SECAUCUS, NJ – Of all the numbers involved in sports betting, operators should worry least about their return on investment in the early years, a panel of experts agreed Wednesday.
“You don’t have to get your ROI straight away. You look down the road and you understand how you pull people in. That’s going to be crucial not just for the operators but for the leagues and teams,” said Kieran Foley, a partner in FMG Consulting Services of New York City.
Russ Yershon, founder of Connecting Brands, agreed: “ROI is not important in the initial stage. It’s branding, awareness, and credibility in the short term. In the long term, you’ll be able to get (financial) success.”
Said Manuel Stern, senior vice president for the USA for the Kindred Group: “It’s so early in the game that it’s hard to have a financial positive financial ROI. For example, coming to New Jersey or Pennsylvania with absolutely zero brand awareness, to think you can get a 300 percent ROI from a team partnership/sponsorship is unrealistic.”
The three were part of a panel discussion on “Gazing in the Crystal Ball: Which Form Will U.S. Betting Sponsorship Take?” during the Betting on Sports America Conference at the Meadowlands Exposition Center. Also on the panel were Robert Davidman, a partner in the Fearless Agency, an advertising and communications company based in New York City, and Shelly Cayette, vice president of global partnerships for the Cleveland Cavaliers of the National Basketball Association. Stephen J. Gongaware, senior vice president of business development for Management Science Associates, moderated.
Evolving market
Operators and sponsors should not expect quick profits from legal sports betting because it is so new to all states except Nevada, panelists said
“This is a market that is prime and that is evolving,” Foley said.
“You are laying the groundwork because this is a growing market. This is an opportunity to get ahead of the game, to understand how you attract the people.”
Compounding the challenge, the United States is not one market but potentially as many as 50 because each state can set its own sports-betting rules.
“You want to be able to target customers you are interested in,” said Stern, whose company is one of Europe’s largest online gambling operators, serving more than 25 million customers worldwide.
Davidman said that because sports betting is not available in every state, some sponsors might not want to spend money to reach those who can’t place a legal wager. While many people in Connecticut are fans of the NFL’s New York Giants or New York Jets, they can’t bet unless they’re in New Jersey.
Cayette cited another wrinkle: the area a particular team serves. The Cavaliers, as the only NBA team in Ohio, draw fans from throughout the state and into portions of neighboring Pennsylvania. In contrast, the NFL has two Ohio teams.
“You might make a deal with the Cleveland Browns, but they can’t use the Cleveland marks and logos in Cincinnati because the Bengals are there,” she said.
Teaching the basics
So far, six states besides Nevada have legalized sports betting since a federal ban was overturned less than a year ago. Davidman said operators, particularly those from places with long-established legal sports betting, should recognize that American fans need to learn the basics.
“They look at these numbers and get confused and turn it off. There needs to be, with these sponsorships, the ability to engage the consumer, teach them how to (bet). Create an experience that’s easy, that allows them to understand what they’re doing, and make it fun. It doesn’t have be a whole bunch of numbers and percentages. That’s why the end game is really exciting.”
A recent study by the American Gaming Association said 39 percent of U.S. adults are current or potential sports bettors. That leaves a majority with little or no apparent interest in betting on their teams.
Cayette told CDC Gaming after the presentation that teams should be careful not to inundate the audience with statistics and percentages at every break in play.
“Overall, if you’re interested in the game, these things are not going to turn you off. You just have to manage it.”
Since sports betting is new to so many people, even fans who don’t bet could find the information interesting, she said.
‘Lead by example’
During the panel discussion, Yershon said the European sports betting market has become so competitive that the numbers of brands vying for attention threaten to turn off fans.
“When you have a daily fantasy sports provider, a sports-betting provider and a casino partner, one thing you don’t want to give fans too much of the same,” he said. “(In Europe), there’s too many brands wanting to get into the fans, and the fans feel disengaged. The U.S. can lead by example.”
Foley said interacting with fans through social media can be crucial for teams and sports-betting operators. He told of the possibility sending snippets of just-completed game action to fans to encourage in-game betting.
Cayette said “things are changing fast” for teams and their sponsors. A few years ago, America essentially had one wireless provider, and now it’s a competition among a variety of industries. Contracts with soft drink companies are not necessarily exclusive any more, and beer brands compete among craft, domestic and import labels.
“Think about what the future could hold,” she said. “Who would have guessed this (sports-betting legalization) would have happened five years ago?
