After launching in Miami this spring, the Sports Decision Makers Summit – from SportBusiness and Sportel – came to London’s Rosewood hotel on July 9-10. This is what we learned from our expert speakers.
We could see perimeter advertising at the Olympics…
Opening the first day of the Summit, Timo Lumme – the man responsible for sale of IOC sponsorship rights – claimed the organisation could even introduce perimeter advertising at the Olympic Games if its controversial Rule 40 clause continues to be diluted. Rule 40 prevents athletes promoting personal sponsors during an Olympic Games (so as not to damage the messaging of the IOC’s partners). But the strength of the rule has been diluted over time, most recently in a ruling by Germany’s cartel office. Lumme said that “total freedom” for athletes could “potentially break our model of solidarity and our funding model”, in which case “perhaps we would have to go to perimeter board advertising”. The Olympics of course has always run a ‘clean-venue’ policy, which stipulates that not even TOP partner branding can be visible in Olympic venues during the Games.
…but athletes will continue Rule 40 fight
In February, a new athlete-led organisation, Global Athlete, launched with a remit ‘to balance the power between athletes and sports administrators’. The Summit’s closing session belonged to the new organisation’s Athlete Lead, cyclist and Olympic champion Callum Skinner, who fired a warning to the IOC. “There is a lot of money in the Olympic Games, more money than there has ever been before. How much do the athletes get from the IOC in the form of any prize or appearance money? Zero. Absolutely nothing. I appreciate the days of amateur sport, the pride of competing at the Olympics for your nation is plentiful, but in many ways that good will that athletes have towards the IOC, towards their nation and towards their team is waning.” He added: “The now-famous Rule 40 has further stressed athletes’ finances.”
IOC sponsorship portfolio shows change and continuity
Elsewhere, Lumme used Coca-Cola’s joint TOP partnership in the beverage category with state-owned Chinese dairy brand Mengniu – from 2021 to 2032 – as the latest example of change-with-continuity in Olympic marketing: renewing with an historic partner while opening to a huge new market. “People say Coca-Cola has been supplanted by Apple and the tech giants, but if you look at consumer recognition, the average consumer touches the Coke brand in some way six times a day,” said Lumme. “The important thing, from our perspective, is that we are responding to the marketplace. We see the future as equity-based partnerships on a global platform.”
Sports media-rights revenue has peaked
Once unthinkable, sport business grandees are now lining up to call peak media rights. Phil Lines – formerly head of international rights sales at the Premier League and now a sought-after consultant – wasn’t even the only Phil to make the argument this month (Octagon head of sponsorship Phil Carling has taken a similar stance). Lines said: “Broadcasters will not pay the rights fees that they are paying now. It has reached its peak.” And he warned those who hope the FAANGs (Facebook, Amazon, Apple, Netflix and Google) might ride to the rescue: “You can’t expect a Facebook or an Amazon to just write a cheque. I don’t see any of them wanting to come in at the amount the pay-tv companies are paying.”
Women’s football – and the WSL – need free-to-air coverage…
This summer’s women’s World Cup, hosted across the channel in France, was another enormous step forward for the visibility of women’s football. In England, the national team’s run to the semi-finals received major coverage on the BBC. Harnessing that momentum and turning it into revenue growth for the domestic Women’s Super League requires an audience, and that means continuing free-to-air coverage, said Kelly Simmons MBE, director of the women’s professional game at the Football Association. “We’ve got to get as many eyeballs on the game and as big an audience as possible,” Simmons said. “That says to me free-to-air will be a critical part of that strategy, whether that’s a mixed model of free-to-air and pay-TV, whichever is the best revenue model.”
…but sponsors can themselves drive interest…
Steve Day, vice-president of sponsorship, brand and product marketing at Visa, argued that sponsors shouldn’t sit around waiting for women’s sport – and women’s football in particular – to deliver huge audiences, when they could use their own influence to move the game forward. “We came to the idea that women’s football was caught in this vicious cycle: it wasn’t getting the audiences, so it wasn’t attracting sponsors to invest, so girls weren’t being inspired, and role models weren’t being created. We took a strategic decision to try and break that cycle…somebody needed to make that move and we decided to invest heavily.”
…and the first $1m/year deal is coming
That’s the forecast of Y Sport managing partner Sally Horrox, who – sitting alongside Simmons and Day on the women’s sport sponsorship panel – suggested the next spurt of sponsorship growth in women’s football would likely come from the clubs, and that a deal to break the $1m/year barrier was most likely in the apparel segment, given the huge female customer bases of brands like Nike and Adidas.
Leagues remain implacably opposed to European club football revamp…
Everyone knows that Uefa has been considering proposals to restructure the Champions League. At one stage it was thought that those proposals included the possibility of holding European matches at the weekend and more matches during the week, although the governing body says weekend matches have never been discussed. Unsurprisingly there has been dogged opposition from Europe’s major leagues, and Peter Leible (Bundesliga International’s head of global audiovisual rights) reiterated the position at the Summit, saying “these are certainly red lines for us”. He also questioned whether the claimed revenue benefits of reform would outweigh the costs: “I have doubts that these plans, with their distinctive steps, would really grow out the business in such a way and would not deduct from our domestic league revenues.”
…but the top clubs won’t stop pushing
The case in favour of European club competition reform was given – albeit moderately – by Charlie Marshall, managing director of the European Club Association. He suggested that changes could be necessary to restore dynamism to Europe’s most-loved tournaments: “Structural change is long coming for premium sports. It has affected every other media sector that doesn’t have the same barrier to entry as live sports, and that structural change is coming…for sure, there will be changes in the monetisation model [of football], but let’s face that together as an industry, rather than as competitors between one other.” Asked if a more distinct European competition would harm the national leagues, he said: “I think we are in a pretty parlous situation if we believe that this is it for the commercialisation of football, that these are the best products we are ever going to have, and from now on it’s just a matter of shifting money around. If we’d have said that 10 to 15 years ago, we’d have a lot of egg on our faces right now.”
Rights-holders need to be thinking about gaming
“The question of how do I get new fans, or bring new people into my sport…gaming is the fastest-growing ignition point,” explained Two Circles chief executive Gareth Balch. “Watching [a] sport live and family influences and participating in it via recreation/education environment have historically been the biggest three, but gaming, having a gaming experience, is the fastest-growing contributor to the ignition point of a fan.” But he made clear this didn’t have to mean a full-on esports layer with a professional apex – building any kind of gaming relationship can be effective.
Esports teams need to put down roots…
Alban Dechelotte, head of sponsorship and business development at Riot Games, and Nicolas Besombes, esports advisor to the Global Association of International Sports Federations (GAISF) both agreed that that geolocation is becoming “essential” to esports as it looks to expand from its traditional fanbase and into a wider audience. “Although we have a European league, we ask each team to build an affiliation with a particular country,” said Dechelotte. “It is about building storylines and narratives for fans to attach to.” also added that “to build long-standing value with local partners, teams need stability. Experiential is the best form of marketing, when you have a physical experience that you’re engaged with”.
…or do they?
“The geolocation idea is extremely unintuitive in today’s sports market,” countered Ralph Reichert, co-chief executive of ESL/Turtle Entertainment. “You look at someone like Manchester City who want to be a global club, all football clubs now want to be bigger than their cities and not bound by location, and then you have people saying that geolocation is the holy grail of esports…I think that’s not true, it’s just one aspect to the story. There’s nothing bad with geolocation, but it’s not the solution to everything, it’s not a rule that sport has local teams. It’s just a historical thing, because you couldn’t play online! You had to build a venue for fans to come to and watch the sport.”
High-net-worth individuals still the power players in sports investment
There is a great deal of interest in and coverage of the increasing involvement of private equity and even venture capital investors in sport but – argues Nic Couchman, partner at law firm Charles Russell Speechlys – it’s private wealth that is still “in pole position”. “Highly wealthy people who have made their money, may have passion for a particular sport, that can move quickly, don’t have to go back to investment committees to make decisions, they are entrepreneurial – they fit the needs of sports in some ways where private equity money doesn’t quite.” As an aside, Couchman said that no one should not expect the typical private equity funding model to play out any differently in sport, saying: “private equity will come in, want to control everything, leverage a lot of value and move on.”
Merchandising growth opportunities lie outside the US
This is according to Steve Davis, who as president of Fanatics International really ought to know. While the licensed sports merchandising business is currently worth $25bn worldwide, he told the summit that with greater speed and agility among merchandisers, it could be worth $35bn in 25 years’ time. And given that $15bn is already extracted from the US, most of that growth would be international. He also noted that rights-holders take only about $1bn in revenue of that total market value. The two factors holding them back, in his opinion, are a lack of distribution networks – particularly between East Asia, Europe and North America – and lack of speed and agility in product design and distribution.
Digital promotes new partners
Guillaume Sabran, Uefa’s head of sponsorship and licensing, revealed that it was only by updating its digital strategy that the European football governing body was able to engage a new class of sponsor – as it has in recent partnerships with Alipay, Expedia and Bookings.com. “We decided to wake up, and stop missing inventory and opportunities,” said Sabran. “We’ve invested in talent, agencies and a CRM system to use the digital ecosystem to combine apps, the website, social media and now Uefa.tv, the OTT platform that is at the end of the chain.” He said that Alipay, Expedia and Bookings.com understood more about the use of data than Uefa, but “what they didn’t have was the passion for the sport and that [combination] has worked well.”
General admission is still the most important category
Legends International president Andrew Hampel reminded rights-holders that the average fan is the real driver of revenue and quality of experience at live matches, and that maximising the impact of general admission fans improves match-day atmosphere and can drive revenues across the board. “If you can keep the general admission price down as a result of what you do elsewhere, that’s a massive win,” said Hampel. “They create the atmosphere from which everyone else benefits. If our stadiums start being less than full, the atmosphere is going to dissipate, and very quickly that’s going to hit TV rights and other areas. You need to have the grassroots fans staying there a long time, enjoying what they’re doing.”
MLB London was a big success
Last month’s MLB London Series generated higher per-capita revenues than any other MLB international game, according to Hampel. He told the Summit that the two-day series between the Boston Red Sox and New York Yankees was an unprecedented success in revenue terms, helping to underscore London’s reputation as a world-class host city. Over 138,000 fans filled the London Stadium in Queen Elizabeth Park for the two sold-out matches, with roughly 30 per cent of fans traveling from the US and 70 per cent being local. Hampel, whose Legends International held the retail concession for the series, praised the MLB for transforming the London Stadium: “It was phenomenal, it felt like an American ballpark.”
Golf leaves past behind to embrace smartphone connectivity
For a while, it felt like golf was fighting a lone battle against the ubiquity of the mobile phone. But that time is over, according to Michael Cole, chief technology officer of the European Tour & Ryder Cup Europe. He told the Summit that the game’s approach to mobile phone use by fans on the course has changed to such an extent that only The Masters prohibits fans from using their smartphones out on the course. The European Tour “no longer sees itself as a golfing organisation but as an entertainment play” and is actively encouraging fans to bring their smartphones to connect with content, commercial offers and for use as a way-finding tool. “We’ve been somewhat a laggard in the sports industry, but we’re catching up,” Cole said.
IAAF demands healthcare commitments
The International Association of Athletics Federations will require host cities of its major events to invest in developing safe spaces for physical activities and encourage participation among the general population, said the organisation’s chief executive Jon Ridgeon. Ridgeon used his opening keynote address on day two to say that – in a world where 81 per cent of adolescents worldwide do not meet the World Health Organisation minimum recommendation for physical activity – the IAAF, as the governing body for the world’s most popular participation sport, had a duty to act. “No city should ever stage any of our events without creating a better sporting future for those communities,” he said. “We want to create a legacy in the cities that host our major championship events, we want to get a commitment from cities that they will create more spaces for people to run and walk after the IAAF goes.”
Everyone loves the Tottenham Hotspur Stadium
An unanticipated recurring topic of conversation was the new north London home of Premier League club Tottenham Hotspur, with a number of speakers specifically praising both its design and the way it has re-imagined the average Premier League match day. Legends’ Andrew Hampel, for example, said that it delivers a “fantastic experience” to all fans, including those on general admission tickets. There were also several anecdotes about the club’s famously intense chairman, Daniel Levy, who we learned was involved in every aspect of the stadium’s design and delivery, right down to the hand dryers in the toilets.