The approval at the end of last year of Law 13.756 / 18, which deals with sponsorship of bookmakers in Brazilian sports, opens up new opportunities for a market that suffers to attract sponsoring companies.
Sponsorship Market in Brazil
Overall sports sponsorship expenses exceed R$ 160 billion (US$ 43.7bn) per year. Brazil is the largest market in Latin America, with about R$ 2.5 billion (US$ 682m) annually generated, about 1.6% of global turnover, very low compared with the strength of our media and entertainment market.
Brazil is the largest emerging market, comparable to many mature ones in Europe.
Unfortunately the sports sponsorship market in Brazil is underutilized. There are limited vision issues of the sponsorship side that sees it just as media, a mere channel of brand communication, in polluted uniforms, field banners, and backdrops.
Another aspect is the lack of vision of the sponsors in the activation of their sponsorship quotas.
Overall, it's already proven, every US$ 1 you spend on sponsorship requires at least another US$ 2 in activations. If the company has a good activation plan and ROI (return on investment) and ROO (return on objctives) it can spend up to 3 times, 4 times the investment, and the return will be very high.
Sports Value was born with the aim of offering sponsors that effective return with sponsorship, which the Brazilian market is lacking.
With the end of Caixa's sponsorship of football clubs and other state-owned enterprises in Brazilian sports, the market should suffer a downturn. According to recent figures published by Sports Value, the exit of Caixa from the Brazilian football should profoundly impact the sector, since the state bank represented 20% of our market.
Brazilian clubs managed to raise R$ 720 million(US$ 197m) in sponsorship in 2017. This puts Brazil in 10th place in the world, ahead of Ligue 1 in France, the Netherlands and Turkey.
The current numbers could be doubled if the clubs understood how to value their properties and the relationship with the supporter. Sponsors, on the other hand, need to go far beyond the visibility sponsorship quotas offer.
Sports betting sponsorships
The approval of the Law that regulates the sponsorships of bookies in Brazil is a step forward for brands to sponsor clubs.
In the European market betting sites are the fifth most relevant sector among the sponsors. They are: sports goods, financial, automotive material, airlines, bets and drinks.
The presence of the brands of the betting websites is a reality. Half of the Premier League teams have a betting site on their shirt. In the English second division, the Championship, betting sponsorships are already in 70% of the uniforms.
It is noteworthy that the contracts are not with the English giants, Manchester United, Arsenal, Manchester City, Chelsea, Liverpool and Tottenham. The largest contract is from West Ham, £10 million a year with betway.
Of the total generated with shirt sponsorship in the Premier League, 17% comes from betting sites.
Even teams that do not wear the brands in the uniform have smaller sponsorships whose website can exploit the team's brand, idols and communication channels with the supporter.
Thus, the regulation of sponsorships here in Brazil will generate a possible help with the exit of Caixa, since many spaces are available, and it seems that prices are falling.
The state-owned bank paid a higher amount than the necessary for the clubs, inflated the market, which at the moment is adjusting.
Fortaleza recently got the first sponsorship with this new segment in Brazil, with NetBet, and apparently the company is negotiating with other clubs.
It makes perfect sense for the business to be in the clubs' shirt, since the gambler loves football, and considering that today everything is digital, companies need to communicate with their target audience.
Thus, a connected and betting supporter is something these companies are looking for, and the clubs are a great bridge to it.
Regulation and supervision, the soul of the business
The most fundamental and important issue in the sports betting market is the smoothness, transparency and oversight of the whole business. It is clear that there are mafia groups operating in this market, and regulators need to be prepared. The sponsorship of bookmakers will give more recognition to brands, which in no way want to erode their credibility.
Thus, companies, along with public power and sports entities, must be able to create ways for the fair game to be preserved.
The global sports betting market is already estimated to move nearly US$ 3 trillion per year, 90% of which is illegal betting.
Regulatory and subsequent monitoring are the way to give security to all involved and strengthen the industry.
Amir Somoggi - email@example.com
Managing Partner of Sports Value, a company specializing in sports marketing, branding, sponsorship and valuation. 20 years of experience in the sports industry.