A couple weeks back (May 20), Sportradar announced a pair of “ground-breaking” (their words, not ours) agreements with the New York Jets and Baltimore Ravens. The sports data company will assist the two NFL clubs in their efforts to “maximize sponsor performance” and unlock new opportunities for partners in the legal sports betting category. The press release also referenced Sportradar’s “ad:s” platform, which would help the two teams “enhance and refine” affiliate marketing strategies. Apparently (the news flew under our radar), the league altered its bylaws to permit teams to collect fees for converting fans into sportsbook customers one year ago. (Participation in the betting handle is still forbidden.)
But despite the adjustment in policy and the desire to offset revenues lost to the pandemic, few—if any—NFL teams have signed a performance-based deal with a sportsbook operator to date. We sought to find out why and what the financial upside is for a club willing to assume the risk.
Our Take: There are several reasons why organizations eager to capitalize on the sports betting gold rush have been hesitant to ink the performance-based deals that would provide them with the greatest upside in terms of revenue. Some teams are simply more risk-averse than others. Remember, partnerships with high cost per acquisition (and thus the greatest potential) are likely going to contain lower guarantees.
There are clubs that will eventually take a run at the affiliate business, but they have yet to sign a performance-based pact because they simply aren’t prepared to commit to an operator yet. No one wants to make the wrong decision and negatively affect their fans, and everyone wants to be sure the partner they choose gives them the greatest financial upside (think: some operators are inherently going to get more adoption; challenger brands will have a higher payout).
Concerns surrounding the auditing and tracking of affiliate referrals and a hesitancy to do long-term deals before the legalized sports betting market matures (uncertainty remains about the size of the opportunity and how fast it will be realized) have also prevented teams from taking the leap.
There are technical limitations, too. Pro sports teams are not digital marketing experts, and even if they employ personnel who “understand how to drive affiliate traffic, they don’t have the physical tools,” explained Mike Smith, head of advertising for Sportradar US.
That is where Sportradar figures into the equation. Their ad:s platform (think: proprietary technology and consultative approach) will enable teams to “essentially [be able to offer] any digital product that a sportsbook [partner] might want, all coming through the [team] where [they] are able to leverage their fan base and data on top of all of our [behavioral] data and understanding of the sports bettor,” Smith said.
On the surface, it would seem as if pro sports teams would be effective sports betting affiliates. “Choice at the bottom of the funnel is swayed by passion,” Smith explained.
With 10-20% of any given sportsbook’s user base likely having originated through an affiliate relationship and operators paying out between $100-$400 per customer, the Sportradar executive said it makes sense for teams to “take a run at that share of wallet.”
There is a lot of money to be made in gambling, iGaming and legalized sports betting from the affiliate side. How much money a team can generate will largely be a product of its chosen partner and how aggressive those companies are in trying to acquire customers (think: promotions). One NFL club executive suggested, “If [the partnerships] are done thoughtfully and strategically, and [organizations] create strong long-term alliances with trusted operators, [teams could realize] seven figures annually or eight figures over the term of the [deal].”
That isn’t going to be the case for every pro sports team, though. “The upside in New York [or Los Angeles] is going to be higher than the upside in [Green Bay] due to market size and the upside for a football team is going to be a lot stronger than the upside for a less popular sport,” Smith said. Of course, the industry as a whole remains in its relative infancy, and as it matures numbers across the board should rise.
It’s important to note that while performance-based affiliate marketing presents a significant commercial opportunity for sports teams, it was the Jets’ and Ravens’ desires to stand out in a competitive sponsorship marketplace that was the catalyst for the Sportradar deals. Smith said, “More than ever, [corporate partners are looking for] predictive analytics, business insights and making sure they can be surgical with their messaging and who they are reaching so they don’t waste dollars [in their partnership deals].”
While ad:s was constructed to serve sports betting partners, there is value in the platform beyond the emerging sector, Smith says. As the exec explains, teams can use the software in both their single-game ticket and merchandise sales efforts. “The assumption is if you really like sports betting, you probably really like sports,” he said.
To be clear, the NFL is not the only league that allows its teams to serve as sportsbook affiliates. In fact, all five of the major U.S. sports leagues permit clubs to collect affiliate revenue (some were vague in terms of limitations). Few organizations are believed to be taking advantage of the opportunity.