Not Table Stakes: The True Value of Partnership Rights and Benefits

Not Table Stakes: The True Value of Partnership Rights and Benefits

Located in Southern California’s San Bernardino Valley, the popular gaming destination has an extensive sports sponsorship portfolio, overseen by Peter Arceo.

Peter came to San Manuel in 2015 as Chief Marketing Officer and became General Manager in 2019. Prior to his time in California, he was Vice President and Chief Marketing Officer for Talking Stick Resort & Casino Arizona, where he oversaw that destination’s naming rights partnership with the Phoenix Suns arena.

 

All Access Interview Series host Jim Andrews recently spoke with Peter about the art of negotiating fair market value for sports and entertainment sponsorships, as well as the many unique aspects of activating, optimizing and evaluating casino partnerships.

Below are edited highlights of the conversation.

Peter: Our number one goal is to ensure our guests are having a good time and that they associate having a good time, and a feeling of excitement and escape, with our brand. We also want to find ways to connect our brand with our audience when they are not at the casino and tap into brands that evoke that visceral energy of having a good time.

Partnering with sports or a venue that hosts live events is an important tactic for us because it allows our brand to be part of another fun, thrilling and exciting experience.

There are many assets related to partnerships that are attractive to casinos—and they are not all signage based. There are many experiential components that are highly valuable. There is nothing better than being able to send our best players from the casino to a game they won’t forget. People will remember that they were afforded that experience because the casino was a partner with that team.

Jim: In addition to many sponsorships throughout your home base in Southern California and Los Angeles, many people are probably surprised to see San Manuel with prominent partnerships with the Vegas Golden Knights and the Raiders as a founding partner at Allegiant Stadium. What’s behind those relationships?

Peter: When we began those, it took people by surprise because it’s not something you see very often. The Golden Knights sponsorship was the first of the two. They of course were the first professional team in the city and there was a unique energy around that.

We saw how the team was able to connect with the fan base so quickly—even aligning with and giving so much support to the community under the tragic circumstances of the mass shooting that took place– and we saw how the partnerships team was able to activate those loyal fans early on, so we thought this would be a great partnership for us.

The key tactical component is that many talented people working in hospitality—casinos, hotels and restaurants—come from Las Vegas, so we saw this as a way to support our recruiting efforts and get our brand out there in a key market where people otherwise would not know who we were.

The Raiders partnership is a different program altogether. In that instance, we looked at the fan base for the team and learned that a large percentage come from the L.A. market. We saw an opportunity to get in front of people from our market when they are in Las Vegas enjoying a game. We all know that one of the benefits of partnering with a sports team is the loyalty of that rabid fan base, especially those fans who are willing to travel across state lines for a game.

Jim: You have been very savvy in your approach to determining what you want to pay for sponsorship rights. How do you approach negotiating price and what advice would you offer others—whether they are sponsors or rights holders—who are trying to determine fair market value?

Peter: I approach a negotiation with a few buckets. There is the must-have bucket of elements that are critically important to us and we want to have included. Then there is the wish list bucket, which I divide in two. There is the list of things we would love to have but know it’s probably a long shot to get done. And there is a list that is somewhat reasonable, where we believe we can integrate some of it into the deal.

I begin the conversation with the partner by finding out what’s on their must-have list. Perhaps it’s category exclusivity, where a partner will say, “Here is what I have to have in order to include exclusivity in your deal.” If you start with that understanding of the must-haves on both sides, the negotiation can only get better.

I also like to have the partner—after hearing my priorities and initiatives—present and pitch concepts around those needs, to see how they translate them into real solutions. That tells me whether they are listening and shows me their approach. That sets the stage for the relationship up front. If they can’t process those needs, it’s going to be a difficult next few years. You start with a deal, but you always need wiggle room to massage it to fit both parties and maximize value.

When the package is at a good place, I always take it to a third party, because the two people at the negotiating table are too close to it and carry biases. A third party can give an independent view on the value. When I receive that valuation back, if we’re on the plus side, that’s great, but if we’re not, I’ll talk with the partner about how to enhance the deal or examine the price. That’s where the two buckets come into play, as we can look to our wish list to add value.

Jim: Related to that, you’ve had experience where a partner brought non-traditional assets and benefits to the table to add value. Can you talk about that?

Peter: In some cases it has taken the form of participation in our community events and helping us give back to our community. Many of our partners come out to our area and participate with us in developing youth and giving to those in need. There is a lot of value in that for us.

We also do a lot with our partners in terms of recruiting. We are in the middle of a large hotel and casino expansion that will mean hiring for hundreds of positions and our partners have helped create social media messages for us to use in our recruiting efforts. It’s not something we negotiated as part of our deals, but we need that help and our partners are willing to do that for us. Having the flexibility to do that adds value that you can’t intrinsically assign a dollar value to.

Jim: As we’ve mentioned, San Manuel has a large portfolio of partnerships and they represent a significant investment. How do you measure the return on those investments and determine whether they are working for you?

Peter: I don’t want to wait for the recap. I want to stay real-time on this, so if there is an asset that is not working in the middle of the term, let’s talk about it. We have made many mid-term adjustments, but you have to come to it with real knowledge, not just a gut feeling.

Nine times out of ten, there is something the partner can do to help. It’s not in their best interest either to hear at the end of the year that an asset underperformed, that our customers didn’t respond to the activation. It’s better to learn that after a few games and address it.

If something is not working, it may be that we are not leveraging it properly, and if we tap into the partner, they may be able to help us modify our approach by applying their experience with a previous sponsor’s use of that asset, or sharing some insights into what their fans respond to.

Jim: Has legalized sports betting and the partnerships that are being done between sportsbooks, daily fantasy operators and leagues and teams had an impact on how San Manuel approaches sponsorship?

Peter: The biggest impact is that traditionally, you didn’t have to consider a team or a venue as a potential competitor. Even though it varies state to state—and here in California sports betting is not currently legal—leagues, teams and venues in some places are jumping into the fray as active operators of sportsbooks or a sports betting enterprise. We have never had to consider whether someone we are going to do a partnership with is going to operate a business that is in direct competition with our interests.

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