As a result of all traditional sport competitions closing down due to the Coronavirus pandemic, sport organizations are set to suffer a deep economic impact in their financial results that may last several seasons.
Traditionally, their commercial marketing framework depended on three main areas that including match day revenues, sponsorship agreements and earning from merchandising and licencing agreements.
This model ultimately depends on the capacity of the sport organization to drive fan engagement as this will fuel greater match day revenues, lucrative sponsorship deals and, hopefully, greater merchandising sales to the loyal fans.
Without live competition though, the challenge to keep fan engagement levels high is immense. Sport organizations, as other type of businesses across all industries, have been forced to get creative, leveraging on the power of technology, to keep close to fans during these times. However, it seems like some of these solutions, although initially thought for the short term, might have an opportunity to remain within the sport organization´s business model in the long term.
In this post, we will share our opinion on how 3 of these short term solutions may actually evolve to become consistent players on a sport organizations commercial marketing model in the future.
1. Fans connecting to the match via Zoom
The Danish football competition returned to action at the end of May 2020, but, as with other competitions, they did so without any fans on their stands. But, Aarhus FC came up with a solution to avoid having to play on an empty stadium which consisted of installing 22 giant screens throughout the stands in order to connect fans through video conference to the live action.
Around 10.000 fans were able to join the match, free of charge, and cheer players as shown on the following video by The Guardian.
We would not rule out this as a permanent solution for sport organizations as it could represent an opportunity to involve the international fan or the domestic fan living in other cities in the live experience.
Moreover, with football clubs showing increasing interest in playing official matches on international markets, this could be a way to keep the traditional fan engaged. For instance, if any La Liga official matches end up being played in the United States, the traditional fan in Spain could join a Zoom call to watch the game from home and root for their team.
2. Players & fans interacting through video conferencing technology
One of the most surprising stories comes from MLB players. Over recent years, MLB seemed to have lost popularity to other major American sport leagues such as the NBA or the NFL.
However, as explained in this ESPN article, players are taking this opportunity to connect with fans through video conferencing technology. The Los Angeles Dodgers for example, have organized "Zoom parties," between players and fans that have registered up to 15K fans.
Similarly, through podcasts, some players have even interviewed the most loyal fans or even other teammates with more "personal" related questions.
At a deeper level, fans are getting access to the daily lives of their favorite athletes including their home workouts or daily recipes for staying in shape. Some teams like the Boston Red Sox are even leveraging the large communities they have built through social media to share official information about the pandemic provided by the local authorities.
Along these lines, the NBPA & CoStar have signed an agreement to enable fans to connect with their favorite NBA players through a new channel created in the app specifically for this purpose.
The objective, as read on this Martechseries article, is:
"...joining members of the NBPA and their fans together through immersive FANCASTS – giving fans rare access to meet and talk LIVE & face-to-face with their basketball idols, the INSIDER SERIES episodes – showcasing the day-to-day lives and lifestyles of the players, and much more."
Ever since the rise of social media, players have managed to get a deeper connection with fans that in some cases, even transcend the relationship between fans and teams. For instance, ever since Juventus signed Cristiano Ronaldo, the club claims its social media following has increased 191%.
The connection fans and athletes are making during these times through these technologies goes far beyond "sport." By getting some peaks into the daily life of these athletes, the content that is being shared is far more authentic and this may prove to build a greater emotional bonding between players and fans.
What remains to be seen is the impact of this on the sport organization. In the long term, it could increase fan loyalty towards the player rather then the club, as fans could potentially feel more identified with what the athlete represents in terms of lifestyle, values, etc.
3. Sport organizations completing their transition into full media companies and developing their own premium content
In the month of May 2020, Didac Lee, former board member at F.C. Barcelona, shared an article on Medium explaining why premium content was set to become a core element of their business.
Sport competes with other forms of entertainment and platforms such as Netflix, video games or YouTube for the time and money of users around the world. These users have access to content "on demand" on these platforms but live sport competition only takes place a few times per week. In addition, there is infinite sport related content in these platforms but sport organizations have problems monetizing from it. As Mr. Lee states in his article:
"The monetization of social networks is like the Holy Grail pursued by all the sports organizations in the world and no one has yet found the best way. I am convinced that premium content is the best product to sell to a digital base of millions of fans. A friction-less, logistics-free, and entertainment-oriented product."
In the current environment, sport organizations have 3 major options to broadcast their games:
Traditional broadcasting platforms: TV networks
Digital players: OTT platforms, Amazon, Facebook, Netflix, etc.
Create their own platform
It seems like sport organizations are making the full transition into becoming their own media company and will look to create their own platform to generate earnings from recurrent subscription fees. After all, both the content that an organization like F.C. Barcelona generates and the audiences they reach are huge but they do not reap the benefits from all of it.
In addition, as Mr. Lee also reflects, creating premium content will also enable them to gather data from fans all around the world, segment their fan base into groups and our opinion here is that they will look to apply "revenue management" techniques across those segments. Or at least, this is how we see it evolving...
In summary
Sports marketing is bound for change, that is the only certainty in these uncertain times and technology will open up the possibilities and accelerate this change.
We have briefly described 3 examples of how disruption could enter the industry which are:
In future posts, we hope to analyze more examples on how the commercial marketing model of sport organizations will adapt to the "new normal."
Meanwhile, keep safe.