This blog post was written just a few days after the first Pfizer/BIoNTech COVID-19 vaccine was given to Margaret Keenan following the UK Government’s regulatory approval. As the UK prepares to roll out one million vaccines a week, there are green shoots offering an indication that life may start to return to “normal” by Q2 of 2021.
Sport has been decimated by the impact of the pandemic and so this is welcome news for everyone. In the United Kingdom, clubs and venues are slowly seeing the return in the short term of fans (up to 4,000 in the lowest risk areas and 2,000 in those areas deemed to be medium risk) which will bring not only welcome revenue but also a chance to reconnect in person with supporters after eight gruelling months.
Many will be tempted to set their minds forward to next Spring, mass inoculation and a return to where we left off in Spring 2020 and the relief that will bring. There will be the temptation to believe that we as an industry are in the clear. However, we believe that the COVID crisis has shone a light on institutional deficiencies in the sports commercial model and that in fact the work is only just beginning; it is work that is both very necessary, long overdue and – excitingly – has the chance to create huge upsides.
With or without a vaccine, we don’t know who can or will not want to return. For those in Tier 3 or facing a move to Tier 3 in light of significant case increases – including London, parts of Essex and parts of Hertfordshire – returning to live sport may still seem a long way off. Many supporters will have felt the loss of their matchday rituals and will want to get their fix in even heavier doses but equally, there will be many who have suffered financial hardships, others who are wary of being in crowds, even with a range of safety precautions; and others who have found other things to spend their time and money on during lockdowns (at one end of the spectrum, Twitch reported a doubling in viewing hours (to 1.6 billion) in the twelve months to October 2020 whilst Netflix’s smash hit The Queen’s Gambit is credited with being behind the 87% and 603% respective rises in the sales of chess sets and books). If demand for tickets and merchandise drops, there will be huge pressure on pricing models.
With the notable exception of the NBA, fanbases of every major sport were ageing even before the crisis. It is the older age groups who have borne the brunt of the health impact of COVID and it is these same groups whom polls reflect greater reluctance to return to live sport even when allowed. Conversely – and unsurprisingly – it is the younger groups who are largely responsible for the huge increase in time and money spent on gaming. What is more, these younger groups have been hardest hit financially by the crisis and if they were not being engaged by sport prior to the pandemic, it will likely be even harder in 2021. Some sports, you could argue, have a twenty-year lifespan if those younger audiences are not urgently brought into the fold.
To complicate the picture further, there is a likely to be a long tail in the corporate market: sponsors will have had more time to assess their activity and whilst the very premium events will continue to attract investment, everyone else will be fighting over less budget and the flight to digital is likely to be accelerated: agility will be paramount in an uncertain market. The hospitality market was already a challenge, with trends towards greater flexibility as corporates found it increasingly difficult to fill their boxes week after week.
The reality is that the above accounts for just about all of the commercial revenue that a club can influence. COVID has revealed what many of us have known for a long time: that the traditional model was already atrophying naturally and this crisis has shone a light on the holes that broadcast revenues were previously just about covering up. Even if we are in the clear from Spring 2021, it would be a massive missed opportunity to revert to the old ways of doing things.
See the challenges of COVID as an opportunity, not just a challenge. We believe the COVID crisis represents a gilt-edged excuse to fix the myriad commercial issues that faced sport before the pandemic. We can see the next phase as a necessary renaissance, one in which sport returns stronger than ever.
If there is one glaring lesson sport should have learnt in 2020, it is that relying for the vast majority of its income on a small number of event/matchdays each year is a model that is too highly leveraged and needs not just mitigating but totally disrupting. The opportunity that lies in conversion from a 30-day-a-year yield management programme to an always-on engagement model is one which sport should have adopted long before the COVID crisis – and now sport has the golden opportunity to hit reset and build towards a vision of year-round revenues.
There is a distinct trend towards D2C in most other sectors. It is being driven simultaneously by technology allowing us to provide content, products and services to people on an individual basis and the revolution in data telling us who wants what, when, how and what they will pay for it. Smart businesses all around us are adapting because they recognise the insight they have on their customers is gold dust: a free resource to inform business diversification and an on-tap (if done correctly) audience to market it to.
Why should sport be any different?
At PTI Digital, we not only have the industry-leading expertise to deliver the tools to gather and interpret data to inform an always-on engagement model that moves away from matchday revenue generation, we marry venue tech and digital and data solutions alongside a commercial approach with deliberate actions to maximise the 365-day-a-year opportunity and deliver real results.
PTI are here to help sport not only survive this crisis but to thrive in its aftermath. We are able to offer you C-Suite experience on a fractional basis, working closely with your existing teams to design, build and execute a vision for a digital-led 24/7 engagement business that by its nature grows in value, the more you invest in it.
We recognise that many sports organisations want to innovate but either don’t know how, don’t have the thinking time, the resource or the budget. We also understand the inherent difficulties of hiring outside help when tough decisions have been made regarding existing members of the team.
We may have a solution for that as well.
Drop us a line at firstname.lastname@example.org for a conversation. We would love to hear about your challenges and see whether we can help you overcome them.