Proactive versus retroactive

In the last month a lot has been written about the impact of COVID-19 on society, the global economy, local economy, our daily lives and of course sport. Experts from every sector offer their thoughts about what happens next. Nothing can be more important than containing and reducing the virus yet we have to contemplate how we move forward when the time is right. Despite the unprecedented nature of this pandemic, it is a stark reminder how brittle and fragile certain things are that we almost took for granted.

Looking back at the 2008/9 global financial crisis questions were raised about the health of the sport business and one of the most commercially developed sports, football. Yet the 14th edition of the Deloitte Football Money League of the top 20 clubs in Europe suggested there was little to be alarmed about. The report read: “This was more than borne out by clubs’ revenue performance in 2009/10. The combined revenues of the top 20 Money League clubs surpassed €4 billion for the first time, with a total of €4.3 billion being an 8% increase on the previous year. All bar three of the top 20 clubs achieved revenue growth in 2009/10.”

In 2010/11 the report was largely similar but only a 3% increase in revenues year on year. And the resilience was due to a number of factors: “Continued growth in revenues of the top 20 emphasizes the strength of football’s top clubs in these tough economic times. Whilst clubs have undoubtedly had to adjust their approach in certain areas, the large and loyal supporter bases, ability to drive strong broadcast audiences and continuing attraction to corporate partners has made them relatively resistant to the economic downturn.”

Moving forward again to the last full account published for the 2018/19 season, there was an 11% increase on the previous season and combined revenue of €9.3 billion. So, in the space of 10 years, the top 20 clubs in Europe more than doubled their revenue. Of course, growth has come at a price with investments in players, coaching staff, commercial staff, new stadia, expansion overseas, new technology to engage with and attract new fans to the game. However, only two months after the outbreak of COVID-19, football and sport in general is in a crisis. If seasons are not completed or tournaments are not played there will be a  meltdown across the sports industry that some will not survive.

We could descend into a lot of finger pointing and ask why ‘sport’ is not in a stronger position to help itself as well as other people in society who need more immediate support. And, to be fair there are initiatives from athletes, clubs and brands to raise funds for those in the frontline fight against the virus. On the whole, sport does not appear to have sufficient reserves to survive without returning to some activity by the summer. Not least because of major events like the Tokyo Olympics and EURO 2020 that have been moved to 2021 which are now pressuring the completion of this season and next season in a shorter time period.

We can look back to the 2008/09 crisis and see what lessons were learnt, acknowledging the impact of COVID-19 is far greater. One such initiative that caught my attention was the American Express ‘Small Business Saturday’ initiative, which became a national event to support 29.7 million small businesses across the US. By 2014 it helped generated more than $14 billion and in 2019 more than 110 million consumers participated in Small Business Saturday. But looking back and taking a retroactive view is not going to prepare sport, business or society for the next 10 years. Getting back to normal is not going to solve the challenges we face now or in the future. And, let’s not pretend the pre-COVID-19 situation was ideal, because it was not.

There are some tough decisions that lie ahead. The decisions made today need to look upstream over the next 10 years and not just 10 months. Consideration in the following areas would help:

Fans first

The industry has a habit of talking about being fan-centric but not always delivering. Here is an opportunity to engage the fans and ask what would be manageable and attractive. There is an oversupply of events, content, subscriptions, merchandise and fan experiences. We have been commercializing the sport business for the last 50 years. Yes, there are contracts in place that need to be honoured to secure revenue and deliver services. But, without fans, live or following around the world, the ecosystem will break down. Now is an opportunity to ensure there are feedback loops in place and deliver a sports calendar that adds genuine value to the lives of fans and the communities they come from.

Off the pitch

In the competition for talent the cost of delivering elite sport has increased significantly. No-one would argue the best in any profession deserve to be well rewarded. Market forces dictate that certain athletes will always earn more than others. But off the pitch, if sport wishes to maintain its relevance at a local and global level, more consideration needs to be given to amateur sport and people who play sport not only to compete but because it is fun. To justify continued investment sport needs to play an even greater role in society. Equal opportunities, gender, racism and education are areas in which sport can achieve more than it does today. Sport is more than simply entertainment and employment for a limited group in society.

The purpose of purpose

Even before COVID-19, purpose driven marketing was a hot topic. Since the outbreak, brand purpose has become even more relevant. It was highlighted by French luxury goods group LVMH who started producing hand sanitizer at no charge for the French health authorities. This will create more value than continuing with the production of Christian Dior or Givenchy perfume. There is the temptation for brands to jump on the bandwagon for self-promotion. Brand purpose should be embedded in your values and beliefs and act as a navigation tool for all employees which is then reflected in the way they behave and work for the brand to deliver products and services. It can also lead to greater success and profit as consumers understand these are authentic, deep rooted beliefs and not short term benefits.

Small data

The words ‘big data’ have been swirling around for some time now. Big data is a phrase used to mean a massive volume of both structured and unstructured data that is so large it is difficult to process using traditional database and software techniques. We believe that by crunching large amounts of data we can deliver a more personalized fan experience. It is time to take a deeper look at ‘small data’ to uncover human stories that turn information into a source of creativity and competitive advantage. For example, in China, KFC adapted their proposition based on insights from gaming and eSports. This was built on the insight that KFC’s meals can be eaten with one hand, leaving the other hand free to hold a controller. A small detail but one of significance to the gaming community.

S.M.L.

As we recover from the impact of COVID-19 a lot of focus will be placed on short term recovery, which is rational. I have received several emails from the membership secretary of local sport clubs asking members not to terminate their subscriptions and allow time to prepare a recovery plan. OK, that is fine if members can afford to pay and not receive anything in return for several months. I might play 50 rounds of golf in a yea

r but I am not going to be able to play 50 rounds in six months. Do I want my money back? No. What I would like to see is a plan for the short, medium and long term as to how the club will think ahead if we face a similar challenge in the next 10 years. Anyone in a management position needs to think in phases and less specifically about ‘this season’ or ‘next season’ to ensure we are better prepared for unprecedented events in the future.

I wonder how the 34th edition of the Deloitte Football Money League in 2030 will read? I hope it will be equally positive as the 14th and 24th editions but also reflect a strengthening of the balance sheet to cope with an unprecedented pandemic like COVID-19. In fact, collectively the sport business should work proactively towards a more sustainable model, not only in the interests of sport but society as a whole.

Take care, stay safe and play inside a bit longer.