The Financial Times recently noted spread betting firms are chasing sponsorship from “Europe’s biggest sports names”. According to the paper, spread betters are locking deals in now before potential European legislation restricts their marketing activity.
Spread betting and gambling have quietly become the biggest engine for sponsorship in recent years.
Today, half of Premier League football clubs are sponsored by a gambling or spread betting firm. The rise of darts has been bankrolled by these industries. Horse racing is dominated by them, and rugby in both codes is coming into the crosshairs too. Of Britain’s major sports, only cricket seems immune.
The gambling engine that’s funding British sport makes perfect sense: sponsor the sports you are encouraging customers to bet on.
But the relationship has become too tight. For sport, it has turned into a high-risk dependency. Regulators have a history of clamping down on industries deemed harmful to consumers. If gambling ends up going the way of alcohol and tobacco, sport has a serious problem.
Because beyond gambling, do marketing directors still want to spend on sponsorship?
Financial services used to, but there are signs it’s wavering. RBS for example pulled out of rugby’s 6 Nations last year. The organisers then found it so hard to find a replacement that they eventually went back cap in hand to the bank – at a much lower price. Investec backed out of sponsoring test cricket earlier than planned; and Aviva only signed a one-year extension to sponsor Premiership Rugby this year.
Beyond finance, Vodafone was set to sponsor West Ham’s new stadium and baulked; while Waitrose checked out of its deal with England’s cricket team, despite all their success. Football’s League Cup meanwhile has faced all sorts of problems and last year’s edition had no sponsor at all. This year’s descended into farce as backers Carabao changed the third-round draw to take place at 4am UK time.
And this isn’t just confined to sport: this year’s Chelsea Flower Show, one of London’s blue chip corporate events, was hit by a wave of sponsor pullouts.
Add it together and there is a mounting body of evidence that suggests marketing directors are turning away from sponsorship.
Clearly, brands don’t feel they’re realising the value they expected when signing up. That may be because measuring the impact of sponsorship is harder than measuring the output of a similar investment in targeted online and social advertising. If you can’t forecast the impact of sponsorship with confidence, why take the risk?
Is there still a case for sponsorship? Yes, but the bar has been raised much higher.
One case is brands entering a market. Carabao, as an overseas brand entering the UK, was still able to make a rational case for pursuing sponsorship – they need brand awareness at scale. Sponsorship can play a strong role in the marketing mix to do that.
Another is the flight to quality. The one part of the market that still looks secure is the ultra-top end. Premium brands remain willing to pay for premium events: think Rolex at Wimbledon, Mercedes-Benz at the Masters, or Louis Vuitton and the America’s Cup. Likewise, the world’s biggest football clubs who command massive deals with global brands. And of course, there remains value for brands with a direct commercial connection to sport, as with gambling.
The bottom line is this though. Sponsorship deals are being judged a lot harder than they used to be.
Next time a rights holder comes knocking on the door, ask yourself if it’s really a compelling way to spend your money. And if it’s not, sit this one out on the bench.