SBJ/March 25-31, 2013/Franchises

Cavaliers selling sponsorships for casinos

The Cleveland Cavaliers have started selling sponsorships for team owner Dan Gilbert’s Rock Gaming corporation, creating an interesting new revenue stream for the NBA franchise.

Under the direction of Brad Sims, Cavs senior vice president and chief revenue officer, the team is leading the effort to sell corporate sponsorships at two existing Gilbert-run casinos — the Horseshoe Cleveland and Horseshoe Cincinnati properties — along with another Horseshoe Casino that’s expected to open in Baltimore next year.

Photo: AP IMAGES
Gilbert’s Rock Gaming also is awaiting regulatory approval of a deal to buy majority interest in the Greektown Casino in downtown Detroit, and Rock Gaming additionally operates the ThistleDown Racino, a combination horse track/casino in suburban Cleveland that is set to open next month.

The three Ohio properties are part of a joint venture between Rock Gaming and Caesars Entertainment.

Cavs owner Dan Gilbert’s Rock Gaming runs the Horseshoe Cincinnati.
Photo: GETTY IMAGES
“We are at the beginning stages in setting up a casino sales team in selling corporate partnerships for the properties,” Sims said.

The Cavs have hired Matt O’Brien, former president of the minor league baseball Sugar Land (Texas) Skeeters, as senior director of corporate partnership development, overseeing the casino properties. The Cavs will hire marketing directors at each of the casinos, who will report to O’Brien, who begins his job on April 1. O’Brien reports to Randy Domain, vice president of corporate partnerships, who in turn reports to Sims.

The relationship is fairly unique in team sports in that a team’s sales group has a number of outside assets to sell, and the team itself will be able to share in the revenue. The revenue generated from any sponsorship sales will be shared by the Cavs and Rock Gaming, but Sims would not disclose what percentage of the sales total would go to each side. How this would affect the NBA’s revenue sharing is unclear.

The team expects to generate between $2 million and $3 million in annual sponsorship revenue at each of the casinos in the short term. Longer-term sponsorship sales projections are pegged between $5 million and $6 million, Sims said.

The team plans to sell title sponsorships at the casinos, including deals for parking garages, poker rooms, high-stakes areas, and bars and restaurants. The Cavs already have a deal of this type at the Horseshoe Cleveland casino, which opened last year. That deal is with a local car dealer for the parking garage of the casino. Specific financial terms of the 10-year deal were not disclosed, but that one deal, negotiated by the team, served to influence the strategy to sell sponsorships across the Rock Gaming properties.

“We have between 10 to 12 different areas in the casinos,” Sims said. “We are also looking at carving out five product deals.”

While the Cavs already have cross-promotional marketing efforts between the team and the Horseshoe Cleveland and Horseshoe Cincinnati casinos, league marketing rules will prevent the team from any cross-promotional efforts in Detroit and Baltimore.

In addition to the casinos and the Cavaliers, Gilbert also owns the AHL’s Lake Erie Monsters, the NBA Development League’s Canton Charge, the AFL’s Cleveland Gladiators and Quicken Loans Arena.

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