Do You Want this Brand Sponsoring Your Team? How Ethical Issues Are Making Sponsorships More Difficult

Shaking Up Sports

By Ricard Jensen & Ryan Dastrup

?We’re seeing many instances in which policymakers and the public are becoming increasingly concerned about the types of companies and brands sponsoring sports events, teams, and leagues.

In the United Kingdom, proposed legislation would ban gambling and betting companies from sponsor the shirts of football clubs beginning in 2023. The idea is that gambling and betting on football may have an ill effect on society, so such sponsorships are not desired. Taking this ethical stance may come at a high price; clubs in the English Premier and the English Championship earned $137 million from gambling and betting sponsorships in 2021, and leaders of several clubs have stated that this new ban would add to their dire financial situation, which was already stressed from covid-related losses.

The ban on betting and gambling sponsorships in England seems especially interesting when compared to the sponsor landscape in the United States. In 2021, we saw several instances in which major professional sports leagues were rushing to embrace new partnerships with gambling and betting interests. For example, the Superdome (home stadium of the New Orleans Saints) is now sponsored by Caesar’s. Ted Leonsis, the owner of the National Hockey League’s Washington Capitals and the National Basketball Association’s Washington Wizards and the CEO of Monumental Sports & Entertainment, is one of many entities working to develop a casino that would facilitate betting inside the Capital One Arena where these teams play home games.

In sum, it makes one wonder why sports betting and gambling are being shunned by sports leaders in the UK but are being seen as a financial savior by sports leaders in America.

Another sports sponsorship sector receiving a lot of attention is the involvement of tobacco companies sponsoring the Formula 1 high-performance race car circuit and the teams that participate in it.

In 2021, tobacco companies led by British American Tobacco and Philip Morris invested more than $100 million to sponsor cars and teams. These sponsorships are no doubt making sponsors happy because F1 is now riding a huge wave of global success due to high TV ratings and significant social media followings; ESPN reports that F1 earned its highest-ever ratings in 2021.

But some critics and policy makers are stating concerns that tobacco company sponsorships might lead to an increase in smoking-related health problems among youth and others who follow the sport. Keep in mind that in the USA the Winston tobacco company sponsored NASCAR stock car racing until 2003.

Again, we have a dilemma; in this case policy makers in the USA have decided tobacco company sponsorship of sport is unethical, but leaders in some aspects of global sport have developed policies that allow such sponsorships as being ethical.

These two examples just scratch the surface of recent ethical issues involved in sponsorship, including:

·????????Several politicians and globally in the US are urging sponsors to abandon the 2022 Beijing Winter Olympics and the FIFA World Cup in Qatar because they are concerned about alleged human rights abuses by the governments of China and Qatar.

·????????Some special interest groups that advocate public health issues are dismayed by energy drinks like Monster and Red Bull who sponsor sports, fearing that youth may suffer ill health by consuming these products.

·????????NASCAR acted quickly this month (January, 2022) to not allow political causes to sponsor cars who compete in their races.

?What does this all mean?

There’s no doubt that 2021 has been a challenging year for the economics of sports teams and events.

Covid-related concerns limited how many fans could attend live events; throughout much of 2021 we had sports without fans, and that made the revenue from sponsorship even more important.

And judging by recent concerns related to Covid omicron, the sports industry is not out of the woods yet. We’ve seen the National Hockey League implement a “covid pause” of about two weeks to protect player health. In the NFL, we’ve seen how the New Orleans Saints could barely field a team because so many of their players had to be restricted from playing due to covid concerns.

In sum, one might wonder if policymakers should become involved in determining the ethics of which types of companies are allowed to sponsor sport.

Of course everyone wants to protect people and society.

At the same time, one could certainly make the argument that sports teams, leagues and events should be given the right to decide for themselves which sponsorships are acceptable.

This is especially critical when many teams are suffering huge financial losses and sponsorships are an economic lifeline.