A warning for those selling sponsorships
A 2018 sponsorship report by Goldman Sachs estimated that in 2017, 38% of esports revenue came from partnerships — nearly quadruple the average for major North American sports leagues. Yes, esports is still small (less than $1 billion in revenue), but this statistic should serve as a warning sign.
First, let’s invoke the caveat that esports, like any “startup,” is still embryonic and predictions of a newborn’s potential reveals just how little anyone knows about the future. Still, it’s better to prepare, particularly when some traditional sports properties seem to be looking the wrong way.
With that in mind, here are 10 sports groups that should keep cozying up to their existing sponsors, servicing the heck out of them (think better activation support) and upping their game, as esports (as a single category) wants a larger share of the sports sponsorship pie in the next 3-5 years.
1. Football (soccer) in Europe. The first thing to catch our attention was news that McDonald’s had pulled German sponsorships out of the Bundesliga and was placing them in esports. If the world’s biggest sport is losing a sponsor of McDonald’s magnitude, then something significant is happening. Or as Franz once said on “Saturday Night Live” (in his mangled German accent), “Ja! Hear me now and believe me later.”
2. Major League Baseball. Simply put, the average baseball fan is older than Moses and the average esports fan is in his or her 20s. Of course, the North American magnitude of baseball far exceeds esports (e.g., the contracts of Bryce Harper and Mike Trout are Exhibits A and B), but esports will look attractive to brands seeking to reach that elusive young male demographic.
3. NASCAR. While NASCAR’s total sponsorship dwarfs all of esports combined and the Daytona gang holds expansive sponsorship expertise, NASCAR faces the same challenge as baseball. It must increase its appeal to people under 35 who like cars, technology, data and speed. If it doesn’t, esports games will offer cooler cars on more exotic tracks.
4. MMA/UFC. We know this sport has experienced a heroic rise during the last decade and the connection to violence should connect with esports gamers who enjoy fighting titles. The issue may be this: Over-the-top digital violence is manageable (and worthy of sponsorship) in its graphic interface form but possibly less so in the octagon where the blood is real.
5. The NFL. Give the “Shield” props for briefly linking up with “Fortnite” to create NFL team skins, but we wonder if it doesn’t prove our point. If the king of American sports is line extending via esports, the same thing that happened to Budweiser and Miller may happen again. It wasn’t long before Miller Lite and Bud Light blew past their parents.
6. The USOC. One of us used to work for this great organization, but the 2020 Tokyo Olympics is starting to seem very scattered. Yes, there are hundreds of esports game choices and only 33 disciplines contested during the 2020 Summer Games. But here’s the thing: Esports sounds like one sport and not a collection of sports, of which only a few have broad global appeal.
7. AEI. That stands for “Almost Everything Indoors.” Yeah, we’re talking to you, lacrosse, rugby, arena football, G League, WNBA and AHL. Don’t take it personally (because we don’t mean it in a personal way). It’s just that esports takes the idea of indoors to a new level for sponsors. If current indoor sports falter, esports may be the replacement.
8. Women’s pro sports. Not unlike other areas of sports and entertainment, it appears a heavy gender bias still exists. It’s possible some companies, once they make the commitment to esports, will double down and support efforts to attract more women to esports … at the expense of “mainstream” women’s leagues and tours (LPGA, WTA and ITF).
9. The PGA Tour and ATP. These sports, and anything else that aligns with the country club set, will generally survive everything (including a zombie apocalypse) but our warning is simple: It’s bad enough fighting for dollars when the competition was merely the NFL, NBA and MLB. The new threat is young folks happy at home playing on multiple screens.
10. Marathons, CrossFit. Fun runs, triathlons, cross-country skiing, swimming and race walking also belong in this category. The esports conviction — particularly as the quality of games and graphics improves — means healthy activities may see drop-offs in sponsor interest.
We’ll end here knowing many readers won’t appreciate our wolf-crying. If you go back to the beginning, our premise was predicting and warning because lost sponsorship sales (or failure to renew existing deals) can mean lost jobs.
It’s a strong economy for the moment, but many experts predict a nasty bear market is looming. If they’re right, it might be a good time for sponsorship sellers to proactively assess why esports investments are booming.
Rick Burton is the David B. Falk Professor of Sport Management at Syracuse University. His newly co-edited book The Sport Business Handbook was published in February by Human Kinetics. Norm O’Reilly is Director of the International Institute for Sport Business & Leadership at the University of Guelph and a Partner Consultant at T1.