The Robert Sarver story seemingly came to a head last week when the NBA announced a one-year suspension coupled with…
And so it begins … to be fair it began some time ago but a new category of advertiser has now gained access to a major US sport. Major League Baseball will now allow teams to advertise CBD products moving forward. I get the stigma, and I understand what’s held this up for so long. This will, undoubtedly, open the category to other leagues who will want a piece of the estimated $4B dollar pie. I would predict that the NBA, NFL, MLS and NHL are not far behind in making similar announcements.
To both of you who don’t know, CBD is the non-intoxicating cannabinoid found in marijuana. It’s used to treat pain, anxiety, inflammation, and insomnia. For obvious reasons of affiliation, it’s been banned as a sponsor category by all major North American sports leagues.
Some people swear by it … others have yet to be sold on its benefits. Like many products in the world, some brands seem to work while others seem to be wholly ineffective.
Major League Baseball is putting on two levels of stipulation for teams to make a CBD deal. One, the company must be National Sanitation Foundation (NSF) certified meaning the ingredients are safe for consumption. The second one is permission from the commissioner’s office. This will allow MLB to have some discretion should a team look to do a sponsorship deal with a controversial brand.
I think there will be similarly structured deals with other leagues as soon as next year. I’d bet the NBA has a policy in place before the next season begins.
WHAT IMPACT WILL CBD SPORTS SPONSORSHIPS HAVE ON THE MARKET?
There are a number of things to unpack here. Most importantly, a new category like this will not disrupt the sports sponsorship world the way legalized gaming did. At least not with the same degree of immediacy. I’m guessing it will take two to three years for this category to be prolific as a sponsorship category. You’ll see a fair amount of discretion exercised by both teams and leagues as this category expands.
That being said, another new category with a fair amount of capital will purchase premium team assets which will drive the price of said assets higher. This will exacerbate access to professional sports marketing options for small to midsize companies. That helps to push revenue to the collegiate space, minor league entities and other developing sports which is a good thing.
Acceptance from broadcasting entities will also be interesting to watch as well. Disney-owned ESPN has always been difficult to embrace new, controversial categories. Regional Sports Networks have historically been less intransigent and I think ultimately, will do what makes them money when there is an opportunity to do so.
MARKETING CBD BRANDS WITH A SPORTS SPONSORSHIP
Nobody asked me but for CBD brands looking to invest in a sports sponsorship, I’d personally look for deal points that have high profile brand awareness components coupled with data capture elements that allows me to market to fans at a time that they aren’t engaged in the game.
This would apply to all sports, not just baseball.
I’d also like to get a player endorsement or two and utilize trade to offset costs on that. This allows me to address any stigma related to my product that a fan may have and enhances my ability to convert fans to my brand.
My goal for any activation would be to reinforce the efficacy, safety and legitimacy of my brand. I’d keep everything above-board with lean-ins on product safety (NSF, FDA, etc.).
TO CBD OR NOT TO CBD … IT’S NOT REALLY A QUESTION
Our society has come to accept CBD as a viable product that provides measurable benefits to consumers. This really is not debatable. What is debatable is how teams should proceed with promoting this product given its relationship with a historically illegal substance.
The very nature of the category requires discretion from both the teams and the league. I applaud baseball for taking the initiative in this category. I am certain other leagues are watching closely and will follow suit sooner than later.
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