Is this the pits? What will happen when Formula 1 shows gambling ads?
In January 2018 billionaire John Malone's Liberty Media Corporation announced that it had completed the acquisition of Formula 1 (the world’s most popular and successful motorsports franchise for those who think racing is as exciting as watching the M25 on fast forward). The reins were handed over by incumbent supremo Bernie Ecclestone and his minions for approximately $8 billion making it one of the biggest trade sales in sports history.
Chase Carey, Chairman and CEO of F1, said at the time:-
“F1 has huge potential with multiple untapped opportunities”.
Now, it seems, it’s time for F1 to pay the piper as one of the most valuable of these untapped opportunities has come to fruition - Formula One has reversed its longstanding opposition to gambling advertising.
Liberty has hashed out a deal thought to be worth up to $100m to sell sponsorship rights to online gambling firms over the next five years. The deal, made the hitherto unknown sports marketing firm Interregional Sports Group (ISG) in London, marks the first time in 40 years in which betting companies will be able to advertise themselves in F1.
In exchange to this monster upfront fee ISG will now try their level best to flog their inventory to the highest bids from global operators looking to build brand awareness beyond the unicorn of football in this ever more crowded space.
It seems from early press releases that brand advertising will be limited to trackside billboards and virtual televisual overlay graphics during races meaning we’ll miss out on sponsored drivers, which seems a shame with such obvious natural affinity:-
Germanic, no nonsense and hugely successful? That sounds like a bwin and Sebastian Vettel match made in Heaven.
British Champion, leads from the front with the best equipment? Hamilton and Bet 365.
Young, exciting, future champion material? That’s got Max Verstappen and Bet Stars written all over it.
Throws money at problems, sits near the back of the grid and doesn’t meet expectations? Well if that isn’t Sergio Pérez and Ladbrokes to a T.
But no, for now ISG will have to turn a profit on their $100 mil outlay with electronic ad boards and for that money, only a few of the global players from regulated markets have the brand budget to get the prime trackside spots. However, much like football before it, ISG won’t be too concerned about buttering up 365, Paddy Power Betfair or Stars Group/ SkyBet. The real payback will come from the Asian handicap sportsbooks whose logos so frequently adorn the shorts of Premier League and Championship football clubs.
With online and televised gambling advertising remaining a massive 'no no' in China, brand recall via shirt sponsorship has been adopted as an effective (if highly costly) means by which of promoting your brand to tens of millions of Chinese sports bettors every weekend. ISG will be selling that same sizzle to Asian operators. There is a caveat, however: - many European football clubs re-sell their pitch side hoarding real estate to Asian clients using virtual advertising, meaning separate ads are transposed onto the hoardings seen at the stadia for live or pre-recorded television show. Again, ISG has probably thought of this and territory packages will be bought, sold and traded between end markets.
The next point worth noting is one of compliance. In the well-regulated UK market gaming ads have to show (at a visible size) responsible gaming and ‘18+’age restriction messages and whilst this isn’t the case for many markets in which F1 is viewed, one slip up here could be very costly for the operators concerned.
Finally there’s the question of whether all this incredibly expensive media at F1 races will actually do anything or whether it’s an exciting big budget red herring? That largely depends on what the hoardings are allowed to say and how busy the race advertising becomes. If, like football stadia before them, the circuits become an A to Z of gaming operator branding then it’ll rapidly turn into a logo soup – and ultimately the only winner will be Liberty Media and ISG.