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Sportsbooks: On a roll

Two years after online sports betting opened in New Jersey, teams and sportsbooks are sorting out an emerging sponsor market across the U.S., and learning one size doesn’t fit all.

courtesy of denver broncos

When the NFL finally cleared its teams to sell sportsbook sponsorships in February, the decision came just in time for the Denver Broncos, who’d been cultivating relationships with operators in a state that was only 10 weeks away from allowing its first legal sports wager.

Six weeks after betting opened in Colorado, the Broncos announced the first sports betting deal signed by an NFL team, locking down FanDuel Sportsbook. A day later, they announced another with little-known U.K.-based operator Betfred. Three weeks after that, they raised the curtain on a third deal, with BetMGM.

Each would include a component meant to distinguish it from the others, a reason for competitors to share a sandbox in a market that opened with four authorized sportsbook sites and already has grown to 15, with still more to come.

The timing of the NFL’s decision to relax its ban allowed the Broncos to not only be the first NFL team in the country to secure a deal, but also be the first of five Denver teams to close one.

“We knew who to talk to and had a sense of their strategies but, honestly, so much changed when we hit their go-live date,” said Brady Kellogg, senior vice president of corporate partnerships for the Broncos. “We’d been talking and talking, but the pace of conversation picked up dramatically after [Colorado] went live. Consistently, you’ve seen there is an advantage of being one of the early movers from a market-share perspective.

“It was phenomenal for us, in the thick of COVID times when a lot of businesses had slowed down, to have this opportunity.”

It is an opportunity easily misunderstood, a category that can rain cash in a market like Denver, one chock full of fans eager to wager and fed by fierce competition between sportsbooks, most of which are building brands from scratch. It also can punish those with unreasonable expectations, like in states with high tax rates cutting into sportsbook budgets, or little competition among books to drive bidding.

Fans make bets on the first day of legal sports betting at Capital One Arena in Washington, D.C. William Hill has deals with both the Capitals and Wizards and is building a new two-story sportsbook on site.getty images

22 teams, 33 sportsbook deals

Two years after the launch of New Jersey’s first online sportsbook, a sponsorship market that started out white hot, with the NHL’s Devils taking in nearly $5 million from the category in 2018-19, seems to be settling into an equilibrium. 

Sports Business Journal identified 22 teams with a combined 33 sportsbook sponsorship deals across the NFL, NBA, MLB and NHL, counting only teams in states that have legalized sports betting. That does not include deals in border states such as New York, casino deals that don’t include online sportsbooks, or DFS deals that do not specifically include the FanDuel or DraftKings sportsbooks. 

Prices range widely, based on market size, sport, exclusivity and regulatory framework within each state. Additional hard costs, such as the build-out of swanky betting lounges, also can affect pricing.

Sportsbooks place bet on team tie-ups

The nation’s rapidly expanding mobile sports betting footprint has yielded 33 sportsbook sponsorship deals for 22 teams across MLB, the NBA, NFL and NHL. Here are the pairings that have been announced: 

Colorado

Handle: $207,655,942 
Gross revenue: $4,166,334
Broncos: FanDuel, BetMGM, Betfred
Rockies: DraftKings
Nuggets: PointsBet
Avalanche: PointsBet

Pennsylvania

Handle: $462,787,392 
Gross revenue: $18,277,566
Eagles: Fox Bet, DraftKings, Unibet
Sixers: DraftKings, BetRivers
Flyers: BetRivers
Penguins: BetRivers
Online handle share: FanDuel, 41%; DraftKings, 28%; BetRivers, 12%; Fox Bet, 6%; Barstool, 6%

Indiana

Handle: $207,042,428 
Gross revenue: $11,266,606
Colts: PointsBet, FanDuel. William Hill
Pacers: PointsBet, DraftKings
Online handle share: DraftKings, 52%; FanDuel, 33%; BetMGM, 8%; BetRivers, 4%; PointsBet 4%

New Jersey

Handle: $748,588,349 
Gross revenue: $45,083,178
Devils: FanDuel, William Hill, Unibet
Giants: DraftKings
Jets: BetMGM

Illinois*

Handle: $139,331,865
Gross revenue: $6,909,706
Cubs: DraftKings
Bears: PointsBet
Online handle share: BetRivers, 87%; DraftKings, 10%; FanDuel, 3%

Nevada

Handle: $575,069,930
Gross revenue: $32,894,000
Raiders: BetMGM
Golden Knights: William Hill, BetMGM

Washington, D.C.^

Handle: $12,186,041
Gross revenue: $1,305,402
Capitals: William Hill
Wizards: William Hill

Michigan**

Tigers: PointsBet
Lions: BetMGM

Tennessee**

Titans: BetMGM

*Figures from August. All other states are from September.
 
**Deals are in advance of the start of mobile sports betting in these states.
^Excludes GameBet state lottery app.
Note: Online share where available.

Source: Sports Business Journal research

Though financials have not been disclosed, sources at leagues, teams and sportsbooks said deals typically range from $350,000 to $500,000 annually for nonexclusive agreements and up to $4 million annually for exclusivity in a larger, competitive market.

There can be outliers, such as the exclusive deals that have William Hill operating a brick and mortar sportsbook at Capital One Arena in Washington, D.C., and DraftKings opening a flagship location adjacent to Wrigley Field.

But, in aggregate, teams typically generate $1 million to $3 million from the category, sources said.

Chicago is the largest of the pro sports DMAs with commercial sportsbooks up and running, followed by Philadelphia, Washington, Denver, Pittsburgh and Indianapolis, although proximity to state lines also can bring markets such as New York City into play.

The pecking order after that generally shakes out based on handle, the amount of money bet on each sport. The NFL historically has generated the highest handle, followed by the NBA and MLB and then NHL, so sponsor pricing generally has followed that order as well.

Because the category is so competitive in most markets, exclusivity comes at a heavy premium, especially for NFL teams. The Broncos explored the possibility briefly before determining that they could generate considerably more from three deals.

Colorado provides an interesting window into the marketing assets that sportsbooks value, which can vary by book and by state. All three of the Broncos deals include digital marketing, a crucial piece in a business that generally lives in fans’ palms. But after that, each is distinct.

FanDuel’s is largely about getting Broncos fans to sign up with a brand they know, with a smattering of stadium, TV and radio advertising to drive home the connection and lots of home-team promotions that reward fans who open accounts. BetMGM’s deal hinges on plans for a stadium lounge that will operate similarly to a retail sportsbook, with a bar, tables, TVs and odds displays, as well “ambassadors” to help new bettors sign up and play. Betfred also has plans for a lounge, though its will be through a tailgate party set up on the adjacent lawn.

Though betting has been live only since May, and the first three months were squelched by coronavirus-depleted schedules, Denver’s six reported sportsbook deals are the the most of any market. The Rockies have a deal with DraftKings. The Stan Kroenke-owned Nuggets and Avalanche locked down an exclusive deal with PointsBet, an Australian bookmaker that has made Denver its U.S. headquarters.

PointsBet has established itself among the bigger believers in team deals, signing with the Chicago Bears, Indianapolis Colts, Indiana Pacers and Detroit Tigers. BetMGM also has six, going heavy on the NFL with the Broncos, Detroit Lions, Las Vegas Raiders, New York Jets and Tennessee Titans, along with the Vegas Golden Knights. DraftKings has the Cubs, Colorado Rockies, Indiana Pacers, New York Giants and Philadelphia Eagles and 76ers. William Hill has the Capitals and Wizards in D.C, plus the Colts, Devils and Golden Knights.

There also are some done that haven’t yet been announced and plenty still to be negotiated in a nation that wagered more than $2.5 billion on sports in September.

The Golden Knights have sportsbook deals with both BetMGM and William Hill. BetMGM also has a deal with the Raiders.getty images

team deals build trust, connection

The sportsbooks that play in the space see team deals similarly. They expose their brand to a market’s most avid sports fans, the very group that is most likely to open an account and bet on games. While they also can do that through TV, radio and outdoor, and can do it hyper-efficiently through targeted online ads, the sponsorship is seen as conveying trust and credibility. That’s especially important for a legal betting app, considering the negative connotations some associate with gambling, and particularly illegal offshore sports betting.

Typically, only FanDuel and DraftKings have high brand awareness going into a new betting market.

“We’ve got to build a brand,” said Eric Foote, chief commercial officer at PointsBet. “We’re new. We’re a challenger brand. We understand that. We’ve got to find a way to build that brand trust and credibility. One way we we do that is finding the proper team or leagues or media partners to partner with.”

Though MGM Resorts is a well-known commodity, the BetMGM online sportsbook that it owns in joint venture with U.K. operator GVC Holdings is only 18 months old. While BetMGM piggybacks off its resort properties to gain national exposure on occasion — such as when its logo appeared during Los Angeles Lakers “home” games from the NBA bubble or on the left field wall at Globe Life Field during the Dodgers’ World Series games — its primary objective is to drive sign-ups to an app with which few fans are familiar.

Generally, the brand’s NFL team sponsorships come with IP rights, signs and digital advertising. But tweaks set each apart.

“The teams that we’ve ended up working with have all had an above and beyond type idea or two embedded in our proposal,” said Matt Prevost, chief marketing officer of BetMGM. “In the case of the Titans, it was the ability to sponsor field goals and extra points. If you watched the game the other night [when the Titans played on CBS on a Tuesday], the signage was remarkable.”

In Denver, a key component of BetMGM’s sponsorship of the Broncos is the betting lounge, a sports bar that functions similarly to a retail sportsbook, serving as a place for BetMGM to drive sampling and signups and reward bettors. Bettors must wager on their mobile devices, but it will look and feel like an MGM Resorts sportsbook.

The lounge PointsBet has planned as part of its exclusive sponsorship with Kroenke will give it a presence similar to that which sportsbooks will have in D.C. and Chicago, where regulation carved out retail sportsbook licenses attached to the major pro sports venues. Accessible from both the street and the arena, PointsBet’s sports bar will include an outdoor area, a large bar and lounge and a VIP area tailored to high-end bettors.

“As long as you follow the proper guidelines within the state, you can re-create something very, very similar to retail that gives you that bang for your buck,” Foote said. “It’s finding an opportunity where the sports bar is open 365 days a year, not just game days. People will be interacting with our brand, our content, our lines, our odds and our ambassadors who are educating the fans, walking them through making deposits.”

PointsBet will track the ROI of its sponsorships with eyes toward metrics in three areas: awareness of both the brand and the sponsorship; expression of purchase preference and an associated willingness to refer friends; and, most importantly, acquisition and retention of customers that can be tied directly to the sponsorship.

It is the last of those that is at the head of these deals, even for the unknown brands. Branding matters, but conversion is king.

“Teams are fantastic at brand, especially with partners that are less known,” said Adam Davis, who as chief commercial officer of Devils owner Harris Blitzer Sports was the first U.S. team executive to build a portfolio of sportsbook sponsors. “We are great at introducing them to our fan bases. We are great at building trust among our fan bases with these brands. Where we have to get to the next level is conversion.

“When you talk about conversion, you’re competing against Google and Facebook and Instagram and Twitter and all these ad sites that can specifically target you and say, ‘Here’s this fan of X team, this is his makeup, we’re going to try to hit him and push him to conversion.’ We need to do that better than they do.”

Tracking the performance of its Jets sponsorship, BetMGM found that users were 50% more likely to click through from an ad that included a Jets logo than an otherwise identical ad without the logo.

“That suggests there’s a real value to using that IP,” Prevost said. “Because of the nature of our brand and the category, direct player acquisition will always be a big feature of any relationship. So our ability to leverage the team’s assets toward some form of direct player acquisition will always be a big piece of the puzzle.”

As markets have emerged, the executives at teams within them have worked to learn a new business, and how they might fit into it. When Broncos marketers were preparing for conversations with sportsbooks, they considered the fan base’s relatively high count of millennials to be a plus, knowing that group overindexed as online sports bettors.

What they found was that sportsbooks had deeper research showing Colorado had a high percentage of illegal offshore bettors and DFS players, metrics they found far more attractive than any broader demo.

“We’re all learning,” Kellogg said. “It wasn’t even six months ago that all this occurred. In our market, nobody had anything. How fast stuff has happened, particularly at a time other stuff has slowed down, is amazing.” 

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