Will rights-holders emerge from Covid-19 lean and mean or broken and weak?

The stands at a Korean Baseball Organization (KBO) League opening game in May. (Photo by Chung Sung-Jun/Getty Images).

  • Covid-19 has hammered rights-holder budgets
  • Industry insiders expect little short-term relief
  • But stronger rights-holder products for fans and partners may emerge

Covid-19’s effect on sports rights-holders globally has been swift and brutal. There have been job losses and swingeing budget and salary cuts, with likely more to come.

Business downturns can produce positive outcomes in the longer term. Greater efficiencies can be found and products and services can be improved, resulting in greater profitability in the years of recovery. Covid-19 is accelerating changes that businesses were already making, particularly towards greater use of digital technology, which could also produce beneficial effects further down the line.

But to see these positive outcomes, the businesses must first survive. SportBusiness asked sports industry insiders what they think the prospects are for rights-holders, and what must be done to emerge from the crisis lean and improved, rather than damaged and weak.

Dr Adam Karg – associate professor and director, sport innovation research group,
Swinburne University of Technology

No doubt there will be a restriction in operating capacity, which means reductions in the size of organisations and resources available for sports rights-holders to conduct their operations. Economically, already we are seeing restrictions in broadcast rights, refocus and recasting of sponsorship agreements and corporate ticketing and initial impacts on fan ticketing revenue streams.

Corporate support flows to sport under a mandate of ‘organisations spend when they have confidence that individuals will spend’. The general downturn in the economy is therefore problematic for the short-to-medium term for rights-holders.

That many leagues at the professional level have been able to maintain some operations, even in closed stadiums and with high costs, has been critical for short-term sustainability and survival, but it won’t be until years down the track, maybe 2023-24, that we see the full revenue mix anywhere near pre-Covid levels.

For sport at lower levels, including community sport, things are dire, with likely very high impacts on their revenue streams. Closure of smaller teams and leagues, and reduced capacity for organisations and governing bodies, presents a real threat to the sporting system.

That sport provides such wide community, social and physical benefits at this level hopefully means support will be prominent from both governments and private sectors.

In recovery, what we will need to see is a focus on efficiency and innovation from rights-holders – so better utilising and building collaboration across the sport value chain to drive solutions and outcomes which can be shared across organisations and teams, or be applied in cost-effective manners. This is critical for rights-holders and fan partnerships.

Sam Goodwin – managing director, CSM Australia

There are two ways to look at this question. Sports rights-holders whose sponsors have remained loyal have 100 per cent had to improve their servicing, value and engagement. They have had to be more agile and creative with their assets.

Consequently, increased player access, digital initiatives and improved storytelling have all been embraced by rights-holders keen to retain their existing partners. So any brands getting into sports sponsorship at this time can expect a significantly improved experience as the majority of rights-holders have really stepped up.

However, due to the effects of Covid-19, many sponsors have had no choice but to drop their partnerships, to cut marketing and activation spends, and rights-holders are certainly feeling this pinch. As confidence returns to elite sport we will find an environment in which the value of rights has effectively reset.

The number and variety of properties available will see sponsorship values fall and brands potentially looking to establish a more diversified portfolio of rights for the same budget they might previously have paid for one deal. In addition, the phasing out of fixed sponsorship packages, which was already happening pre-Covid-19, has accelerated, so every partnership should be uniquely tailored to the brand.

All in all, while rights-holders have improved, they will still find it tough going for some time, while brands will currently get excellent value for their investments. Nevertheless, the need to prove to brands that sponsorship is a sensible spend of marketing dollars has never been greater, so demonstrating how they can leverage assets to achieve meaningful impact and measurable results will continue to be of key importance.

One further thought is on the role of agencies within this. Both rights-holders and sponsors have had to cut costs and some of that impact has hit internal rights sales and sponsorship teams. With a lot of financial uncertainty impacting the whole economy, businesses will be hesitant to add to their head count, making the use of agencies the ideal way to meet objectives without the long-term commitment of recruiting.

Richard Thomas – chief commercial officer, New Zealand Rugby

At New Zealand Rugby, we are excited and optimistic about what the future looks like. Sports rights-holders can emerge from Covid-19 leaner and improved if they take the time to think about what their core purpose is and how they orientate to that.

Critically, they will have to focus more on their customers and design with customers at the core of their future offering.

Covid-19 forced us to run a leaner, New Zealand-only version of Super Rugby this year – dubbed Investec Super Rugby Aotearoa – featuring the five New Zealand teams and the competition has been a huge success, with massive growth in viewership, attendance at games and social media engagement.

While it has been a tough time for all sports rights-holders, we feel that we are emerging from this period with a tighter focus and we are clear and motivated by the opportunities for change that Covid-19 has given us.

Torrey Dorsey – head of sales, Asia Pacific, SailGP

The current pandemic has given us at SailGP the opportunity to focus on important initiatives to make both our racing and broadcast even more attractive. As part of this, we have been evaluating, refining and redefining our offer to our commercial partners, representative teams, media channels and our host cities – both existing and prospective.

The addition of IMG and its global resources and expertise, through our partnership with Endeavor, has added a new dimension to SailGP. The postponement of Season 2 has allowed us to spend a significant amount of time together; to evaluate the successes and shortcomings of our inaugural season, which is an exercise that would have been difficult to execute in such detail if we were actively competing.

The SailGP narrative will continue to reinforce our pillars of ‘sustainability’, ‘innovation’, ‘technology’ and ‘entertainment’, but there are also plans to transcend sport; to present a more purposeful proposition that addresses issues beyond the field of play for a greater societal impact.

In short, we will continue to strive to be a leader in sustainable practice. From our ambitious goal of carbon neutrality by 2025, through to our use of innovative technology, such as the remote set-up of our broadcast production that was implemented from day one, to the Tesla solar power-walls that provide temporary power on-site and charge the batteries of our revolutionary race boats to ensure they are truly powered by nature. We will continue to look at how we can accelerate change to a clean future, powered by nature.

The coronavirus pandemic caused an unprecedented sequence of events, with the effects still at play. But, it also presented an opportunity for SailGP, and all in the sports and entertainment industry, to redefine who we are; and to re-emerge leaner and stronger than before – and with increased purpose.

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