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Gambling sponsorship ban threatens Italian rights-holders

SportBusiness explores how a new ban on gambling advertising in Italy will affect sports rights owners and sponsors.

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  • Betting sponsorship clampdown to combat problem gambling
  • Serie A could lose €120m a year in revenues
  • Critics call government measures ‘anti-constitutional’

Italy’s Council of Ministers last month moved to ban all gambling sponsorship and advertising – threatening revenues of Italian rights-holders, including potentially wiping €120m a year from Serie A clubs’ coffers.

It is a response to what is perceived by law-makers as a gambling epidemic in Italy. Italy’s deputy prime minister, Luigi Di Maio, who is spearheading the so-called Decreto Dignità (Dignity Decree), has called this a “social emergency that needs to be tackled immediately”. 25 years after the first moves were made to deregulate the sector, Italy is now estimated by H2 Gambling Capital to be the world’s fourth-largest gambling market and the largest in Europe.

Serie A has expressed its “extreme concern”. Like other major European football leagues, the betting industry is a major segment for sponsors of its clubs. In a statement, it said: “Preventing companies in this sector from investing in promotion would cause competitive disadvantages to Italian clubs, diverting advertising budgets for our teams abroad.”

The ban represents a two-fold problem for Serie A. The first is that several of its clubs – including champions Juventus – have sponsorship links with betting firms. Take those away and Serie A believes it could drain €120m a year out of their collective coffers. The second is that a ban on betting advertising might decrease the value of Serie A’s live broadcast rights – by creating a downward pressure on the cost of ad airtime.

David Peters, founder and director of consultancy The Value Xchange, expects the ban to hit Italian soccer pretty hard in the short term: “Gambling firms have massively inflated the cost of shirt sponsorships, so Serie A will be in this position where half the clubs are scrambling around looking for sponsors from other sectors at the same time. I think we could easily see the cost of shirt sponsorships drop by 50 per cent.”

Garry Dods, managing director of sponsorship consultancy Wearefearless, agrees the speed of the ban’s implementation will be a problem for Italian sports. “This ban is being imposed so much quicker than the EU-wide ban on tobacco, which had years of notice and time to plan ahead. Valuable sponsorship agreements take significant time to land given they’re constructed strategically and justified as part of a long-term brand strategy. Replacing this enormous revenue hole will not be a quick fix and could prove catastrophic in the short- to medium-term.”

While soccer is far and away the most dependent on betting sponsors in Italy, there is a potential secondary impact for other popular sports such as basketball, volleyball, rugby union and cycling, adds Peters. “Traditional soccer sponsors that have been squeezed out of the sport by betting firms may be able to find shirt deals. But that, perhaps, means there will be a smaller pool of sponsors for other sports.”

The Decreto Dignità

Under the decree, a ban on gambling sponsorship agreements and “any other type of communication of promotional content” becomes applicable from the January 1, 2019.

There is some leeway for pre-existing sponsorship deals, which can run up to mid-July 2019, though Di Maio has confronted clubs that are trying to secure deals with betting sponsors before the law becomes official. The deputy prime minister has said new partnerships, like those between Lazio and Marathonbet or AS Roma and Betway, are “not worth the paper they are written on”.

The Council is a powerful law-making body, so its decision to introduce the ban carries a lot of weight within Italy. But it does need to introduce the ban to the Italian Parliament over the next two months for approval.

Opponents of the ban are weighing up their legal options. If nothing is done to modify the ban, they may challenge it as anti-constitutional.

In a recent blog from law firm Squire Patton Boggs, senior associate Alastair Purssell and trainee solicitor Jack Blakey argue: “The Italian constitution guarantees a freedom of enterprise, which enables licensed companies in Italy the ability to advertise in the country…the ban could breach Italian constitutional protections and thus gambling operators may be inclined to escalate this issue before Italian courts.”

There is also an argument that the Council should have given three months’ notice of the ban to the European Commission (EU Directive 2015/1535), so the ban may still fall foul of EU-level law.

If, however, the Decree does become law it may have some other notable knock-on effects. It might, for example, force rights holders to reintroduce some rigour to the way they work with sponsors – rather than simply taking the gambling sector’s easy money. “Clubs,” said Dods, “will need to be entrepreneurial about creating assets and rights that offer a unique advantage over competitive alternatives.”

It could also create opportunities for digital replacement technology, which would allow clubs to continue showing betting sponsors’ branding on broadcasts outside Italy.

Charlie Marshall, chief operating officer of leading virtual advertising technology provider Suppenor, says: “I think there are a couple of potential implications. Firstly, rights owners could still benefit from betting partner income by using DRT to appease their own market regulators by leaving in-venue and domestic broadcast perimeter boards free of betting sponsor content, whilst inserting betting partner branding virtually for international audiences.

“Secondly, regulators could apply pressure on international rights owners to employ DRT in a blocking sense to keep their own markets free of content that is ‘unfriendly’ in a regulatory sense. This calls into question who would cover the cost, but it would be a very interesting debate to hear played out.”

Could clubs and sponsors see a way around the law? Purssell and Blakey conclude that it is unlikely: “The legislation will impose penalties of a minimum fine of €50,000 or five per cent of the value of the advertisement or sponsorship. However, the fine is imposed against ‘each violation’, which could accumulate a burdensome sum over the period of a season.”

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