It was recently reported that Major League Soccer (MLS) is set to become the first of the major American sports leagues to approve cannabidiol (CBD) as a sponsorship category, tapping into a potentially lucrative revenue source in an industry that continues to grow.
The terms of the category are still unknown. Will the league sanction kit sponsorship, in-stadia branding or even naming rights? Will it look for a central partner to add to its own roster and how will it allocate, if at all, exclusivity across the various product types and variations coming to market with increased regularity?
In the US, since the 2018 Farm Bill allowed hemp to be removed as a controlled substance and become an agricultural commodity, sport has had an eye on this new sponsorship category. Research by BDS Analytics and Arcview Market Research last year predicted that the US CBD market will be worth up to US$20 billion by 2024. In the UK, where CBD can also be legally sold under strict product guidelines, the Centre for Medicinal Cannabis found that the current market was worth UK£300 million (US$393 million) and projected it would reach a value of almost UK£1 billion (US$1.31 billion) by 2025.
With figures like these, its little wonder sport is interested in new commercial options from this burgeoning market.
While the news about MLS is certainly interesting, it is not the first sports property to dip its toe into the CBD market. A number of partnerships are already in place with governing bodies and directly with athletes. However, the major powerhouse leagues such as the National Football League (NFL) and National Basketball Association (NBA) maintain a cautionary stance against CBD.
USA Triathlon became the first major Olympic governing body to explore the category when they announced a four-year deal with Pure Spectrum in 2019. In the same year, the Ultimate Fighting Championship (UFC) entered into a eight-year research partnership with Canadian CBD producer Aurora Cannabis. The principle of the deal is to assess the performance benefits of CBD in reducing pain and inflammation, improving wound healing and general recovery. Working together, the two parties plan to produce a specific ‘high performance’ sports brand called Roar Sports, which will provide UFC fighters and the public with best in class products.
The clamour to understand CBD’s potential performance benefits add an interesting element to the sponsorship tale. Various testimonies highlight its effect in reducing muscle soreness and overall pain, stress and anxiety relief as well as improved sleep quality. Pain relief in contact sports is a constant issue; a natural alternative, with limited reported side effects compared to pharmaceutical painkillers, could offer a very positive athlete welfare story.
For these reasons, medical teams and sport science departments are desperate to understand more. This should be music to any commercial teams’ ears. In any professional sports organisation, consider the investment in terms of fees and wages on the playing squad. The role of the performance team is to try and maximise that investment by ensuring players are fit, in form and available for selection as often as possible. If CBD does support athletic recovery across a number of key indices then it will very quickly become a must-have.
Genuine scientific research into the effectiveness of CBD in a sporting context remains limited. Despite this, a recent review across both codes of professional rugby in the UK found that use increased significantly when players were between the ages of 28 and 33.
Professor Graeme Close of Liverpool John Moores University, who led the research, speculated that “players are likely to have residual pain built up following years of collisions”, adding: “For many professionals, the period of their late 20s and early 30s sees a shift of focus to prolonging their career. It is therefore little surprise that players within this age group are seeking different types of therapy to maximise their availability and with-it earning potential.”
For the clubs, too, being able to maintain the performance of current players is often financially advantageous in comparison to having to replace them.
If CBD is effective in aiding recovery and, as research suggests, becomes commonly used amongst athletes seeking to prolong their careers, it will have a huge impact on its credibility. It places the product firmly within a lucrative demographic in terms of age, disposable income and an increasing interest in health and fitness. As seems to be the goal of the UFC partnership with Roar Sports, commercial opportunities could expand beyond simple sponsorship into licenced product ranges.
Despite the proposed performance benefits, many still associate CBD with cannabis and therefore view its sponsorship potential in terms of a lifestyle category similar to that of energy drinks. The likes of Red Bull and Monster have had a significant impact on the sponsorship industry over the last decade and a half. They developed a new category, broke traditional models to own their own teams and events, all while developing a youth lifestyle narrative. In 2018, total energy drinks sales in the US were worth just shy of US$13 billion. In comparison, the CBD industry is predicted to be worth US$20 billion in the country within the next few years.
Caution is needed, however. This is a new and, in many ways, difficult balancing act for executives. The hype surrounding CBD due to its reported effects and improved availability does not mean it is without risk. The study led by Professor Close highlighted some worrying trends.
In certain rugby clubs, up to 70 per cent of players have or are using CBD to manage pain. Many of these products are as yet untested and, despite CBD being removed from the World Anti-Doping Agency (Wada) banned list in 2018, Professor Close explains that the “psychotropic cannabinoid THC, which remains a prohibited substance, can still be present to levels that could result in an adverse drugs test and potential disqualification from competition.”
He adds: “More safeguarding is needed to protect players and clubs in terms of batch testing. Additionally, more independent research is needed to assess the effectiveness of CBD as a remedy for pain management and recovery before performance benefits can be confirmed”.
Indeed, last year professional triathlete Lauren Goss and Olympic skier Devin Logan both accepted six-month sanctions following drug tests linked to CBD products that elicited adverse THC findings.
In the US, the major professional leagues are not subject to Wada’s strict testing rules. However, Olympic and European professional sport is a different matter. A relatively young CBD industry is going to have to get professional very quickly and implement testing similar to nutrition brands if it is to realise its potential in sport. Further adverse findings, leading to increased player sanctions, would be a major PR blow, and could cause sports administrators to delay widespread opening of the category.
The news that MLS is to become the first major US sports league to sanction CBD sponsorship will certainly grab headlines. It will increase pressure on other organisations to rethink their positions and in the face of reduced revenue due to Covid-19, examine if a new sponsorship category could help clubs’ weather the storm.
Potential performance benefits add to the credibility of the product which will help it gain acceptance among sponsorship rosters. However, with research still in its infancy and issues regarding product regulation unresolved, CBD has a way to go before the industry is acknowledged among the stable of top sporting sponsors.
John Mulcahy is a director at the Sport Science Agency which sits at the intersection of sport, performance science and marketing. John works with agencies, rights holders and brands helping them tell performance stories that enhance their content and commercial output.John Mulcahy