On the verge of a serious change in sport revenue models?

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On the verge of a serious change in sport revenue models?

For many people, sports clubs are much-loved and emotional institutions where the fates and fortunes of a team can be seen in action. But there’s a hidden side to sports clubs and that’s the financial one. Few sports fans choose to care about the minutiae of a sports club’s accounts, and even fewer know that there are teams and teams of finance staff profit-hunting on behalf of clubs every day.

In reality, sports clubs are no different to any other corporation. They are multi-million dollar businesses which have strategic business plans, profit-making schedules, shareholders and owners, and everything else associated with the hard work of private enterprise. And with more and more states legalizing it in the US, it’s no surprise to learn that betting is changing the face of US sports clubs – for better or worse. Here’s how.

Sponsorship deals

In recent years, the rise in sponsorship deals has begun to permeate all kinds of American sports. A prime example of a recent sponsorship deal is the National Football League, or NFL’s, decision to pair up with Caesars, a US gambling firm. On the face of it, sponsorship deals provide great revenue streams: the sports club or league gets a large chunk of money in return for access to coveted data, the right to use logos, adverts on kit, and more.

To some, sponsorship deals are often considered problematic – especially when it comes to revenues. The sports industry largely resisted it for many years due to previous gambling-related scandals, such as the point shaving scandal seen at Boston College during the 1978-79 basketball season. It has been argued that the systematic introduction of gambling and associated sponsorship packages will harm the integrity of sports and lead dedicated fans (and the cash from their season tickets, merchandise and viewer status) to turn away because the profit-free fun of the game has been removed. It’s only now the Supreme Court has ruled that states can decide whether or not to legalize sports gambling that many in the sports world are starting to form opinions on whether or not such deals do actually result in a mass, revenue-cutting switch away from sports.

Increased consumer interest

Sponsorship deals, then, are often seen as negative developments for the casino industry thanks to the potential they hold for match-rigging, integrity harming, and more. But from a purely commercial point of view, there may well be more to the rise in betting and gambling than that. After all, it is not necessarily the case that betting leads to people falling away from sport. In fact, it could even lead to more viewers, which could in turn lead to more revenues for the sports clubs.

It’s worth remembering that for some people online betting is a desirable thing to do, and something that makes people want to tune in more and more to sports, giving them an even greater stake in the outcome. With the online betting industry now believed to be ready to produce over $74 billion by 2023, it is clear there is a real appetite for this service. For a commercial sports brand, a rise in online betting could well lead to more fans – making it easier to see why organizations such as the NBA are happy to strike sponsorship deals with casinos.

More to gambling

Finally, it is also worth noting that there is much more to online betting than just sports betting. As a look at the NJ Online Casino will show, gambling is a phenomenon which covers casino games including poker as well as top sports. So while it’s clear that deals like the NBA’s recent partnership with MGM is a significant game-changer in the industry, there’s also much more to the rise in gambling than just sport and the fevered arguments between those for and against this development may well turn out to be unnecessary.

Some sports clubs in the US are believed to be worth tens of millions of dollars, and the leagues and conferences who run and administrate them – such as the NFL or the NBA – add even more value to the sector. With online betting sponsorship deals now on the horizon for many of the leagues and clubs, the big debate over what consequences they might have looks set to continue. Only the passage of time will settle the question of whether online betting is likely to cause sports revenue to decline, rise or have no effect.

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