2020, one step back for a big leap forward?
2020 will surely be remembered as a special year for the sport industry at both practical and supporting levels. The Covid-19 pandemic had a major effect on sports rights holders (A), which led to them quickly adapting their business approach, including their marketing strategies (B). However, it seems that theses news approaches might define a new standard in the sports industry (C).
2020, a step backward for a better leap forward?
A. A major upheaval in sport industry
When looking at revenues for sports rights holders (Clubs, Leagues, Federations), we can divide them in 4 categories: broadcasting rights (TV, social networks), production rights (events with ticketing), merchandising and sponsoring.
Jean François Jeanne, CEO of Infront France, recently explained to Global Sports Jobs the allocation of revenue for most of the sports rights holders in France:
- 39,5% of the global revenue comes from sponsoring
- 31,6% comes from ticketing
- 21,1% comes from TV rights
- 7,8% comes from merchandising
These incomes often yield low profitability in contrast to the different costs involved (Players and Staff salary, stadium maintenance…).
When the Covid-19 crisis began spreading rapidly, rights holders were forced to play without audiences in stadiums, or worse, stop playing altogether. This throws the balance between revenues and costs off its equilibrium point. Evidently, this crisis is having a huge impact on ticketing revenues and, indirectly, on other activities.
Consequently, Clubs, League, or Federations are left without certain vital revenues. Recently, sports figures like Didier Lacroix (Stade Toulousain – Rugby – Top 14) and also Tony Parker ( Owner – ASVEL- Basketball – Jeep Elite) warned on the dangers of the lack of ticketing revenues for clubs living on “real” revenue. Indeed, this “real” economy, based on ticketing and sponsoring revenues, is the foundation of most of the French sports rights holders’ economies. With a “real economy”, revenues coming from broadcasting or donations can be defined as complementary or marginal.
Nowadays, theses rights holders are left with revenues from broadcasting, sponsoring and merchandising. These revenues will continue to crumble as long as the crisis lasts.
To save their activity, many rights holders have innovated and have offered alternatives to address the lack of ticketing revenues and the decrease in sponsoring revenues (B).
B. The rights holders’ ability to adapt
During the crisis, sports remains one of the French top 5 subjects of interest (Havas Sports and Entertainment, 2020). In order to meet the demand, many rights holders have tried to figure out the best way to activate their remaining rights.
Rights holders recently focused on innovative ways to create value or at least to keep the existing ticketing revenues hailing from yearly subscribers or hospitality partners. At the very least, they need to cut losses…
First, content creation remains an essential element for rights holders. Besides TV rights, many rights holders provide initiatives enabling fans to live their passion through their favorite athletes.
The NBA once again paved the way by setting up a stable season and playoffs, but also by providing a unique digital experience to their fans with partnerships like Microsoft and ESPN (Disney Company). This kind of experience can now be seen in France with the France Football Team showing fans on the LED display surrounding the pitch.
Furthermore, many right holders used social networks or email marketing to interact with fans on content. The Stade de Reims (Football – Ligue 1 Uber Eats) or the Sporting Union Agenais (Rugby-Top 14) used their fans to create and validate their new identity with a new club logo. Digital uses can therefore bring right holders closer to fans and highlight their commitment.
Then, the work on your image can also have an impact on merchandising. Many rights holders tried to expand their merchandising revenues through new fan engagement.
For example, Paris Basketball (Basketball – Pro B )extended its partnership with Adidas by announcing the release of their new streetwear (Hoodie, sweatshirts) with the help of artists like Jok’Air or DandyGuel. Stade Toulousain (Rugby – Top 14) built a “Supporter’s Wall” inside the stadium Ernest Wallon where fans could purchase a plate and, in essence, be a part of the stadium.
Finally, because the crisis has impacted companies as much as right holders, sponsorship deals might require further attention. Indeed, partner companies will demand more from the right holders as certain deliverables cannot be upheld (hospitality, visibility, activation to name a few…) To this end, some rights holders diversified their content offer or created parallel events. An excellent example is the Olympique de Marseille (Football – Ligue 1 Uber Eats) activating its partners on Twitch and Youtube, and IronMan providing virtual races with connected devices in partnership with Sport Heroes.
Consequently, as we are still defining the impact of the crisis, many right holders shifted their focus on the ideas of proximity and consistency with fans. This led to a wave of innovative actions between the different stakeholders that make up the sports industry.
Facing these innovations, one question remains: what will be the future impact on the sport industry?
C. An ideal innovation framework
Once, we can turn the pandemic page, lessons will have to be learnt and used to improve the sport industry. Even though these innovations may seem diverse and scattered, we can learn 3 important lessons from rights holders through the Covid-19 Crisis.
Put your fans at the center of everything you do
First, even though they cannot be physically present, it will always be the fans that will carry the sport industry. To this end, it is essential to consider the relationship with fans as one of the most important elements of your communication, your merchandising and also of your sponsorship. Rights holders need to deliver the right message or the best content, to the right person at the right time. We believe that fan loyalty and engagement is not something that sports rights holders should take for granted. Rights Holders need to develop, activate and reward their community with premium content or exclusive experiences.
Capitalize on the digital shifts
In order to put your fans in the center, the use of digital tools is more than ever paramount. The digital shift is the second lesson that the pandemic crisis has given us. Whether it be for through a new customer relationship management (CRM) strategy, for communication on social networks or for presence in eSports, digital activation will continue to take larger and larger role in our industry. The recent deals made by Amazon, Facebook, Alibaba or Rakuten as media or sponsors in the sports ecosystem only goes to confirm that the digital arena as become the new playground for professional sports.
Become a complete entertainment actor
Finally, right holders can understand their breadth and potential in the entertainment industry. The recent partnerships between Puma, Milan AC (Football – Serie A TIM– Italy) and RocNation (Sean Carter’s Label – Jay-Z) or the Felyn Festival organized at the Groupama stadium, home of Olympic Lyonnais (Football – Ligue 1 Uber Eats), showed that the link between entertainment and sports are more and more frequent. We also can add the rise of eSports as an independent industry but also complementary to the sports industry, as shown by PSG’s (Football- Ligue 1 Uber Eats) eSport team or the Olympique de Marseille Twitch channel.
To conclude, we not only have the right to believe that industry will recover but that rights holders will also have the ability to remain agile in years to come. This pandemic could be the foundation for a number of evolutions in the sports industry.
As Winston Churchill once said, « If you are going through hell, keep going! ».