Sports Business: Five Current Themes
I know that people are generally considerate enough to wait until December or January before unleashing their observations on trends of the moment. However, if my local Wyevale garden centre can begin their Christmas promotions in August, I am prepared to go early with my thoughts on current #SportsBiz themes. So, here goes.
1. Player as a Platform.
Players’ professional sporting careers tend to be short so they need to look for ways of making money outside and beyond their playing services. For decades, of course, athletes have been tying up with brands and augmenting that income with endorsement money.
But now, the player is truly beginning to emerge as a platform. Social media helps them cultivate and communicate with their own followings, outside of any club or employer they may have. It also provides brands with new platforms from which to promote themselves – and pay the player for the privilege.
Separately, entrepreneurialism and investing allows players to have a say in, and benefit from, the businesses of the future. Moreover, athletes from Colin Kaepernick to Marcus Rashford are using their platforms to promote social justice and drive change: the things they deeply care about. My friend Adam Whyte who is CEO of influencer management platform Edge says that “creators are the new bus stops and billboards” and it strikes me that is equally true of high-profile athletes – whether for their own causes, or those of others.
We are hearing a lot about greenwashing and sportswashing at the moment. Like laundering in the case of money laundering, “washing” here refers to the attempts to improve the image of a brand, company or country by generating an association with something wholesome. So, washing is the laundering of a reputation.
The concept of sportswashing is by no means new and an early high profile example is Hitler’s attempt to use the 1936 Olympic Games in Berlin to present the Nazi regime to the world in a positive light. The recent takeover of Newcastle United, the 1976 World Cup in Argentina and 2018 World Cup in Russia are all examples of events that have drawn allegations of sportswashing.
“Greenwashing” is a newer phrase. Due to the influence that they have over their fans and followers, sports organisations have a unique opportunity to be a force for good in the climate change battle. To take a couple of motorsports examples, Williams F1 recently announced a net zero target by 2030 and signed up to the UN Sport for Climate Action Framework. Meanwhile, Mercedes GP has apparently already achieved net zero status. My partner Jody MacDonald has written a good short blog on sustainability issues in sport here.
While a commitment to net zero is undeniably a good thing, commitments such as these remain, for the moment, without formal monitoring or regulation. But that is beginning to change. Increasingly, focus is shifting to how an organisation achieves net zero and not just when. For example, does it intend to rely heavily on offsetting as opposed to reducing emissions? The Competition and Markets Authority has released its “Green Claims Code” and has warned businesses that they have until the New Year to make sure that their environmental claims are legally compliant. It will, therefore, become a legal requirement, rather than a mere public relations banana skin, for organisations to ensure its claims are correct and can be substantiated, and avoid allegations of greenwashing.
No doubt we will see other kinds of washing emerge in the coming years.
3. NFTs and Social Tokens.
These are everywhere at the moment. The hype – and with it some of the negative commentary – will eventually settle because these new technologies are indeed here to stay. NFTs have practical applications way beyond their use as mere digital collectibles and will continue to impact industries from ticketing to gaming and beyond. Teams and athletes are also now engaging with social tokens to attract and profit from their followings. These tokens can be used to provide benefits to fans such as access to limited content or “money can’t buy” experiences. Those concepts are not new, but it is the easy “tradeability” of the tokens that sets them apart from simple loyalty point type schemes. Tokens, and NFTs, are liquid and can be bought or sold, creating new economies and comprising new stores of value.
The financial advantages of athletes trading in NFTs has already been shown by the early riders of the NFT wave – four-time Super Bowl champion, Rob Gronkowski generated approximately $1.6 million in ETH from an NFT “drop” earlier this year. NBA’s Top Shots, which I wrote about here, has seen comfortably more than £500 million of sales in the 18 months or so since its launch.
Beyond the world’s top athletes and sports bodies though, NFTs could present a way for junior athletes to fund what can be a financially challenging start to their careers. The capital required to kick-start and sustain a professional career in the likes of tennis or golf or dare we say – motorsport – can be very high. The price of equipment, travel, coaching and accommodation across the world adds up fast. Minting and selling NFTs is one way that young athletes can try to monetise their names and images and finance the beginning of their careers. While traders might see NFTs issued by junior athletes as a high risk investment, they may also see significant upscale possibilities.
The National Collegiate Athletic Association (NCAA) in America has adopted an interim policy permitting college athletes, for the first time, to make money off their name, images and likenesses. The policy change is an attempt to help college athletes fund their young careers. A number of these athletes have already expressed an interest in NFTs as an avenue to explore. Notwithstanding the myriad other applications of NFT technology, do not be surprised to see this method of fundraising take off.
At the recent Leaders conference at Twickenham Stadium, a couple of prominent sports business podcasts like Unofficial Partner and Sport Unlocked were recorded before live audiences. We are also seeing that sportspeople can revive or extend their careers by putting out podcasts of their own, as Peter Crouch exemplifies. And we are seeing examples of some whose names are being made, or sustained, primarily through the podcast medium. Tim Ferriss and Joe Rogan are good examples, albeit from outside sport.
So, audio is enjoying a boom. The interesting thing to watch will be whether the podcast format will continue to dominate or whether new formats may emerge or begin to predominate. For example, will platforms for live, audio content based around community interests – like Clubhouse – grow or fade? Or, will the on demand appeal of podcasts mean they will remain the weapon of audio choice for the foreseeable future? And what part does traditional radio play in all of this?
5. New sports.
The past ten years or so has seen the rise of the new sports format: take an existing sport and tweak it (usually, by making it shorter or reducing the number of players). Not everything has been a success but think The Hundred, Twenty20, 3X3 basketball and GolfSixes.
Using cricket as an example, English cricket has recently been described by the Financial Times as “sleepwalking through a demographic crisis”. Spectators of the sport typically come from a middle-aged and male background. The Hundred, a newly created format for cricket of 100 balls faced per team, was largely intended as an answer to diversify the audience of cricket in the UK.
Whilst the new tournament was not without its faults, the attention that it has brought to women’s cricket is undeniably impressive. It has been reported that 1.6 million people tuned in for the opening night – a record for a women’s cricket match. Attendance of the women’s final of over 17,000 also broke a record (set on the opening night of the tournament) for the highest attendance of any domestic women’s cricket match across the world. Whilst the number of tickets bought by women throughout the tournament was still low (21%) and there is still a long way to go in terms of equality of pay between women and men players, The Hundred has shown that tweaking existing sports can be highly beneficial for the survival of a sport.
New formats like this certainly provide opportunities but what about some of the new (or least breakthrough) sports?
Padel is one, a racket sport already reasonably established in Spain, Italy and some Central and South American countries but not well known in the UK. Pickleball is another – a sort of mixture of tennis, table tennis and badminton that gained a lot of traction in the US during Covid lockdowns. Endorsements from the likes of Leonardo DiCaprio and George and Amal Clooney have not hurt at all.
Or what about kabbadi, the very old and massively popular sport on the Indian sub-continent that according to the FT sometimes bests Indian cricket Test matches for audience figures and can outperform football’s World Cup there. Could it crossover into widespread Western adoption?
Keep an eye out for new and emerging sports. Could some of these break through into mainstream consciousness?