Italy Issues Blanket Ban on Gambling Advertising, Sponsorships

Bet365

Effective January 1st, 2019, all forms of gambling advertising and sponsorships will be banned under Italian law. Gambling operators, media outlets, sport groups and event organizers are all required to follow the new Dignity Decree; failure to do so will result in administrative fines up to 5% of the value of the advertising or sponsorship, per violation. The government intends on issuing larger fines (up to $+/- $570,000) to those who advertise gambling services/products to kids. Deputy Prime Minister Luigi Maio has expressed intentions of lobbying the EU for a Union-wide ban.

Howie Long-Short: Gambling is synonymous with Italian futbol. Stadiums are named after gambling companies and gaming companies are represented on club kits as primary sponsors. To put the significance of this ban in perspective, Alun Bowden, Senior Consultant, Eilers & Krejcik Gaming called it, “by far the most significant thing to happen in online gambling this year and yes I include PASPA in that.”

The Italian government issued this ban to strengthen consumer protection laws and all money raised from fines paid will be invested into programs designed to fight gambling addiction, so while gaming operators (and their shareholders) are upset, they’re unlikely to find much sympathy from the public, here.

That will change though if Serie A clubs start to struggle financially, a likely outcome when club sponsorship deals expire (existing agreements can be fulfilled); gaming companies invest +/- $135 million/year in Series A sponsorships and Italian clubs (see: AC Milan, 2-year ban) are already struggling to meet UEFA Financial Fair Play rules.

Several Italian clubs are publicly traded including Juventus, AS Roma and Lazio.

Fan Marino: Maio won’t have to lobby hard in England, senior gaming execs (think: Philip Bowcock of William Hill, Peter Jackson of Paddy Power Betfair) there are already asking the government to implement regulations; concerned children are being subjected to far too many gambling-related ads on television (particularly, tied to sporting events). Of course, a blanket ban on advertising is beneficial to the giants of the industry as it becomes more difficult for small outfits to take mindshare.

It’s worth noting that Australia also now has a ban on gambling related advertisements during sporting events. While no ban is needed here yet, it’s easy to foresee one coming down the pike if the competition for legalized sports bettors begins to look like the infamous DFS competition of 2015. Perhaps the time is coming sooner than later, CBS is reportedly “all-in” on gambling related advertising.

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A.S. Roma Sign’s Massive Shirt Sponsorship Deal, Share Price Drops with Semi-Final Leg 1 Loss

Roma

A.S. Roma has announced the largest sponsorship deal in club history, a 3-year pact (begins in ’18-’19) that will make Qatar Airways the club’s official shirt sponsor through the ’20-’21 season. The deal, worth $48.7 million/season (or +/- 2.5x the NBA’s most valuable patch partnership), is among the largest ever signed by an Italian futbol club. The logo of Qatar’s state-owned airline will “adorn the front of the first team’s shirts” and the company will serve as the top flight Italian soccer side’s “Main Global Partner.” Qatar Airways becomes just the 7th kit sponsor in the club’s 90-year history; the first team has played without a shirt sponsor since the ’14 season.

Howie Long-Short: Limited shares of A.S. Roma trade on the Borsa Italiana under the symbol ASR (OTC: ASRAF). Interestingly, the share price over the last 30 days has mirrored the first team’s success (or lack thereof) on the pitch. When the club stunned Barcelona (overcoming a 4-1 loss in Leg 1) on April 10th to advance to the Uefa Champions League semi-finals, the share price jumped 22% to $.73; by Tuesday morning it had risen to $.82. The team dropped the first leg of the semi-finals (to Liverpool, 5-2) on Tuesday afternoon and the share price began to dip in after-hours trading; by Wednesday’s close, shares were down -14.7% (to $.70) from Tuesday’s high.

While stock performance has little correlation with wins and losses in North America (see: MSG +48% since Oct. ’15, Knicks winning percentage over same span is .374, RCI hit a 5-year low during the Blue Jay’s first trip to the playoffs since ’93 in ‘15), it requires a closer look in Europe. Like Roma, MANU is having a strong season on the pitch ranked 2nd in the EPL standings; since the club’s August 12th EPL season opener, shares are up 14% (to $19.10). JohnWallStreet will take a deeper dive the correlation between on-field performance and the share price of publicly traded European clubs, in the coming weeks.

Fan Marino: ASR is playing in the Uefa Champions League semi-finals for the first time in 34 years, but the club is going to need a dominant performance (at least a 3-goal victory) on May 2nd (2nd leg), to qualify for the final. Of course, had the team not scored 2 late goals (they trailed 5-0 in Leg 1); all hope would have dissipated. For those wondering, Real Madrid and Bayern Munich are competing in the other semi-final; Real Madrid won the 1st leg 2-1 on Wednesday afternoon.

U.S. soccer fans will have a chance to catch A.S. Roma (+ Liverpool, Real Madrid and Bayern Munich) live in action this summer. Beginning on July 20th, 18 of the world’s top club teams will compete in the 6th International Champions Cup presented by Heineken. The event’s 27 matches are spread across 3 continents (North America, Europe and Asia), with 17 on U.S. soil; Roma will play in East Rutherford (NJ), San Diego and Dallas. You can find full schedule and ticket info, here.

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WSJ: Just 7 Ways to Publicly Invest in Sports, JWS: Not the Case

wsj-wallstreetjournal

The WSJ published a recent story asserting there are few ways to directly invest in sports, a notion we dispute. The article deemed just 7 publicly traded equities to be sports-related and based their conclusion, that fans are better off watching and playing sports than investing in them, on the performance of 2 exchange traded funds; one of which (FANZ) has beat the S&P since its July ’17 inception, which would seem to counter to their argument. The article cites Matt Hougan, the CEO of Inside ETFs, and his belief that most of the economic value within sports (ownership and player contracts) “comes in private transactions”, to support the author’s thesis; but fails to pay consideration to the revenue streams that support those contracts (and generate ownership profits). It’s worth noting that JohnWallStreet follows over 100 sports-related equities.

Howie Long-Short: Sports teams generate revenue from 4 sources; broadcast rights, ticket sales, sponsorships and merchandising. Several publicly traded equities use a similar business model; Churchill Downs (CHDN), International Speedway (ISCA), Dover Motorsports (DVD) and Speedway Motorsports (TRK), and thus should also be included on the list. Others, like Acushnet Holdings Corp. (GOLF) and Callaway Golf Company (ELY), are undeniably directly tied to sports; and no one would claim your basket was unfocused if companies like Nike (NKE), Lululemon (LULU) and Fitbit (FIT) were to be included. Oh, and don’t forget Activision Blizzard’s (ATVI) new esports league (Overwatch); their inaugural season starts today.

Fan Marino: The story names the New York Knicks, New York Rangers (MSG), Atlanta Braves (BATRK), Manchester United (MANU) and Borussia Dortmund (BORUF) as the teams you can purchase equity in. The Toronto Blue Jays, Toronto Maple Leafs (RCI), Juventus F.C. (JVTSF), A.S. Roma (ASRAF) and SS Lazio (BIT: SSL) are also all publicly traded.

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Adidas Invests in Facebook for Soccer

Onefootball, a German mobile application with 25 million users across 200 countries, announced it has closed on Series B and Series C funding rounds; the company previously acknowledged raising $20 million in investment capital. Described as “Facebook for football without the social element”, the app offers news, live scores and stats for over 140 leagues in 16 languages. Focused on building a premier user experience that results in higher conversions for advertisers, founder Lucas von Cranach said that despite the captive audience (90% opt-in to receive push notifications), the company “won’t build a betting business, won’t build a merchandise business, and we won’t build a ticketing business”.

Howie Long-Short: Onefootball remains privately held, but Adidas (ADDYY) participated in the most recent round; finding value in the captive mobile fan base mentioned. Information pertaining to the amount of capital invested and valuation were not disclosed. There are several publicly-traded soccer teams. Manchester United is traded on the NYSE under the symbol MANU. You can buy A.S. Roma (OTC: ASRAF), Juventus (OTCJVTSF) and Borussia Dortmund (OTCBORUF) over-the- counter. Lazio is traded on the Borsa Italiana under the symbol BIT: SSL.

Fan Marino: As recently noted, more teams at the 2018 World Cup will wear uniforms made by Adidas (11) than Nike (10); but that won’t be the case when it comes to cleats. It’s expected that for the 2nd World Cup in a row, more than half of all players will be wearing NKE footwear; 52% wore the brand at the ’14 WC. For comparison purposes, just 36% of players wore Adidas footwear in 2014.

Onefootball has quietly raised a Series C round and added Adidas as an investor

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