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Online gaming firms to review sponsorships
Pan-European - 05 October, 2006
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Online gambling companies are likely to curb their sponsorship of European football teams after Bwin Interactive Entertainment AG was banned from backing clubs in France and Germany.
It is "definitely going to be put on hold," William Fenton, who tracks sponsorships accords for U.K.-based Sports Marketing Surveys Ltd., said in a phone interview. "There are too many question marks."
Companies such as Vienna-based Bwin and Gibraltar-based 888 Holdings Plc have boosted the value of Europe's soccer jersey sponsorship market to EUR 343 million over the past two years, backing teams including AC Milan, Monaco and Sevilla.
The companies are facing legal challenges from government-licensed gambling firms in countries including Greece and Portugal. They may have less to spend on marketing after Congress at the weekend passed laws to shut down Internet gambling in the U.S. 888 said in a statement today.
They are suspending its U.S. operations that would have a "material adverse impact" on earnings. Sales there accounted for more than half its revenue last year.
888 shares fell 26 percent to 108.25 pence in London today, while Bwin slid 35 percent to EUR 13.58.
Jersey sponsorships are worth as much as EUR 20 million a year, according to Barcelona team president Joan Laporta. They were part of a "spectacular" rise in marketing spending by online gambling companies last year that amounted to USD 170 million, Fenton said.
Three days ago, France's league banned Bwin from putting its logo onto Monaco's jerseys and stopped 888 backing Toulouse, citing the risk of legal proceedings. Bwin's co-chief executives were arrested Sept. 15 while unveiling its accord with Monaco. France's gaming monopoly, Francaise des Jeux, had filed a complaint, accusing Bwin of illegal services, according to Bwin.
The company's co-CEOs, Manfred Bodner and Norbert Teufelberger, were each released on EUR 300,000 bail Sept. 18.
Bwin, which backs AC Milan, may cut its marketing expenditure, according to Konrad Sveceny, the company's head of investor relations. It spent EUR 100 million on marketing in the first six months of 2006. "We'll find other ways of advertising," Sveceny said in a phone interview.
In August, state authorities in Germany banned Bwin from operating and sponsoring Bundesliga team Werder Bremen, saying it didn't have a betting license.
"The environment will get worse before it gets better" for online gaming companies, Simon Holliday, a partner at U.K.-based Global Betting and Gaming Consultants, said in a phone interview. "Some companies will draw back."
Bwin says its services are legal across the European Union and expects the European Court of Justice to rule in its favor in a test case it's considering. A verdict is expected in about a year, Holliday said.
Rob Mitchell, a London-based sports marketing manager for 888, didn't immediately respond to an e-mail message seeking comment about the company's jersey sponsorship strategy.
It is "definitely going to be put on hold," William Fenton, who tracks sponsorships accords for U.K.-based Sports Marketing Surveys Ltd., said in a phone interview. "There are too many question marks."
Companies such as Vienna-based Bwin and Gibraltar-based 888 Holdings Plc have boosted the value of Europe's soccer jersey sponsorship market to EUR 343 million over the past two years, backing teams including AC Milan, Monaco and Sevilla.
The companies are facing legal challenges from government-licensed gambling firms in countries including Greece and Portugal. They may have less to spend on marketing after Congress at the weekend passed laws to shut down Internet gambling in the U.S. 888 said in a statement today.
They are suspending its U.S. operations that would have a "material adverse impact" on earnings. Sales there accounted for more than half its revenue last year.
888 shares fell 26 percent to 108.25 pence in London today, while Bwin slid 35 percent to EUR 13.58.
Jersey sponsorships are worth as much as EUR 20 million a year, according to Barcelona team president Joan Laporta. They were part of a "spectacular" rise in marketing spending by online gambling companies last year that amounted to USD 170 million, Fenton said.
Three days ago, France's league banned Bwin from putting its logo onto Monaco's jerseys and stopped 888 backing Toulouse, citing the risk of legal proceedings. Bwin's co-chief executives were arrested Sept. 15 while unveiling its accord with Monaco. France's gaming monopoly, Francaise des Jeux, had filed a complaint, accusing Bwin of illegal services, according to Bwin.
The company's co-CEOs, Manfred Bodner and Norbert Teufelberger, were each released on EUR 300,000 bail Sept. 18.
Bwin, which backs AC Milan, may cut its marketing expenditure, according to Konrad Sveceny, the company's head of investor relations. It spent EUR 100 million on marketing in the first six months of 2006. "We'll find other ways of advertising," Sveceny said in a phone interview.
In August, state authorities in Germany banned Bwin from operating and sponsoring Bundesliga team Werder Bremen, saying it didn't have a betting license.
"The environment will get worse before it gets better" for online gaming companies, Simon Holliday, a partner at U.K.-based Global Betting and Gaming Consultants, said in a phone interview. "Some companies will draw back."
Bwin says its services are legal across the European Union and expects the European Court of Justice to rule in its favor in a test case it's considering. A verdict is expected in about a year, Holliday said.
Rob Mitchell, a London-based sports marketing manager for 888, didn't immediately respond to an e-mail message seeking comment about the company's jersey sponsorship strategy.
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