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Federations | Why one size never fits all

  • Some international federations have no choice but to outsource sales
  • Fiba was forced to take rights sales in-house by collapse of ISL
  • FIVB divides its rights up between agencies with local market strengths

 

Animal imagery abounds in the English language and, in the endless circular debate about the most effective way to structure the commercial operations of International federations, two phrases spring instantly to mind: ‘Horses for courses’ and ‘more than one way to skin a cat.’

As the International Table Tennis Federation looks to a brighter commercial future by bringing the sales and marketing of its rights back in-house, other IFs have adopted different solutions as they strive to optimise value in a fiercely competitive marketplace which has been changed forever by digital technology.

According to Frank Leenders, director general of Fiba Media and Marketing Services, the wholly-owned subsidiary of the International Basketball Federation (Fiba) which takes care of all of its commercial activities, the in-house versus agency discussion shows no sign of abating any time soon.

The reality is that the IF sector is as polarised as any other cross section of the sports business with some sitting on media and marketing assets worth many millions while others are, figuratively, scrabbling for loose change under the sofa.

Consequently, not every IF has the luxury of choice. For some the only option is to outsource sales because it makes more financial sense than meeting the monthly costs and expenses of in-house staff. For others, appointing a third party leads to a loss of control, poses management and possible relationship issues and is simply not worth the hassle against the level of revenue from a guarantee or a split of sales.

PICTURE: FIBA's Frank Leenders

Agencies

Back in the day when giants like ISL roamed the earth, agencies made a lot of sense. As an International federation, you would agree a deal, plan your spending for the next rights cycle with confidence and wait for the guarantee payments to roll-in. The agency bore the risk and, so long as they didn’t go bust, they represented an efficient way of running a Federation. It removed commercial stress even if the cost was kissing goodbye to optimised rights revenue.

But the problem was that agencies did go bust and then stuff started to hit the fan. In fact, among those that went to the wall was ISL, which had a raft of clients on major guarantees including Fifa and Fiba.

“Fiba was effectively forced to take its rights back in house by the collapse of ISL and did well for a decade or so with a small team of good people,” Leenders says.

“When I joined in 2011 the issues were discussed again, not just in terms of effectiveness but governance and the way the commercial element is integrated to keep some separation between the sports politics and business of the federation. You have to ensure that you create the right environment and culture for the commercial side to flourish,” he says.

For Fiba the answer was to set up Fiba Media and Marketing Services as a wholly-owned subsidiary to handle the commercial business. It is described by Leenders as “a club within a club, but fully integrated.”

He adds: “With that in place we were able to negotiate the next crossroads which was how to grow – not just organically but in a successful manner and to take advantage of the opportunities generated by the changes in the Fiba calendar.

“The issue was how could we involve investors and strategic partners to fuel that growth without losing control of the governing body.”

Model

Fiba arrived at the model that is in place now, working with Infront Sports & Media on marketing and with Perform Group on media matters.

“The deals run until 2033, which is four World Cup cycles, and both bring us commitment and resources in terms of international networks, human resources and talent, technology, finance and production that Fiba wouldn’t otherwise have,” he adds. “At the IOC, Fifa or Uefa things might be different. Not every governing body has their scale but this works for us.

“The issue facing most organisations in sport outside the elite tier of international federations or bodies like the NFL and NBA, is to find the model which gives the right balance between core in- house resources and the control that gives you as part of a mix with external parties.

“The external groups need to be given a chance to commit to something for the long term and the sort of deals where somebody just pays a fee and then goes off and sells rights for three years is really no good.

“I don’t believe in buyout deals as they always seem to go wrong in the long-term. There always needs to be a win-win so our model is to allow (third parties) to come in and invest and to be given a good chance to deliver value over the long-term and make a good return.”

While technology continues to change the nature of the revenue opportunities facing sport, Leenders does not feel that will necessarily impact significantly on the basic business models currently in place.

“Yes, we will see an impact from OTT and virtual reality and other technologies but for me I don’t think it will change the relationship between international federations and their partners,” he says.

“You may see situations where there is a different approach to investment in resources, but I don’t think it will change the partnership between rights owners and their strategic partners if they are built on transparency and a win-win relationship.”

Case study: FIVB

The changing commercial imperatives and opportunities facing international federations have also shaped strategy at world volleyball’s governing body, FIVB.

TV and marketing director Guido Betti says that when he joined the organisation almost a decade ago media rights were sold in a piecemeal fashion by a small agency which sponsorship deals were done in-house under the direction of the then president.

However, in 2012 FIVB announced the appointment of IMG, Dentsu and XYZ to handle media and marketing, with IMG looking after media sales outside of Asia where Dentsu – also responsible for sponsorships in Asia – would use its local market strengths.

Betti says that the arrival of new president Ary Graca with Fernando Lima, formerly of Brazilian media company Globo as secretary general, ushered in a new era of professionalism and now, as Graca enters a further eight years in office, the focus is on another commercial shift.

“We know we have a great opportunity and I believe I that volleyball is unique because it is played throughout the world by men and women. At the Olympics, it is always a strongly-rated sport, but outside the Games it has been too difficult for those who play or are fans of the sport to get access to content,” Betti says.

“So, we are thinking in news ways about the future, but the core of the commercial strategy is a shift from a business-to-business to business-to-consumer approach. Digital is a key driver and we want to create a platform that acts as one delivery point and one destination for the world of volleyball,” he explains.

“The business model is being restructured to give us control of all rights, including retaining domestic rights on host countries, as well as control of production. That means we can sell market-by-market, A-Z.

“One of the problems we have had is that products have been delivered in different ways in different territories. We can change that to create value and credibility through our TV exposure while digital will give us direct access to consumers. That means producing quality content and for us content will be king.”

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