By Kenneth Russo, June 26, 2019 –
In a major policy shift, Major League Soccer enacted changes to its commercial sponsorship guidelines. Under the changes adopted, the 26 clubs will be allowed to contract for shirt and stadium naming rights sponsorships with sports betting and liquor companies. Both of these types of entities can now be prominently displayed on the shirts of MLS clubs and also be considered as potential stadium naming rights sponsors. The sponsorship policy changes take effect immediately.
It is customary across the globe to have shirts and kits (uniforms) with corporate sponsors. In North America, the only sport outside of soccer to have any form of corporate uniform sponsorship is the NBA. The basketball league began sponsorship patches on the front of its teams’ uniforms in 2017, and the program has been regarded as a success for the teams.
Up until this past Wednesday, MLS Clubs were prohibited from doing business with gambling and spirits brands. However, beer and wine companies were not on the list of prohibited sponsors, and from a policy standpoint, the arbitrary line drawn on alcohol-related sponsors was likely hard to rationalise. However, allowing sponsorships from gambling companies represents a major policy shift, and a position very different from the other North American Professional sports leagues, who have gone out of their way over the years to disassociate themselves from sports wagering. (For years Las Vegas was even off limits as a potential home to a professional sports franchise due to its connections with legalised gambling.)
What is behind these changes? MLS views itself as an innovative, creative league. “We want to be viewed as a progressive league, and provide our clubs with an appropriate level of flexibility,” Carter Ladd, the league’s senior Vice President of Business Development, was quoted as saying. “We don’t want to be restrictive; we want to enable them in a positive way, and that’s why we’re taking this action… We strongly believe this is going to help drive new revenues.”
Activating sponsorship agreements with gambling and alcohol companies does have it challenges and sensitive points, in particular, marketing such products to children or the perception of same. For that reason, the revised guidelines have certain restrictions. MLS is taking steps to ensure all advertising by such sponsors is directed toward an “age-appropriate audience,” it said. For example, youth-sized replica shirts will not be allowed to have such sponsors; neither will the shirts of uniforms worn by clubs’ academy and youth players. Additionally, MLS will also restrict players under the age of 21 from appearing in any alcohol-related advertising or digital content, and no players are allowed to appear in sports betting-related marketing.
Ladd told Fortune Magazine recently that the league feels it is “uniquely positioned in the North American sports landscape” to benefit from changing attitudes – particularly toward sports gambling, which he noted has long “been embraced as part of the fabric of the game” in other countries.
Furthermore in May 2018, the United States Supreme Court in Murphy v. National Collegiate Athletic Association, 584 U.S. ____ (2018) overturned the federal ban on sports betting. Since then, 15 states and the District of Columbia have now authorised betting in some form, according to the American Gaming Association.
The sports betting market represents a two-pronged opportunity for MLS: as a revenue generator and as a fan engagement tool. The sports betting market is really in its infancy in the U.S., and MLS wants to be on the forefront of the potential creates. In March 2019, the league announced a multi-year deal with MGM Resorts that made MGM its first “official gaming partner,” The new MLS regulations make it easier for its teams to reach similar deals of their own.
It should be noted that MLS clubs will still be subject to their own states’ laws governing sports gambling. Another issue is the fact that sports betting is not legal in Canada, and this potentially complicates matters for the three Canada-based MLS clubs, including raising the question of whether a Canadian MLS team could have an American-based gambling sponsor.
For a list of the permissible types of activities the league’s new rules will allow, please link to: russo law and soccer: mls-sponsorship-guidelines/
One of the most distinctive activities that will be allowed by these rules changes is that MLS clubs are now allowed to establish in-stadium sports betting facilities, in connection with licensed gambling operators, in jurisdictions that permit such establishments. Washington, D.C. is one such place. Ted Leonsis, who owns the NBA’s Washington Wizards and the NHL’s Washington Capitals, plans to open such a facility within Capital One Arena, the downtown venue shared by both of his teams.
“Right now, we want to take advantage of the widespread legalization of sports betting in the U.S.,” Ladd said, adding that the league will “pursue best practices to protect the integrity of the game.”
Asked about MLS’s more accommodating stance toward spirits, Ladd pointed to data indicating that Americans’ tastes are drifting more toward liquor, which has steadily been taking market share from beer and wine. “Part of what drove our thinking is the research we did on where the [alcohol] industry is going,” he said. “As social mores change, there’s less of a line between beer and wine, and spirits.
MLS already has a league-wide sponsorship agreement in place with Heineken Beer. Ladd opined he anticipates the league’s new guidelines to “double, if not triple our revenues” from spirits sponsors, which he currently placed in the “seven-figure range.”
We should expect MLS clubs to start announcing new sports betting and liquor sponsorships before the end of this year.