On Friday, the Washington Capitals and Caesars Entertainment Inc. (NASDAQ: CZR) announced a multi-year partnership that will put the Caesars Sportsbook logo on Capitals home and alternate jerseys for games played at Capital One Arena in Washington D.C. On August 18, 2021, the NHL’s board of governors unanimously approved advertisements on jerseys to begin in the 2022-23 season. The Washington Capitals are the first team to announce their new jersey sponsor with this agreement with Caesars Sportsbook.
In August, the NHL approved 3-inch-by-3 1/2-inch sponsorship patches on home and alternate jerseys to be worn only in the home locale of a franchise in a market where sports betting is legal. Therefore, the Washington Capitals can only use their jerseys with the Caesars Sportsbook patch in D.C., where sports betting first launched on May 28, 2020.
The Capitals will have a Caesars Sportsbook patch featuring the company’s gold and green goblet logo on the upper right chest of the red home and blue alternate sweaters starting next season. The financial terms of this multi-year deal have not been disclosed. Still, it’s estimated that it could be as valuable or even more valuable than Washington’s Capital One Arena naming rights deal which amounts to $10 million per year.
Caesars by William Hill at Capital One Arena
The new jersey patch sponsorship is not the first partnership between Caesars Entertainment and the Washington Capitals. Caesars by William Hill Sportsbook opened on May 26, 2021. Monumental Sports & Entertainment signed an initial agreement with William Hill in October 2019 to make Capital One Arena the first professional sports venue in the United States with a sportsbook inside its walls. Monumental is the holding company for the Capitals, Mystics, and Wizards, among other Washington D.C. sports properties.
Caesars Entertainment acquired William Hill for approximately $4 billion on April 22, 2021, and assumed its existing partnership with Monumental Sports & Entertainment. The Caesars by William Hill Sportsbook includes an 18,000 square foot, two-floor sportsbook with wall-to-wall LED TVs, DC sports memorabilia, and a world-class restaurant designed by a local Michelin-starred chef. It also features 17 betting windows and 12 self-service betting kiosks, as well as Verizon 5G Wi-Fi capability to allow fans to place wagers from their mobile devices.
History of Advertising on Sports Uniforms
In European leagues, jersey sponsorships have been a common occurrence for decades. However, North American leagues have been hesitant to follow suit in fear of sacrificing the traditions of the respective sports. However, leagues have been gradually adopting this practice to generate more revenue. Major League Soccer (MLS) started allowing jersey sponsors in 2007, and the Womens’ National Basketball Association (WNBA) followed suit in 2009. In 2019, the MLS started allowing sportsbooks for its jersey sponsors.
The National Basketball Association (NBA) became the first of the four major North American leagues to allow jersey sponsors ahead of the 2017-18 season. The NBA generated about $150 million in revenue from its jersey patch program last season, and it has become difficult for other leagues to ignore the massive revenue potential. Before the NHL adopting the jersey sponsors, Commissioner Gary Bettman said it would take an “unusual circumstance – which I would define as a lot of money that I’m having trouble comprehending right now – for us to even be thinking about it.”
COVID-19 Created Need for Additional Revenue
The unforeseen need for additional revenue came quicker than Bettman expected as the COVID-19 pandemic led to unexpected negative financial impacts. During the 2019-20 season, league revenue declined 14%, operating income fell 68%, and the average NHL team value decreased for the first time since 2001. To help recoup some of that lost revenue, the NHL permitted teams to sell advertising on player helmets last season, which allowed the league to retain more than $100 million. With the continuation of that program and the introduction of jersey sponsorships, the NHL should recover from COVID-19 financially.
The Washington Capitals will make their jerseys available for sale both with the sponsor patch for fans who want to wear exactly what the players wear and without it for fans seeking the traditional, ad-free design. Monumental Sports & Entertainment is currently working on finding a new jersey sponsor partner for the Wizards, Mystics, the G-League team Capital City Go-Go, and the NBA 2K League team Wizards District Gaming.
Sportsbook operators have shown a habit of copying each others’ strategies for marketing, brand growth, and consumer engagement, so we will likely see other sportsbooks attempt to agree to jersey sponsorships in cities where sports betting is legal. As more states legalize sports betting, there will be further opportunities for partnerships like this groundbreaking agreement between Caesars and the Capitals.