Spanish Soccer Drops Sports Betting Sponsorship; Cash Shortage A Warning To US Leagues

Spanish soccer is facing a cash crisis later this year when regulations come in outlawing gambling sponsorship in the country’s top leagues.

Gambling companies have commercial agreements with a number of clubs across the top two tiers of Spanish soccer. It is worth around $109 million to clubs and this cash helped many through the COVID-19 pandemic.

But from the summer they won’t be able to advertise their brands or associate with teams.

Historically gambling firms have paid big money to showcase their brands on soccer shirts in Spain – and clubs have benefitted from the increased cash flow by spending more money on player transfers, wages, staff, and stadium and training center renovations.

Games were played without fans during COVID at an estimated cost to the league of $2.2 billion. Gambling sponsorship helped bridge some of the financial gap.

But the era of European soccer being funded by gambling firms appears to be coming to an end. Leagues in other countries have either already banned betting firms from advertising on team shirts, or will soon implement the ban.

And Spain is bracing itself for a big impact on club finances when betting firms finally get the boot.

Sports betting in Spain is becoming more regulated, as is advertizing

What’s Happening In Spain?

The government approved a ban on gambling advertising for teams in La Liga and La Liga 2 – Spain’s top two soccer leagues – in 2020. That ban was set back during the height of the coronavirus pandemic, when teams were struggling for cash.

But now the regulation will be imposed before the start of the next soccer season, in August 2022.

According to newspaper SPORT, 22 of Spain’s top 42 clubs will be seeking a new main sponsor this summer. The millions of euros generated from gambling deals have been keeping some clubs afloat – but now they must wean off.

Come August some teams may not have a lucrative main sponsor – and this could impact on Spanish soccer’s competitiveness in a global market.

Indeed, La Liga president Javier Tebas last year railed against the new ban.

“It’s contradictory that in a country where gambling is a legal activity, advertising it is prohibited. We believe forbidding it outright is a mistake,” Tebas said at the time. “Evidently it’s going to cause lots of damage and while we have appealed to the government, the clubs will have to scrape around in a very difficult moment.

“We have asked the government to consider a different policy because what they are doing is cutting clubs’ ability to generate revenue and therefore reducing our competitiveness with the rest of Europe.”

Why Does This Matter To Americans?

The reason Spain’s shift towards banning gambling advertising is so important is that it highlights the dependence some sporting leagues and teams have on an industry that, in Europe, is steadily being regulated.

Over the past decade there has been a boom in commercial gambling sponsorship across sports on the continent – so much so the campaigners and legislators are now pushing back.

American sport is, conversely, at the start of this curve. The US sports betting industry is booming as state after state legalizes gambling. Advertising, commercials, TV shows and more are now dedicated to sports betting – and leagues such as the NFL, NBA and MLB are earning millions of dollars in revenues.

This supercharge of cash could well lead to leagues and teams developing greater competition, building bigger stadiums, and investing in community projects. But eventually the spending will level out – and in time it could begin to decrease if gambling advertising is regulated more tightly.

In fact, we’ve already seen some sportsbooks cut back their commercial spending.

And so this is where US sports teams could eventually face the same worrying future many Spanish soccer clubs are staring at now. Of course, there are may variables to make up the success and failure of a sporting franchise – and gambling money (or the lack of it) alone is unlikely to break a business. But La Liga’s looming cash crisis is a lesson to those who are seeking to rely too heavily on revenues from an industry that will likely, given time, face greater regulation.