises based in the UK. More than 600,000 people have already attended each of the previous two NFL events on Regent Street, and the Jacksonville Jaguars have long been rumoured to become a permanent NFL London-based franchise. On top of this, Britons have already witnessed regular-season NBA games on home turf as the Global Games Schedule expands overseas.
The globalisation of sport, as discussed in Synergy’s NowNewNext report, is happening fast. It seems that a Conservative government would be prepared to turbo-charge this process. Sponsors need to be ready for the opportunities - and challenges – that this will bring.
Minority parties explore major changes
|Despite UKIP repeatedly referencing their support for ‘unifying a British culture’, the promise may be somewhat inhibited by a pledge to abolish the Department for Culture, Media and Sport as part of their streamlining measures. Given the department’s crucial role in administrating UK sport at every level, including a major role in delivering the Olympics, the policy seems potentially ill-judged.|
Another policy that stood out from the manifestos was the Green Party’s position on horse racing. The proposal for a whip-free Grand National, and consequent ‘full review of the sport’ would represent a step towards the event being cut from the sporting (and sponsorship) calendar altogether. With £80m bet every year by the British public and 600m TV viewers globally, the policy would have widespread impact.
These more outlandish promises might be laughed off in almost any other election campaign, but given the likely delicate balance of power, concerns are justifiable, especially if either party were to grab power under a coalition or alliance.
Boiling 500+ pages of manifesto down into a seven-point snapshot was easy. Not because the Synergy Insights team comprises some of the brightest sponsorship brains in Britain (although this may well be true), but because sport and sponsorship have largely been sidelined by the UK political parties. While our seven snippets show that the parties have not been totally silent, one thing is emphatically clear:
Sport could use sponsors now more than ever.
Conservative Party https://www.conservatives.com/manifesto
Labour Party http://www.labour.org.uk/manifesto
Liberal Democrat Party http://www.libdems.org.uk/manifesto
Gambling Watch UK http://www.gamblingwatchuk.org/
Office for National Statistics http://www.ons.gov.uk/ons/index.html
Sport England https://www.sportengland.org/
Sport and Recreation Alliance http://www.sportandrecreation.org.uk/
Sports think tank http://www.sportsthinktank.com/