Gambling sponsor ban to add to Spanish clubs' financial pain
A looming ban on gambling sponsorship will put renewed financial pressure on Spanish football clubs and could lead to a drop in sponsorship rates across the board.
A looming ban on gambling sponsorship will put renewed financial pressure on Spanish football clubs and could lead to a drop in sponsorship rates across the board while increasing the wealth gap between sides according to experts.
Thirty out of the 42 clubs in Spain's top two divisions have commercial partnerships with betting companies, while seven LaLiga clubs, including Valencia, Sevilla and Real Betis, have shirt sponsorship deals with betting firms.
La Liga president Javier Tebas says the law, approved last November by Spain's coalition government and effective from the end of this season, will cause Spanish football "90 million euros of harm".
"It's contradictory that in a country where gambling is a legal activity, advertising it is prohibited. We believe forbidding it outright is a mistake," Tebas told Reuters.
"Evidently it's going to cause lots of damage and while we have appealed to the government, the clubs will have to scrape around in a very difficult moment.
"We have asked the government to consider a different policy because what they are doing is cutting clubs' ability to generate revenue and therefore reducing our competitiveness with the rest of Europe."
Spain is not the only country to stem the rise in gambling advertising as Italy banned gambling sponsorship in sport in 2019 and the United Kingdom is weighing up a similar law. "This is a trend we're seeing in mature societies," said Sergi Vieta, a sports partnerships consultant and professor with the Johan Cruyff Institute.
But he said Spain's ban, at a time when clubs have been forced to agree pay cuts with players due to colossal losses from the pandemic, was ill-timed.
"Clubs can't have fans at the stadium, they don't have merchandising, they can't go on tours. They're facing big limitations on revenue streams while having big costs and it's hard for them to reduce those expenses," he said.
"Now they face the additional impact of losing this revenue stream from betting. The best thing would be to reduce betting sponsorship over the coming years, not from this July."
LaLiga estimates clubs have missed out on 2 billion euros in ticketing and merchandising revenue since the pandemic struck last March, forcing all matches to be played behind closed doors and depressing the transfer market.
The seven Spanish clubs with betting shirt sponsors did not respond to requests for comment and have not publicised the value of their deals.
Media reports suggest Sevilla's deal with Marathon Bet is worth five million euros annually, while Betis's three-year deal with Betway, struck in 2020, is reported to be worth 10 million.
Vieta also predicted the ban would have an adverse impact on smaller clubs as betting deals accounted for a larger proportion of their total income than the likes of Real Madrid, Barcelona and Atletico Madrid, who earn more from television rights deals and competing in the Champions League.
Sports marketing lecturer Richard Denton of the Johan Cruyff Institute said the law was likely to drive down the value of other sponsorship agreements. "There might be one or two sponsors waiting in the wings thinking this is their opportunity and as the market is suppressed maybe they can negotiate clubs down a couple of million," he said.
"It's going to be a bit of scramble, maybe the market will dip and clubs won't be in a position to decline if they get a half decent offer."
But he also said sponsorship rates would rebound in the next three to five years, just as Formula One overcame the 2005 ban on tobacco sponsorship. "Sports sponsorship has this ability to recover from setbacks and changes in the industry. Short term it’s painful but long term there will be more opportunities," he added.
Spain's culture minister Alberto Garzon last year said football's ever closer relationship with gambling firms had "normalised" the practice and led to an 11% increase in people aged 18-25 gambling over the last four years.
The ministry of culture did not respond to a request for further comment on the law.
Pressure group Ludopatia Online welcomed the law for halting the "continued bombardment" of gambling adverts during sports broadcasts and removing logos on football shirts.
But Andrea Vota, president of online gambling association JDigital, said less than 0.5% of Spain's population suffered from gambling addiction and warned the banning of advertising could send a regulated industry underground.
Vota, who said Spain's gambling sector contributed 185.4 million euros in tax in 2019 and employed more than 84,000 people, added the law would hurt other industries such as the news media which have come to rely on advertising revenue from betting firms.