TO GAMBLE OR NOT TO GAMBLE: 10 KEY ISSUES WHEN NEGOTIATING SPORTS SPONSORSHIP DEALS WITH BETTING PARTNERS
As the new Premier League season explodes into life in the midst of the competition’s 25th anniversary, it’s worth noting that no fewer than 9 of this season’s 20 top flight clubs have front-of-shirt sponsorship deals with brands in the gambling industry. Everton’s deal with African betting company SportPesa, Swansea City’s deal with Letou, and Burnley’s tie-up with Dafabet are three notable examples.
Despite the FA’s recent decision to cease all sponsorship with betting companies following a number of high-profile controversies within the sport, almost every Premier League football club has some form of betting partnership, across a range of different models (pitch-side advertising is one common approach, and three clubs have ‘shirt sleeve’ sponsorship deals with betting brands). Some even have tie-ups with multiple betting partners.
And it’s not just the football industry which is jumping on the bandwagon. A growing collection of clubs, governing bodies, and athletes across a range of other sports are looking to the gambling industry as the most effective way of reaching their primary target audience and maximising the value of their own sponsorship assets. See Conor McGregor’s recently announced deal with Betsafe.
The commercial drivers are well-documented. Premier League clubs are increasingly looking to international partners to take advantage of surging viewership, and increasing appetite, in emerging markets. The explosion of the global online betting industry has come at the perfect time. For betting companies, these deals offer an ability to secure measurable and tangible ROI in real time.
But what are some of the key legal issues and considerations?
1) Think about the scope of sponsorship rights being granted
The reality is most sponsorship strategies involve engaging a multitude of commercial partners across a variety of territories, in order to maximise brand exposure, engagement and revenue. How these rights are packaged, and defined, is therefore critical. Betting partners will likely want the right to an official designation(s) (e.g. “Official Betting and Gaming Partner” and/or “Official Shirt Sponsor”). The international nature of many modern-day deals (Premier League clubs currently have shirt sponsorship deals with betting brands located in Malta, the Philippines, Gibraltar and Kenya to name but a few) means that careful consideration should be given to whether a deal is exclusive within a territory, or on a worldwide basis.
The growth in shirt sleeve sponsorships is another key consideration (Liverpool is the latest club to make this step with financial services company, Western Union, and both Watford and West Bromwich Albion have partnered with betting brands for these deals). Clubs/rights holders should ensure their right to enter into separate, shirt sleeve deals is permitted under the front-of-shirt sponsorship agreement.
All the usual commercial considerations when packaging sponsorship rights are relevant here. Key rights which should be clearly defined include perimeter board branding (who covers the cost of design and production of content?); non-digital signage (training ground as well as stadium?); website/app branding; publicity and marketing materials; tickets and hospitality; and in-stadium screen advertising.
When granting rights in relation to player/manager appearances, the terms of individual employment contracts and image rights agreements should be borne in mind.
2) Remember gambling licences
Commercial deals between clubs/rights holders, and betting companies, must comply with relevant UK legislation as well as requirements published by the Gambling Commission. Betting partners should, therefore, ideally be contractually obliged to maintain in force during the term of the sponsorship agreement a valid gambling licence in accordance with relevant UK gambling legislation, as well as any other applicable licences and consents. Interestingly, of the 9 shirt sponsorship deals between Premier League clubs and betting partners, all but one involve a betting brand based outside of the UK. Whilst this might seem like an obvious issue to cover off in any agreement, it is one that can be easily overlooked.
3)What about the gambling industry and minors?
The UK Gambling Commission requires that advertising is not aimed at children and young people (under the Gambling Industry Code for Socially Responsible Advertising, gambling products cannot be targeted at children). This clearly restricts betting companies from being ‘named’ sponsors on the shirts of youth or underage teams, as well as replica shirts being sold to minors. Clubs/rights holders could, however, use this as an opportunity to exploit a corporate social responsibility (CSR) or community opportunity with a local charity, as a number of Premier League clubs are now doing.
4) Don’t forget your own brand guidelines
Making the grant of rights in the agreement subject to the club’s or rights holder’s ‘brand guidelines’ is a sensible approach. A set of brand guidelines can be as high-level or granular as you see fit, but should ideally set out some basic requirements around what is expected of sponsors and partners to ensure they behave in a way that aligns with a club's/rights holder's own brand values.
5) Take care over your morality clauses
A betting partner will inevitably want assurance that the club or rights holder will not act in an inappropriate way that may negatively affect its brand. Consideration should be given to the exposure of liability that might arise from the inclusion of these types of morality clauses – ideally the scope of these provisions should be sufficiently narrow so as to prevent situations outside the control of the club/rights holder triggering the brand’s right to terminate (for example, a poor run of results or performances; or a first team player making a derogatory comment on social media). Always be wary of promising something that you can’t control.
6) Protect against negative behaviour
The club/rights holder should have the ability to get out of the agreement should the betting partner commit a material breach of the agreement, or engage in some form of negative behaviour (what constitutes ‘negative behaviour’ should be clearly defined). As an example, a betting partner should not operate in any jurisdiction illegally, and thus expose the club/rights holder to additional reputational risk.
7) Be mindful of the sensitivities
Gambling is considered by some as morally objectionable and, as such, social and religious considerations in contractual negotiations are advisable. Back in 2013, Newcastle United’s Papiss Cisse, for example, refused to wear a shirt sponsored by Wonga as he felt it offended his Muslim faith and personal beliefs. Clubs/rights holders should be on top of these issues and take a proactive approach during contract negotiations. This will then provide necessary flexibility when players are aligning with particular brands.
8) The value of data in the digital age of sponsorship
There will likely be a desire to activate the partnership by sharing content via social media and other digital channels. Therefore ownership and access to data will be a critical issue. A betting partner’s right to carry out social media campaigns via facebook or twitter, or access the club’s CRM database, should be carefully covered off under the agreement. Clubs/rights holders may also want the ability to tap into the betting brand’s valuable customer data as a means of identifying and targeting new audiences.
9) Too long or not long enough?
As with all commercial deals, clubs/rights holders should think carefully about the length of the contract term. Clubs/rights holders may want to consider a shorter initial term but build in a mechanism for the parties to extend along with upwards and downwards performance-related metrics (e.g. promotion/relegation/winning trophies). Another sensible approach is including an ability to renegotiate the value of the contract should the club, for example, qualify for Europe, or win a trophy.
10) Who are you contracting with?
Finally, it is not uncommon for betting companies to seek to contract with clubs/rights holders via a third party agency. From a legal and risk perspective, it is usually always preferable to contract directly with the betting brand itself. Special care should also be given when contracting with non-UK based brands.
To find out more, contact Jonny Madill or one of the Sheridans Sports team.
