Sports Marketing : A Global Approach to Theory and Practice [1st ed.] 9783030537395, 9783030537401

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SPORTS MARKETING A Global Approach to

Theory and Practice

SEA N ENNIS

Sports Marketing

Sean Ennis

Sports Marketing A Global Approach to Theory and Practice

Sean Ennis Department of Marketing University of Strathclyde Glasgow, UK

ISBN 978-3-030-53739-5    ISBN 978-3-030-53740-1 (eBook) https://doi.org/10.1007/978-3-030-53740-1 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Limited 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

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I dedicate this book to my long suffering wife Liz for putting up with me during the development of this text. I would also like to dedicate it to some of my friends who support Huddersfield Town. They include: Richard and Finola Siddall; Robert, Paul and Ross Ewart; Clive Cheney, Alison and Laura; and “Uncle” Jim Prendergast. We have reached the heights of ecstasy and the lows of depression over the years.

Acknowledgements I would like to thank Vicki Watson for the professional and committed way in which she organised the content into something that closely resembles a book. Without her contribution it is unlikely that it would have seen the light of day. My thanks also to Liz Barlow and Sophia Siegler for helping with the editing of the text.

VII

Contents 1  Introduction: The Sports Sector in a Global Context �����������������    1 2  Sport and Its Role and Contribution to Society and Economic Development���������������������������������������������������������������������������������    9 3  Sports Governance�������������������������������������������������������������������������������������������   39 4  Understanding Fans and Their Consumption of Sport �������������   75 5  Sports Distribution and Media Rights �������������������������������������������������  101 6

 ormulating and Implementing Sports F Marketing Strategy�������������������������������������������������������������������������������������������  129

7

Ticketing Strategies in the Sports Sector�������������������������������������������  153

8

The Sports Product and Brand-Building Decisions���������������������  187

9

Globalisation of the Sports Product �����������������������������������������������������  213

10

Managing the Sports Sponsorship Process �������������������������������������  245

11  Sports Marketing in an Era of Radical Uncertainty ���������������������  283



Supplementary Information Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

1

Introduction: The Sports Sector in a Global Context Contents 1.1

Introduction – 2

1.2

Sport in the “New Normal” – 2

1.3

The Global Sports Sector in Context – 3

1.4

Structure of the Book – 4

1.5

Chapter by Chapter – 5

1.5.1 1.5.2

 hapter Summaries – 5 C Case Studies – 7

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-­3-­030-53740-1_1) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_1

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1

Chapter 1 · Introduction: The Sports Sector in a Global Context

1.1  Introduction

Welcome to this text book on the subject of sports marketing. I hope that you enjoy the content and more importantly gain a deep understanding of the issues and challenges that face sports marketers working in this exciting industry sector. I use the word “exciting” because sport engenders a number of different feelings and emotions among many people world-wide. Passion, enthusiasm, fanaticism, euphoria and despair all feature to a greater or lesser extent in the typical sports fan’s lifestyle. It is also a sector of industry that is growing in terms of employment opportunities. Increasingly, sports administrators and sports property owners seek out suitably qualified individuals to work directly in this industry. Hopefully, this text will inspire you to take any such opportunities. Many of you may eventually end up working as brand managers, digital marketing executives, advertising executives, media marketers or in the area of data analytics. While you may not be employed directly by sports clubs, bodies and sports organisation, you could find yourself playing a significant role in terms of working with sports bodies. This initial chapter attempts to place the sports sector in a global context. We begin by considering some of the key trends that have taken place over the past 15–20 years or so. We then consider the key themes and dimensions that we address in the subsequent chapters in this text book. As you work your way through these topics, I would like to add a cautionary note. The sports sector, as we shall see, is a vibrant, dynamic and at times, an unpredictable industry. As I write these introductory notes, we are currently in the middle of the Coronavirus crisis. Sport, in tandem with all areas of business and society in general is undergoing change. By the time you read this text, hopefully, we will have emerged from the worst aspects of its influence. We should also note that it is critical for us to keep up with the latest developments and research in the sports sector. As part of the support for this text, I will generate regu-

lar blogs to stimulate discussion and provide opinion on the latest concepts and theories. 1.2  Sport in the “New Normal”

The term “new normal” has featured prominently throughout 2020. The message behind it indicates that business and society will need to grapple with new challenges and problems, post-Coronavirus. The sports sector is no exception. Prior to 2020, many sports exhibited varying degrees of success. These ranged from increasing revenue streams and more global popularity, through to more modern stadia. Generally, within the context of the most popular sports such as football, rugby and cricket, sports property owners invested in enhancing the quality of the fan experience and engagement. Increasing revenues led to higher salaries. Some critics have argued that ultimately this is not good for the overall sport. As we shall see later in the text, many sports organisations and clubs engaged in practices that defied the conventions of prudent business management. While the sport may have generated extremely large amounts of cash that flowed into the organisation, salaries, transfers and agents’ fees have led to even more cash going out. Such a business model is not sustainable in the longer-term. The coronavirus crisis brought immediate problems that challenged the efficacy of existing business models. Within weeks, sports property owners were pleading for support from respective governments. While the top clubs were in a better position, the cancellation and postponement of games, tournaments and events, created a cash crisis. Will sport recover? I have no doubt that it will. However, it may take a number of years before we get back to a situation that existed before the crisis. As of June 2020, sports such as football, horse racing and snooker made tentative steps to re-start operations. Working with governments, the “new normal” featured games being played behind closed doors, with no fans allowed in, due to restrictions such as social distancing.

3 1.3 · The Global Sports Sector in Context

The media, who bought the rights to show such games, in many cases refused to make the original agreed payments, if the events did not take place. Even when they did, they paid a reduced fee to take account of the fact that they were getting a “diminished” sports product. Does this raise the prospect of reduced media rights payments in the future? Who knows? Overall, some commentators suggested that global sports revenues could decrease by as much as fifty per cent. The major European football teams, between them, could lose over £3 billion. The reality suggests that many sports had to face up to the unpalatable fact that their original business models might no longer work in a post-Coronavirus environment. The “new reality” began to bite, and bit hard. 1.3  The Global Sports Sector

in Context

In this section, we identify the main developments in the sports sector. They are by no means exhaustive, but such trends and drivers have transformed the way in which the sector has evolved and provide us with a background to the way in which sports marketers will have to function in the coming 15–20 years or so. 55 Geographic shifts The last two decades has witnessed a refocus in terms of the nexus for sports events. Traditionally, major sports and events evolved in the North American and Western European regions. Across most of the popular sports, these regions staged the major events. However, regions such as Eastern Europe, The Gulf Region, and particular key countries from Asia, have moved “centre stage”. Formula One has widened its base for staging Grand Prix events. Over the past number of years, it has located an increasing number of such events in countries as far apart as Vietnam, Bahrain and Singapore. In the sport of cricket, the nexus has moved from the United Kingdom to India.

China has invested heavily in developing domestic football and increasingly many major football teams in Europe have been bought out by Chinese, Thai and Indian conglomerates. Who would have suggested 15 years ago that Qatar would be awarded the rights to stage the 2022 World Cup? 55 The emergence of eSports eSports has grown exponentially over the past 15 years or so. We examine this sport in more detail later in the book. Technology has played a significant part in its growth. Among young people, particularly those in the fifteen to twenty-five bracket, it has changed the concept of sports participation and consumption. The notion of physical exercise has, to some extent, been overtaken by the sedentary engagement with electronic games. 55 Social media and digital platforms We have witnessed other transformative developments, particularly in terms of how fans engage with their favourite sports, teams and players. Social media, in particular, has veered away from traditional methods such as TV, Press and Radio. Many fans consume their sport via social media platforms such as Facebook, Twitter, Instagram, to name but a few. Twitch has recently appeared on the scene and appears to be eminently suitable for fans as a mechanism for enhancing the fan experience. Digital platforms, in many guises have also revolutionised the way in which we watch sport. Arguably, fans have much greater choice in terms of the devices they use to engage with their favourite sports. The days of linear TV are numbered. 55 Sustainability In line with other business sectors, the sports industry has been grappling with the challenges of addressing the issue of sustainability and its impact on the environment. New stadia, in particular, have to reflect such issues as energy conservation, recycling, use of appropriate materials and so on. 55 The commercial imperative The sports sector, particularly at the top end of the pyramid, has fully embraced

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Chapter 1 · Introduction: The Sports Sector in a Global Context

the commercial focus on the way in which its operations are run. Instead of relying on well-meaning amateurs to run the sport, property owners have recruited (at senior management level) successful individuals who have performed effectively in traditional sectors such as financial services and retail. 55 The ethical dilemma While the commercial focus may create much more significant revenue streams, many sports have been afflicted by the twin problems of doping and match-fixing. Sport is a results business. Success, in many cases, is not defined by how efficiently the club or association is financially managed. For many stakeholders, particularly fans, it is defined by success on the pitch. Some individual athletes, in the quest for improvement and success, make use of illegal drugs to achieve their objective. Sports such as athletics and cycling have experienced many scandals as a result. The problem is compounded by the inability of the drug testers to “catch out” the offenders, particularly in cases where the technology is not sufficiently developed to identify “state-of-the-art” drugs. Match-fixing is another negative aspect of sport that has increased dramatically over the past 20 years, particularly in Asian countries. 55 Growth in female sports We have witnessed a significant growth in the area of female sports in the past decade. Football, cricket and rugby, in particular, have established leagues and competitions that are increasingly played at a professional and semi-professional level by female players and athletes. This has been made possible by effective marketing. In this case, such sports have attracted the interest of broadcasters. In turn, this improves the opportunities to attract sponsors. All of this is driven by widening and increasing the number of viewers and attendances at such games and events. 55 The decline in terrestrial broadcasting coverage and linear TV The sale of media rights has transformed the way in which sport is distributed to and con-

sumed by fans. Increasingly, fans are moving away from relying on linear TV coverage (scheduled programmes at fix times, with no opportunity to target individual viewers). Fans increasingly watch sport as and when they want to and are more likely to favour personalised content and packages. 55 Technology The role of technologies such as Augmented Reality (AR) and Virtual Reality (VR) have made a relatively slow introduction to the way in which fans consume sport. As we will discuss later in the book, such tools are likely to grow in both use and popularity as we move forward. Developments in both Internet speed and latency, such as 5G, will facilitate the use of such technologies and will revolutionise the way in which we engage with sport. Much of this is in the embryo stage, as I write this section. These developments provide us with an early indication as to how the sports sector has evolved and changed over the past two decades. In summary, the sports sector is virtually unrecognisable from the way it operated a couple of decades ago. In this text, we examine and assess the main concepts, theories and practices in sport. 1.4  Structure of the Book

The focus of this book is on theory and practice from a global perspective. To address that focus, I have structured the book around two sections: chapters and cases. The latter can be used in a class setting by your lecturer or in an out-of-class section for individual reflection and analysis. Cases can quickly become dated. To address that problem, I will introduce new cases on a regular basis that reflect the latest thinking and practice by sports clubs, organisations and other key stakeholders in the industry. 7 Section 1.5 contains ten chapters which address the key topic areas that impact on the role of sports marketing in detail, as well as a number of cases (that are linked to each chapter).  

5 1.5 · Chapter by Chapter

1.5  Chapter by Chapter 1.5.1

Chapter Summaries

In this section, we consider the main issues to be addressed in each chapter. zz 7 Chapter 2: Sport and Its Role and Contribution to Society and Economic Development  

In this chapter we consider the broader issues surrounding sports and where it fits into people’s general life within society. We consider this from a health and social perspective and also focus on the relationship between sports administrators, sports property owners and other key stakeholders and the government. In the latter case, we assess the different roles and contributions of political leaders in relation to the development of sport. We also review the process involved in bidding for and staging hallmark (mega/major) sports competitions and events. In particular we review the different benefits that can accrue to the host country/city and the impact on its citizens. We ask the related questions. Why bother? Is it worth the effort? zz 7 Chapter 3: Sports Governance  

This chapter examines an increasingly important topic within the general framework of the sports sector: how are individual sports and organisations governed? We live in an age where all profit and non-profit organisations are increasingly held to account for their behaviour and general performance in society. The sports sector is no exception. We assess the key principles of sports governance and address the issue as to whether its characteristics make it easier or more difficult to manage. The commercial imperative arguably has put more pressure on sports bodies to govern their respective operations in a transparent and equitable manner. We also look at evidence of good and bad practice in this area. zz 7 Chapter 4: Understanding Fans and Their Consumption of Sport  

In order for marketers to work effectively in the sports sector, it is imperative that they have a clear understanding of their central

unit of analysis: the fan. This is no different from other business and non-business sectors. Without such knowledge, particularly in a volatile and fast-moving sector such as sport, it is unlikely that they can devise and implement appropriate and relevant strategies. In this chapter, we examine the concept of fandom. In particular we assess the ways in which fan’s consumption of sport has changed over the past couple of decades. We note the influence that social media platforms, technology and data analytics play in this process. We also address the issue of how fans engage with their favourite teams and athletes and the consequent challenges and opportunities facing sports marketers. zz 7 Chapter 5: Sports Distribution and Media Rights  

At the top end of the sports pyramid, sports organisations and clubs have been the recipients of a major income stream from the sale of media rights to broadcasters for the right to cover leagues and competitions. Over the past 20 years or so, successive renewals of contracts have increased exponentially. Sports entity owners, arguably belatedly, have realised the value and power of their respective properties. This has led to significant rises in salaries (some would say to obscene levels) along with increased transfer and agents’ fees. In this chapter we trace the emergence of media rights as a critical tool in the overall business and marketing strategy of sports organisations. We address the emergence of powerful Pay-Per-View (PPV) broadcasters and consider their business models. We also examine the emergence of a new wave of operators which are labelled as Over the Top (OTT) and how they have threatened the original business models of the PPV operators. zz 7 Chapter 6: Formulating and Implementing Sports Marketing Strategy  

Strategy is at the heart of any successful business. Successful sports properties and organisations are characterised by their ability to think and act strategically. By adopting a planned approach, they can take a long-term view of the way forward and map out a series of initiatives and tactic to help them achieve

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Chapter 1 · Introduction: The Sports Sector in a Global Context

6

1

their goals and objectives. Without evidence of such a planned approach, it is most likely that they will lack direction, akin to a car with a faulty steering wheel. In this chapter we consider the key ingredients of strategy and the different approaches that sports organisations can adopt to drive changes and move their business forward in an unpredictable and fast-moving environment. We also consider the dangers of adopting an overly prescriptive approach to planning. zz 7 Chapter 7: Ticketing Strategies in the Sports Sector  

Ticketing (more commonly referred to as pricing) strategy plays a crucial role in the success of overall marketing strategy in the context of the sports sector. It is a significant revenue generator for most sports clubs. Some commentators argue that, in light of the contribution of media rights, ticketing has become less important. However, this is a dangerous assumption. It is possible that income from media rights might decrease. Ticketing focuses on the fan. They pay to watch their favourite teams. It will continue to play a major role in revenue generation going forward. In this chapter we assess the different approaches to ticketing and examine them in the context of the characteristics of the sports sector. We also consider the role that the secondary ticketing market plays in the process. Some commentators argue that such operators pick up on the weaknesses in ticketing strategy and allow fans to gain access to tickets. Others see them as a blight on the fan: costing them significant amounts of cash. zz 7 Chapter 8: The Sports Product and Brand-Building Decisions  

As the commercial imperative moves to the fore in many sports organisations, we see the widespread adoption of terms that are used universally in traditional manufacturing and services sectors. The “sports product” and “brand-building” have entered the lexicon in the context of the sports sector. In this chapter we consider the components of the sports product. We argue that it is

multi-layered-from the central core elements to a redefinition of what the product could be in the future. Some sports organisations take a myopic and narrow perspective on what constitutes the product. Others have redefined their product to take account of the changing environment and fan preferences. Some have made changes to the product in order to appeal to new segments. We assess the concept of innovation in sport and examine how new product development can enhance, or in some cases, detract from the overall value proposition. We also assess the role that branding plays in shaping the marketing strategy. zz 7 Chapter 9: Globalisation of the Sports Product  

The commercial imperative dictates to many sports organisations that they must seek out new avenues for increasing the revenue streams. Product globalisation represents the next logical sequence to follow. In tandem with other business sectors, this option presents a number of attractions for the CEOs and senior management of sports properties. In this chapter we consider the different modes of entry that sports organisations use in order to penetrate specific countries or geographic regions. We focus on some examples of how sports organisations such as the English Premier League, the NBA and the NFL have approached new geographic markets. We assess the criteria that sports marketers can use in order to assess the attractiveness and risk associated with market entry. We also examine the role that technology and social media platforms have opened up the door for fans that may not be in a position to physically attend games, but can do so from remote locations, using the appropriate media streaming devices and season passes. zz 7 Chapter 10: Managing the Sports Sponsorship Process  

In this chapter we evaluate another of the revenue streams for sports organisations: sponsorship. Sports sponsorship represents between seventy to seventy-five per cent of all expenditure by companies in this area.

7 1.5 · Chapter by Chapter

We assess the attractiveness of sport as a medium for branders to align their product’s values and properties with an appropriate sport. Sport is associated with passion, excitement, uncertainty, enjoyment. What’s not to like about tying in your brand to such an environment? We consider the various stages of the sponsorship process: from identifying potential partners, putting a value on the sponsorship, managing the relationship between both parties in the process and assessing its effectiveness. We examine the threat that is posed by ambush marketers. These are companies that are not official partners and pay nothing to the sports property owners. We consider the impact that they can have on the value of the official sponsorship deal. We look at remedies for eliminating, or more realistically, minimising the threat from such sources. zz 7 Chapter 11: Sports Marketing in an Era of Radical Uncertainty  

In the final chapter we take some time to consider the future of the sports sector over the next 15–20 years. This exercise tracks the way in which emerging developments might continue to pan out. For instance, tools such as Augmented Reality (AR) and Virtual Reality (VR) are in the early stages of fan adoption. It is likely that refinements to existing technology will make such tools more attractive for adoption. We consider what the stadium or sports arena of the future might look like. Key developments in areas such as sustainability and the environment will play a more significant and influential role over the next decade. The sports sector will be obliged to increasingly factor such considerations into their formulation and implementation of strategy. We examine the implications that arise from the Coronavirus crisis that has so blighted every aspect of our lives and how this impacts on the sports sector. We borrow a phrase from the business literature: “radical uncertainty”, to capture the realities of life, post Coronavirus.

1.5.2

Case Studies

I have developed a number of cases in this section to help you apply and understand some of the issues faced by sports organisations and marketers. They will also stimulate some discussion in class. I have related each of the following cases to the relevant specific chapter. Please note that some of them are relevant discussion cases for other chapters as well. These cases are for discussion purposes only. You should not interpret them as an indication of good or bad practice. 7 Chapter 2 55 Dubai: Back to the Future 55 Good on Ya Sport  

7 Chapter 3 55 South African Cricket: Dark or Bright 55 FIFA and Its Relationship with Adidas 55 Bernie Ecclestone: A Man For All Seasons  

7 Chapter 4 55 Flying Arrows 55 Rio Olympic Games and Fan Consumption Patterns  

7 Chapter 5 55 Squashed. Anyone for Tennis?  

7 Chapter 6 55 Twenty-Twenty or One Hundred Vision 55 Vaporised  

7 Chapter 7 55 The Leaving of Liverpool: Fans Walk Out 55 The Price is Right: The Case of Boston Celtic and the NBA  

7 Chapter 8 55 I Want to Ride My Bicycle  

7 Chapter 9 55 Rugby: Pushing the Scrum Backwards 55 Snookered  

7 Chapter 10 55 Pie in the Sky: Anatomy of a Sponsorship Deal 55 Siemens: Knowing Me, Knowing You 55 Telstra and Its Loose Connections 55 Women’s Sport: Catching the eye  

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Sport and Its Role and Contribution to Society and Economic Development Contents 2.1

Introduction – 11

2.2

 he Meaning, Purpose and Organisation of Sport T in Society – 11

2.2.1 2.2.2 2.2.3 2.2.4 2.2.5

 efining the Concept of Sport – 11 D Exercise – 12 The Purpose and Value of Sport in Society – 12 Exercise – 13 Evolution and Organisation of Sport – 13

2.3

 overnment Attitudes and Policies Across Geographic G Regions – 15

2.4

Sport and Culture – 18

2.5

The Role of Funding in Sports Development – 20

2.6

 unding for Sports at the Elite F End of the Spectrum – 22

2.7

 ports Tourism and Its Contribution to Economic S Development – 25

2.7.1

City-Based Branding – 26

2.8

Bidding for and Staging Major Sports Events – 27

2.8.1 2.8.2 2.8.3 2.8.4

 enefits of Staging Mega Sporting Events – 28 B Legacy – 28 Image Change – 29 Cost Overruns – 30

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_2) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_2

2

2.8.5 2.8.6 2.8.7 2.8.8

 nderstating Costs – 30 U Overstating Economic Benefits – 30 The White Elephant Effect – 31 No Real Supporting Evidence to Support the Perceived Benefits – 31

2.9

 riteria Used to Assess Bid Submissions for Mega C and Major Sports Events – 31

2.9.1 2.9.2 2.9.3

 ital Factors – 31 V Supporting Factors – 32 Bidding and Hosting Mega Events: Losing Its Appeal – 32

2.10

Conclusions – 33 Appendix – 34 References – 37

11 2.2 · The Meaning, Purpose and Organisation of Sport in Society

nnLearning Objectives On completion of this chapter you should be in a position to address the following objectives: 55 To understand the role that sport plays in society 55 To assess the links between sport, culture and politics 55 To evaluate the various funding models that are adopted by policy-makers to develop sport 55 To examine the different views and perspectives of the role of sport in society 55 To assess the role that sport plays in the economic development of a country/ region 55 To contextualise the link between sport, tourism and destination marketing 55 To assess the opportunities and challenges of bidding for and hosting major sporting events.

2.1

Introduction

In this chapter we consider the role that sport plays in society. This is important because it places the subsequent assessment of sports marketing in context. We consider the ways in which sport has evolved and changed from an activity that was regarded as essentially an optional, amateur and “pure” activity, in many ways developed in order to distract people from the realities of life, to something that has “morphed” into a highly commercialised and professional business sector. A number of factors have led to this shift in focus and emphasis. We assess the links between sport, culture and politics. Sport cannot exist or develop in isolation: it is dependent on a number of interwoven issues and factors. Among them being the attitudes and perspectives of policy-­ makers and politicians, to the role that sport can play in shaping and influencing their respective societies. This relationship between politics and sport can be a force for good and evil; most likely in equal measure. We consider different

approaches to managing this relationship and evaluate relevant examples and case studies. In particular, we evaluate the different approaches used by policy-makers to fund the development of sport across the spectrum: from “grass-roots” up to the elite end. We also look at geographic differences across the major geographic regions. We also consider the role that culture plays in influencing people’s attitudes to sport. We examine the role that the historical development of a particular country plays in developing sport from an unstructured and disorganised way, into something which has in many cases evolved into a professionally organised and highly structured industry. Intertwined in this chapter is the role that sport can play (for good or bad) in heightening nationalism and pride in the country concerned. For many people, sport allows them to escape the tedium of daily work and life and instead fantasise and participate in the success of a particular sporting individual or team. In the latter half of this chapter we consider how sport has become a significant player in the development of tourism and city branding. This is frequently manifested in the desire of particular countries and cities to bid for and host major sporting events or competitions. We look at the opportunities and challenges involved in this process and examine the practical realities by looking at relevant examples and cases.

2.2

 he Meaning, Purpose T and Organisation of Sport in Society

2.2.1

Defining the Concept of Sport

It is invidious to start a chapter on sport by attempting to define what the term actually means. However, it is important to do so in order that we can identify its characteristics. Coakley and Pike (2009) conclude that most sports commentators, practitioners and policy-­makers tend to coalesce around the following definition:

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Chapter 2 · Sport and Its Role and Contribution to Society and Economic Development

12

2

“Sports are institutionalised competitive activities that involve rigorous physical exertion or the use of relatively complex physical skills by participants motivated by internal and external rewards” (p 5).

I suggest that we inject some caution in terms of how we interpret this definition. At first glance it would appear to rule out activities such as chess, darts and snooker. We can extend this further, to rather esoteric sports such as synchronised swimming perhaps. Clearly there is little or no physical activity involved when two people are playing chess. Yet we cannot fail but admire the mental agility and capability of such players, particularly at elite level. Likewise, snooker is an immensely challenging game of skill, yet has little “rigorous exertion”. For our first activity in this chapter I would encourage you to assess the following question. 2.2.2

Exercise

??Assess the view that snooker is not a sport and does not deserve to be placed in the same category as sports such as rugby and football.

Perhaps we should read the definition more carefully in order to avoid taking a “dogmatic” view of what constitutes sport, in terms of internal and external rewards. This enables us to recognise that many people participate in sport because they derive strong personal enjoyment from performing a particular set of activities. From an external perspective there is also the reward that comes from receiving approval from the fans, spectators or the viewing audience. A key element of sport is its competitive nature. Clearly the nature and extent of the competition can vary depending on the skill level attached to the activity. At the top end we have the elite, professional sports competitors. At the lower end it may simply be the desire to complete a 10K run in a certain time by a casual or “fun” runner.

Another key strand to the definition rests with the concept of sports being institutionalised. This implies that as sports evolve, they adopt standard rules and procedures and are administered by an overall governing body or council. Such organisations evolve and adapt the rules, take account of emerging technologies, record performances, address issues such as cheating and bad behaviour and take responsibility for improving the standards of the sport and spreading it to a wider audience and a greater number of participants. In summary, it may be overly simplistic to apply a rigid definition of what constitutes a sport. Clearly there are some “sports” that do not evoke much physical exertion but nonetheless require high levels of cognitive skills and mental agility in order to compete at the elite level. Thus, in my view, sports such as darts and snooker fall under the category of sport as they fulfil most of the typical characteristics of a sport (competitive, institutionalised, providing entertainment for an audience and so on). We should also recognise that there is no universally accepted view of what constitutes a sport and more importantly how sport “fits into” a particular society or social setting. In some regions certain sports have precedence over others and attract the most funding. Different attitudes may prevail about issues such as gender equality or the provision of funding to new or emerging sports. In extreme cases (as we shall discuss later in this chapter) political leaders can use sport to further their particular political agenda or as a surrogate for extreme nationalism.

2.2.3

 he Purpose and Value T of Sport in Society

Virtually all of us would probably subscribe to the view that sport in essence is inherently “good” for both the individual in particular and society in general. This generally applies whether or not we take an active role in ­participating in a particular sport or whether we are ardent fans or supporters of a team or competition.

13 2.2 · The Meaning, Purpose and Organisation of Sport in Society

While there are negative associations with sport such as systemic state-sponsored doping, cheating, match-fixing and so on, the benefits largely outweigh the “downsides” in most people’s minds. We can summarise the benefits as follows: 55 Sport allows us to escape the daily stress and pressures of every-day life 55 It provides a mechanism for people to exercise to different levels of exertion and thus can address health issues such as obesity and diabetes 55 It can act as a mechanism for bringing opposing political, religious and cultural difference together and be a potential solution to conflict 55 It can instil a sense of national pride and identity in individuals 55 It can contribute significantly to the overall economic development of a city/region/ country 55 It can showcase cities and countries and significantly boost sports tourism 55 It can provide an outlet for disadvantaged people and groups to enhance their future prospects 55 It can direct people away from criminal activity 55 It can provide discipline and focus for individuals 55 It can create “role models” that young people and children can look up to and seek to emulate 55 In multi-cultural societies sport can bring people together in a common cause e.g. supporting a football team 55 It can inspire people to perform better in both their chosen sport but also in their general lifestyles.

2.2.4

Exercise

??Examine more fully the “downsides” that sport brings to society.

2.2.5

Evolution and Organisation of Sport

When we consider how sport has evolved in society we should note that it is linked closely to history and the social, attitudinal and cultural patterns which prevailed at that particular juncture in time. In effect, everything to do with sport is contextualised within the society at that time. We can see differences in the way in which individual sports have evolved and organised across the different geographic regions. For instance, Van Bottenburg (2011) provides an interesting analysis of how sports became institutionalised and formalised in the cases of North America and Europe. In the case of the USA, sports such as baseball, basketball, hockey and American football became very popular in the nineteenth and twentieth centuries. In this situation, schools and universities played (and continue to do so) a significant role in the formalisation and development of these sports. In particular they also reflected parent’s attitudes to the importance of extra curricular activities-particularly in the case of middle-­income parents. Over a prolonged period of time, the schools and universities took over the running and administration of these sports. They also quickly recognised the importance of commercialisation and this was evidenced by the emergence of owned-franchises (teams owned by individual entrepreneurs and organisations) who saw the commercial value of their involvement in leagues and competitions that had major appeal within their relevant segments of customers. Sociologists argue that the North American class structure (although containing numerous flaws such as racial discrimination) was less rigid than was the case at the same time (late nineteenth/early to mid/twentieth century) than was the case in countries such as the UK. In the latter case, particularly during the

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Victorian era, there was considerable opposition to the concept of physical education. In Europe many countries used gymnastics as a means of improving individual and class discipline. Holt (1989) notes that commercial forces were largely excluded from sport and its development in the UK. The key sports of baseball, basketball, hockey and American football quickly gained traction and popularity as a result of the increased focus on commercialisation and professional marketing within North American society. Consequently, they had a large, captive market and did not become too involved, or indeed see the need for international development of their sports. By contrast, sport in Europe adapted many of the popular English sports such as football (soccer) and tennis and engendered many inter-dependencies. Sport in many European countries largely evolved through the significant contribution of volunteers and clubs. Schools and universities played a less significant role in propagating the respective sports. Of course, we have to acknowledge that variations occurred and still exist across the different European countries. This is to be expected: given the different social and cultural patterns which exist. We explore this more fully later when we consider the different funding models for sport. Van Battenburg (2011) argues that the development of sport across Europe and the USA is not static but constantly evolves and interacts. In terms of attempting to differentiate between the two vast regions, he suggests that the North American organisation and development of sport tends to follow an “educational - commercial” configuration. By contrast the European approach tends to evolve around a “voluntary-governmental” configuration. The European approach explicitly recognises the more interventionist role of government in terms of sports development and funding. The North American approach also revolved around what might be termed a “many sport” arrangement: where universities and colleges, many of them publicly funded,

developed facilities and a coaching infrastructure which quickly led to a focus on the elite end of the spectrum. As a consequence of this focus, it could be argued that the USA more quickly adapted to the challenges of producing elite athletes that could consistently win medals at hallmark events such as the Olympic Games. Put simply, the infrastructure and coaching created an environment that encouraged and developed sports performers at the top end of the spectrum. By contrast the European model focused on a “sports for everyone” philosophy. Ingrained, as sports was, in the shape of a volunteer and club focus and linked to welfare policy principle, this emphasised the importance of participation. This happened arguably to the detriment of elite athletes who did not experience the same infrastructure as their North American counterparts. Moving to Eastern Europe, a perusal of sports development in countries such as the old Soviet Union and Eastern Germany indicates a far more proactive role being played by the respective governments. Sport was seen as a mechanism to promote the political ideology of the leaders. This led to many unsavoury practices such as systemic doping of athletes and a disregard for the regulations. In the case of Asia, sport evolved initially through religious missionaries who went to different countries in the region in the nineteenth century and introduced various sports that were popular in Europe and North America. Hong (2006) describes this initiation as a product of Western cultural imperialism. The Asian Games (founded by the YMCA in 1913) was the first attempt to run an organised games. Countries such as Japan, China and the Philippines saw this development as an opportunity to train people for real competition. Over the years the Asian Games has had a number of ebbs and flows, partly from a lack of funding and partly from a number of disputes between countries. The emergence of powerful Gulf States such as Kuwait also shaped the direction of sport and led to numerous disagreements, particularly as to how the games should be administered and

15 2.3 · Government Attitudes and Policies Across Geographic Regions

what countries could be allowed to compete. This led to a split and the emergence of the East Asian Games in 1993. The arrival of a number of ex-Soviet Union countries also changed the dynamic of sport in the region. More recently we have seen the emergence of China as a powerful force in world sport. This is not just happening in the context of winning medals at the Olympics. The Chinese president has placed great importance on the country using sport as a mechanism for reinforcing its position as a global power. The results of this are to be seen in the major investment in football at the professional level in China and the increasing investment in major European football clubs. Similarly, other Asian and Gulf States are becoming increasingly involved in football ownership. Examples include a Thai family acquiring Leicester City (English Premier League) and a Qatari investment in Paris St Germain (a French football team). In some Gulf States, while not necessarily generating athletes and sportspeople of a sufficient calibre to win medals, they have given passports to non-nationals and have achieved success in the Olympics as a consequence. 2.3

Government Attitudes and Policies Across Geographic Regions

The preceding section has examined the development of sport. We can see that across the different geographic regions such developments have followed different patterns of evolution. One constant in any such analysis and discussion is the link between sport and politics. It is not difficult to see why such a link emerges. From a political perspective, sport is seen as something which exhibits positivity and a glow that appeals to many people, irrespective of class, gender or religion. Thus, it can be argued that it has a major unification role to play in societies which in many cases are disunited and in conflict. In the UK for instance, in the early part of the twentieth century, politicians regarded football and its development, as a mechanism

for distracting the working class away from harsh living and working conditions. Factories closed on Saturday for a half-day and this allowed thousands of people to attend matches. If their team did well, legend has it that productivity increased dramatically on the following Monday. Within a slightly more cynical context, the Marxist view of sport is that it is “the opiate of the masses”. In other words, it provides something mindless to occupy the working class’s time and attention! Success in the form of the national team or individual athletes doing well in events such as the World Cup and the Olympic Games also works well for politicians as people develop a strong sense of national pride and identity. This is particularly the case in relatively small countries (that are not used to success). When the Republic of Ireland reached the quarter finals of the World Cup in 1990 the impact could be seen in the attitude and mind-­ set of Irish people in general (not just Irish football fans). There was a strong sense that Ireland had arrived in the world. This was evidenced by the number of people visiting Ireland and the number of Irish people travelling abroad. Politicians like to envelop themselves in success. Sporting success in the form of winners, provides just such a setting. It allows a politician to benefit from increased visibility, attention and heightened awareness. Sport can massage a politician’s ego and can enhance reputations  – again in situations where an individual or team has succeeded in major competitive events. There are, of course, potentially negative consequences that can follow on from the interface between politics and sport. Governments have boycotted major sporting events. For instance, the UK government attempted to boycott its Olympic team from competing in the Moscow 1980 Olympic Games. The period from the early 1970s through to the early 1990s witnessed the isolation of South Africa from competing in major international sporting events. While this had much justification due to the nature of apartheid as practiced by that government, many people argued that sport should not be

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dragged into politics; nor should politics become involved in sport. Political leaders can take their link to sports to extremes. In the 1960s and 1970s for instance, many of the so-called Eastern-Bloc countries (satellites of the Soviet Union) practiced systemic state-sponsored doping. More recently the interface between politics and sport has manifested itself in the bidding for and hosting of major sports events. We investigate this topic more fully later in the chapter. However, there have been instances where sports-entity holders (the owners of the sport) and politicians have been accused of chicanery and unethical behaviour. For

instance, serious (but unproven) questions have been raised about the manner and circumstances surrounding the award of the 2022 World Cup to Qatar. Other criticisms of the interface between politics and sport include the attempt to link a sport to a particular cause. We witnessed this in the sport of NFL in the USA, where American footballers have been accused of disrespecting the country by kneeling down during the playing of the national anthem. This practice commenced in 2016. The counter-view is that the President: Donald Trump has also used this action by the players to play politics.

China Makes Its Mark

China is one of the largest and most populated countries in the world. Since the 1980s it has undergone a transformation in many different areas: most notably in its shift away from the traditional Communist policies to a subtler, yet noticeable, genuflection towards some of the basic principles of traditional capitalism. The sports sector typifies this transformation. Up to the 1990s sport was exclusively the preserve of government, at national, regional and local level. In tandem with the shift, sport has also moved towards a more free-market view of the world. This is reflected in the level of investment in sport both domestically and in international markets. The emergence of President Jin Jinping brought further transformation to the sports sector. A life-long fan of football, he has moved the sports sector to the centre of the overall five-year plan for the economy. This is most accurately reflected in a decree introduced in October 2014 which was titled “Opinions on accelerating the development of the sports industry and promoting sports consumption”. This was introduced by China’s State Council, the central governing body. He also focused on soccer as a central plank in the development of sport policy in China. Jinping was motivated to introduce such initiatives because he recognised that the overall double-digit growth enjoyed in the economy was no longer sustainable and as a consequence

a more nuanced and focused approach to overall development was required. He encouraged leading entrepreneurs and corporations to invest in the Chinese Super League and also to invest in sports property acquisitions in key international markets. Part of the decree focused on the need to increase the sports space available to society. In the 13th Five-Year plan (2016) it set a target of increasing the sports facilities by 700 million square metres of space by the year 2025. Part of the plan also outlined a target of building one-hundred new sports towns by 2025. This would appear to provide strong evidence of the intent of President Jin Jinping in terms of where he sees the sports sector over the next ten to fifteen years. Major business-people such as Wang Jianlin and Jack Ma together with companies such as the Wanda Group and Alibaba have invested billions of dollars into sports properties such as domestic and international football teams, players and agencies. For example, Wanda has invested in Infront Sports and Media and has taken a stake in Athletico Madrid. It has also taken over the Ironman Triathlon series. Fosun International Inc has acquired Wolverhampton Wanderers (an English Championship football team). It has also taken a stake in a company owned by football agent Jorge Mendes, called Gestifute.

17 2.3 · Government Attitudes and Policies Across Geographic Regions

Li Yonghong, a Chinese businessman, acquired AC Milan (the well-known Italian football team) in 2017. Unfortunately, his ownership was short-lived and in 2018, the club was sold to Elliott Management (a venture fund). There are many other instances of such major and significant investment. The peak period for this level of investment was roughly between 2014 and 2016. The Chinese economy has since slowed down, leading commentators in both the economic and sports spheres to express concern about the future sustainability of such investment. The extent and depth of expenditure can be seen from the enormous salaries that have been paid to footballers in an attempt to lure them to play in the Chinese Super League. At first glance, it would appear to make no financial sense: essentially paying players to play in a league that in terms of standards is a long way below the quality of the “big five” leagues in Europe. Why has there been such a feverish level of investment and expenditure? It has clearly been driven from the top: in the form of President Jin Jinping. Such overt decrees as the one initiated in 2014, explicitly encourage business people to invest. Is this a dangerous direction to pursue on the part of the Chinese government? It is noticeable that in 2017 the Chinese Super League has introduced new regulations restricting the number of non-Chinese players that can be signed by an individual club. Likewise, tax laws have been introduced which penalise foreign players. Chadwick (2017) points out that the government still controls all aspects of sport in terms of its development and expansion. This allows for quick decisions leading to quick implementation with regard to any change. Due to the slowing of the economy, the Chinese government has made a number of key statements cautioning Chinese entrepreneurs and corporations against taking undue risk with regard to international investments. It is clear that much closer monitoring and auditing of the financial performance of corporations is on-going. China is an enigma for sports commentators and practitioners. The boom in consumption of sport among Chinese consumers is

large and (at the time of writing) shows little sign of slowing down. This is reflected in the levels of expenditure on sports clothing, equipment and accessories. Companies such as Nike and Adidas have made impressive inroads into this market. Likewise, Chinese companies have cast aside the traditional image of being copy-­ cat manufacturers of sports clothing, and are now offering value propositions that can compete on quality with the established global sports manufacturers. Chief among such local companies are STARY and FLIPSLED. Football, perhaps the most global and accessible of all sports has not proved to be a successful hunting ground for China. It has made little or no impression via its national team globally: only qualifying for the World Cup final in 2002. The nature of the level of investment in the Chinese Super League and the international investment in clubs and sports properties explicitly sends a signal that China expects to “sit at the top table” globally by 2030. The level of interest in the Chinese Super League is evidenced by the major jump in payment for exclusive media rights paid by Chinese Sport Media in 2017 (£1.5 billion for a five-year deal). Major football clubs in Europe also target the Chinese market aggressively in terms of preseason friendlies and merchandising. How long will it be before a Chinese footballer breaks through and makes the big time with one of the main clubs in England, Spain or Italy? We have yet to see sports such as rugby and cricket make any inroads into the Chinese market. In individual sports such as athletics, swimming, tennis and basketball, China has performed credibly in the context of individuals winning global events and credible local sports icons such as Li Na (tennis), Guo Jingjing (swimming) Lin Dan (badminton), Liu Xiang (110 metre hurdler) and Yao Ming (basketball) have emerged over the past 20 years or so. The link between sport and politics is never more visible than the case of China and it appears to show little sign of changing any time soon. (Source: adapted by the author from Chadwick (2017), (White Paper: Yutang Sports (2017).

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??1. In your view how sustainable is the policy pursued by China in the longer-term? 2. Is this strategy good or bad for global sport generally? Detail the benefits and potential downsides for the key stakeholders such as sponsors, club owners, sport-entity holders, fans and media rights owners. 3. Assess the role played by the Chinese government in developing the Chinese sports sector domestically and in the global sports environment.

2.4

Sport and Culture

The old adage that “no man (or woman) is an island”, is apt in the context of discussing the relationship between sport and culture in society. Very few of us are so reclusive that we can exist without any formal or informal contact with fellow human beings. Likewise, we are not immune from the various behaviours, norms, signs and symbols that permeate our every-day existence. The term “culture” is difficult to define with preciseness. Hofstede (1994) defines the term as “…the collective programming of the mind which distinguishes the members of one group from another”. Spencer-Oatey (2012) provides a more detailed interpretation and suggests that culture refers to “a set of basic assumptions and values, orientations of life, beliefs, policies, procedures and behavioural dimensions that are shared by a group of people and that influence (but do not determine) each member’s behaviour and his/her interpretations of the meaning of other people’s behaviour”. It is not our intention, in this chapter, to engage in prolonged discussion on culture: we discuss it in a different context in 7 Chap. 4. However, we need to recognise that culture plays a significant role in shaping people’s attitudes, behaviour and perceptions of the role that sport plays in society. Most researchers in this field argue that culture is learned: not inherited. We, as individuals, learn and develop our values within the context of the social environment within which we live, work and socialise. We are  

influenced by symbols and artefacts (e.g. dress code, physical layout and the feel of a particular environment such as the work-place). We behave according to the values of the society. We do not necessarily behave in a universal and standard way in this case. Many of us conform to the accepted values and norms: some respect some of them and a few of us may rebel against some or all of them. We belong to a number of social groups: ranging from our immediate family to social groups and work groups. Culture is often described as “fuzzy” in so far as people do not follow identical patterns of behaviour or adhere rigidly to a common set of values. As we noted earlier, variations can occur. Culture is also subject to change: nothing remains static. However, most commentators agree that change can be gradual in terms of how it diffuses across groups and sub-groups. Cultural diffusion is also a selective process: not everything is accepted by society in an indiscriminate or non-questioning manner. Spencer-Oatey (2012) also notes that cultural borrowing exists. This happens more frequently in cases where people live in a multi-cultural society. Some of the values and/or behaviours of one culture may be subsumed into another culture. This is a selective process and it is also common to witness situations where one group belonging to a specific culture is resistant to borrowing from another culture. A good example would be in the case of the religious beliefs of a particular group within a society. So, in the context of sport and its role in society, what role does culture play in sports development? Firstly, the nature of society in many countries and regions has changed perceptibly over the past couple of decades. Greater freedom of movement and social mobility means that multi-culturalism prevails in many societies. In the context of sport, this integration of values, ideas, artefacts and so on in theory (but not necessarily in practice) can lead to greater inter-cultural understanding. Sport plays a part in this process, particularly in the context of the introduction of sports that are popular within one culture and are now being played

19 2.4 · Sport and Culture

in another country. Global TV coverage and live streaming of sports has also succeeded in making them popular in different geographic regions. In many ways this has speeded up the diffusion of individual sports and their subsequent development. This is not a new development however. In a previous section we identified the role that missionaries and the military played in introducing sports such as football, American football, basketball and baseball to countries in Asia. Over time (gradual cultural diffusion) these sports have gained in popularity (albeit at different levels of uptake) and are now played, followed and enjoyed by groups of people in these countries. We have noted already how the perception of sport changes over time. Up until the 1980s the Olympic movement was an aggressive proponent of amateurism. This in many ways was a legacy of Victorian times in the UK, where sport was the preserve of the “gentleman amateur” and the notion of paying individuals to participate was regarded as squalid. If we consider the evolution of sports such as rugby union and rugby league, we can graphically see this legacy. In the case of rugby league in the UK, it essentially emerged as a split from rugby union because of the latter’s objection to paying players to compete in a professional manner. It started in the North of England (Lancashire and Yorkshire) and initially was the preserve of the working classes. Although it has expanded significantly over the years (both within the UK and internationally) it is still strongly associated with the “working man’s sport”. It was not until the mid-1990s that rugby union accepted (it was already happening informally) the concept of professionalism. We referred to norms earlier in this section. Norms revolve around the expected behaviours and values that exist within society. Most people tend to conform around these norms and it can take time before they may change or alter. A good example here is the traditional perception of gender involvement in sport. Sport has traditionally been perceived as the domain of the male species. If we go right back to the ancient Olympics in Greece, it was

seen as exclusively a male preserve. This view has tended to predominate over the centuries. Masculinity and muscularity were the twin pillars upon which most sports were developed. In Western Europe and North American right up until the 1950s and 1960s, women were reluctantly accepted into the sporting milieu. Their traditional role as home-makers and the “gentle sex” permeated through to their participation in sports. Where they did compete, it was mainly in the more genteel and less physically demanding sports. The norms and values of many societies reinforced this view. A case in point was the Women’s marathon race at the Los Angeles Olympics in 1984. It may seem remarkable in the context of athletics today, but this was the first time women were allowed to compete in the marathon event. Up until then it was seen by many people as being too demanding for females and could possibly damage their health. For the record, fifty women took part in this inaugural marathon and forty-four of them completed it. The hegemony of the male species in no longer as dominating as it once was. Women compete in sports such as MMA, boxing, rugby, cricket and football to a very significant extent. This is reflected in larger TV and streaming viewing figures. We can also witness changes in sports in the area of diversity. Sports that were once the preserve of “white males” e.g. rugby and cricket in South Africa, are now played by other cultures and races and in the process have built up significant volumes of support within these cultures. The 1997 Treaty of Amsterdam stressed the social importance of sport and identified one of its key roles as being one of uniting and building national identities. Various studies by Euromonitor in the past number of years consistently show that almost three-­ quarters of Europeans regard sport as a means of promoting integration. In a later chapter, we consider in more detail the influence of culture on the individual fan’s motivations and behaviour. Here we concentrate on the influence of a society’s culture on its relationship with sport.

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In summary, sport and culture are inextricably linked in terms of trying to understand the ways in which sport evolves and develops in a particular society. Individuals and sport cannot exist in isolation. Both are dependent on participation, networking, relationship-­ building and interfacing with various stakeholders (governments, policy-makers, professional sports bodies, voluntary clubs and sports societies and so on) in society. All are shaped behaviours, norms and values. As individuals we learn from such interactions and are in turn shaped by society. Sport plays a significant role in the lives of many people  – particularly in terms of participation in, attending and viewing sporting events. What sports we play and watch, are shaped by the culture of the society within which we live. For sports marketers it is important that we have an understanding of such influences and how they can shape the future of a particular sport.

2.5

 he Role of Funding in Sports T Development

While high profile leagues and competitions such as the English Premier League (EPL) derive large amounts of revenue streams to more than sustain the cost of running such events, many sports struggle to generate the required funding to develop the sport, the athletes and its development at community or grass-roots level. In this section we consider the different approaches or models that are used to address this challenging aspect of sports development in society. As we mentioned earlier, governments of all shades and hues have to address significant health-related issues in society such as obesity and specific diseases such as diabetes. Young people in particular are also engaging with more sedentary activities. In doing so they run the risk of not engaging in sufficient exercise and therefore building up long-term health problems. Over the years, people’s lifestyles and work habits also militate against exercise: many of

us are office-bound or work from home, again adopting a sedentary position. While governments to varying degrees, are taking action on these issues by trying to address the challenge of encouraging greater participation across the sports spectrum, reality intrudes in the form of insufficient finance being available in order to promote sports. At the grass-roots level, clubs and sports bodies are reliant to a greater extent on funding to develop its sport. Funding can come from the following sources: 55 The taxpayer via government allocations 55 Levies generated from national lotteries (albeit it is in competition with other bodies such as the arts, health and so on). Levies in some cases are also placed on betting companies and betting 55 Corporate sponsorship, where companies invest in a particular sport. In the latter case there is usually an expectation that they will get a return on their investment 55 Individuals in society who are prepared to pay subscriptions in order to benefit from the facilities, coaching and so on 55 Revenue from media rights paid by broadcasters for access to major games, competitions and events. Some of this revenue can filter down to the community or grass-roots level of the particular sport in question. Eurostrategies (2011) undertook a comprehensive study with sports clubs, sports ministries and key stakeholders across the full range of member states in the EU. It examined the various approaches and frameworks used to provide funding for sport. Four revenue sources were seen to be critical in terms of trying to identify variations in approaches to sports funding across the member-­states of the EU. They can be summarised as follows: 55 Level of sports participation (measured by membership rate) 55 The average level of public funding per capita 55 Relative importance of the direct contributions by householders 55 The contribution of voluntary work (Eurostrategies 2011, p 9).

21 2.5 · The Role of Funding in Sports Development

We consider the main features of each approach here. zz The Northern and Western Europe Model

55 Evident in Austria, Belgium, Denmark, Finland, Germany, Ireland, Netherlands, Sweden and Luxemburg 55 These countries typically had high levels of participation in sport (around 20% of the population). This leads to a high level of social provision 55 The high level of volunteers and officials tends to keep some of the costs down 55 Contribution by householders is relatively low.

zz The Mediterranean Model (Greece, Italy, Spain and Malta)

55 Low(ish) level of public subsidy 55 Levels of household expenditure is high when compared to the extent of public funding 55 The public spends roughly half the amount per capita to that of households 55 Contribution of voluntary work is lower than is the case in the Northern and Western Europe model. zz The Rainbow Model

55 Central European countries mainly make up this group (Estonia, Hungary, Latvia, Portugal, Romania, Slovakia, Slovenia, Lithuania 55 To some extent these countries have been affected by the collapse of the sports infrastructure resulting from the breakdown of the old Soviet Union in the later 1980s 55 Limited demand for leisure sports, associated with relatively low-income levels 55 Low on the list of public funding priorities 55 Low levels of voluntary work 55 Memberships rates between 5% and 12% 55 A need to advance the sports culture.

zz BCP Model

55 Refers to Bulgaria, Czech Republic and Poland 55 Similar to the Rainbow Model in terms of social demand

55 Even lower levels of public expenditure per capita 55 A high level of revenue coming from levies on lotteries and betting/gambling service 55 Low levels of household expenditure. In addition to the four models identified in the study, variations were also pinpointed in the cases of France and the UK. In France the situation that pertains is similar in many ways to the countries identified in the first model. However, there is lower willingness on the part of households to spend money on sport. The membership rate of clubs and sports associations is lower than group one countries. However, there is a higher level of public funding. In the UK there is a relatively lower level of public support from government agencies. Households demonstrate a higher propensity to spend money on sport and there would appear to be a higher appreciation of the importance of sport. The downside is that with the comparatively lower levels of public support, there is a lower rate of participation than many of the other countries in group one. The report makes a number of observations as to the future challenges of funding sport in society over the coming years. 1. Secure, increase and diversify the resources allocated to sport in general and grassroots sport in particular. 2. Promote and enhance financial solidarity between the professional/elite end of the spectrum and the grass-roots end. 3. Promote and support voluntary work. 4. Recognise the public interest of grass-roots sport in other policy areas. 5. Improve the evidence-base relating to grass-roots sports participation and funding: particularly in the area of transparency with respect to financial flows of money. This report is comprehensive in the context of Europe. We need to recognise however that 6–7 years on from this study things may have changed in many of the member-states of the EU. The deep recession which existed around that time would certainly have

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affected public expenditure levels on sport and also on the propensity of households to also spend money in this sector. Since then economies have shown signs of emerging from the deep recession although expenditure on sport probably is at the lower end of public expenditure. In the case of central and eastern European countries such as Poland, Czech Republic and so on, benefits from joining the EU are likely to have improved their economic position

with income levels rising more quickly (albeit from a much lower base than many of the Western European countries). In terms of attitudes to sport from the perspective of the population; particularly younger people, we should acknowledge the growth in sedentary activities such as “e-sports” in general and gaming in particular. This is likely to have a “knock-on” effect on participation rates in more traditional sports such as football and running.

Benetton and Its Community Roots

The concept of shared value was put forward by Porter and Kramer (2011). This approach to redefining the concept of value is based on the belief that business should not be fully governed by the economic imperative. Rather, the needs of society and the communities within which companies work should also come into the decision-­ making process with respect to their future strategic direction. In the context of the sports sector, Benetton, the well-known fashion company provides a good example of how corporations can practically implement this concept. Benetton, despite its global imprint and success over the past 40 years or so, started off as a traditional family-owned clothing manufacturer in Treviso in north-east Italy. Treviso is the provincial capital of the Veneto region. In the early days of its operation it established a major local sports facility in Treviso called La Gharida - Citta dello sport. This has grown over the years to a 220,000 square metre facility. It is owned by Benetton and managed by

2.6

 unding for Sports at the Elite F End of the Spectrum

Our preceding discussion has focused to a large extent on funding for sport in general, particularly at the grass-roots level. In this section we consider the challenges and approaches to funding sports and athletics at the professional/elite level. How important is it for a nation to experience success; in the form of medals and/or

Verde Sport – a Benetton sports company. This is separate from Benetton’s sponsorship of the local basketball team and various other sponsorships of sports over the years. The facility contains a comprehensive infrastructure including four basketball and volleyball courts, 2 beach volleyball courts, six rugby playing fields, three air-conditioned gyms for basketball, volleyball, a swimming pool, a fitness centre, a nine-hole practice golf course, restaurant, fan-shop, guest quarters for players, a three hundred seat conference centre and meeting room spaces and a special play area dedicated to children between the ages of 1–6 years. This multi-functional sports infrastructure is free for everyone in the community throughout the 365 days of the year. This is a good illustration of a company that recognises the role that the local community has played in its success. By creating, developing and managing such a structure it can be argued that this highlights the concept of shared value in practice.

qualifications in finals of keynote sports competition such as the Olympic Games or World Champion championships? De Bosscher et  al. (2013) pinpoint the following influences. National pride, international recognition and prestige, public interest and the “feel good” factor and the popularity of sports and the possibilities of increasing participation rates as a consequence of the success of top athletes and their position as role models.

23 2.6 · Funding for Sports at the Elite End of the Spectrum

The attitudes of governments and policy-­ makers to sport in general and to elite sport in particular varies across the globe. Objectives can include the following: 55 To encourage as many people in the population as possible to participate in sporting activities 55 To focus on key demographics in order to reduce obesity and health e.g. teenagers, middle-aged people and so on 55 To apply a diverse approach to funding, giving equal recognition to all sports irrespective of popularity 55 To focus on and prioritise those sports that are most likely to generate medal-winning opportunities at hallmark sporting competitions such as the Olympics 55 To regard sport as being less important than other key priority areas for public funding e.g. health, education and culture 55 To place sport at the centre for promoting a political agenda. These objectives typically are not mutually exclusive: they tend to mix and merge and will fluctuate, depending on the policies of successive governments, the state of the economy and the circumstances pertaining to the country’s performance and success in sporting events and competitions. De Bosscher et al. (2015) pinpoint a number of components that can lead to elite sports success. They are summarised as follows: 55 Macro levels: influence the social and cultural environments and reflect the economy, demography, geography and climate, urbanisation, politics and the national culture 55 Meso-levels: influence the policy environment such as coach development policies on talent identification, recruitment and development

55 Micro-levels: reflected in the success of individual athletes, influence of inherited genes and the social influence of family, friends and coaches. As we noted in the preceding section, the policy-makers responsible for public funding and investment in sport have a challenge of trying to capture a balance between the elite end of sport and grass-roots levels. While ideally, we might want to see both ends of the spectrum treated in equal measure, in practice we can find many variations. Let us explore the elite sports end in greater detail. We have already identified the main value of sport to society. The key stakeholders such as governments, sponsors, coaches, scientists and many individual members of society recognise the importance of achieving international success in sport through measures such as cups, trophies, competitions and medals that are won by that country’s teams and individual athletes. If taken to extremes, such as the way in which political leaders in some cases have used sports for their own political ends, it can lead to unethical practices such as cheating and the abuse of talented children. Pursuing success at all costs, in addition to unsavoury practices and behaviour can also lead to serious questions being raised about the way in which public money is being disbursed across the sports fraternity (individual sports and their administrators). Green (2006) raised some questions about the efficacy of sports funding and posits the view that in some countries there has been a shift in focus from “a sports for all” policy to “not about sports at all”. Let us look at the case of the UK.

A Case of Success Breeding Success

The 1996 Atlanta Olympics represented a particular low spot for UK sport. This was captured in its 36th place in the overall medal table (one medal). Many commentators attributed this perceived failure to be in part due to the focus by Governments on “sport for all”. The

Prime Minister, John Major was a strong advocate of this policy which arguably may have done some good for general participation in sports but did not provide adequate investment at the elite end. This was in contrast to other countries who employed a much stronger level

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of funding to elite athletes and sport in the quest for medals and success. A change of government in 1997 brought in a new political perspective which viewed sport as being critical to society and this view was reflected in a change of direction in the way in which funding was provided. Further governments continued with this policy resulting in the scrapping of some funding that was allocated to support sports in schools. Individual objectives such as one of increasing the level of participation in sport by 1 million on 3 days a week, was refocused to younger people as opposed to the entire population for 1 day a week. Sports such as cycling received far more funding. This was in order to allow it to employ the best designers, coaches and scientists available. From the Beijing Olympics (2008) to the most recent one (Rio de Janeiro) in 2016. As a result, the UK has become arguably the most dominant country in this sport and this has been reflected in its medal haul. Sports such as athletics and rowing have also received large increases in funding over the years, again leading to significant improvement in performance and medal-­ winning at the Olympics and World Championships. This increase in performance led to the UK finishing second on the medal table at the Rio Olympics in 2016 (67 medals). Many commentators argue that this is a key measure and validator for the policy of investing heavily in key sports. Others disagree. Ingle (2017) argues that a focus on medals has led to unfair and inequitable practices in the way in which funding is allocated to sports. Sport UK, the body responsible for managing the budget, has created four categories or bands of sports. Groups one and two reflect sports that have consistently delivered medals and therefore receive the bulk of the funding. This is based on the principle that success breeds success and a culture of winning and innovation can be further improved and developed only by the requisite funding necessary to sup-

port such a culture. By contrast, sports in groups three and four receive little or no funding. If a sport is in category four (where the expectation is that such a sport is unlikely to produce a medal) it will receive no funding. A sport in category three (where the expectation is that it can deliver at least one medal) receives very little funding relative to those in the top two categories. This is graphically demonstrated in the case of GB badminton which has seen its funding decrease from £5.9 million (in the last tranche of allocation) to zero. This is despite the fact that it achieved its target at the Rio Olympics. Other sports that have lost their funding include: synchronised swimming, water polo, goalball, wheelchair fencing and visually impaired football. Further inequities would also appear to surround the sport of the modern p ­ entathlon. This sport received funding of roughly £ 7 million over the next 4 years. This allocation will support eighteen athletes; none of whom have any realistic chance of delivering a medal to Team GB. It can be argued that sports such as the modern pentathlon, equestrianism and sailing: at best peripheral sports in terms of participation and level of interest among the general public, receive a disproportionate amount of financial support. Likewise, it can be argued that some sports are more difficult to win medals in than others. For instance, sailing is a niche sport where not many countries or competitors perform in. By contrast, a very popular sport such as basketball, is very difficult to compete in for a country like the UK; due to the depth and nature of the competition. Basketball has also seen its level of funding cut substantially. Is this unfair? Given that it is a sport that is very popular with young people, particularly those from ethnic communities and some of whom live in deprived and disadvantaged areas. The Director of Performance has suggested a medal target of 81 medals for the Tokyo Olympics in 2020.

25 2.7 · Sports Tourism and Its Contribution to Economic Development

??1. Examine the extent to which you would agree with the view that a focus on medals is damaging to the overall development of sport in the United Kingdom. 2. Select another country (or your own country if you are not from the UK) and assess its approach to funding athletes and sports at the elite level.

In summary, funding models for elite sports again show variations across different countries and regions. Some focus on elite sports, possibly at the expense of addressing the need to encourage individuals in society to take up sports and participate in events. The culture and values of society (as we discussed in an earlier section) revolve around the community and an ethos of volunteerism. This is evidenced in countries like Sweden and can be seen in clubs and schools where volunteers manage, coach or provide leadership and direction for the development of the particular sport in question. In the future, opportunities arise in the area of funding from closer relationships with the business world. Our case study on Benetton shows how both the company and the community can derive mutual benefits from an initiative. Australia in the form of its Australian Olympic Council, is encouraging the federal government to establish a national lottery. They propose that two-thirds of the profits could be dedicated to funding for sports. They estimate the funding from this source could generate additional money of around $50 million Australian dollars. This has been stimulated in part from the poor performance of its athletes in the Rio 2016 Olympic Games. As young people turn more towards e-sports and gaming, the imperative is there for governments to encourage active participation in traditional sports in order to combat health problems. At the same time, it is also important that a nation produces athletes and teams that the younger generation look up to and seek to emulate. Role models and sporting icons play a significant part in cultivating interest in sports participation. Without such “heroes” and narratives, this becomes a major challenge for the sport sector and its sources of funding.

2.7

Sports Tourism and Its Contribution to Economic Development

In this section we consider the role that sports tourism plays in the economic development of countries, regions and cities. Roche et  al. (2013) cite the World Tourism Organisation who estimated in 2011 that tourism was the largest industry globally. Kressman (2016) suggested that the sports tourism sector globally was worth in excess of $600 billion. This highlights the growing contribution of this sector to tourism. This growth has been driven by a number of factors including the following: 55 The growing exposure to sports events, competitions world-wide via subscription-­ based television, the Internet and the consequent desire to attend such events 55 The growth in the number of participants in events such as marathons, 10K races, orienteering, cycling and so on 55 The growth in the number of people engaging in active lifestyles revolving around sport 55 Increases in disposable income (relatively speaking) in key geographic regions such as China, India and Russia. Middle-­ income segments in particular have grown significantly and many people in this grouping want to travel to watch sport or to participate e.g. golf holidays. Further indications about the importance of the sports sector to the economy can be found in a study commissioned by the EU (2012). It estimated that it generated 2.12 per cent of total employment across the twenty-­ seven-­ member states. Germany had the largest number of sports-related jobs (1.15 million) followed by the UK (610,000) and France (410,000). Peric (2015) identifies four experiences that sports tourists seek: 55 Entertainment experiences: where participants are mostly passive (spectators) and is more likely to be one of absorption than of immersion 55 Educational experiences: tend to involve more active participation

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55 Escapist experiences: can teach just as well as educational events can, or amuse just like entertainment ones, but they involve greater participant immersion (they want to become an active part of the event) 55 Aesthetic experiences: tend to minimise the active participation, while participants are immersed in an activity or environment, but they by themselves have little or no effect on it (p 88). He suggests that the sports tourism products can start off in any one of the four directions and can be developed further to address some or all of other experiences. An example could be a basketball training academy for beginners. This is essentially sports training in the sport of basketball and unlikely to attract fans or spectators. However, it could also incorporate a basketball competition at the weekend which could generate an attendance and could further develop by inviting famous basketball players to take part in a brief demonstration of their skills and meet afterwards with the fans. Sports tourism can be directed towards individuals who want to be active (marathon running, cycling and so on) or those who are passive spectators at events or those visiting famous football stadia. For the active tourist, we can see how sports marketers further segment this group by creating specific sports tourism products such as golf tourism, snow-based tourism, city marathons and so on. The passive tourists (depending on their sporting interests and passions) have a vast array of products to choose from. Examples include attending mega sports events (World Cup, Olympics, World Championships, Tour de France stages), attending qualification games involving their particular country (World Cup qualifiers in football), and visiting host cities to watch their team in action (Six Nations Rugby, test cricket matches). Over the past number of years, it is increasingly common for sports event organisers, clubs and sports bodies to work more closely and collaboratively with other key stakeholders such as city/local authorities, national and regional government bodies with responsibil-

ity for overall tourism, the business community, hotels and restaurants and so on. This engagement is based on the realisation that synergies can be achieved by working with stakeholders that also can benefit from the hosting of an event or a particular game. Devine et al. (2011) highlight the dangers of pursuing a strategy of staging events that are not integrated or planned and where a lack of communication or cooperation between the interested parties can create a barrier to the success of the business. From the perspective of economic development this situation can lead to missed opportunities. It can also create negative perceptions internationally if the event is mismanaged or elements of the infrastructure do not measure up e.g. not enough hotel rooms or poor telecommunications facilities and technology. 2.7.1

City-Based Branding

Given the increasing opportunities to generate significant revenue for the local and national economies, it is no surprise to see that cities have embraced a more professional and strategic approach to managing sports tourism. Branding of anything (physical product, service, person, city and so on) is predicated on the belief that in order to be relevant to a target audience, the “product” must be able to achieve one or two points of differentiation from its direct and indirect competitors. Otherwise why would anyone want to purchase or consume that product? In the context of tourism and destination marketing this is equally important and challenging. Marketers are faced with the task of creating a product that resonates with a target market; where individuals in this segment have positive perceptions and attitudes about that product, will purchase it again and act as ambassadors for the product by “spreading the good news” about it to their friends and social networks. Social media platforms have helped in this regard. This can work both ways. Good experiences will lead to inspiring narratives on social media. Likewise, bad experiences will generate negative comments and publicity.

27 2.8 · Bidding for and Staging Major Sports Events

In this context, some cities have seen sport in general and events in particular, as a good opportunity to generate revenue, increase the number of visitors and capture international coverage as a consequence of staging such activities. Sport-focused city branding can also engender a sense of pride in the citizens; particularly when high-profile events are staged. City-based branding has specific challenges and complexities that are not to be found to the same extent in other sectors. Moilanen (2015) identifies some characteristics of city branding. They can be identified as follows: 55 It is a multi-dimensional product, containing many diverse elements (heritage, history, culture, infrastructure, sport and buildings to name but a few) 55 It is delivered by many different stakeholders 55 Often there is a conflict of interest between the stakeholders. This can lead to a breakdown in communications and an ill-­ conceived strategy 55 Management and marketing of the brand can be outside the control of those tasked with this responsibility 55 The pernicious influence of politicians is a common feature 55 Dangers associated with making unrealistic promises or exaggerating sports assets and features (Herstein and Berger 2013). Melbourne is a good example. It has a very strong tradition for staging mega-events such as the Olympic Games and the Commonwealth Games. It stages a Formula One event each year, hosts the Australian Open Tennis Championships (one of the four “Grand Slam “events), stages test matches at the Melbourne Cricket Ground (MCG) and other major national events such as Australian Football League games. It has invested in the appropriate infrastructure by way of stadia, hotels and telecommunications. The benefits to the stakeholders are clear. Increased visitors spend money in the city which impacts on hotels, bars, restaurants and so on. International media coverage of mega

sports events provides the city or region with the opportunity to project other key dimension of its tourism product e.g. cultural activities, beaches, historic castles, scenery and so on. It also enables the city to project its people: their friendliness and so on. Glasgow used sport to project its points of differentiation. It has staged the Commonwealth Games in 2014 and hosted the UEFA Cup Final in 2007. It has a tradition of sport.

2.8

 idding for and Staging Major B Sports Events

Evidence that the sports sector plays a prominent part in the economy and within society in general is to be clearly found in the role of hallmark sports events. It would appear that some countries will do anything to win the rights to stage such events. What constitutes such an event? Mega sports events refer to typically recurring events that have a global relevance and appeal and capture the level of media interest that corresponds to the scale and interest of the event. At the top of the pyramid lies the Olympic Games and the football World Cup. In both cases they attract the interest of a global audience of sports viewers and fans. Typically, mega events attract a very large number of visitors who come to the city or country to attend the event. Such events are likely to have significant impacts on issues such as infrastructural development and urban regeneration. We can apply a notional “categorisation” of such events by recognising that the scale and scope of the event can vary. At a slightly lower level, major sporting events, while still having an international relevance and appeal, attract less viewers and visitors and a slightly lower international media coverage. They relate to World Championships in specific sports such as athletics, rowing, rugby and boxing. Major events can also refer to regional championships such as the Asian Games or the European football championships. They also tend to be recurring (every 2–4 years).

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Another category of major sporting events refers to “one-off ” games or competitions. Events such as the European Champions League Final would fit into this category. Some sports have key competitions that reflect the top end of their schedule. Golf has the “Four Majors”. With the exception of the US Masters (always staged at Augusta), the other three tend to be allocated to individual golf courses that meet their requirements. In the case of tennis, it stages four “Grand Slam” events (US Open in New York, French Open in Paris, Australian Open in Melbourne and the Championships, Wimbledon in ­London). Annual sports events such as the Superbowl (NFL) generate more limited global appeal but within the context of the USA, the city that stages the event can showcase its assets to a wide audience. At the lower end of the events spectrum, cities can stage national championships or competitions which clearly have a more limited appeal in terms of viewers and visitors. 2.8.1

 enefits of Staging Mega B Sporting Events

The Summer Olympic Games is arguably the biggest sporting event, recurring every 4 years. The city which wins the bid to stage the games typically has to handle around 10,500 athletes from over 200 countries. It has to have the facilities to stage over 300 events in 28 different sports. It typically sells around 10 million tickets for these events. The International Olympic Committee (IOC) generates around 50 per cent of its total revenues from media rights, from which it provided a portion to the host city. Baade and Matheson (2016) identify a number of short and long-term benefits that can accrue to the host city. We can summarise them as follows:

Short-term benefits

55 An economic boost to the city arising from construction 55 Increase in the number of tourists 55 Media rights received from the IOC (roughly 30% shared with the organising committee)

55 The “feel-good” factor among the city’s citizens 55 Boost for hotels, hospitality, restaurants and entertainment outlets.

Long-term benefits

55 New and improved sports facilities that can be used post-event 55 Investments in overall infrastructure, roads, transport and telecommunication 55 The “advertising effect” falling out from the global media coverage of the event 55 Boost for tourism as a result of increased numbers of visitors 55 Potential for foreign direct investment and increased international trade as a result of the city’s exposure to foreign corporations 55 Can put the city on the international map. Examples include Barcelona (1992 Olympics) that transformed itself into an international city and became one of the most popular destination cities in the world for tourists 55 The “advertising effect” can also lead to spin-off’s for neighbouring cities and the country as a whole (Coattail Marketing). 2.8.2

Legacy

“Legacy” is a term that is highlighted as being a critical expected positive outcome resulting from hosting a mega/major sporting event. This refers to critical key performance indicators that are used to assess the long-term success or otherwise of the event. It comes into play long after the event itself has been staged. It poses the following question. What evidence is there to indicate, a number of years after the event had taken place that the city/country/region has gained long-term benefits as a consequence of staging that event? Indeed, the sports-entity holders such as the IOC and FIFA explicitly look for evidence in the bid submissions that the committees identify specific areas where such legacies are expected to happen. Legacies can be divided into “hard” and “soft” elements.

29 2.8 · Bidding for and Staging Major Sports Events

Soft structures include: knowledge (e.g., organisational, security, technological); networks (e.g., political, sport federations, security); and cultural goods (e.g., cultural identity, cultural ideas, and common memory). Hard structures include: primary structures (e.g., sport infrastructure, training sites); secondary structures (e.g., villages for athletes, technical officials and media); and tertiary structures (e.g., security, power plants, telecommunication networks, cultural attractions) (Preuss 2004). The importance of achieving legacies resulting from the hosting of major sporting events is highlighted in the concept of legacy planning. Hartman and Zandberg point to the literature on this concept and describe it as a situation where the event is embedded in a larger picture: focusing on a pre and post-­ event development surrounding the planning. In other words, legacies should not be expected to emerge in a spontaneous and unanticipated manner. Rather they should be planned from the very beginning of the bidding process and feature as the central platform of the bid. 2.8.3

Image Change

We enter the political sphere in this instance. Political leaders frequently see sport in general and mega sports events in particular as a conduit for promoting their political agenda and philosophy. Adolf Hitler could quickly envisage the benefits of using the 1936 Olympic Games as a means of reinforcing his political views and signalling them loudly and clearly to the rest of the world. The Chinese government used the Beijing games in 2008 to change the popular image that many countries held about its society and political beliefs. It went for a “soft” approach, using the individual competitions, the stadia and “soft scenes” of everyday life in a modern city to project a different image. This appeared to work in terms of changing peoples’ perceptions. The Gulf region has also recognised the power of sport on a global stage. We looked at the case of Dubai earlier in this chapter. Over the past 20 years or so other Gulf States have

made major investments in acquiring the rights to host mega and major sporting events. Examples include Abu Dhabi and Bahrain (Formula One races), Qatar (2006 Asian Games) and arguably the most unexpected of all: winning the bid to stage the 2022 World Cup. The political ramifications generated by the awarding of this event to Qatar have revolved around accusations of bribery and corruption on the part of the Qatari bid committee. No hard evidence has been produced to support this accusation. States in this region also have to grapple with negative perceptions of the way in which the Rulers run their regimes; with questions raised about issues such as women’s rights, democracy, labour conditions and so on. Foley et al. (2012) point to the fact that many of the rulers have aggressively taken the sports event space by storm in the past number of years. Amara (2008) argues that investment in sports events is driven to a significant extent by the need to build a new identity through “an emerging model of the modern monarchy state” (p 107). The implications of these moves by the Gulf States in the sports space are not likely to have any impact in the short-term. It takes time to change the global perception of a particular country’s culture, political philosophy and so on. Qatar had originally set as its aims for the Doha Asian Games in 2007 around the following objectives: 55 To put Qatar (with the world’s third largest natural gas reserves, but with a low international profile) “on the map” 55 Increase tourism by establishing an annual circuit of international sporting events in Qatar, and 55 Instil discipline in Qatar’s young people by providing facilities to enable them to participate in sports (Kolatch 2007). It subsequently failed in a bid to stage the 2016 Olympics but won the rights to the 2022 World Cup. If we take these benefits at face value it is clear that by winning the right to host mega

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events it can be argued that there are clear “wins” to be generated. However, a closer examination of these claims leads to the intrusion of reality! Baade and Matheson (2016) note that “predictions are rarely matched by reality” (p  207). We have to recognise the downsides that can fall out from hosting mega sporting events. The drawbacks are as follows. 2.8.4

Cost Overruns

This would appear to be an endemic feature of most bids and subsequent costs associated with the event. The worst example of this occurred with the Montreal Olympic Games in 1976. The local authorities estimated that it would cost $125 million to stage. The actual cost plunged the city into over $2.8 billion in debt. It took until 2008 before this debt was fully cleared. Cost overruns are often outside the control of the local organising committee. The timeline from developing the bid submission to winning the bid to staging it can be anywhere from 10–15  years. Clearly land values and construction costs can fluctuate during this period. Extraneous events that affect the general economy can also rebound on the original budget. Zimbalist (2010) notes that the bid committee for Athens (2000 Olympics) initially projected a cost of $1.6 billion. The eventual cost came in at $16 billion. Beijing estimated the costs would be around $1.6 billion. The final costs were $40 billion. 2.8.5

Understating Costs

In the quest to convince key stakeholders such as businesses, sponsors and the citizens of the city, the bid committees have often been accused of understating the real costs of staging the event. It is hard to prove if this actually has happened. However, the desire on the part of key influencers such as political leaders and party officials and the pressure placed on committee members, can lead to political expediency. This can lead to negative perceptions among the citizens post-event.

The seeming inability to make accurate forecasts and the frequency of this happening, has led to many cities in recent years pulling out of the bidding process because of a lack of interest and cynicism in the city and communities. The London Bid Committee (heavily supported by the Labour Government) projected costs of around £3–4 billion. It ended up with a cost return of around £17 billion. Many people criticised the committee for being disingenuous with the true costs. Vested interests in the form of government, construction developers, and banks and so on would appear to have played a role in the budget-setting and subsequent communications strategy.

2.8.6

Overstating Economic Benefits

Some commentators suggest that because the people behind the bidding process and the preparation of the documentation have a vested interest in proceedings, there is a danger that benefits, in the form of increased employment and higher levels of tourism, are exaggerated in order to impress key stakeholder. This is often seen in the net number of visitors attending the event. For instance, Baade and Matheson (2016) cite the experience of London during the 2012 Games. The number of visitors to London declined significantly in net terms during the months of July and August (when the event was staged) as compared to the previous year. This was graphically highlighted by the decision of London’s West End Theatres to close during this period. Many people who have no interest in the particular event will more than likely avoid the city or region in question. Indeed, local residents in many cases make a decision to go on holiday to a foreign destination to escape the perceived hassle and chaos that tends to happen. Examples of this include increased security operations (with a range of restrictions on parking and movement) and congestion in the key areas of the city.

31 2.9 · Criteria Used to Assess Bid Submissions for Mega and Major Sports Events

2.8.7

The White Elephant Effect

While mega events such as the Olympics and the World Cup can lead to the construction of state-of-the-art stadia, in many cases the perceived potential benefits suffer from exaggerated claims from the host committees and political leaders. What happens to these stadia 2–3 years after the event? The evidence is mixed. Coates and Humphreys (2008) researched this question and came to the conclusion that there was little empirical evidence to support many of the perceived economic benefits associated with new stadia and arenas. Examples include Athens, where the main stadium and many of the other arenas that featured in the Olympics in 2000 now lie derelict and in a major state of disrepair. The iconic “Bird’s Nest” stadium which received so many plaudits from designers has been rarely used since 2008 and has been partially converted into apartments. Conversely the athletes’ villages that were built for the Atlanta (1996) and Los Angeles (1984) games were converted into new dormitories for local universities. The stadium used in the London 2012 games was rented to one of the London-based premier league football teams: West Ham. It was re-designed in such a way as it could be converted back to an athletics stadium to enable it to stage major championships (it staged the World Athletics Championships in 2017). Glasgow, as part of its bid submission guaranteed that the athletes’ village would be transformed into social housing. It has taken far longer than originally stated by the bid committee to deliver on this promise.

2.8.8

 o Real Supporting Evidence N to Support the Perceived Benefits

Baade and Matheson (2016) reviewed the extant academic research on the economic impact of the Olympic Games. Their evalua-

tion of these studies does not generate much support for the view that major economic benefits automatically flow from the staging of mega-events in general and the Olympic Games in particular. Most of the studies which indicated some improvements such as the creation of new jobs and household consumption typically could best be described as modest in terms of their contribution to economic development.

2.9

 riteria Used to Assess Bid C Submissions for Mega and Major Sports Events

The value of sports properties which fall under these categories allied to the potential benefits that can accrue to the “winner” ensure that in theory a rigorous methodology is used to judge the merits (or otherwise) of submissions. Westerbeek et  al. (2002) undertook a major study which identified the key criteria used and the process involved in making bids for such events. The findings indicated that eight key success criteria were identified. They further divided the criteria into four that were deemed to be vital to the potential success of a bid and four that were important, playing a supporting role. 2.9.1

Vital Factors

55 Ability to organise events: (management expertise, sport-specific technical expertise, technical infrastructure, a track record of organising events and staff knowledge) 55 Political support: (government involvement and support for the bid and the process (financial, human resources and physical) financial and political stability of the city/country) 55 Infrastructure: (the necessary telecommunications, transport, road infrastructures, community support, necessary hotels and accommodation, stadia, and ability to deliver proposed stadia and arenas)

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Chapter 2 · Sport and Its Role and Contribution to Society and Economic Development

55 Existing facilities: pre-existence of established high quality facilities that have already been used to stage major sports events previously (including stadia and hotels and accommodation). This leaves the city/region in a better position to start construction early. 2.9.2

Supporting Factors

55 Communication and exposure: (reputation of the city/region, city-based marketing initiatives, communications and IT systems) 55 Accountability: (relationships events bidders have with event owner(s) and the public(s), transparency in terms of the financing of the bid and the required infrastructure, justifying to the public how their money is being spent) 55 Bid team composition: (the mixture of expertise on the bid team/committee and how they are perceived by relevant stakeholder, gender balance, sports experts such as former athletes, ambassadors, high level businesspeople and age and experience) 55 Relationship marketing: (the power and influence of people on the board such as political leaders, allowing access to key influencers and decision-makers and making friends with them in order to bolster credibility, trust and confidence). Since this study, arguably, the stakes involved in the bidding process and the resulting rewards to the successful bid committee have been raised even higher. The Internet, social media and digital marketing tools and technology have increased the level of exposure and coverage that the winner will be able to obtain. As noted earlier, media rights have also increased exponentially, with a portion of that filtering through to the host cities and countries. Environmental and ecological concerns have also emerged over the past 15  years. These issues are now assessed in relation to how the various bids factor these issues into their strategy. This is reflected in areas such as the design of new stadia and infrastructure.

2.9.3

 idding and Hosting Mega B Events: Losing Its Appeal

Event property owners such as FIFA, UEFA and the IOC have been the subject of intense criticism for the manner in which they have conducted the bidding process. Accusations of a lack of transparency, corruption and chicanery have been rife: most notably with the award of the 2022 World Cup to Qatar. Countries with questionable civil rights policies have staged major sports event. High profile personalities such as Sepp Blatter have had to resign or been removed from their posts as a consequence of their dubious practices. There is now evidence to indicate that the kudos resulting from staging mega sports events are being outweighed by a degree of worry and cynicism among prospective bidders. In 2015 Boston formally withdrew its bid to stage the 2024 Summer Olympics. This happened despite putting together a very simple and low-cost proposal. It relied on using existing stadia and developing temporary stands and arena. It identified a cost of $4.5 billion to organise the event with a further $6 billion allocated to improve existing infrastructure such as roads. It did not however engender any public support for the bid: a vociferous campaign run by citizens of the city indicated that the bid would be doomed. Budapest also pulled out of bidding for the 2024 games. Over 250,000 signatures from its citizens forced a referendum. The local authorities saw the writing on the wall and promptly pulled out. This cynicism has come about because of the plethora of bad publicity surrounding these events. Concerns about taxpayers being exposed to the debt arising after the event have also coloured judgement. Cities are effectively taken over by the event property-owner and some citizens become annoyed when they witness the effective “lock-down” as evidenced by road closures, restricted entry, over-zealous security and so on. When the senior administrators are escorted around in luxury limousines, the anger becomes even more pronounced! The notion that host cities have become the playgrounds for over-paid and corrupt administrators has gained traction in the media. This

33 2.10 · Conclusions

is compounded if the cities are left with white elephants, large costs to the taxpayers and little or no boost to the economy. Ethical concerns have also been expressed about the dangers arising from cities and countries located in developing economies, staging such events have also grabbed media attention. For instance, many of the stadia that were built for the 2014 World Cup lie idle and derelict. In response some form of reality has intruded into the mind-set of the sports entity holders. For instance, UEFA made some radical changes to its staging of the UEFA Euro Championships 2020. Instead of locating the finals in one country, or across two countries, it has elected to stage the event across thirteen cities in Europe. These range from Baku (Azerbaijan) to Copenhagen and Bucharest. The CEO argued that this allows cities and countries who could not afford to stage the full event to become actively involved. It is also a recognition that it may no longer be feasible to expect countries to cover the full costs and challenges of staging such events. It also addresses the possibility that in the future only wealthy cities and economies could act as hosts. 2.10  Conclusions

In this chapter we have considered the role that sports plays in society. Due to the positivity and excitement that typically surrounds this sector we have seen how it impacts on many parts of society, acting as a diversion for many from the mundaneness of everyday life. The relationship between sport and politics is very strong: political leaders and parties can see the way in which sport can be used to embed them in the community, promote their political agenda and increase their profile on the national and global stages. Funding for sport is an essential platform for sports development in society. We assessed the different models that are adopted to increase participation in sporting activities and address health issues. The higher (elite)

end of the spectrum, provides the appropriate environment and facilities to enable athletes to compete and be successful at international level and at the global championships in their area. Sports tourism has become a critical part of general tourism’s contribution to national economies. The global appeal of sport is evidenced in the numbers of fans prepared to travel to witness sports events. Also, growth areas such as participation sports attract large numbers of people to cities to compete in events such as marathons, skiing and orienteering. We considered the issue of bidding for and hosting mega/major sports events. For years many cities and countries pursued the acquisition of the rights to stage such events with great zeal, sometimes bordering on unethical behaviour. More recently, due to scandals and the ever-spiralling costs associated with such events, cities are re-appraising the benefits that might or might not accrue from such events. Overall, the sports sector has grown in importance in many countries over the past 10–20 years. This is due to a number of reasons but the move to a more business-like and professional approach to marketing sport has undoubtedly helped in this regard. Learning Outcomes 55 Sport in general plays a significant role in the economic development of a country and is a source of major employment 55 The value of sport can be seen in areas such as building national pride and national identity, escapism, increased tourism, bringing cultures together and acting as a conduit between people of different religions and political views 55 Culture is closely linked to sport, particularly in terms of how peoples’ attitudes, behaviours and perceptions influence their involvement in sport 55 Political leaders and parties view sport as a mechanism for increasing their profile and political agenda. This can

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Chapter 2 · Sport and Its Role and Contribution to Society and Economic Development

34

2

55

55

55

55

55

55

55

engender both positive and negative outcomes for societies Funding sport at elite and grass-roots level is critical in terms of sports development. The challenge is to capture a balance between public funding, householders paying for sports services and corporate involvement Sports tourism is one of the key categories of overall tourism strategy in many countries City-based marketing and branding is central to attracting visitors and sports tourism in general and hosting major sports events Bidding for the right to stage mega/ major sports events has led to unsavoury behaviour from the perspectives of the sports event owners and prospective bidders There is little evidence to suggest that cities and countries benefit greatly from hosting such events Planned or predicted legacies in particular, often do not emerge, leading to the “white elephant” effect Increasingly, sports property owners are looking at more innovative and less-­ costly ways to stage mega sports events such as using a multi-city approach.

2. Using TWO examples, assess the ways in which city-branding can capitalise on sport to build its brand equity. 3. Assess the extent to which you would agree with the view that schools and universities could play a much more proactive role in sports development at the elite end of the sports spectrum. 4. You are the Marketing Director for the sport of badminton. You have been asked by Sport UK to make a twenty-minute presentation to them justifying why your allocation of funding should not be withdrawn. Detail the issues you would cover in your presentation. 5. Culture does not remain static. It changes over time. Discuss the implications of this observation for sports. Select one sport and examine the impact in detail. 6. Traditional sport has been portrayed as male-dominated. To what extent do you agree with this view? Use examples to support your line of argument. 7. Some commentators argue that the benefits of staging mega sports events far outweigh any disadvantages. Examine the extent to which you would agree with this perception. Use a detailed case study to develop your point of view. 8. Evaluate the merits of adopting a multicity approach to staging mega sports events.

??End of Chapter Discussion Questions 1. Examine the role that sports “role models” play in encouraging individuals to participate in sport. Use a detailed example to support your point of view.

Appendix

Dubai: Back to the Future

Dubai is one of the emirates that make up the United Arab Emirates. It invested in sport back in the 1980s and was one of the first city states in the Gulf region to recognise the power of sport. To some extent it was forced on them. Dubai did not have oil reserves that their neighbouring Emirate Abu Dhabi enjoyed. The rulers of Dubai realised

that they needed to develop a long-term vision and identified sectors such as retailing and sports. They realised, that if developed and marketed properly, such investment would ­generate revenue streams to allow the city to prosper. Since the 1980s it has built up a track record for hosting and delivering a number of high-pro-

35 2.10 · Conclusions

file sports events and competitions. These include the Dubai Rugby Sevens, the World Cup of horse racing, Dubai Duty Free tennis championships (part of the ATP and WTA tours) and the DP World Tour golf event; better known as the finale of the “Race to Dubai”. This latter event is held towards the end of the calendar year. In recent years, it has established itself as a world class venue for sky diving and air sports competitions. In 2012 it hosted the FAI World Parachuting championships and in 2015, the FAI World Air Games. More recently it set itself the task of being an innovative city when it comes to staging sports events. While not pulling away from the traditional events and sports, it has adopted the view that it has to look to the future. As part of its look ahead to the future, it staged the first World Future Sports Games. This revolved around staging futuristic technology-based sports competitions. As befits the title of the games, the sports featured modern technology and artificial intelligence (AI). The events included the following: driverless car racing; robotic soccer; robotic running compe-

??Discussion Questions 1. Is there a danger that investing in unproven sports, such as the ones that featured in the World Futuristic Games, the rulers of Dubai will become removed from mainstream sports?

titions; drone racing; manned drone racing; robotics swimming; robotic table tennis; robotic wrestling; and a cybathon competition. It has bolstered its investment in staging sports events by investing heavily in the required infrastructure, e.g. Meydan racecourse and the Sheikh Mohammad bin Rashid stadium. This has a capacity of 60,000, is fully air-conditioned and its cradle-­like support allows for a range of facilities that operate underneath the structure. Other sports facilities include the Ned Al Sheba sports complex, which contains state-of-the-art indoor and outdoor training facilities including altitude acclimatisation chambers and leadingedge training pitches. Many of the leading European football teams visit there for pre-season and mid-season training. By integrating sport with retailing, and designing a modern infrastructure of hotels and entertainment, it can be argued that Dubai is up there with the best of the world cities that have used sport as a mechanism for differentiating and branding its product. (Compiled by the author from various sources on the Internet).

2. Assess the approaches to sport that have been employed by neighbouring Gulf States such as Bahrain, Qatar, Saudi Arabia and Abu Dhabi.

Good on Ya Sport

Australia’s sporting culture derives from its history as a former British colony. In the nineteenth century many convicts and prisoners were sent to this vast land as a form of punishment. It was seen, literally, as the end of the world. The arrivals had to make a go of things in their new setting and they quickly took up many of the sports that they were familiar with from the UK and Ireland. Sports like cricket and rugby took hold and what was later to become known as “Aussie Rules Football” evolved: mainly from rugby and Gaelic football (a native Irish sport).

Such sports were seen as vehicles for developing discipline and manliness in males and played a role in developing a civilised ­society. In contrast to the focus on gentlemen pursuing sport in the UK, the life of the colonists in the early decades was rough and tough. Brought up in such a violent environment, where drunkenness and gambling were common features of life, sport had to blend into this atmosphere. Australian sports tended to reflect this lifestyle and the colonist saw themselves as being much tougher and competitive than their counterparts back in the UK.

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Chapter 2 · Sport and Its Role and Contribution to Society and Economic Development

This environment instilled a strong sense of pride and being successful in sport was seen as a key indicator of such national identity. As the country developed, it was perhaps inevitable that Australian society began to “mirror” some of the behaviours from the UK. This was reflected in the class system. As the colonists evolved, some moved into higher income streams and a class structure evolved in equal measure. This was reflected in the development of schools to reflect these income levels. This applied to the area of sports also. Some sports, such as cricket, tennis, golf, rowing, yachting, hunting and horse racing, reflected the upperclass pursuits of the day. Like the UK, individuals fitting into this social class had more time and money for such pursuits. By contrast, the working classes worked 6 days a week and had little time for leisure activities. The era of amateurs and professionals also emerged in the Australian social system. The role of women in sport followed a similar line of development. Physical exertion was seen as not being compatible with being a women: perspiration and damage to reproductive systems were perceived as being major problems! Following a similar pattern of evolution, such outmoded thoughts and practices gradually faded away, although right up to the present day, some sports are associated more with the upper classes. However, like many other countries, major initiatives have addressed issues such as diversity, gender balance and equality, and participation rates. The indigenous population of Australia (the society that was there before the settlers arrived) had their own sporting pursuits. These involved foot running, climbing, object-throwing and water-based activities. These pursuits were survival-based with respect also for their tribal elders. Their pastimes reflected their close relationship to the land and water. Within the changing society that evolved throughout the nineteenth and twentieth centuries, it is clear that they had their own distinctive culture

which had to survive alongside the fast-­growing multi-cultural society that was evolving. The Yuendumu Games was established in 1962 to celebrate the cultural and sporting traditions of the indigenous population. Australian Rules Football and boxing are particular sports where we have seen numerous indigenous sportspeople participating in and enjoying success. In the case of boxing, for example, Lionel Rose became the World Bantamweight champion in 1968. Yvonne Goolagong enjoyed much success also in the sport of tennis. The multi-cultural aspect of Australian society has been ever-present since the arrival of the early settlers. This was manifested in the arrival of immigrants from a range of European countries such as Italy, Greece, Serbia, Croatia and so on. More recently, in the last 50 years or so, the population of Australia has increased with arrivals from Asian countries such as Malaysia, Vietnam, Taiwan and China. Twenty-five per cent of the Australian population were born overseas. Over forty per cent of the population have at least one parent that was born overseas. The multi-cultural environment has helped to integrate different cultures and introduced sports activities such as tai chi, while sports, such as badminton, have grown in popularity as a consequence of its popularity within the Asian communities. The climate of Australia also contributes to the stereotype of it being an outdoor society, where sport and sporting activities play a significant role in everyday life. The perception that Australia is in some way remote from other major centres of population in Europe and North America has highlighted the importance of being successful in sport and thus, being in a position to show the rest of the world what Australia and Australians are all about. This is typically captured in the sport of cricket, where the traditional and long-­established Test Series with

37 References

England tends to generate much debate and argument. The rivalry is enhanced by the perceived relationship between the Colony and the Empire b ­ uilders. Until the 1990s, football (soccer) trailed in popularity by comparison to cricket, AFL and rugby. However, the national team made a significant breakthrough in the 2002 World Cup. Arguably, the build-up to this breakthrough

??Discussion Questions 1. Assess the dangers of using stereotypes to describe a particular sporting culture. 2. How does the Australian sporting culture differ from the sporting culture in your country?

References Amara, M. 2008. The Muslim world in the global sporting arena. Brown Journal of World Affairs 14 (2): 67–76. Baade, Robert A., and Victor A.  Matheson. 2016. Goiing for the gold: The economics of the Olympics. Journal of Economic Perspectives 30 (2): 201–218. Chadwick, Simon. 2017. The strategy behind a smile. Sport Business International: 69–70. Coakley, Jay, and Elizabeth Pike. 2009. Sport in society: Issues and challenges. McGraw-Hill. London: Boston Coates, Dennis, and Brad R.  Humphreys. 2008. Do economists reach a conclusion on subsidies for sports franchises, stadiums and mega-events? Econ Journal Watch 5 (3): 294–315. De Bosscher, Veerle, Simon Shibli, Hans Westerbrook, and Maarten Van Bottenburg. 2015. Successfulelite sports policies: An international comparison of the sports policy factors leading to international sporting success (SPLISS 2.0). Meyer and Meyer Sport. De Bosscher, V., P.  Sotiriadou, and Van Bottenburg. 2013. Scrutinising the sport pyramid metaphor: An examination of the relationships between elite success and mass participation in Flanders. International Journal of Sports Policy and Politics 5 (3): 319–339. Devine, Adrian, Emily Boyle, and Stephen Boyd. 2011. Towards a theory of collaborative advantage for the sports tourism policy arena. International Journal of Public Sector Management 24 (1): 23–41. EU. 2012. A study of the contribution of sport to economic growth and development in the EU. SportEconAustria (SpEA: Project Lead). November. Available at http://ec.­europa.­eu/assets/

was grounded in the multi-cultural involvement of immigrants from “soccer-loving” countries such as Italy, Croatia, Greece and the UK. The A League – the local professional football league, has continued to grow in popularity and increasingly attracts more viewers and school-children to take up football. (Sources: Developed by the author from different sources on the Internet).

eac/sport/library/studies/study-contribution-spors-­ economic-growth-final-rpt.­pdf. Eurostrategies. 2011. Study on the funding of grassroots sports in the EU.  In Eurostrategies Amnyos. Koln: CDES, Deutsche Sporthochschule. Foley, Malcolm, David McGillivray, and Gayle McPherson. 2012. Policy pragmatism: Qatar and the global events circuit. International Journal of Event and Festival Management 3 (1): 101–115. Green, Mick. 2006. From “sports for all” to “not about sports at all”. European Sports Management Quarterly 6 (3): 117–238. Herstein, Ram, and Ron Berger. 2013. Much more than sports: Sports events as stimuli for city re-branding. Journal of Business Strategy 34 (2): 38–44. Hofstede, G. 1994. Culture and organisations: Software of the mind. London: Harper/Collins Business. Holt, R. 1989. Sport and the British. A modern history. Oxford: Oxford University Press. Hong, F. 2006. Sport, social transformation and political independence: The Asian Games. European Consortium for Political Research. Joint Session, Intercollege. Available at http://ecpr.­eu/Filestore/PaperProposals/ b3448a63-71fc-4550-bdcb-f8aab08dbcd7.­ppdf accessed September 30th 2017. Ingle, Sean. 2017. Does UK funding work: How many medals do Team GB really need? The Guardian. February 6th. Kolatch, J. 2007. Gulf course: Doha, Qatar, pursues the 2016 Olympics. The Wall Street Journal, December. Available at www.­opinionjournal.­com/ la/?id=110010980. Accessed 13 Oct 2017. Kressman, Jeremy. 2016. The impact of sports tourism. Digital Marketing News. Available at: https://skift.­ com/2016/06/17/the-impact-of-sports-tourism-digital-marketing-news-this-week/. Accessed 13 Oct 2017. Moilanen, Teemu. 2015. Challenges of city branding: A comparative study of 10 European cities. Place Branding and Public Diplomacy 11 (3): 216–225. Peric, Marko. 2015. Managing sports experiences in the context of tourism. UTMS Journal of Economics 6 (1): 85–97. Porter, Michael E., and Mark R. Kramer. 2011. Creating shared value: How to reinvent capitalism and

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unleash a wave of innovation and growth. Harvard stream/handle/1874/305755/Van_Bottenburg_2011_ Business Review: 4–17. Why_are_the_European_and_American_sports_ Preuss, Holger. 2004. The economics of staging the worlds_so_different.­pdf ?sequence=1. Accessed Oct Olympic games. London: Edward Elgar. 9 2017. Roche, Sarah, Deborah F.  Spake, and Mathew joseph. Westerbeek, Hans M., Paul Turner, and Lynley 2013. A model of sporting event tourism as economic Ingerson. 2002. Key factors in bidding for hallmark development. Sport, Business and Management: An sporting events. International Marketing Review 19 International Journal. 3 (2): 147–157. (3): 303–322. Spencer-Oatey, H. 2012. What is culture? A compilation White paper. 2017. Chinese sports industry trends and of quotations”. GlobalPad Core Concepts. popularity of sports consumption in China as Available at http://www.­warwick.­ac.­uk/globalpadreflected by Media. Yutang Sports. 13th April. intercultural. Available at http://www.­sportaccordconvention.­ Van Bottenburg, Maarten. 2011. Why are European and com/sites/default/files/page/file/White%20Paper%20 American sports worlds so different? Path-­ Yutang%20Sports%20for%20SAC2017.­pdf. dependence in the European and American sports Zimbalist, Andrew. 2010. Is it worth it? Finance & history. Available at https://dspace.­library.­uu.­nl/bitDevelopment: 11.

39

Sports Governance Contents 3.1

Introduction – 40

3.2

Governance Defined – 41

3.3

Governance in the Context of the Sports Sector – 42

3.4

Role and Remit of Sports Governance – 43

3.4.1

Exercise – 44

3.5

Characteristics of Sports Organisations – 45

3.6

Key Criteria for Effective Sports Governance – 48

3.6.1

Accountability, Transparency and Independent Monitoring – 49 Exercise – 49 Transparency – 49

3.6.2 3.6.3

3.7

Global Perspectives on the Governance of Sport – 53

3.7.1

3.7.3 3.7.4

T he Changing Influence of Anglo/American and European Cultures on Sport Globally – 54 Impact of Different Cultures and Behaviours on Sports Governance – 54 The Legal Response – 56 Exercise – 57

3.8

A Framework for Effective Governance – 57

3.9

Conclusions – 58

3.7.2

Appendix – 60 References – 72

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_3) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_3

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Chapter 3 · Sports Governance

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nnLearning Objectives

3

On completion of this chapter you should be in a position to address the following objectives: 55 To understand the overall role of governance in organisations and its relevance to the sports sector 55 To assess the roles and responsibilities of key decision-makers in sports organisations with respect to governance 55 To evaluate the scope and remit of senior management and administration 55 To understand the factors that have led to sports governance moving to the top of the agenda for sports organisations 55 To identify the characteristics of the sports sector and their impact on governance 55 To assess the relationships between senior management and administrators and the key stakeholders 55 To assess the implications that arise from running elite sports as a business 55 To identify and assess the criteria for effective sports governance 55 To evaluate the challenges facing senior management with respect to governance.

3.1

Introduction

As we have noted in earlier chapters, the world of global sport has changed irrevocably over the past couple of decades. At the elite or top level in particular, sport has witnessed a transformation from an activity which has been run with an emphasis on its purity and participation to an area which is run as a business. We explore the broader implications of this development as a running theme within the book. However, one of the main consequences of this shift toward a “business” or “business-like” approach to managing and marketing sport has been a focus on how such sports are governed. As clubs, leagues, events, and individuals seek greater success and profitability, it is inevitable that we witness an infiltration of activities and behaviour which is unethical or

damaging to the particular sport, organisation or activity. Sports organisations have moved away from utilising enthusiastic and well-meaning “amateurs” running the sport, to recruiting individuals who have proven themselves in the harsh commercial world. It is inevitable they will bring procedures and practices to bear on how they run sports organisations. For many sports organisations this has led to a focus on strategies such as “building the brand”, widening revenue streams, becoming more clinical in negotiating with stakeholders, such as the media, over rights and pursuing sponsorship deals more aggressively. In their quest for greater profitability many sports organisations have been accused of unethical behaviour. In pursuing a more commercial and aggressive strategy, critics argue that they have potentially destroyed the purity and innocence of sport and have created a selfish environment where key stakeholders such as fans have suffered as a consequence. We will explore this accusation later. One of the “by-products” of commercialisation and a focus on profit is that of greed. We can witness this in the behaviour of individual competitors, senior management of clubs and organisations and indeed governments as all pursue the ultimate goal of success. This is evidenced by issues such as corruption, doping, match-fixing and gambling. We assess the implications that arise from these activities on the governance of sport in this chapter. In the early sections we consider the role and remit of sports governance and recognise that it impacts directly on how a particular organisation is directed and controlled. We consider some cases to demonstrate the effects of good and bad governance. We assess the characteristics of sports organisations and how, arguably, it is more difficult to govern sport than it is to govern ­traditional business organisations. Later in the chapter we evaluate the relationships between sports organisations and key stakeholders such as sponsors, media, governments and sports fans.

41 3.2 · Governance Defined

We examine the criteria that lead to effective sports governance. We highlight the importance of creating a climate and mode of operation which is built around transparency and accountability and scrutiny to the relevant stakeholders. Finally, we discuss the future challenges facing sports administrators and marketers. 3.2

Governance Defined

When we use the term “governance” we are referring to how an organisation is owned, controlled and managed. We should acknowledge that this is a complex and confusing area. For instance, Mallin (2013) notes that it includes “legal, cultural, ownership and other structural differences” (p 15). Therefore, it would be dangerous to assume that a standard “one size fits all” approach to designing and implementing a governance system and approach will work globally. We should be cognisant of these differences. While accepting that patently unethical or sharp practices are not acceptable, everything is contextualised within the cultural, social and legal framework that pertains in different countries or regions of the world. The ASX Corporate Governance Council defines governance as “the framework of rules and relationship, systems and processes within and by which authority is exercised and controlled within corporations”. (2014, p 3). Consistent with the growth in emphasis placed on the concept of good corporate governance, is the emphasis on viewing any organisation (be it profit or not-for-profit) as an entity that should behave and operate on the rationale that it should be a good corporate citizen. This extends across areas such as working for the good of the community, not damaging the environment and complying with the rules and regulations as set out by the respective policy-makers. This philosophy argues that the sole objective of any for-profit organisation is not just to seek profit. Rather it should do so within the realms of operating within and respecting societal values. Therefore, such organisations have a wider set of objectives besides profitability.

Increasingly organisations are being held to account for their actions and behaviour. When they appear to deviate away from what is considered “acceptable”, they attract due opprobrium from the media. Over the past decade we have witnessed many instances of organisations that have “over-stepped” the mark. For instance, some banks operating in the financial sector have been prosecuted for misleading customers and selling financial products that are not appropriate for them. It is a moot point as to whether such behaviour has been sufficiently punished or sanctioned. However, the net consequence is that organisations across the business and non-business spectrum are being increasingly held accountable for their actions and behaviour. In a world where the media operates on a constant “24-7” principle, it is very difficult to sustain unethical or socially irresponsible behaviour. Organisations increasingly have to focus on issues such as transparency and accountability. As we shall see later in this chapter, both are the cornerstones of effective governance. In addition to addressing social responsibility or corporate citizenship, organisations are obliged to protect the interests of their customers and shareholders. The stewardship of the organisation therefore should reflect this in its approach to developing overall business and marketing strategy. For instance, taking undue risks with investor’s money is a good example of where a company can damage the stakeholder in the longer term while pursuing the consummate urge to derive more and more profit in a particular area. Policy-makers globally are also introducing a range of legislative measures to enable them to take legal action against organisations who breach ethical and social responsibility boundaries. Admittedly this varies across the different regions and again reinforces the point that no standard set of measures is applicable in all cases. Apart from such measures addressing issues of accountability and transparency, they also address the issue of providing confidence to the general public and customers. Whether this translates to reality is question-

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Chapter 3 · Sports Governance

able: many people have a healthy cynicism for the ways in which “big business” operate and are dubious about some of the compliance measures that have been introduced. Other key issues such as gender representation are also taking up a higher degree of significance within the context of corporate governance. For instance, are women sufficiently represented on Boards of Directors? Are specific interest groups sufficiently represented? What about ethnic representation? These are big issues, and as we shall see later this chapter, have major significance for the governance of sport. In summary, governance is all about providing direction, leadership, control and compliance for an organisation. Typically, a Board of Directors takes responsibility for providing this direction and leadership and they employ executives to take the organisation forward by developing strategies and procedures that follow the general vision and direction. The absence of a coherent approach to governance can lead to a “vicious spiral”; where the organisation loses focus, implements policies that are at odds with acceptable behaviour and where it risks alienation from its key target markets and stakeholders. It is analogous to a ship without a rudder: it will flounder around in the sea and ultimately disintegrate. 3.3

Governance in the Context of the Sports Sector

Our focus in this book is to examine the key developments and decision areas that impact on effective sports marketing. As mentioned in the introduction, governance is one area that has emerged over the past couple of decades and arguably is still weak, variable and tentative in terms of how sports organisations face up to the inevitable challenges that it brings. We have witnessed, at the elite level of most sports, a shift away from the traditional approach to governing sport to a more modern one, which is built around commercialisation and monetisation of assets. This is

exemplified in the reduction in influence and role of the “amateur enthusiasts” who traditionally have been at the top in most sports at elite level. They have been replaced by “hard-­ nosed” commercial businesspeople who have attempted to drive the respective sport forward by employing principles and procedures that are more typical of how commercial operations are run. This change has varied in intensity and degree depending on the sport and on the geographic location. It can be argued that the North American sports of NFL, baseball and basketball were pioneers in the field of monetisation and capitalising on the inherent value attached to the sports. This was best exemplified in their deals with media broadcasters. In Europe the English Premier League since its inception and re-design of the original First Division in 1992, has also maximised its profits. Again, this is demonstrated in the value of successive domestic and international media rights deals. Individual clubs have also invested heavily in building the international brand on the global basis. This has permeated through to other football leagues in Europe such as La Liga and Serie A. Sports such as tennis, rugby, cricket and basketball have also recruited people from industry to monetise their respective businesses. Governments have also sought to raise participation levels in sport in order to address social and health issues such as obesity. More professional and systemic approaches have also been introduced by governments to use sport as a mechanism to promote nationalism; mainly through winning medals at hallmark events. They have also employed more and more individuals from the commercial sector to heighten the profile of sport at elite level and also in the lower tiers such as the promotion of mass participation sports events. We have witnessed the proliferation of marriages between commercialisation and volunteerism with the emphasis increasingly on commercialisation.

43 3.4 · Role and Remit of Sports Governance

3.4

 ole and Remit of Sports R Governance

The governance of any sport generally falls within the remit of the board of directors. The board is made up of individuals who have been elected to represent the interests of the shareholders or constituent members of that sporting body or organisation. Shilbury et al. (2013) note that “to govern is to steer….and to make decisions that are consequential, strategic and impactful, usually on behalf of others” (p  363). The board sets the strategic agenda for the organisation and defends the ethos and values of the sport in such a way as to protect the interests of the key sports stakeholders. They can be identified as: fans, athletes, coaches and infrastructure, sponsors, media and government (where relevant). Ferkins and Shilbury acknowledge that the inter-relationships between the various actors in this process can be complex and confusing. For one thing there is certainty that stakeholders will wield different levels of influence around issues such as power, legitimacy and urgency (Ferkins and Shilbury 2015). Thus, we have situations where there are multiple stakeholders with different objectives that do not always coalesce around agreed agendas. This can lead to debate about who the board actually represents? The obvious answer is the members who see themselves as the owners of the sports organisation. However, as we have seen in many cases; shifting agendas and power leverage can lead to situations where the so-called primary stakeholders (Clarkson 1994) identified as individuals or clubs that are critical towards the survival of the sport, may be superseded by secondary stakeholders (who can influence the direction of the sport but are not deemed to be essential). A good example here is the pervading and growing influence of media on sports. Broadcasters such as ESPN, Star Sports and Sky have invested so much in particular sports that they can clearly put pressure on executives and directors to make decisions that suit their agendas. We see this in the scheduling of

sports events and games to meet the needs of broadcasting to key markets at times that are appropriate for that time-zone. Arguably this may not represent the best interests of the primary stakeholder: the fan. In this case it can cause hardship and disruption for fans as they have to travel to games at unsuitable times. The media can also put pressure on the guardians/directors of the sport to change the nature of the sport in order to make the product more attractive for the global TV/­tablet/ second screening viewer. This potentially can affect the duration of the game or simplifying the rules. Currently, the organisers of the male and female tennis tours are contemplating reducing the length of a game in order to potentially make it more exciting. Conversely, the directors of the four “Grand Slam” events are under pressure to increase the number of sets that women play – from the best of three to the best of five. This has been driven by the fact that they currently receive equal prize money to their male equivalents. This raises a dilemma. Clearly, broadcasters can bring in large amounts of money for the governing bodies. This can then be spent and redistributed in such a way as to improve the quality of coaching, facilities, general infrastructure and raise the profile of the sport (thus attracting more lucrative sponsorship deals). This has to be balanced against any threat (potential or otherwise) to the values of the sport. Such developments and pressures reflect the complexity and challenging nature of sports governance. If values are compromised or decisions are made that have a potentially negative impact on primary stakeholders then it can be argued that governing bodies are not operating in their best interests. We can identify the areas that the board of directors’ address in the sports context. We should note that at elite levels of sport, the board will typically employ a ­ number of senior executives to drive the strategic vision of the sport forward and implement strategies that follow these objectives. This can generate debate and controversy as well. Is senior management there to implement and follow the instructions of the board?

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Do they exist to set the agenda for the future direction of the sport? What levels of accountability to the board (together with checking/ monitoring mechanisms) exist? Different views are put forward on this topic. For instance, it can be argued that senior management are there to implement the vision of the board. In other words, the board of directors provides the “brains” in the form of the strategic direction, and management provide the “brawn” in so far as they are tasked with making sure that the implementation of strategies is consistent with these objectives. The contrary view would suggest that the senior management are recruited to take the sport/club/organisation forward and must be given sufficient leeway by the board to initiate strategies that will move the organisation forward into the longer-term. This tends to be the typical approach found in the traditional commercial sector. If the CEO or the senior strategy team in this case introduce radical change that is clearly at odds with the long-­ term success of a business, they will quickly be removed from office. This raises questions about the attitude of the board to their relationship with senior executives/management. Should they be paternalistic and conciliatory? Should they adopt an autocratic and dictatorial stance? Much will depend on the make-up of the board. Are they appointed on the basis of skills and capabilities that they bring to the sport? Are they appointed because of patronage or reward for long-term service to the sport? Are they democratically elected? Are they representative of the overall membership of the organisation? Are they representative of the demographic make-up of members? Do they represent vested interests? The answer to these questions is that old perennial response: it depends! Most sports bodies display some of the aforementioned features. No organisation is perfect in terms of how it is constituted and certainly all sports bodies embody weaknesses and deficiencies. If an organisation veers too much toward the extreme end of the spectrum with regard to its relationship with senior executives then it is likely to create major problems that ulti-

mately can severely damage the sport. A sudden movement away from one extreme to the other can also lead to problems of a long-term nature. If the board is very conservative and made up of members that are appointed on the basis of patronage and entitlement and not on capability or skills, then a sudden shift in direction by a new CEO can create very difficult working relationships and lead to negative consequences for the sport. 3.4.1

Exercise

?? Identify a sports body that has gone through a major change in direction recently and assess the relationship between the governing body and the senior executive during this process of change.

We can make the observation that the board of directors has to tread a fine line between allowing the senior management team and CEO to drive forward change (where appropriate) and long-term initiative and monitoring the initiatives in such a way as they do not threaten the key values and ethos of the sport. Both extremes (a dictatorial and one-sided approach or a loosely monitored one) can lead to irreconcilable differences in the relationships between both parties. The broad areas which need to be covered in the context of sports governance are summarised below: 55 Developing, maintaining and changing (where appropriate or necessary) the rules and regulations of the sport 55 The development of the sport, both locally, regionally, nationally and globally 55 Developing the facilities, coaching and academies to improve the quality of athletes competing in the event from grass-­ roots up to elite levels 55 To initiate, maintain and work with existing sponsors 55 To seek new potential sponsors 55 To liaise and network with key stakeholders such as the media, governments and politicians 55 To set and oversee policy on key issues such as gender balance and representation

45 3.5 · Characteristics of Sports Organisations

55 To set and oversee policy on the issue of diversity (participation levels in different categories, disability) and within areas of low economic growth and unemployment 55 To develop and implement robust, transparent policies and procedures with respect to cheating (incorporating doping and misuse of technology) 55 To develop and implement robust, transparent policies and procedures with respect to issues such as match-fixing and illicit betting 55 To develop policies and procedures for negotiating media rights for their specific assets 55 To arbitrate on matters of dispute within the sport 55 To implement the rules and regulations in an equitable and transparent manner 55 To create and implement policies, procedures and measures that allow the board and its senior management to be held accountable to the appropriate stakeholders 55 To develop systems and procedures for awarding the right to hold hallmark events for the sport.

1.

2.

The board of directors or appointed guardians of the particular sporting body, together with the executive team are responsible for designing and implementing policies, procedures and strategies that address the core values and ethos of the sport, recognising that the sport or organisation in question has to be responsive to the changing environment within which it operates. 3.5

Characteristics of Sports Organisations

The question has to be asked as to whether the characteristics of sports bodies means that it is more difficult or easier to introduce and implement effective governance? It is not an easy question to answer but we will firstly identify the characteristics of sport which may make it different from traditional corporations and how they operate.

3.

The nature of sport. A key outcome in sport is that of uncertainty. You cannot predict with one hundred per cent accuracy the outcome of a particular event or competition. Contrast that with the case of a car manufacturer which churns out hundreds of thousands of cars annually with no doubts about their performance capabilities. This poses challenges for sports administrators in terms of planning for the future; in an environment which is built around uncertainty. Flawed financial models. Most businesses that I am familiar with, operate for profit and are driven by the need to manage financial resources tightly in order to generate acceptable sales, market share and profits for their owners or shareholders. While poor governance can lead to risky decisions regarding investments and the squandering of resources, most corporations attempt to follow a logical strategy in terms of managing finances. However, in sport we see evidence that organisations and clubs that are run by people with commercial expertise and experience, do not follow such basic principles. Many football clubs in the English Premier League for instance generate manifestly large sums of cash. However, in the quest for success many of them blow the cash away on vastly inflated salaries and transfer fees. Despite the vast amount of money generated by the league and the clubs, many of them are running at large losses. Quite simply they do not follow logical business principles. Emotion (driven by the desire for success in the form of trophies) and so on, overcomes any qualms about managing the financial resources. Composition of the Board. While we recognise that there is an inexorable shift in composition of the board or senior administrators from volunteers and enthusiasts to commercially minded people, in many cases such boards do not necessarily reflect the reality of what is needed in order to run the sport properly.

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5.

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Chapter 3 · Sports Governance

How many boards of sporting bodies are dominated by middle-aged males? I would argue, too many. These people may bring some skills and expertise to the table but do not necessarily reflect the needs, desires and expectations of their key stakeholders (be they fans, participants and so on). Sports such as golf are a good example of the dominance of middle-aged males, where there is a serious need to reflect the views of young people or females. Lack of due diligence. In the quest to attract more investment and cash into the club, many sports bodies do not carry out the extensive due diligence that is more commonly applied in traditional business operations. An underlying mantra of this text is that “sport is a performance-driven business”. This explicitly recognises the importance of being successful. Many sports are also cash businesses. They require large volumes of money to move the product forward. We have witnessed many scandals about fraudulent individuals investing in clubs and sporting bodies for their own individual benefit. A focus on the “now”: not the future. The quest for success in sport is often ephemeral and short-lived. As mentioned previously, clubs and organisations are often tempted to spend vast amounts of money on players in order to “buy success”. Not surprisingly it does not necessarily lead to success in the form of trophies. In the English Premier League for instance it has not been unknown for clubs to effectively take out a mortgage on season ticket sales for a ten-year period in order to generate cash to enable them to buy players. This is a classic example of the focusing on the “now”. It invites high levels of risk and potentially damages the future viability of the club. Good business common sense can go out the window with such practices. Seeking out and doing deals with unsuitable sponsors. With the ever-­ increasing need for cash for many sports organisations many commentators query the suitability of certain categories of sponsors. For instance, sports such as rugby and

7.

8.

9.

football increasingly become dependent on sponsors from the alcohol and gambling industries. It is not our role here necessarily to debate the merits or otherwise of such practices. However, it can be used as an indication of the dependency of sport on such corporations. Relationships between governments, policymakers and sporting bodies. This is a grey area. However, such interfacing has implications for governance. Governments see sport as a mechanism to promote their agenda globally. The Olympics is possibly the most valuable sports brand world-­ wide. The staging of such an event can generate great prestige and publicity for governments. Many Olympic Games have been tainted by the stench of corruption in the context of governments and political leaders using the event to promote a political ideology or an attempt to change the perception of that country’s politics world-wide. This has led to many accusations of “buying off ” individual Olympic members to get their vote. We have seen this also with respect to the staging of the World Cup. Emotion. The sports sector is characterised by emotion, passion, excitement and experiences. When combined, they can challenge logical decision-making and behaviour. For instance, it can lead to the condoning of unethical behaviour in the form of cheating, match-fixing and doping. It can lead to the apparently bizarre situation where the administrators of a particular sport may be willing to “bury their heads in the sand” and ignore instances of cheating that have been proven in the test laboratory. This is exemplified in the sport of cycling where instances of systemic doping have been ignored because the administrators feared that ensuing bad publicity would damage the overall image of the sport. It is strongly suspected that this is why Lance Armstrong was allowed to continue competing (and winning) numerous editions of the Tour de France. Accountability. This again is a grey area. Some large and powerful sports bodies

47 3.5 · Characteristics of Sports Organisations

have only recently had to face up to the question of who they actually answer to. In traditional businesses of course, senior management and boards of directors are answerable to their owners or shareholders. They are also answerable in a less direct way to the financial media who pass judgement on their relative performances. However, in the case of the sports sector it might be dangerous to assume that senior administrators are answerable to such a clear and transparent extent. A typical case in point in recent years is the case of FIFA – the ruling body for football (soccer) world-wide. Many of us are familiar with scandals of an ongoing nature which came to the fore in 2015 when a number of senior administrators were arrested in Switzerland and the Federal Bureau of Investigation in the USA (FBI) carried out a detailed investigation. We discuss various aspects of the scandal in a case study later in this chapter. However, the most revealing aspect of the investigations was the issue of accountability. FIFA was not accountable to any particular government body or agency. Although headquartered in Switzerland, its President, Sepp Blatter operated within closed surroundings and a very narrow body of individuals, all within the context of the FIFA organisation. He was able to dispense largesse in the form of cash to delegates from a number of countries who were members of FIFA.  Ostensibly this could be interpreted as providing finance to encourage and develop football in deprived and under-developed regions and countries of the world. Investigations appeared to indicate that it was a non-toosophisticated way of establishing influence and control over key delegates. It is no wonder that someone like Blatter arguably lasted so long as the President of such an organisation. There can be no doubt that Blatter left a lasting legacy on FIFA and did much to explode the issue of effective governance within the sports sector. 10. Global business versus non-­profit. Many sports bodies and organisations such as

FIFA, the International Olympic Council (IOC) and the National Basketball Association (NBA) among others, pursue a virulently commercial, business-driven strategy. However, many such sporting institutions are recognised as being nonprofit by government agencies. This has implications for how they are perceived – particularly in terms of transparency and accountability. This raises a dilemma in terms of how they operate their business. It also raises questions about the way in which they are governed. Self-­regulated, closed and insular bodies do not exactly stimulate an open and transparent environment. This can create opportunities for obfuscation and a lack of clarity in their strategic direction. This makes it difficult for independent observers to accurately track their performance. In turn this can lead to breaches in behaviour that would be more quickly recognised and held to account in traditional commercial operations. In summary, there are a number of features of the sports sector which might indicate that it is arguably more difficult to address the issue of sports governance than might be the case with traditional business corporations. Perhaps the picture is not that simple. For instance, Haigh (2016) in an assessment of the way that sport is run and administered in Australia makes the following observation:

»» “What

we’re presented with in Australian sports governance, then is a curious mix of shiny corporatism and altruistic volunteerism, cosy privilege and noblesse oblige (pp 3–4)”.

This quote articulates the dilemma facing the issue of governance in the sports context. While organisations within many tiers of sport (from grass-roots to elite level) continue to embrace a more professional and commercially minded approach to strategy and focus, they still retain some of the traditional values and practices of an earlier era.

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Chapter 3 · Sports Governance

 ey Criteria for Effective Sports K Governance

We have examined the specific characteristics of the sports sector. This suggests that it has some influences and drivers that make it different from the traditional corporations operating in the corporate world. In this section we consider the criteria that shape an environment where governance can be applied in a coherent and relevant manner. The overriding message so far is that the sports sector has arrived rather late in the context of fully embracing the concept of governance. To some extent this can be expected. Esam (2016) argues that bad governance has been more readily identified with traditional businesses rather than within sports bodies and organisations. He bases this view on the perception held by many people that sport is all about purity and integrity. As we have noted this rather “rose-tinted” interpretation has been dented in recent years by numerous scandals across sports as diverse as cycling, chess, athletics and fencing. Rhodes (1997) notes that sports organisations “tend to act in self-organising, interorganisational networks characterised by interdependence, resource-exchange, rules of the game and significant autonomy from the state” (p 23). This partially reinforces the view that many such institutions operate in a different way to the more regulated and accountable traditional commercial corporations; particularly with respect to accountability. The level of independence would seem to be higher in the case of the sports sector. However, we need to be somewhat cautious here. The raft of scandals that have hit many sports, combined with more extensive and penetrating; not to say cynical media coverage, has focused the spotlight on sports organisations. This in turn, has led to a clamour for governments and policy-makers to adopt a more interventionist approach. This is particularly so in the perception that sports bodies have traditionally operated in a self-regulated manner: where overall governance is driven by the internal senior members of the institution and where any problems

or scandals are dealt with from within. Rhode’s view also does not take into account the pervading influence of social media, which was in its infancy at the time of the publication of his book. Critics are forcing policy-makers to question the efficacy of this approach. This argument is based on the view that if you allow “self-policing” by internal members, you create a situation where issues are covered up or ignored (in the worst-case scenario). This ends up with bad decision-making and a failure to address the fundamental problems. While nobody might argue for an environment where a sports organisation has to subjugate its processes, procedures and strategy in totality for approval to a state agency (one end of the spectrum), it is difficult to countenance an argument which is based on the view that it should operate in a fully autonomous manner. If a sports body is a recipient of public funding then the latter view is virtually impossible to sustain. Mehta (2017) provides some interesting observations on this question of autonomy. He notes that the traditional model of self-­ regulation allows for a degree of flexibility and argues that bodies such as the IOC have addressed criticism and introduced changes. However, other sports bodies have been accused of not taking appropriate measures or introducing robust processes for dealing with systemic scandals. For instance, the International Association of Athletic Federations (IAAF) has been heavily criticised for the way in which it has dealt with doping and cheating in that sport. At state level, the Russian Athletics Federation was banned from the 2016 Olympics after being found guilty of employing a systemic approach to doping its athletes. The issue of political intervention in the running of sport opens up a number of potentially sensitive and controversial questions. For instance, it poses the risk of governments attempting to manipulate a sports body in such a way as to ensure that favoured individuals acquire senior and influential positions. They could also potentially refuse to accept individuals elected by the sports body in question.

49 3.6 · Key Criteria for Effective Sports Governance

It is difficult to argue for a total rejection of the role of government in sport however. Where serious instances of fraud, corruption and systemic cheating are taking place, arguably the government has a part to play in addressing such issues  – particularly where the ethos and values of the sport are being called into question. Clearly, where sports bodies are receiving publicly funded finance from the taxpayer it can be strongly argued that the government directly or indirectly (through an independent body) should have some degree of oversight of the way in which that sport is being governed. 3.6.1

Accountability, Transparency and Independent Monitoring

In this section we explore more fully the key principles of effective sports governance. The preceding discussion implies that a sports organisation should meet the key criteria of accountability and transparency. Also, in order to ensure such an open environment, it can be argued (though not necessarily accepted by everybody) that there should be some form of external and independent monitoring of the processes and procedures to be implemented. Accountability is central to any attempt to formulate and design effective governance policy. Every individual in society is accountable for their behaviour and has to adhere to the basic laws of the country or region. Failure to do so is likely to lead to some form of punishment or sanction. Likewise, in business, corporations that fail to behave in the acceptable way are also likely to suffer the consequences. In practice, if the relevant legislation is not effectively policed or implemented then the likelihood is that unethical behaviour will occur. Grant and Keohane (2005) put forward a set of criteria which can be helpful in understanding the issue of accountability. Although written from the perspective of the political scene, they can be applied to any industry sector; including sport. Pielke (2013) has applied these criteria to the case of FIFA to highlight

the lack of accountability that can occur in major sports bodies. We can see how a sports organisation such as FIFA measures up on the issue of accountability (. Table 3.1). Only two mechanisms would appear to suggest that FIFA has some form of specific accountability. In the case of legal issues, the Swiss legal system (the country where FIFA is headquartered) could in theory act as a control mechanism. However, in practice, the Swiss authorities grant protection against internal and external examination and they have been reluctant to prosecute FIFA for any alleged wrongdoing. We might also expect existing sponsors to take some form of sanction as a result of bad publicity. Again, it would appear as though many of them have backed away from the ultimate sanction of cancelling contracts with offending institutions. We should bear in mind that this article was published before the major scandal surrounding FIFA emerged in 2015. What can we learn from this case? The obvious implication is that in situations where sports bodies and institutions are largely free from the typical accountability criteria it becomes a breeding ground for corruption and other nefarious activities. It can also be argued that it creates a mood of arrogance and insularity which makes it extremely difficult to drive change in the ethos and corporate culture.  

3.6.2

Exercise

??Making use of material that is available on the Internet, critically assess how FIFA has addressed its problems since the 2015 scandal.

3.6.3

Transparency

The issue of transparency is another central platform of effective governance in general and sports governance in particular. As we have noted, the number of scandals surrounding sport has increased exponentially in the past number of years. One of the prime

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Chapter 3 · Sports Governance

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..      Table 3.1  Accountability measures within FIFA Accountability

Explanation

Within FIFA

Hierarchical

The power that superiors have over subordinates within an organisation.

NONE The president is only accountable to the FIFA-congress, which he leads

Supervisory

Relationships between organisations. E.g. does someone else need to approve decisions?

NONE Member association without any power

Fiscal

Is there any control over funding?

LITTLE Little transparency in FIFA’s finances

Legal

International bodies must abide by the laws of relevant jurisdictions

Opportunity for accountability. FIFA has to abide to Swiss Laws

Market

Power that can be exercised by investors or consumers through market mechanisms

Sponsors could influence FIFA a main investor

Peer

How do peer institutions evaluate the institution?

NONE Only direct peer IOC; no accountability to them or any other NGO

Public reputational

Reputation of an organisation among superiors, supervisory boards, courts, fiscal watchdogs, markets and peers; related to each of the accountability forms listed above.

NONE Essentially no accountability to its public. People care about the game, not FIFA. No widespread call for reforms.

3

Source: Table based on Pielke (2013)

sources of dissatisfaction amongst fans and other key stakeholders within the sector is the absence of any real transparency with regard to how many sports authorities and bodies actually operate. When a scandal emerges, in almost every case it is unclear as to how the processes and procedures occurred to allow such an eventuality to happen. Why should this be the case? Forster (2015) argues that Global Sports Organisations (GSOs) – those bodies responsible for the overall governance of sport, are immensely powerful in a number of different ways. For instance, although many of them are categorised as non-profit organisations, they generate vast amounts of income and cash because they own a particular asset or

sports entity such as the World Cup or the Olympic Games. Access to and responsibility for dispersing such funds leaves that body in a powerful position. As we discussed in 7 Chap. 2 they also have close (some would say unhealthy) relationships with political parties, leaders and governments. We see this most clearly in the case of the bidding for and hosting of major sports events. Politicians in many cases use the opportunity to promote their own image and agenda and will do anything to ensure that their country or city is awarded the rights to stage the event. GSOs are also accused of a lack of transparency in terms of how they disburse revenues. This was a heavy criticism of how FIFA, and Sepp Blatter, in particular operated. Many  

51 3.6 · Key Criteria for Effective Sports Governance

federation members from developing economies or poorer regions of the world were the recipients of funds. Ostensibly such cash was awarded to develop football pitches and facilities and to hire coaches to develop academy systems. In reality, much of this largesse was held in the bank accounts of the key official in that particular country or region. In return, many commentators observed that Sepp Blatter received their votes and support when it came to the election of a new president. Whatever the accuracy or otherwise of such observations, the message that can be taken out of this example is the lack of traceability as to how such decisions were made and instigated. It is very difficult to hold someone to account for a particular decision, if the process by which that decision was initiated and implemented is obfuscated and effectively cannot be traced. In the context of transparency, Duval (2016) poses three questions that need to be answered in order to assess the extent and depth of transparency within a sports organisation. 1. Where is the money going? This is an attempt to follow the argument that if you “follow the money” then you will get the answers. On this basis it can be argued that if disbursements and expenses can be identified and traced, then it becomes much clearer as to how the organisation operates and more importantly justifies its procedures. However, sports bodies can create a bewildering array of accounts and organisations which makes this task extremely difficult. In some countries the financial authorities do not necessarily make it easy by protecting such activities. Annual reports can identify the amount of general expenses incurred for instance but do not specify the details to any significant extent. As Duval notes “The implicit complicity (countries such as) of the Swiss State (or Monaco for the IAAF), and Swiss local authorities, is undeniable. It is not unlike the organized financial opacity that enabled Switzerland to become the central node of tax evading schemes.” (p 1).

2. Who decides what and why? This might appear to be an easy question to address. All Sports Governance Organisations (SGOs) have an official legislative body. However, it may be dangerous to presume that they make the critical decisions. In many cases this consists of a narrow executive board or a couple of individuals. Such decisions are often made in “behind-closed door” sessions and are not necessarily documented. This again raises questions as to the role of the overall legislative body. While it may take a vote on an overall change in direction or strategy, the key decisions have already been made and all that happens is a “rubber-­stamping” exercise with little or no informed or reflective discussion taking place. How can somebody be held to account for instance if no detailed minutes or voting records are published for public consumption on the Internet? 3. What are the rules saying? While many organisations publish their detailed rules and regulations, Duvall is critical of the lack of enthusiasm about making available the rationale behind rulings on specific aspects of the sport or issues that emerge from time to time. This is evident in many doping-related instances. The SGO will publish the general findings in a press release. However, it can be very difficult to get the actual detail as to how that decision was arrived at. He cites the example of the Garcia Report into the way in which the World Cup was awarded to Russia and Qatar. The author was commissioned by the FIFA ethics committee to investigate the case and publish a detailed report together with recommendations. When the report eventually was published it contained many parts that were redacted by the Committee in order to protect the confidentiality of certain members. This internal “self-policing” did not produce a report of substance that shed any real insight into what actually happened. Such practices only serve to increase the incredulity and cynicism among stakeholders and clearly do not address the pressing inter-related issues of accountability and transparency.

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Chapter 3 · Sports Governance

From the preceding discussion it is clear that the issue of sports governance has major ramifications for sports marketers. If serious questions are raised about the various approaches to governing sports across the different levels (from elite to grass-roots), it makes the task of increasing the fan-base, negotiating deals with existing and potential sponsors and dealing with ongoing media rights more complex and difficult. While most of the focus in this text is on sports at elite level, we also need to recognize that at other levels the imperative is not necessarily structured around the sole objective of profit. From a government perspective, sport may be regarded as a public or merit good. In these cases, some sporting initiatives may be paid for by the government in order to encourage people to participate in sport. Examples

include activities based on encouraging people to exercise and address the dangers of obesity. In such cases, some initiatives may be funded from the tax payer’s contributions and are provided “free” at point of consumption. In the case of merit goods, where there is the expectation that people are likely to under-­ consume, they may be subsidized. This makes the questions of accountability and transparency even more critical; if there is a danger of fraud or corruption due to inappropriate misuse of such funds. The role played by volunteers in terms of ensuring that sports events and competitions take place should not be ignored either in the context of how such sports are governed and marketed. Bad governance, leading to bad behavior can make the job of the sports marketer more difficult to implement and justify.

Justin Gatlin and the Role of IAAF in His Career

On 5th August 2017, at the World Athletics Championships held in London, the American runner Justin Gatland more than upset the applecart when he broke the dominance of Usain Bolt in the 100 metres event. He ran his compatriot Christian Coleman and Jamaican Bolt into second and third place respectively. In doing so, he lit the fireworks on a very controversial issue that has haunted the sport of athletics over the past 15–20 years. Gatlin was convicted not once, but twice for doping. In 2001 he received a two-­year ban for taking medication containing an amphetamine (a banned substance). He claimed this was for an identified problem: attention deficit disorder and that this had been logged for over 10 years or so prior to his offence. The ban was subsequently halved. The United States AntiDoping Agency (USADA) subsequently admitted that Gatlin neither cheated nor intended to cheat. The second time round occurred in 2006 when Gatlin was tested positive for testosterone and received a ban of 8 years. This was halved

on appeal in part because of the circumstances surrounding his first case. He argued in his appeal that he was set up by his masseuse who rubbed testosterone cream on his legs and buttocks without his knowledge and that this would effectively place the drug in his system. He also agreed to cooperate with the authorities and taped conversations that he had with his coach at the time, Trevor Graham. This individual has had a chequered history of doping with athletes such as Tim Montgomery and Marian Jones. They subsequently received bans and in the case of Jones, received a jail sentence. He served the period of 4  years and returned to active competition in 2010. Since then he has performed better than ever in the elite US and European events and in the World Championships and Olympic Games. In the case of the World Championships he has won two silvers and ultimately the gold in 2017. He has also won silver and bronze at the Olympic Games since returning in 2010. The fact that the 100 metres final is seen by many as the “blue riband” event of the sport of

53 3.7 · Global Perspectives on the Governance of Sport

athletics always places it in sharp focus, particularly when it is likely to be stained by scandal. The win at the London Championships sparked off much heated debate about the issue of doping, cheating and fraudulent behavior. Critics of his win stated that it was positive proof of the weak and tentative approach of the governing body, IAAF with respect to dealing with the problem of doping. The failure by the World Anti-­Doping Agency to increase the ban from 2 to 4 years until 2015 is an indication, critics say, of the haphazard and weak approach. The IAAF has strongly supported life-time bans but argue that judgements at arbitration boards and legal courts have indicated that

??1. Assess the approach of the IAAF with respect to addressing the issue of doping in the sport of athletics. 2. Is the correct decision from the perspective of sports governance in this case to ban offenders for life?

3.7

Global Perspectives on the Governance of Sport

Palmer (2013) notes that when we examine the issue of sports governance in a global context, we are dealing with three different levels or tiers of sports bodies: supranational, national and subnational. In the case of the first tier, they arguably represent organisations that are difficult to pin down to any specific set of government regulations. They also exhibit what Henne (2015) refers to as hybrid characteristics. By this she refers to “synergies between binding and non-binding mechanisms” (p 326). For instance, while many of the sports organisations which fall into the supranational category exhibit all of the trappings and substance of traditional multi-national companies, they also retain the classification of being a non-profit body. This juxtaposition

such an approach is not acceptable. In a sport where there has been numerous and systemic cases of doping and cheating offences (for instance the Russian ban from the Rio Olympics in 2016 and going as far back as Ben Johnson in the same 100 metres event in the Seoul Olympics in 1988). As the IAAF continue to struggle to maintain the credibility of the sport, Gatlin’s win shattered some of the initiatives introduced by Lord Sebastian Coe – the CEO of the body, to address the issue of reform of the sport. The ability to retain existing sponsors and attract new ones has also been threatened by such negative publicity.

creates difficulty in terms of monitoring their corporate behavior and governance. It creates opportunities to create procedures that can infringe ethical behavior at best or in the worst-case scenario escape the scrutiny of legislators and governments. They also create a degree of obfuscation over where they are located. We have seen similar instances in traditional business operations where companies such as Google and Amazon have been able to take advantage of tax subsidies by transferring profits and income to countries where they can receive the best possible tax benefits. Large sports organisations such as FIFA and the IOC locate their offices in a particular country but it is fair to say that it is difficult to pin them down on their behavior – particularly over the way in which revenues and expenses are managed. It can be argued that the inexorable move towards corporatization in sport has led to increased examples of poor governance. When sports organisations move away from being the guardians of an amateur sport (where the issue of profit generation does not feature on the agenda) to one which is run on a “hard-nosed” commercial basis by individuals who have worked extensively in the tradi-

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tional commercial sector, we should not be surprised by such increased incidences. We should acknowledge that there is a danger that sports marketing experts and academics apply a “one-size-fits-all” approach to the challenges of introducing an effective sports governance policy and strategy. We need to realise that there are reasons why sports bodies behave in a different way within different geographic regions of the world. We consider some of these issues in the next section. 3.7.1

 he Changing Influence T of Anglo/American and European Cultures on Sport Globally

Historically, due to a combination of extending their respective empires, Great Britain, America and some European countries, as part of their colonization, were also responsible for spreading their respective sports to these regions. We can cite the examples of cricket in India and Pakistan and baseball in Japan and Taiwan to support this view. Horton (2011) notes that colonial powers like Great Britain, in effect, created deep cultures and structure with respect to their traditional sports such as cricket. We can still see this sports powerful influence on society in countries such as India and Pakistan. However, as we have noted earlier in this text, a shift has been afoot over the past couple of decades in terms of where the power lies in sport. For example, as many of these so-called developing economies enhanced their economic performance they also generated a society with larger amounts of spending power, seeking greater choice, variety and quality in terms of their leisure time. Sport is a natural recipient of such demands. As a consequence, we have witnessed much greater involvement and more importantly investment by companies, sports bodies and governments in the area of sport. Asia for example has staged a number of Olympic Games since its first hosting: Tokyo (1964). Since then cities Seoul (1988) and

Beijing (2008) have successfully staged this mega-­event. The power has also shifted in the sport of cricket to the Indian cricket body. The headquarters has shifted from London to Dubai a number of years ago, again reflecting the growing commercial influence. The Gulf region has made a number of bids for hallmark events across a number of sports: the most critical one reflected in the decision by FIFA to award the 2022 World Cup to Qatar. We can debate the merits or otherwise of this decision in another part of the text. However, it reflects the fact that countries with little or no background or heritage in sport have the financial capability, muscle and influence to win such a bid. We have also witnessed the staging of many major events in countries within the Gulf region. They are too many to list here but we can highlight Formula One (Bahrain and Abu Dhabi) as a typical example. More concrete and systemic examples of companies in Asia, and the Middle-east can be found in the numerous, high-profile take-­ overs of English Premier League teams. A quick perusal of who owns the twenty English Premier League teams will reinforce this observation. The acquisition of media rights for major sports events in countries such as China also provide strong evidence of the importance of sport to those societies. While countries such as India, China and other south-east Asian countries have little tradition in sports such as football, basketball and so on, they have become key players in such sports by dint of the amount of investment that they have brought to the respective sports. 3.7.2

I mpact of Different Cultures and Behaviours on Sports Governance

It is not our brief in this text to engage in substantive discussion on general issues such culture in society. However, it is important to recognize that as countries from regions of

55 3.7 · Global Perspectives on the Governance of Sport

the world that have become much more significant in terms of their contribution to sport, it is reasonable to assume that the issue of sports governance becomes even more complex and difficult to grapple with. The approach to economic policy and development differs across regions and can impact on the approach to managing and running sport. Some countries operate in a way in which companies are allowed to compete in open-market, liberal economies. This is reflected in the attitudes to profit and growth and can be a source of encouragement for individuals who want to pursue a “win at all costs” approach. It could be argued that the approach to sports management and governance in a country like the USA reflects this philosophy. By contrast other countries have traditionally operated an approach which reflects a more rigid and centrally planned philosophy. In the context of sport this can lead to a very close relationship between the government and the sports officials. In both cases the issue of sports governance can lead to different approaches to issues such as accountability and transparency. Differences in attitude to factors such as gambling have led to major governance issues for senior administrators and Boards of Directors. The emergence of key markets in Asia for instance has opened up major revenue streams for European football clubs. While this potentially has positive benefits for the clubs it has also led to instances of attempts to engage in match-fixing. Similar issues have arisen in the sport of cricket. Attitudes to gambling vary world-wide. In Muslim countries it is banned. However, it has not prevented gambling (telephone and online betting) and arguably the greatest problems with regard to match-fixing have emanated from these countries. This raises questions about the ways in which legislation has attempted to address such problems. The link between politics and sport also varies considerably across different geographic regions. It would be wrong to assume that very close relationships only occur in regions such as Asia, Africa and the Gulf region. Politics and sport have coalesced in

every part of the world since sport was invented. Instances of poor governance and unethical behavior also is not confined to any particular region. In the case of the bidding process for the 2006 World Cup for instance, various investigations laid heavy criticism at the German government for agreeing to lift sales of arms to Saudi Arabia and also agreeing to create investment in countries such as South Korea and Thailand, all in return for votes. The end result? Germany won the bid to stage the 2006 World Cup. It would be wrong to assume that this decision was solely based on the above investments. Germany clearly ticked the boxes in terms of heritage, infrastructure and so on. However, the close involvement of government, German corporation and the German bid committee certainly helped. It is also not unusual for members of ruling families in regions such as the Gulf region to hold high office in the respective sports bodies and organisations. While this is clearly an overt indication of the incestuous relationship between politicians and sports bodies, it is by no means unique to these regions. It becomes even more complex in countries such as Russia where sports organisations have been structured in such a way as to represent and implement the direct interests and priorities of government. In many European countries a perusal of the membership and organisation of sports bodies will also reveal that government officials and key influencers feature in terms of representation, albeit in a subtler way. Arguably in this latter case it is even more difficult to monitor or trace. Attitudes to the role of sport in society (discussed in more detail in 7 Chap. 2) also vary and can lead to poor governance. The most extreme example perhaps is the way in which the Nazi party attempted to use the 1936 Olympic Games as a vehicle to promote their political philosophy and agenda. Less extreme but similar accusations have also been levelled at the Chinese government for the way in which they used the Beijing Olympics (2008) to create a softer image of their policies.  

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Where countries with different philosophies and practices on issues such as violations of human rights, gender equality, child-labour, and racial discrimination gain increasing influence over the running of sporting events and competitions, the issue of sports governance becomes even more complex. For instance, many sports bodies are keen to do business with such countries, on the basis that their involvement (as owners, investors, sponsors or competition hosts) will generate finance to re-invest in the sport. They place great emphasis on spending this money on grass-roots sports in order to encourage children to take up the sport. As a consequence, there have been many instances of poor governance as sports bodies “turn a blind eye” to evidence of bad behavior.

1. 2. 3. 4. 5.

Structure. People. Communication. Standards and conduct. Policies and processes (for a fuller description visit: 7 https://www.sportengland. org/media/11193/a_code_for_sports _governance.­pdf).  

In a European context the European Parliament, in light of the major scandals to have emerged in recent years, adopted a resolution “on an integrated approach to sport policy, good governance, accessibility and integrity” in 2017. This body was motivated to move in this direction by the recognition of the important role that sport plays across the twenty-­seven member states: the sports sector covers 3.5% of total EU employment. ??Should high-profile sports become involved However, this resolution does not carry any in sponsorship deals with companies and legal weighting. brands from the alcohol sector? Outline the It reinforces the UK approach by urging arguments for and against. its member states to force sports bodies, in receipt of public funding to comply with minimum standards and codes of behavior. 3.7.3 The Legal Response Critics of the EU resolution point to the fact that it merely contains some pious platiDue to the characteristics of sports organisa- tudes without focusing on the challenges of tions – particularly at supranational level it is implementation. In particular, it fails to specextremely difficult to enforce detailed legisla- ify how the EU might more actively engage tion on the part of governments and policy-­ with specific sports organisations across makers. The practice within countries such as Europe. the UK was to initially lay out a voluntary This highlights potential serious difficulcode by which sports organisations could sign ties if legislative bodies such as the EU tread up to. Generally, such initiatives were volun- too far into the ways in which individual tary in nature and had no legal legitimacy in sports are governed. Cries of political interthe sense that they could be enforced in a ference are likely to abound and levels of trust court of law. Typical of this approach was the and confidence on the part of senior adminisVoluntary Code of Good Governance trators are likely to decline. ­introduced in the UK in 2011. This was subseHowever, staying completely out of sport quently refreshed and updated in 2015. is only going to lead to further instances of In 2016 Sport England and UK Sport malpractice, corruption and fraud. A self-­ jointly developed a Code for Sports policing system; where the sports body moniGovernance. This was based on the findings tors itself is unlikely to work either. from interviews with over two-hundred sportIn light of the ever-increasing number of ing and non-sporting organisations and is sig- scandals occurring in sport globally it is indenificant in so far as it is mandatory for sports fensible, particularly in the case of sports organisations to comply with the code if they receiving public funding, that no robust codes are recipients of public funding. The docu- of behavior, with mandatory elements should ment covers five broad principles: not be introduced.

57 3.8 · A Framework for Effective Governance

3.7.4

Exercise

??Using the resources of the World-wide web assess the nature of the relationship between the government and sports organisations with respect to sports governance in ONE of the following countries. Australia, South Africa, Denmark or Jamaica.

3.8

 Framework for Effective A Governance

Our investigation of sports governance indicates that this is not an easy area to manage. The peculiarities of sports organisations, combined with the inexorable rise of commercialization and increasing access to multiple streams of revenue creates many opportunities for bad practice and behavior. Because of the nebulous relationship between governments and sports bodies it can be very difficult to identify the wrong-doers and effectively sanction them in such a way as they are properly punished and removed from the sport. When we consider the causes of poor sports governance, the root causes revolve around a lack of accountability and a lack of transparency. This leads in turn to a lack of democracy in terms of the processes and procedures adopted in organisations. Minikin (2015) cites the work of Allern and Pedersen (2007) who highlight the importance of addressing the issue of democracy and identify three different dimensions. 1. Competitive democracy: emphasizes the use of the vote to reach a decision concerning competing interests. 2. Participative democracy: seeks active participation by all members and is characterized by a consensus-based approach to decision-making. 3. Deliberative democracy: seeks to solve conflict through discussion and consultation. (Minikin 2015, p 438). Many sports bodies, certainly at the top tier, such as those operating at transnational level, operate in their own “bubble” and have cre-

ated a culture whereby they have insulated themselves against any possibility of being accused of poor behavior. This is changing; mainly due to the preponderance of scandals in recent years. The increasing influence of social media and “24– 7” news channels make it increasingly difficult to escape scrutiny. It therefore forces sports bodies to adopt a set of principles and procedures that conform to the heightened expectations and demands of the key stakeholders in the industry: fans, sponsors, governments and media. It is difficult, if not impossible to apply a “one-size-fits-all” approach as there are considerable differences across different geographic regions. Healey (2012) notes that in Australia the law applies to sport just as it does to other organisations and business sectors. In the USA there is a sharp difference between amateur sports organisations and professional sport. In the former case the community leagues and schools athletics associations conform to the American Sports Act and the rules laid down by the United States Olympics Committee. By contrast, professional leagues have greater freedom. For instance, in the case of Major League Baseball, it is not subject to anti-trust legislation despite the obvious commercial aspect of its operations. In Europe, sports bodies are governed by general EU legislation on various forms of economic activity such as freedom of movement of individuals. However, as we have noted earlier in the chapter the EU has little legislative powers regarding the rules of sport. As we have noted some initiatives have been introduced to a code of behavior but it is unlikely in the medium-term to have a direct effect on sports governance. In terms of developing a framework for effective governance it is critical that sports bodies provide procedures that address the following issues, with targets and key performance indicators where appropriate. This set of questions is by no means exhaustive and needs to be refined and adapted to reflect the scale of operations of the sports organisation in question (global, international, national, regional, local).

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An effective framework for sports governance has to be based on the principles of accountability and transparency. Clear and unambiguous communication is a critical dimension within the context of addressing these two principles. Ultimately sports bodies are answerable to their stakeholders. The way in which budgets are approved and implemented is critical to successful governance. Stakeholders should be able to monitor the sources of funds and how they are subsequently allocated. Clear criteria should be identified on web sites. Likewise, the process by which members of the board or governing body are nominated and elected needs to be clearly stated and available for easy access and identification. Minutes of meeting should also be disseminated via appropriate communication methods such as the website. In the context of both principles, the following issues need to feature strongly. By doing so they can address the dangers of a lack of accountability, transparency and democracy: 55 Clear identification of the overall remit of the organisation: objectives and strategy 55 Clear identification of the process by which decisions are arrived at 55 Clear identification of the term of office for members of the board and the rationale for such a decision 55 The composition of the board: identifying the logic for the structure 55 Roles and responsibilities of individual board members and the executive team 55 Declarations of specific areas of interest from board members that might create possible conflicts of interest 55 The procedures for reporting key performance indicators and targets 55 Identification of how the governing body addresses issues such as gender equality, diversity and social responsibility 55 Identification of how the performance and direction of the sports body is audited: from an internal and external perspective. In the latter case this may refer to the appointment of an independent board member

55 Identification of how the organisation complies with relevant legislation at governmental and/or sports sector level 55 Identification of a process which allows individuals to raise concerns about aspects of behavior on the part of the governing body. This list is by no means exhaustive. The extent to which these items are implemented inevitably will be shaped by a number of influences. These include the following: 55 The size, scale and influence of the sports body 55 Differing cultural attitudes across the world to issues such as social responsibility, corruption and the influence of governments on the sports organisation 55 The role that public funding plays in the revenue streams for the sports organisation. In summary, this framework needs to be adapted and contextualized. It is dangerous to put forward a “one-size-fits-all” approach due to the diversity of opinion, behavior and practice that is encountered globally. In view of the scandals and poor behavior that has occurred in the sports sector over the past number of years coupled with the increasing pressure placed on sports bodies by governments and policy-makers, it is imperative that the issue is addressed in a planned and coherent manner. 3.9

Conclusions

In this chapter we have examined the concept of governance and how it impacts on the administration of sports organisations and bodies. Sports governance has risen in prominence on the strategy agenda for the sports sector and has been driven by the raft of scandals which have afflicted many sports over the past decade or so. In part, this has happened because at the elite level, sports organisations and clubs have moved from a situation where it has run sport in an amateur way (emphasizing the purity of the sport and participation) to a position where it is run with a focus on revenue stream generation and the adoption of business prin-

59 3.9 · Conclusions

ciples. While this is not necessarily bad for the sport’s body’s relationship and sport, it has spawned greed and an increasing interaction with key stakeholders tendency to behave unethically as organisa55 The Anglo/European and American tions seek to extract as much money as possicultures have shaped and influenced the ble and applying business principles that in way in which sports organisations have some cases lead to unethical behavior. addressed the issue of sports governance We acknowledged that many sports organ55 We should avoid adopting a universal isations have tended to operated “under the approach to the creation of a framework radar” and in a different way from more tradifor effective sports governance tional business sectors. This is evidenced in some 55 Cultural differences and behavior shape cases by the simple question of who they are attitudes to governance in areas such as answerable to. Trans-national sports bodies such corruption, gambling, cheating and as FIFA and the IOC have appeared to operate diversity within their own internal “bubble” and appear 55 While not condoning bad behavior to be exempt from scrutiny in any country. within the realm of sports governance, This lack of scrutiny in many cases had led we should recognize that procedures to instances of behavior which would not be and policies for managing governance tolerated in traditional business sectors. While will vary and will evolve, depending on such sports bodies apply business principles the context and geographic region. they are often run in a “ham-fisted” and non-­ democratic manner. Hence the need for proper governance. We identified two critical aspects of effec- ??End of Chapter Discussion Questions tive governance: accountability and transpar 1. Assess the view that the focus on treatency. Without proper procedures, policies and ing sport as a business had damaged its systems to address these issues, the end result overall values. Use one detailed examis likely to create a non-democratic body, with ple to support your point of view. loosely applied and ambiguous practices that 2. Some commentators argue that it is encourages bad behavior and ultimate damimpossible to devise a standard set of age to the sport or the individual club or principles for managing sports goverorganisation. nance. How valid is this view? We also identified a number of characteris 3. Evaluate the role that cultural differtics of sport that lead to such behavior. This is ences play in shaping attitudes to the evidenced in the way in which revenue streams governance of sport. are managed, with the focus in many cases on 4. Charismatic leaders in sports organisashort-term success at the expense of a cohertions generally create a culture of conflict. ent long-term view of the business of sport. How accurate is this view? Use examples Learning Outcomes 55 The characteristics of sport and the sports sector make it different from many of the traditional business sectors 55 The increasing focus on revenue, profit and success has led to increasing evidence of poor governance and bad behavior 55 Sport at the elite level is no longer just about sporting principles: it is a business 55 This leads to a lack of accountability and a lack of transparency in terms of

to support your line of argument. 5. Examine the roles played by the Chief Executive Officer and Chief Marketing Officer in the area of sports governance. 6. Assess the extent to which you would agree with the view that governments have a major role to play in ensuring that sports organisations address sports governance in a responsible manner. 7. The characteristics of sport in general and sports organisations in particular ensure that it is very difficult to apply standard principles and procedures for

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addressing the issue of sports governance. Examine the extent to which you would agree with this proposition. 8. Evaluate the perception that sports fans generally do not care about issues such

as doping and cheating, as long as they can witness excellent performances in the arena. Use examples to support your point of view.

3 Appendix South African Cricket – Dark or Bright

Background The history of cricket in South Africa is inextricably bound up with the policy of apartheid, which was introduced by the government in 1948. This policy actively discriminated against the black and coloured members of South African society and was manifested in a range of initiatives, such as segregation on buses, separate schools and separate areas where people could view sporting events in the stadia. Although encountering world-wide criticism and opprobrium, sports such as rugby (traditionally played by the Afrikaner and white community) and cricket (predominantly white) continued to operate in the domestic and international arenas. The issue was brought to a head in 1968/1969 with a coloured player by the name of Basil D’Oliveira. He had left South Africa some years before, because of lack of opportunities to play at a top level for that country. He was banned from entering South Africa when he was selected to represent England on their tour there. He had already played for England prior to this tour and ironically was not initially selected. That clearly would have solved the problem for the South African Government. However, one of the selected players got injured and D’Oliveira was called up as a replacement. This triggered the ban and England cancelled the tour. Other countries such as Australia also cancelled up-coming tours and South African cricket was cast out of the international cricket scene. Over the next 20 years or so, cricket continued to be played strongly and vibrantly in South Africa. Some coaches and administrators worked on building up interest and enthu-

siasm within the coloured communities, largely under the radar of the international gaze. Many talented white cricketers did not have the opportunity to display their talents on the international stage at the top level as a result of the ban. They did play in England and Australia at county and state level (below the top (test) standard). South African cricket attempted to circumvent the ban by organizing rebel tours to their country. International teams were recruited and offered high levels of payment and a couple of them took place. It aroused the ire of the antiapartheid supporters and although one or two attempts were made by those players to do some basic coaching in the local black townships, it did not have much success in stemming the tide of criticism. South African officials, such as Dr. Ali Bacher, were accused of hypocrisy because they put the self-interest of the white cricketplaying community at the core and also sought to generate profit from these tours. During this period of isolation, cricket administrators were criticised for not doing enough to develop cricket in the coloured and black communities. They were also accused of meekly accepting the apartheid policies of the South African government during this period. Re-Introduction Much of the subsequent part of this case is centred on what happened after the release of Nelson Mandela in 1990. This move by the South African Government effectively signalled the end of their uncompromising approach to apartheid. Mandela had been a noted critic of apartheid and was instrumental in setting up the ANC  – a protest movement which aggres-

61 Appendix

sively challenged apartheid from the early 1960s onwards. He spent the best part of 30 years in jail for his actions. The move to re-integrate South African cricket happened very quickly. Dr. Ali Bacher, one of the leading proponents and organizers of the rebel tours, quickly moved to get South African cricket back on the international stage. With help from the ANC, the two existing cricket boards: the South African Cricket Board (the traditional body) and the South African Cricket Union (which was always run on multi-racial lines) came together and merged. The new body was called the United Cricket Board of South Africa (UCBSA). During early through to mid-1991 Bacher and colleagues feverishly set about networking and negotiating with international cricket board representatives in an attempt to gain sufficient support and votes to be re-admitted into international cricket. After numerous meetings, they eventually gained approval from key cricket nations such as the West Indies, Pakistan and India. South Africa was also approved for participation in the 1992 World Cup. A further bonus occurred when the Indian board responsible for running cricket had to cancel a visiting tour from Pakistan and asked South Africa if they could, at short notice, step in for a tour to India. South Africa was back on the international cricketing scene almost in the blink of an eye! The team were received rapturously by Indian cricket fans and the show was on the road. Post-1992 With little development, in any formal sense of cricket, in the black and coloured communities it was not surprising that the initial teams were made up of almost exclusively white cricketers. Nelson Mandela took over as the President of the country and he followed a policy of forgiveness about the way in which apartheid policies, so vigorously pursued by successive South African governments, had impacted so dreadfully on the black and coloured populations. This manifested itself in a benign attitude to the re-entry of cricket and rugby to the interna-

tional competitive environment. It is probably fair to say that the continuing lack of investment in infrastructure and coaching in the development of these communities was “shoved” under the carpet and accepted by politicians, administrators and indeed the general public, in their quest to re-establish South Africa as a successful sporting nation once again. The Springboks (the national rugby team) won the World Cup in 1995. This was hosted by South African as well, so there was an immediate boost to the country in terms of pride. One of the most iconic photographs in sport shows Nelson Mandela wearing the Springbok jersey (seen by many as the ultimate seal of approval of the apartheid era in years gone by), presenting the trophy to the South African captain. This single act reinforced the message that Mandela was prepared to forgive (if not necessarily forget) this period of history. The next few years witnessed the establishing of the South African cricket team: known as the Proteas, as a successful member of the international cricket circuit in at both test and one-day level. However, not many black players emerged, of sufficient calibre, to be classified as consistently good enough to play at this elite level. One such player however, Makhaya Ntini, was the first ethnically born black player to play for South Africa. He became one of the iconic players from 1998 to 2009, and was only the third player from that country to take 300 wickets in test cricket. He also became a role model for the black community and did a lot to foster interest in cricket from this community. Since then, a number of black players have made contributions to South African cricket including: Lonwabo Tsotsobe, Aaron Phangiso, Kagiso Rabada and Temba Bavuma. Today, cricket is the second most popular sport in South Africa, and is the only sport in the country to feature in the top two sports of all race groups. This has had both successes: Herschelle Gibbs, a Cape Coloured, is one of the sport’s most dominating batsmen and the black bowler Makhaya Ntini reached number 2 in the ICC Player Rankings in 2006. As might be expected when the black population were represented by their own political

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parties and movements and dominated the structure of the government, gradual moves were made to address the on-going imbalance in the structure of sports such as rugby and cricket. Both sports were still dominated by the white population. Many critics of the system argued in that, in the case of cricket most of the black players who broke through to play at the top level came from wealthier backgrounds and received extensive coaching at private schools. Thus, it was argued, that the imbalances and injustices in the sport of cricket were not being properly addressed by the government and the administrators. This would appear to support the view that sports, like rugby and cricket, had not really undergone any serious form of transformation. Changes Afoot The United Cricket Board of South Africa (UCBSA) originally merged from two earlier incarnations of boards, also went through a process of change and became known as Cricket South Africa (CSA). Before it changed its structure, however, it established its first Transformation Monitoring Committee at a special conference at the Southern Sun hotel in 1998. This committee identified ten major thrusts or directions that the sport should follow in order to transform the sport to reflect the demographics and changing nature of South African society. These thrusts were identified as: 1. The role of the UCBSA Board. 2. Democratization. 3. Redress and representivity. 4. Constitution. 5. Competitiveness and revenue. 6. Development. 7. Closing the gap. 8. Funding and distribution. 9.  Recording the full history of South African cricket. 10. Accountability and ­monitoring. Progress was reviewed and the UCBSA Thrusts were fine-tuned by CSA at its National Transformation Indaba in 2013, whereby the rapid Africanisation of cricket was made a stra-

tegic priority with the focus on the following resolutions: 1. Governance. 2. Procurement and appointment of staff. 3. Professional cricket. 4. Amateur cricket. 5. History and Legacy. 6. Funding. (source: 7 http://cricket.­co.­za/cat/23/AboutCSA/1943/Transformation-Philosophy/) Currently Cricket South Africa is committed to its undertaking on transformation and redress that includes delivery of the following key issues: 55 Demographically representative entities and democratic structures 55 Development of cricketers and our human capital 55 Equitable allocation of resources and equity across the board 55 Ethos of dignity and equality 55 A culture of sustainability, non-racialism and access for all 55 Recognition of the history of all South African cricket.  

During the late 1990s through to the mid-­2000s a consistent argument was put forward and largely centred on the view that if South Africa was to be seen as a “rainbow nation”: this should be reflected in “rainbow cricket and rugby teams”. Various initiatives were introduced to force cricket teams to introduce a quota system, whereby they had to pick a certain number of players from the black community in their teams. This engendered much controversy and debate within the cricket sector and across the country as a whole. Its advocates argued that this was the only practical way in which to ensure that players from these communities could progress their careers. It would also allow them to be developed, not just as players, but also as role models for the youngsters. The counter-argument was based on the view that players should only be chosen on the basis of merit, that is you are picked if you are good enough; not because you have to make up a quota.

63 Appendix

Ironically, as a result of such measures, white players felt that they were being victimised. In some instances, players of major talent such as Kevin Pietersen, decided to move to England to pursue his international ambitions, arguing that he was being restricted by the quota system in South Africa. In 2007 CSA decided to do away with the quota system. South Africa had introduced a quota system in 1998 to address the racial discrimination caused by the Apartheid system. The stipulation was then that every team had to field four players of colour  - a term which encompasses black Africans, mixed-race people and those of Asian descent. It was officially removed in 2007. Sports minister Makhenkesi Stofile stated the focus would switch to helping black athletes by investing £15m a year.

»» “Quotas are out. We are not going to

decide who must be on the team. All we are saying is expose everybody, give them an opportunity”, (7 http://news. bb c . c o. u k / s p o r t 1 / h i / f ro n t _ p a g e / 7082466.stm)  

This caused further debate. Surveys suggested, that by a small majority, the general population still favoured its retention. Further Change Serious questions were raised about the behaviour of the CSA. South Africa hosted the Indian Premier League (a very successful 20/20 competition in 2009). This happened because of terrorism problems in India. In order to ensure continuity and satisfy sponsors, India took up the offer from CSA to host the event in South Africa. CSA’s remuneration committee recommended that bonuses be paid to CSA staff to reward them for the success of this event. However, the CEO Gerald Majola and the COO Don McIntosh had already negotiated bonuses for its senior officials with the IPL and they received the majority of these bonuses. One of South Africa’s justices recommended that Majola be the subject of a disciplinary enquiry as a result of these allegations. It was established that these payments had been made. KPMG

and legal advisors were asked to carry out an enquiry and make investigations. This report was commissioned by the Minister of Sport and Recreation and instructed a Ministerial Committee of Enquiry, chaired by Justice Nicholson, to carry out this investigation. The subsequent King Report on Governance for South Africa (2009) also emerged because of international changes in approach to this area. It emphasises the need for transparent and effective communication with its various stakeholders, to build trust and confidence. The report concluded that both officials had a duty to inform CSA about the background to the negotiations about the payments and that they did not act in the best interests of the organization. Commentators made the observation that the sacking of Majola and McIntosh was caused mainly by the situation where a large and unwieldy board is threatened by the power that resided in the hands of a couple of individuals. In 2013 the CSA re-introduced the quota system. A recent report, presented to CSA at that time, contained information that most black African players give up the game between the under-19 and provincial level, at an age at which, if they are not contracted, will need to find jobs. The report also revealed that when black African players do get into the system, they are often further side-lined. Only two black African players turned out in more than 80% of their franchises’ games last season and when they did, they bowled less overs and batted lower down than players of other races. 2016 witnessed a further step up in the emphasis on the racial quota system. South Africa’s Sports Minister Fikile Mbalula felt that the government should no longer have to beg for transformation across South African sports, such as cricket, rugby, athletics and netball. He announced that none of the governing bodies of sports would be allowed to bid for international c­ ompetitions until such time as the ratio of blacks significantly improved. Support for this position could be made by considering the bare statistics of what happened post-­ reintroduction to the international arena. Black Africans (defined as those who come from the

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black, Asian and mixed race communities) make up around eighty-five per cent of the total population of South Africa. However, in 2014/2015, they accounted for only ten per cent of players who played at test match level. Since readmission, a further statistic revealed that as of 2016 only seven out of ninety players, who have been selected for their country at cricket, have come from these categories. His comments were generally accepted by the CSA who decided to go with a policy of having six players out of the eleven in the international team that must be classed as black and at least two must be black African. These remedies, in their view, should address the concern of the Minister that it is a move to redress the injustices of the apartheid era. This policy was also implemented across the franchises in the main league and further down the leagues. At the national level the policy was refined and adjusted to allow for six such players to appear in test matches in the calendar year, as an average. This meant that in some matches, against potentially weaker countries, it could be

??Discussion Questions 1. Assess the approach to the governance of the sport of cricket in South Africa. 2. Examine the relationship between the governing body for cricket and the government.

enforced to the full. In matches against stronger opposition, the number could be reduced. This raised the overall question as to whether this policy is equitable or not? Many commentators felt that selection, particularly at the top level, should be based on the principle of meritocracy-you only get selected if you are good enough. Others felt that it is a significant step in the process of transforming the sport of cricket and in the longer term will ensure that the sport is representative of the demographics of the population as a whole. (Sources: adapted by the author from: T.A.W. (2017) “A new racial selection policy for South African cricket”. The Economist September 19th. Mnyanda, Siya (2016) “Imposing racial quotas is a vital step forward for South African Sport”. The Guardian. April 29th. Hoult, Nick (2017) How cricketing quota policy has impacted South Africa”. The Telegraph. July 1st. 7 http://cricket.­co.­za/ item/1943/Transformation.)  

3. Evaluate the racial quota system employed by the cricket body.

FIFA and Its Relationship with Adidas

Introduction FIFA is the non-governmental, non-profit organization which, since 1904, is responsible for the governance of global soccer (Pielke 2013). Overall, 211 associations divided into six confederations (such as UEFA and CAF) affiliate with FIFA (FIFA 2016a). The former president Joseph Blatter had been in power for 18 years, before the scandal led to his ban from soccer related activities (FIFA 2016b). The newly elected president is former UEFA secretary general, Gianni Infantino. Apart from setting the rules of the sport and supporting those confederations, FIFA is

best known for organising the World Cup, which is played every four years. Between 2011 and 2014 FIFA’s revenues have been estimated around US$ 5.7 billion, with its main income being sponsorships (U$S 1.6 billion) (Pylas 2015). Within FIFA’s system, the highest form of sponsorship is the so-called FIFA-Partner, who is allowed to use all FIFA events for marketing purposes. It is estimated that each FIFA-Partner currently pays around US$100 million for a four-year cycle (Deutsche Welle 2013). The six current FIFA-Partners are Adidas, Coca-Cola, Gazprom, Hyundai/KIA, Visa and the Chinese Wanda Group, which just

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signed its contract in March 2016. Famous second tier sponsors (sponsoring the World Cup only) include McDonalds and Budweiser. Adidas Adidas is a German sportswear company founded as a shoe manufacturer by Adolf Dassler in Herzogenaurach, Bavaria in 1940, where it is still headquartered. Today, the Adidas AG develops, designs and markets athletic products, with brands such as Adidas, Reebok, and Rockport. It is the largest sportswear manufacturer in Europe and second largest in the world, employing around 55.500 people. Adidas’ global sales in 2015 have amounted to €16.92 billion. At the time of the scandal, Adidas was the sixty-second most valuable brand in the world and additionally the third most sustainable brand (Corporate Knights 2015). Overall, Adidas presents itself as a socially responsible company, with the goal to make the world a better place, stressing their core values as “Performance”, “Passion”, “Diversity” and “Integrity”. Adidas’ sponsorship approach is characterized through tolerance, diversity and a strictly enforced anti-doping policy. Adidas is the oldest of all FIFA-Partners, being a partner (and providing every match ball) since 1970. Just recently Adidas prolonged their contract until 2030 (Reuters 2013). Available at 7 https://sports.yahoo.com/news/ adidas-extends-world-cup-sponsorship-until2020-12362990-finance.html (. Fig. 3.1).  

 

 he FIFA Scandal T FIFA had been accused of corruption and unethical practices for years, especially after the World Cup bidding results for Russia 2018 and Qatar 2022 came out. The public outrage about corruption, bribery and similar, increased strongly. The accusations climaxed when FBI officials arrested seven of FIFA’s top executives on 27 May 2015, just 2 days prior to FIFA’s general assembly. Two of those officials were existing (at the time) vice presidents: Jeffrey Webb and Eugenio Figueredo. All of them were charged with alleged cases of corruption and bribery in different areas, such as host bid-

dings or marketing and TV deals, within the past 2  years. Just hours after those arrests, Swiss authorities opened-up legal investigations with regards to the bidding of 2018 and 2022, and four men (amongst them former FIFA executive Chuck Blazer) pled guilty in a US corruption investigation from 2013 involving bribes totalling more than US$10 million. Instantly, FIFA tried to save its reputation as much as possible. President Joseph Blatter, perceived by many people as the heart of all evil within the corrupt FIFA-­system, released a statement emphasizing that he welcomed the investigations and wanted to root out all wrongdoings within FIFA. Only 2 days later Blatter had been re-­elected as FIFA President, despite the scandal and a public outcry for deep-rooted change. As the scandal continued to unfold, more officials, as well as the organization itself, were accused of bribery and corruption, which ultimately forced Blatter to step down just 4 days after his re-election and forced FIFA to postpone the World Cup 2026 bidding. Still, it took until 7 August until FIFA announced that it would also conduct internal investigations about potential corruption within its system. The FIFA scandal peaked again when Swiss government officials opened criminal investigations against Blatter in September. Those investigations led to a provisional ban in early October and in December the FIFA Ethics Committee extended this ban from all soccer related activities for the next 8 years for him and UEFA chief Michel Platini. Overall, the crisis led into a widespread wave of disruption, counting fourteen arrests, multiple bans by the Ethics Committee and many additional investigations opened. For example, the way in which the bidding process was conducted for the Soccer World Cup in 2006, which was awarded to Germany. In February 2016, re-elections were supposed to mark a new start for FIFA. During those elections a set of reforms, entailing changes such as term limits for president and council, integrity checks of council members, disclosure of individual compensation and a clear separation between management and political functions was agreed upon with an impressive majority.

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3

Committee

annually

..      Fig. 3.1  Organisational structure of FIFA prior to organiational reform in March 2016. (Adapted by the author from: FIFA 2015b and Larkin (2015))

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The election of Gianno Infantini, as the new president, however, drew criticism, since he is believed to be one of Blatter’s protégés, and many people would have preferred someone completely detached from FIFA’s past in order to transform it into a transparent, non-corrupt organization.  didas’ Behaviour as the Scandal Unfolded A In order to assess the influences the scandal had on Adidas, it is important to re-iterate Adidas’ behaviour during the scandal in order to better understand the impacts. Throughout the whole scandal, Adidas’ reaction has been neutral. Although no sponsor took rapid action, such as a withdrawal, Adidas’ public statements, compared to other sponsors, were very subtle. Whereas for example FIFA-Partner Visa stated that they would reconsider their sponsorship connections if FIFA failed to reform, Adidas indicated that it would continue to promote its very high standards of ethical behaviour. Adidas also encouraged FIFA to adopt transparent policies. It took Adidas until December to finally state that even they might reconsider the sponsorship, if FIFA failed to change its governance policies and procedures. However, it also expressed the view that it seemed to be going in the right direction. Overall, Adidas’ reaction can be considered as a “wait-and-see” approach. However, with this behaviour Adidas did not diverge from the other sponsors. As stated, the only sponsor threatening to withdraw at an early stage was Visa. On the contrary, Gazprom pronounced their full support for FIFA, stating that the sponsorship agreement would not be affected by the scandal. But, Gazprom, being a Russian corporation, has to be evaluated differently, especially when analysing consumers in areas such as Western Europe, due to its government connection. It must be remembered that Russia was due to stage the 2018 World Cup, It could be credibly argued that at the very minimum, it was unlikely to “rock the boat”. On the other hand, Adidas strongly differed from other sponsors, when they did not

join them (excluding Gazprom and Hyundai/ KIA) in their call for Blatter to step down as president. Whereas, the other sponsors did so a few days after the scandal surfaced, Adidas refrained from joining this call for action. This again emphasizes that Adidas stayed more muted than the majority of other sponsors. A uniform reaction from all sponsors, including Adidas, was evoked through passing the reforms proposed by the ethics committee, as well as the election of the new president. All main sponsors stated their hopes for the future and exclaimed that they saw this as a step in the right direction. However, reactions were not overly enthusiastic, still stressing that a lot of work had to be done in order to fully get FIFA back on track. In summary, in accordance with the other sponsors, Adidas reacted in a reserved and neutral manner throughout the whole scandal. Although, all sponsors refrained from taking vast actions, it can be said that Adidas’ behaviour was even less critical than most others. (Case adapted from Ennis, S., Marck, Michael and Giese, Stefanie (2016) “Implications for Corporate Sponsors arising from scandals in sport: The Case of Adidas and FIFA. Anzmac Conference Proceedings: Christchurch, December). References 55 Corporate Knighets. 2015. 2015 Global 100. 55 Deutsche Welle. 2013. Adidas nets longer sponsorship contract with FIFA.  Deutsche Welle, [online] 21 November. Available at: 7 http://www.­dw.­com/en/adidas-nets-longersponsorship-contract-with-fifa/a-17244096. 55 Pielke, R. 2013. How can FIFA be held accountable? Sport Management Review (Elsevier Science). 16 (3): 255–267. 55 Pylas, P. 2015. Coca-Cola, Visa and Adidas are responding to the FIFA corruption scandal. Business Insider, [online] 28 May. Available at: 7 http://www.­businessinsider.com/ coca-cola-visa-and-adidas-are-respondingto-the-fifa-corruption-scandal-2015-5? IR=T.  

 

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??Discussion Questions

3

1. Assess the approach of FIFA in relation to its attempts to deal with the scandal. 2. Examine the approach of Adidas, as one of the key sponsors, to the ensuing scandal.

3. What are the learning points, if any, from the point of view of governance in this case?

Bernie Ecclestone: A Man for All Seasons

Background The Formula One sport has its origins in the European Grand Prix championships of the 1920s and 1930s. In 1946 the genesis of Formula One emerged with the Fédération Internationale de l’Automobile’s (FIA’s) standardisation of rules. A World Championship of Drivers followed in 1950. During this period and into the 1950s around twenty races were held at various venues throughout Europe, although some were not regarded as being of much significance. Italian motor manufacturers, such as Alfa Romeo, tended to dominate the early seasons of this sport. In the late 1950s races were shortened from around 300  miles to 200  miles. This year also saw the introduction of a championship for constructors. The early part of the 1960s witnessed the emergence of a number of British specialist teams such as, Lotus, Cooper and BRM, and later McLaren, Tyrrell and Williams. These outfits were created purely for producing, developing and completing purpose-­built open-wheel racing cars and had overtaken the industrial manufacturing powers such as Ferrari, Mercedes, Maserati and Alfa Romeo. Most of the developments during this period centred on innovations to engines and aerodynamics. From a marketing perspective, 1968 highlighted the arrival of unrestricted sponsorship. This happened mainly because of the withdrawal of support from automotive-­ related companies and brands. Tobacco companies were at the forefront in sponsoring teams. Safety was also a major concern. During the 1960s and 1970s a number of top drivers

lost their lives on the circuits. It was not unusual to see two or three perishing annually. This led to a number of initiatives to address the issue of safety and they reduced the incidences of fatalities. By 1994 it appeared as though Ecclestone and his fellow directors had addressed the “danger” element. This belief was shattered in 1994 with some bad crashes and injuries. It culminated in three deaths during practice and in the actual race at San Marino. Ayrton Senna died following a horrific crash in the race. This sparked off a raft of changes to the engine capabilities, overall design of the cars and the configuration and design of the race tracks. The last 20 years has provided evidence that this tightening up on safety has worked and certainly all but eliminated the number of fatalities. Arguably, it also took away the element of danger from the sport.  he Emergence of Bernie Ecclestone T Motorsport was in the DNA of Bernie Ecclestone. Ever since he set up a second-­hand motor-cycle parts business in the 1940s his passion for all things “motor” knew no boundaries. He also competed in various Formula three races during this period. Questions might be asked about his skill as a driver because he featured in numerous crashes and eventually had to concede that he was never going to succeed as a top driver. Initially, he became involved in Formula One through his management of a couple of the well-known drivers at that time. He took a major step forward in 1971 when he purchased the Brabham team for £100,000. He was to run this team for over 15 years; eventually selling it for £5 million. As a team owner, he became

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heavily involved in administration issues affecting the sport of Formula One, and was a proactive member of the Constructors Association. He took the view that to make the team successful virtually all of the resources had to be poured into the design of a competitive car for the Formula One races. The previous owner of Brabham had focused more on the business of car production. Due to weight issues with the engines being used (they were heavier than the competition) the performance of the team fell back somewhat and left them behind most of the other teams. Ecclestone teamed up with a very promising driver: Nelson Piquet. He also changed the engine. The combined effect was that Piquet narrowly lost the championship in 1980, but eventually winning in seasons 1981 and 1983. In 1985 Piquet left the team, professing himself unhappy at the unwillingness of Ecclestone to pour more money into technological developments, the lack of which, in his view made them somewhat uncompetitive. Ecclestone subsequently sold the team that year for £5 million. Ecclestone, during his period as team owner, was eventually elected as the Chairman of the Formula One Constructors Association (FOCA). He worked closely with a friend of his on the association-Max Mosley. The latter addressed a number of potentially contentious legal issues. Ecclestone saw the selling of TV rights for the sport as a critical element in developing the sport and focused much of his attention on this issue. His entrepreneurial skills led to the right to negotiate TV rights on behalf of the sport. This came from detailed discussions with FIA-the federation which represents the interests of the sport. He quickly set up Formula One Promotions and Administration (FOPA), giving forty-­ seven per cent of television revenues to teams, thirty per cent to the FIA, and twenty-three per cent to Formula One Promotions and Administration (FOPA) (i.e. Ecclestone him-

self); in return, FOPA put up the prize moneygrand prix could literally be translated from French as “big prize”. Television rights shuffled between Ecclestone’s companies, teams, and the FIA in the late 1990s, but Ecclestone emerged on top again in 1997 when he negotiated the present Concorde Agreement: in exchange for annual payments, he maintained the television rights. Ecclestone recruited some key people to address the safety issue (mentioned earlier in this case) and from the late 1990s through to today, these initiatives have significantly improved the safety of the sport-mainly through the design of the tracks. He has subsequently dominated the sport of Formula One for over 40 years.  he Recent Takeover of Formula One T In October 2016 the American conglomerate Liberty Media formally took over the sport of Formula One. Ecclestone was expected by many commentators to be invited to continue as Chief Executive Officer. However, in early 2017 the Liberty senior management made it clear that they wanted a clear separation from the legacy of Ecclestone and appointed a new CEO; Chase Carey. They have given him the title “Chairman Emeritus F1 The total value of the takeover is around £6.4 billion, although that includes a sizeable amount of debt, with the equity valued at just over £3.5 billion. (The Telegraph: 23rd January 2017).  ow Has the Sport of Formula One Fared H During the Reign of Ecclestone? It can be argued that when Ecclestone acquired control over the right to sell TV rights, he took the sport “fighting and kicking” into the twentieth century. Prior to his involvement, some people argue that the sport was disjointed and lacking in any centralised leadership or vision. For instance, Ecclestone sold the rights to cover F1 as a single product and not individually as a set of disjointed races. This unified approach enabled Ecclestone, over time, to acquire a

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dominant position in the relationship with the media companies. The last three decades has witnessed the sport of Formula One broaden its international horizons to many of the emerging and developing economies of the world. This is highlighted in the programme for the 2017 season.  he 2017 Calendar in Full T 55 March 26 - Australia (Melbourne) 55 April 9 - China (Shanghai) 55 April 16 - Bahrain (Bahrain) 55 April 30 - Russia (Sochi) 55 May 14 - Spain (Barcelona) 55 May 28 - Monaco (Monte Carlo) 55 June 11 - Canada (Montreal) 55 June 25 - Azerbaijan (Baku) 55 July 9 - Austria (Spielberg) 55 July 16 - Great Britain (Silverstone) 55 July 30 - Hungary (Budapest) 55 August 27 - Belgium (Spa-Francorchamps) 55 September 3 - Italy (Monza) 55 September 17 - Singapore (Singapore) 55 October 1 - Malaysia (Sepang) 55 October 8 - Japan (Suzuka) 55 October 22 - USA (Austin) 55 October 29 - Mexico (Mexico City) 55 November 12 - Brazil (Sao Paulo) 55 November 26 - Abu Dhabi (Abu Dhabi). Ecclestone also spotted the importance of generating as much cash as possible from the various stakeholders in the business. A report published in 2013 revealed that “Generally speaking, $500 million comes from the fees that promoters pay to host races and then another $500 million comes from the fees that broadcasters pay to screen the sport. Then you have circa $250 million coming from sponsorship  - trackside advertisers and series sponsors. The remaining $250 million is coming from things like corporate hospitality” (F1 perfects formula for financial success, By Matthew Knight and Inez Torre, CNN.) The contracts with the hosts who stage a Grand Prix event are designed in such a way that upward only annual increases are standard

(usually around the order of 10%). Figures show that over the past two decades, F1 was the most globally watched sport on television in the world (500 million viewers). In terms of who owns and controls the sport, the same article revealed the following:

»» The actual Formula One Group - the com-

panies that own the commercial rights to F1 - is made up of multiple companies. We are talking about 30–40. They invest in multiple jurisdictions  - the UK, Jersey, Luxembourg, Switzerland, all over the place  - but the parent company of the group is called Delta Topco and they are based in Jersey. So, the owners of that you could say are the ultimate owners. It is 35.5% owned by a private equity firm called CVC Capital Partners. The second biggest shareholder is an American company called Waddell and Reed  - they have got in the region of 20%. The third biggest shareholder is the estate of Lehman Brothers  - they have somewhere in the region of 12%. Bernie Ecclestone's family trust has circa 10% and Ecclestone himself has around 5%. It's a complicated structure.

The report also identifies another layer of complexity: there is no standard fee for staging an event. Ecclestone recognised that in an era where emerging countries and economies, from outside the traditional North American and European markets, more revenue could be extracted. Countries such as China, Turkey and Gulf States were eager to place their offerings to a wider market. They viewed sport in general and Formula One in particular, as an opportunity to capture world attention, attract tourism, change perceptions that people might have about their policies and so on. Ecclestone realised that higher fees could be charged for the right to stage such high profile events. More established venues, such as Monza (Italian Grand Prix), did not have to pay as much as the newer venues. It was estimated that Singapore initially paid over $60 million per year. Malaysia, its neighbouring country, paid around $67 million. In many such cases, the

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government of the respective country paid the fees. Around forty-eight per cent of the profits generated goes back to the teams. In 2011 the profit generated amounted to around $1.2 billion. However, not all teams are treated equally. Some teams, such as Ferrari, get five per cent more than the others. This is because of the history and heritage which a team like Ferrari “brings to the party”. This is seen as recognition that too many teams either change their names due to alterations in ownership. Rewarding tradition can be perceived as protecting the image and exclusivity of the sport. Problems in the Wind? A critical issue in the development of the sport is that of audience figures globally. In 2008 the sport captured over 800 million viewers world-wide. By 2015, this had declined to around 425 million: a sharp indicator that the sport had slipped in popularity. However, relative to other sports, the figures still make impressive reading – given that fans consume sports differently, when compared to 2008. In response, F1 since 2012 began to sell media rights to subscription (Pay) television channels. This has generated additional income which it could be argued, begins to offset any losses from a potential drop in advertising or sponsorship. It can be equally argued that a move to pay television will have an impact on the viewing figures: not everyone can afford the subscriptions or may be prepared to do so. The lack of involvement or engagement with the Internet and social media platforms also might indicate the F1 is potentially sowing the seeds of terminal decline. Younger people do not engage as much with television any more: preferring to watch events through live streaming or OTT alternatives. Attendance at individual Grand Prix events is also showing signs of a decline. Many people also feel that the sport has become too predictable and does not generate

enough uncertainty or excitement any more. The team with the best designed car tends to win almost every event. This is not good for generating enthusiasm or interest. In a recent Grand Prix Drivers Association (GPDA) survey, 77 per cent of the 217,756 fans that answered it admitted that they were concerned that business interests were taking priority over the sport itself. And a whopping eighty-nine percent felt more needs to be done to ensure that Formula One is more competitive on the track. “The fans are clear: they don’t want a radical overhaul of grand prix racing that takes it away from its historic roots”, said the GPDA Chairman, Alex Wurz in a statement. “It may sound simple, but the best drivers and teams fighting on track in the most exciting cars is their priority. And we, the drivers, passionately share that view. They want competitive sport, not just a show, and they think that Formula One business has become too important, jeopardising our sport.” All of the above trends and developments raise potential questions about the long-­term future of the sport and the viability of its business model.  he Legacy of Bernie Ecclestone? T The removal of Bernie Ecclestone ends an era in sports marketing in general and Formula One in particular. His forty-year reign has certainly moved the sports from one end of the spectrum to the other. Ecclestone has drawn much criticism over the decades for his approach to running and governing the sport. He has been accused of being a dictator and serving his own interests at the expense of the Formula One teams and other key stakeholders. In some ways, he has been receptive to changes in the rules and regulations-particularly in terms of engine design, degrading tyres and restricting the number of pit-stops. The drag reduction system (DRS) and the kinetic energy recovery system (KERS) have both been instituted to make the racing more exciting and to aid overtaking-but don’t sit well with purist

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fans. Reducing noise levels at events, while addressing environmental concerns, may have alienated traditional fans who enjoy the excitement and atmosphere which it generates. The personality of Ecclestone and his focused approach have opened doors to key leaders and rulers in the global scheme of things. He is well connected and this has led to opening the sport in critical and attractive markets: such as China, Russia and India. He has professed ignorance of the role of social media and the Internet. He has been accused of being “anti-­ female”. The following quotation might sum up his views.

»» Speaking

to Autosport in February 2000, Ecclestone did not expect women drivers to ever do well in Formula One, adding: "She would have to be a woman who was blowing away the boys. What I would really like to see happen is to find the right girl, perhaps a black girl with

??Discussion Questions 1. In terms of how the sport of Formula One has been governed, how would you assess the contribution of Bernie Ecclestone during his period in charge? 2. In your analysis of Ecclestone’s ­contribution, examine his personality and how that has shaped the direction of the sport: for better or for worse. 3. The new owners of Formula One have recently taken over. What recommendations would you make to them in terms of the future development and governance of the sport?

References Allern, E.H., and K.  Pedersen. 2007. The impact of party organisational changes on democracy. West European Politics 30 (1): 68–92. Corporate Governance Principles and Recommendations (2014) ASX Corporate Governance Council. Australia.

super looks, preferably Jewish or Muslim, who speaks Spanish”. He has also been accused of bigotry and of being racist. This quote is an indicator of some of his views. He has expressed the view that Adolf Hitler was someone who was capable of getting things done. Accusations of bribery were made against Ecclestone in Germany and this was eventually settled out of court with a payment of £60 million. He also had to settle a tax avoidance case in the UK. Source: Developed by the author from various sources on the Internet. Adapted from 7 https://www.­motorsport.­ com/f1/news/grand-prix-drivers-associationsets-global-fan-survey-record/610591/ Knight, Matthew and Torre, Inez (2013) “F1 perfects formula for financial success”. Available at 7 http://edition.cnn.com/2013/ 07/30/sport/motorsport/f1-money-billion-dollar-business/index.­html  

 

Clarkson, M.B.E. 1994. A stakeholder framework for analysing and evaluating corporate social performance. Academy of Management Review 20 (1): 92–116. Duval, Antoine. 2016. The rules of the game: The need for transparency in sports governance. Available at: http:// www.­p laythegame.­o rg/news/comments/2016/034_ the-rules-of-the-game-the-need-for-transparency-insports-governance/. Accessed 2/8/2017. Esam, Alistair (2016) “A lack of accountability”. Governance, October, Issue 268, 6–7 Ferkins, Lesley, and David Shilbury. 2015. The stakeholder dilemma in sport governance: Towards the notion of “Stakeowner”. Journal of Sports Management 29: 93–108. FIFA Statutes (2015). Available at http://www.fifa.com/ mm/document/affederation/generic/02/58/14/48/201 5FIFAStatutesEn_Neutral.pdf FIFA (2016a) Associations. Available at http://www. fifa.com/associations/ FIFA (2016b) Joseph S. Blatter. Available at http://www.fifa.com/about-fifa/thepresident/joseph-s-blatter.html Forster, John. 2015. Global sports governance and corruption. Available at: http://www.­nature.­com/articles/palcomms201548.­Accessed 3//8/2017. Grant, Ruth W., and Robert O. Keohane. 2005. Accountability and abuses of power in world politics. American Political Science 99 (3): 29–43.

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Haigh, Gideon. 2016. Available at www.­theguardian.­ com/sport/2016/jul/29/griffith-review-essay-seehow-they-run-sports governance in Australia. Accessed 23/05/2017. Healey, Deborah. 2012. Governance in sport: Outside the box. The Economic and Labour Relations Review 23 (3): 39–60. Henne, Kathryn. 2015. Reforming global sport: Hybridity and the challenges of pursuing transparency. Law & Policy 37 (4): 324–349. Horton, Peter. 2011. In Sport in Asia: Globalization, Glocalization, Asianization, ed. P.  Pachura. New Knowledge in a New Era of Globalization. Available at www.­intechopen.­com. https://www.­s portengland.­o rg/media/11193/a_code_ for_sports_governance.­pdf. Larkin, B (2015) “The structure and policies of FIFA. Available at: http://sites.duke.edu/wciip/tournament-guides/world-cup-2014/fifa-institutional-policies/the-structure-and-policies-offifa/ Mallin, Christine A. 2013. Corporate governance. 4th ed. Oxford University Press. Oxford: United Kingdom Mehta, Ravi. 2017. The future of sports governance: Will sport sustain its traditional model of auton-

omy? https://www.­lawinsport.­com/articles/item/ the-future-of-sports-governance-will-sport-sustainits-traditional-model-of-autonomy (3rd January). Accessed 02/08/2017. Minikin, Brian. 2015. Legitimacy and democracy: Implications for governance in sport. Sport, Business and Management: An International Journal. 5 (5): 435–450. Palmer, Catherine. 2013. Global sports policy. London: Sage Publications. Pielke, Robert, Jr. 2013. How can FIFA be held responsible? Sports Management Review. (16): 255–267. Reuters (2013) “Adidas extends World Cup soccer until 2020, (November 21st). Available at Available at https://sports.yahoo.com/news/adidas-extendsworld-cup-sponsorship-until-2020-12362990-finance.html) Rhodes, R.A.W. 1997. Understanding governance: Policy networks, governance, reflexivity and accountability. Open University Press. Philadelphia: USA Shilbury, D., L.  Ferkins, and L.  Smythe. 2013. Sport governance encounters: Insights from lived experiences. Sports Management Review 16: 349–363.

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Understanding Fans and Their Consumption of Sport Contents 4.1

Introduction – 76

4.2

The Concept of Fandom – 76

4.2.1 4.2.2 4.2.3

F ans and Fandom Defined – 76 Fandom Characteristics – 77 Fans as Consumers – 77

4.3

Fan Typologies – 78

4.4

Fan Motivations – 79

4.5

Fans and Affiliation – 81

4.6

Dysfunctional Fan Behaviour – 82

4.7

Fans and Their Consumption of Sport – 83

4.7.1 4.7.2 4.7.3 4.7.4

 hange in Direction and Focus – 84 C Connectedness – 85 Empowerment – 85 Drive for Enhancements and Data – 86

4.8

Second Screening – 86

4.9

Big Data and How Fans Engage with It – 87

4.10

The Fan Going Forward – 88

4.10.1

Key Drivers and Trends – 89

4.11

Conclusions – 92 Appendix – 94 References – 100

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_4) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_4

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nnLearning Objectives

4

On completion of this chapter you should be in a position to achieve the following objectives: 55 Understand the concept of fandom 55 Assess the different categories of fans and the implications for sports ­marketers 55 Assess whether or not fans differ from traditional customers in other business sectors 55 Contextualise fans within the wider picture of tribalism and tribal marketing 55 Understand the various factors that motivate fans to consume and engage with sport 55 Distinguish between direct and indirect consumption of sport 55 Assess the link between consumption and ritualization 55 The rise of the virtual fan 55 Evaluate the role that social media plays in the consumption of sport 55 Examine the role played by technology in sports consumption 55 The concept of big data and how fans engage with it.

4.1  Introduction

In this chapter, we consider the concept of the fan and fandom and how they engage with and consume sport. This is critical, because, if we do not understand the fans, their motives for engaging with sport and the tools and platforms they use to develop their interest in a sport, then it becomes very difficult, if not impossible, to devise strategies that resonate with them. If we cannot come up with relevant responses to their behavioural patterns then the likelihood is that much of our sports marketing endeavours will at best, be wasteful and at worst, fail. In the initial sections of this chapter we examine in detail what we mean by the terms “fans” and “fandom”. We expand on this to assess the different categories or tiers of fans that exist and how their behaviour places them in such categories. We recognise that very few, if any, fans exist in isolation. As is

the case with general consumer behaviour theories and concepts, fans want to be part of an overall community or group which reflects their opinions, attitudes and behaviour. Sport is essentially a social and group-based phenomenon. In this context we assess the concept of tribal marketing and how sport provides a salient platform for fans to engage with their sport in the company of like-­ minded individuals. We assess the different motivations that shape the fan’s behaviour and how they engage with sport individuals, clubs, organisations and sports entity-holders. We investigate how these factors and motivations have changed over the past couple of decades. Issues such as social media platforms, digital platforms and technology have all combined to re-define the ways in which fans consume sport. We evaluate the challenges and opportunities for sports marketers. Our analysis of the fan will provide you with a deeper understanding of the underlying drivers that shape their behaviour. We conclude the chapter by assessing the implications for the sports marketers and decision-­ makers in sports bodies and organisations. This in turn provides us with some good preparation for addressing the ways in which they have to respond to fans in order to make their product relevant to their target markets and how they need to introduce changes to their existing approach. 4.2  The Concept of Fandom 4.2.1

Fans and Fandom Defined

The terms “fan” and “fandom” appear extensively in the sports marketing literature and also in the context of practitioners working in the sector. Put simply a fan is someone who exhibits an interest, enthusiasm or loyalty for a particular sports person, club, organisation, event or competition. Fandom refers to the collective behaviour of individuals that is reflected in a group situation. Virtually all of us like to share our interests and enthusiasm with other like-­

77 4.2 · The Concept of Fandom

minded people. This is reflected in many different ways; social media engagement and sharing of opinions, attendance at live events or watching a particular sporting event in social settings such as bars and people’s houses. Just as the case with general consumer behaviour, not all fans or customers behave in exactly the same way, exhibit the same levels of interest, support or loyalty. As is the case with the concept of market segmentation, sports marketers have to grapple with the challenge of understanding different behaviours and needs on the part of fans. A “one-­size-­fits-all” approach is no longer acceptable as we shall see in this chapter, in the modern-­day marketplace that constitutes the sports sector. 4.2.2

Fandom Characteristics

Agas et al. (2012) go a little further than I did when I defined the term “fan” in the preceding paragraphs. They define it thus: a fan is “someone who expresses enthusiasm and passion that even moves beyond reason” (p 111). This introduces a dimension that is not as prevalent in other product or service-­related categories: passion. It is difficult to argue against the notion that passion is a major driver in the case of most fan behaviour. Together with excitement and related to the characteristic of uncertainty, the typical fan exhibits these characteristics to a greater or lesser extent. It is difficult to identify other product/service areas that feature such commitment and behaviour. We can point to entertainment and music-related products, possibly religion and lifestyle brands such as Harley Davidson that may have similar attributes surrounding their value proposition. This reference to passion and behaviour beyond reason, suggests that some fans might be characterised as fanatics. The term is derived from the Latin word “fanaticus” and literally translates as a devotee. Such a term suggests behaviour that in some instances equates to ritualism and sacredness (akin to religious behaviour). In a more negative context it suggests unacceptable behaviour that has been witnessed in some sports over the

years; such as hooliganism in football and rioting at football matches. When attempting to define and categorise fans, we have to be careful to acknowledge that motivations and behaviours are represented on a continuum. At one end we have passive, disinterested fans and at the other extreme; fanatical fans that exhibit behaviour that could best be described as excessive (in a positive or negative sense). Issues such as identification and loyalty are linked to different types of fan behaviour and we shall examine them presently. 4.2.3

Fans as Consumers

When running seminars on fandom I always pose the question as to whether or not fans are consumers in the traditional sense of the word. It inevitably creates argument and debate and at the end of it we generally conclude that there is no “definitive” answer. In order to help us with this question it would be appropriate to consider some of the characteristics of fans. Samra and Wos (2014) highlight three “unique” features surrounding the concept of fandom. 1. Fans possess a strong and emotional attachment with the consumption objects. 2. Fans behave as loyal ­consumers who exhibit several loyalty behaviours. This is reflected in repeat purchases and insisting on staying in the relationship. 3. Fans present informal membership behaviours such as co-production and investment. This is captured in the active and on-going relationship between the sports entity and the fan. While it is questionable whether these are truly unique characteristics there is no doubt that in team sports such as football, rugby, cricket, NFL, AFL and basketball, fans tend to exhibit these characteristics. This is particularly so in the case of the emotional attachment, active behaviour and engagement and strong (some might say intense) degrees of loyalty. Are fans equivalent to traditional consumers? This is arguable. For instance, with team-­

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related sports (as mentioned in the preceding paragraph) fans who exhibit strong degrees of commitment are more likely not to behave in the traditional ways that consumers do. For instance, fans of a particular team are most unlikely to switch their commitment to another team easily. If that team is performing badly in terms of results, some fans might stop going to the games until the club signs new players or appoints a new coaching team. Unless a fan falls into the very casual, disinterested end of the spectrum, they are likely to go back to attending games when that team picks up on performance and becomes more successful and competitive. On the other hand, fans in the highly committed end of the spectrum will stick with the club come what may. This is in sharp contrast to many B2C and service brands. If a consumer is dissatisfied with the service or the quality or the price of a brand, it is far easier to switch to another brand or become promiscuous in terms of varying purchases around two or three alternative brands. The level of intensity with respect to loyalty, emotion and commitment is typically not reflected to the same extent. It can also be argued that fans are “consumers with boundaries”. While they consume the product, they have little influence over how the product might be designed, redesigned or changed (in terms of rules, technology usage, how the sport spends its money on facilities, infrastructure, players and coaches). This is changing somewhat (as we shall discuss later). However, it makes it difficult for the fan to take ownership of the product. In the worst-case scenario, fan loyalty and commitment can be taken for granted by the authorities and owners of sports brands and entities, resulting in decisions that only serve to alienate them. This can ultimately lead to bad practice in the context of sports governance (discussed in detail in 7 Chap. 3).  

4.3  Fan Typologies

We have indicated that in order to more fully understand the fan and fandom, sports marketers need to have a grasp of how fans differ

within and between different groups. The sports marketing literature identifies numerous different approaches and frameworks for undertaking this task. We will attempt to unravel the thinking behind some of these concepts. Typically, the typologies identified in the literature revolve around factors such as commitment, usage/consumption rates, loyalty and self-identity. One of the simplest ways to categories fans is to distinguish them on the basis of how often they attend games. This can be captured in the following categories: 55 Casual/fair-weather fans: these individuals attend infrequently – at most once or twice a year 55 Regular fans: individuals who get to some or most of the games, mainly or exclusive home games 55 Diehards: equivalent to fanatical fans who attend all games home and away. While this approach is useful as a basic mechanism for identifying different fans, it sheds little light on the inner-most thoughts and behaviours. It also assumes that fans can be classified only by their physical presence at games. This is debatable, given the developments in technology which allow many fans to consume sport virtually. How would we describe Chinese fans who watch games on the Internet or via illegal streaming sites and spend a lot of money on merchandise and so on? At best this approach is similar to demographic methods for segmenting traditional markets. It provides a point of comparison but does not get into the minds of fans. Pimentel and Reynolds (2004) introduce the concept of commitment when assessing the different types of fans. They distinguish between ultimate fans: who are affectively committed and proactively engaged in sustained behaviours and devoted fans: who are slightly lower on the scale but nevertheless can be expected to be committed to the team under all circumstances. It can be argued that fans can be plotted on a spectrum to illustrate the different categories of behaviour, ranging from relatively committed to be zealously committed.

79 4.4 · Fan Motivations

Richardson (2004) notes that highly committed fans are more likely to explain on-field success in terms of internal controllable factors such as team tactics, individual performance by a player or the team and the contribution of fans. Conversely, defeat is often explained away by external factors that are uncontrollable; for example, poor refereeing. Another stream of literature on fandom relates to the concept of social identity theory. This is an important contribution as it recognises the importance of who they are, based on the groups that they associate and affiliate with. Sport in general, and team-based sport in particular, lend themselves to this notion. Dionisio et al. (2008) cite the examples of BIRGing and CORFing as indicators of social identity theory in action. BIRGing refers to the concept of “basking in reflected glory” and captures a behaviour where the individual participates in successful outcomes that have happened through success on the pitch that is winning a cup or championship. Through the prism of this success, an individual can experience a feeling of vicarious achievement (the pleasure from imagining the success achieved by others such as a team) and sharing that experience with others. By contrast, behaviours such as casting off reflected failures, refers to the psychological tendency of fans to back away from failure by not attending matches. Stewart et al. (2003) carried out an extensive review of the literature on fan typologies and devised the following framework and identified three categories of fan. 1. Internalised, vested and focused fan: the most important factor being the emotional connection to the team followed by the desire for excitement and entertainment and finally the “big” experience. 2. Self-expressive, committed and casual fan: in this case the primary factor is excitement and the special experience followed by emotional attachment and team identification. 3. Camaraderie, care-free and casual fan: here the focus is on social interaction and entertainment followed by team identification. This is a useful approach because it encourages us to think of the motivations that shape

the fan’s behaviour: particularly with respect to a number of drivers such as the “big” experience and the socialisation factor. ??In relation to your sport and the team that you support how would you assess your approach and where would you place yourself in terms of describing your fan typology?

4.4  Fan Motivations

Daniel Wann and colleagues have engaged in some extensive work over the years on the subject of fan motivations. They have provided some useful insight into the inner workings of the minds of fans. From an extensive review of articles and publications on the psychological factors that encourage fans to consume sport Wann et al. (2008) noted that there appear to be eight motives that appear extensively in the literature. 1. Escape: where fans view sport as an opportunity to get away from the boredom of everyday life such as work and study. It provides a diversion. By attending or watching sport they can momentarily forget about troubles such as bills and paying the mortgage. 2. Economic: this motive strictly speaking does not mean that an individual is actually a fan of a particular sport. Primarily a sporting event, game or competition, provides that person with an opportunity to make some money by means of gambling or betting on the particular outcome. With the advent of the Internet and online betting facilities this has emerged as a prime motive for many people when engaging with or consuming sport. 3. Eustress: this is the opposite of what we refer to as stress. The latter does not provide any excitement or arousal: it usually can cause illness or depression. Eustress refers to situations where the individual can experience euphoria; for example, the team wins the championship. It resonates strongly with the excitement and passion that sporting events “bring to the party” and can be a strong motive for attending or viewing on television.

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4. Group affiliation: this encourages individuals to share and participate with other likeminded people in their quest to support and identify with a particular team or event. Fundamentally it represents the socialisation aspect of sport. 5. Entertainment: this motive goes beyond the functional aspects of supporting a team or sport. It recognises that there are hedonic aspects to watching and attending sports events. This will vary; depending on the preferences of the individual. For some people, boxing, wrestling and MMA events present an opportunity to enjoy the violence that are associated with such sports. 6. Family: although similar to the group affiliation motive, this brings it closer to home. Many people see sport as an opportunity to spend more quality time with family members. In many cases, particularly with team-based sports, fans initial interest is sparked off by the parent(s) bringing them to games as kids. This tradition is passed on subsequently to the next generation. 7. Aesthetics: some sports are by definition less aggressive and more focused on particular demonstrations of skills. For instance, many tennis fans enjoy watching particular players because of certain aesthetic facets associated with their style of play, for example baseline rallies, or a powerful serve. Likewise, in sports such as gymnastics, the athletic prowess and skill of an individual gymnast can appeal to some fans. 8. Self-esteem: this refers to feelings of selfworth in an individual and how that can be enhanced by sport. For instance, when a team wins a competition unexpectedly, this can create a sense of BIRGing that we mentioned earlier. Likewise, when the individual is surrounded by thousands of fans at the stadium, all wearing the team jersey, the level of self-esteem can rise dramatically. A more recent report has refined these motives (Performance Communication 2016). Those labelled as family, self-esteem, group affiliation and economic, have been replaced by the following motives.

55 Learning: the fan watching to learn from, and be inspired by, the participants 55 Bonding: the use of sports to bond and spend quality time with family 55 Achievement: the feelings of vicarious achievement that fans share when their team wins 55 Connecting: the sense of belonging that fans feel by being connected to a larger group. Of course, it would be too simplistic to ignore the fact that motivations such as the eight identified by Wann and his colleagues are universal across all sports. Likewise, it is more realistic to acknowledge that motivations are also likely to differ when we take factors such as gender, age, ethnicity and sub-cultures into account. Fan motivations for watching and attending sports are multi-layered. Much of the research in this area is grounded in empirical studies of North American fans. Clearly that environment is not symptomatic of other regions of the world. Therefore, I urge caution when reading around this topic as specific cultures are different. This is particularly the case in the growth markets for sports consumption such as India, China and the Gulf region. A number of scales have been developed to measure the motivations of fans in order to shed greater insight. Most of the work on this topic has largely been built on the eight motives that were identified from the literature by Wann et al. (2008). We can see the similarities by citing two scaling methods. For instance, Smith and Stewart (2007) utilised three dimensions within their framework: psychological, sociocultural and social belonging. James and Ross (2002) pinpoint four motives: attributes of spectator sports, sociability, entertainment and self-definition. Solberg and Mahus (2014) in their review of fan motivations stress that the general issue of sociability features universally in virtually all of the studies in this area. This resonates strongly with our earlier examination of motives such as family, group affiliation and bonding.

81 4.5 · Fans and Affiliation

Psychological Self-esteem Escape Personal Aesthetic Entertainment Sensory stimulation Economic

Social: Family Group affiliation

Motives for influencing sports consumption

..      Fig. 4.1  Motives for Influencing Sports Consumption. (Source: Adapted from Wann et al. (2001))

In summary, our investigation of the motivations behind fan’s involvement in sport reveals that they are multi-dimensional and need to be examined with specific contexts such as the type of sport, gender, age and culture. An analysis of the existing research in the area reveals that a number of motives consistently emerge across the various studies. . Figure  4.1 indicates that fan motivations can be summarised under three distinct areas: social, psychological and personal. Why is it important for sports marketers to have an understanding of fan motivations? We will attempt to answer this in further detail in 7 Chap. 5. However, we can make the following observations at this stage. Like all sectors, marketers are challenged to develop products, adapt existing ones and look into the future in order to remain relevant to their target market’s needs and requirements. The sports sector is no different. Motivations change over time. Fans can drift away from traditional sports and move to new and perceptually more exciting developments: e-sports being a case in point. Customer retention and customer relationship and experience management are fundamental challenges for all marketers. Again, the sports sector is no exception. If we do not fully understand the motivations and needs of our consumers (in this case  

 

sports fans) then it is unlikely that we can successfully address such challenges as customer retention. 4.5  Fans and Affiliation

Two of the primary motivations identified earlier in the chapter: family and group affiliation highlight the importance of community and a sense of belonging to a community. This leads us to the concept of tribalism and how it impacts on people’s behaviour. People do not exist in isolation (except for a few reclusive individuals). Most of us desire to be part of something: usually involving people. This initially involves family and family members. As we grow up, our network extends to school friends, people we play sport with and socialise with: work colleagues, members of our networks of contacts and so on. The animal kingdom tends to hunt in packs. Humans likewise tend towards groups and group affiliation. Nowhere is this more evident than the case of sport: team-based sport in particular. Madrigal (2002) picks up on the rationale that for many people belonging to a particular group or community helps the individual to provide distinctiveness from other social groups. Sports affiliation to a particular team, particularly in times of success, provides this

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degree of distinctiveness and reinforces the pleasure experienced by the individual because it is shared with other group members of a like mind, persuasion and motivation. For me as a fan, it is captured when my team wins a competition or cup and the shared passion that takes place in the stadium. Likewise, when the team parades through the city afterwards, it is hard to beat the sheer joy and enthusiasm that pulses through the fans. The notion of tribes and tribal marketing was introduced to the literature by Cova and Cova (2002). They note that the term “tribe” “conveys the same characteristics as an “ethnic group” but on a smaller scale: local, linguistic and cultural homogeneity.” (p 597). Dionisio et  al. (2008) reinforce this message by noting that a tribe is made up of “a network of heterogeneous persons, in terms of age, sex and income, who are linked by a shared passion or emotion”. (p 22). The sports sector and fans in particular would appear to integrate perfectly into this notion of tribes and in particular tribal behaviour. Rituals and symbolism are other critical aspects of tribal behaviour. We witness this in team sports particularly. Fans wear the jerseys, scarves and beanies to reflect and reinforce their commitment and passion for the team. Some fans go further and place tattoos of their team’s crest or favourite players on their bodies. When attending games some fans get their faces painted in the colours of the team. Rituals revolve around the stadium (equivalent to the cathedral in a religious context), meeting places (bars or at the supporter’s club), the seat that belongs to the season ticket holder and so on. The behaviour of such groups or communities of fans does not automatically generate unswerving loyalty and commitment to the club at all times. There may be periods when loyal fans become disenchanted by decisions made by the board of directors or the manager. For instance, when a particular player who has proved to be very popular with the fans is sold, this may engender criticism and in the worst-case scenario, a decline in attendance. This is a mechanism for fans to record their displeasure. More extreme forms of

behaviour may revolve around boycotting certain games or carrying out a protest march outside the stadium on the day of a game. Fans can reflect positive group/tribal/community behaviours with respect to their attendance at games, irrespective of performance on the pitch. They can act as ambassadors for their team and country at away games. Fans from Brazil, Scotland and Ireland in particular, have built up strong reputations for their friendly behaviour at international tournaments, even when their teams do not necessarily win games. In an era where there is an ever-increasing focus on commercialism the onus is on senior management of clubs to take on board the importance of fans and their behaviours (positive and negative). This is particularly so in the case of dealing with sponsors. In certain situations, fans can take it out on the club and sponsor if they do not like the latter or agree with its business strategy. This was evidenced recently in the case of Newcastle United: an English Premier League team. For a number of years, it was owned by Michael Ashley: the owner of Sports Direct. He received much criticism in the general media for the way in which he was alleged to have run this business: low wages, little concern for worker’s rights and a reluctance to invest in the team. Interestingly, while groups of fans protested at various junctures during his tenure of the clubs, attendances were very consistent – selling out to capacity in the case of virtually every game. Despite Ashley’s reputation as a business-person, the club was financially sound. Ironically fans heavily criticised him and his senior management team for not releasing sufficient funds to invest in players.

4.6  Dysfunctional Fan Behaviour

Fan behaviour manifests itself in different ways. We have identified the continuum from the occasional, disinterested fans at one end, to the “die hard” fanatical fans at the other end. For the most part fans behave in a responsible, positive, committed and loyal way. However, on a negative note, team-based

83 4.7 · Fans and Their Consumption of Sport

sports such as football can also attract fans that clubs could well do without. The adage that successful clubs breed success is only partially true. They also are likely to attract categories of fans that infiltrate the club and use it to promote their own attitudes, perceptions and prejudices. In extreme cases this can be seen in violent and aggressive behaviour, often fuelled by alcohol. Sectarianism, racism and other extreme and non-acceptable forms of behaviour predominate. In the worst case this spreads out to violence and fighting. Wakefield and Wann (2006) carried out research on the concept of the dysfunctional fan and their findings largely support the above observations – particularly the role that alcohol plays in fuelling such disruptive behaviours. We should inject a rod of caution with the findings from such studies however. For instance, they tend to be based on specific sports in specific cultural and geographic contexts: in this case, collegiate NFL (American football) sport in North America. Sadly, dysfunctional fans have a disproportionate influence on club owners and league administrators. This is evidenced in some European football leagues where alcohol is banned within the stadium to the general fan or a “weak” beer is only available. Policing is also extensive and intimidating  – particular for the well-behaved fan. Clubs are fined when dysfunctional fans make obscene chants – revolving around religious bigotry or racism. In such cases the vast majority of fans suffer because of the behaviour of a minority of disruptive fans. 4.7  Fans and Their Consumption

of Sport

In the previous sections we considered the concept of the fan, fan motivations and fan behaviour in a group or tribal context. We now move on to investigate the way in which fans engage with their particular sports. This is essential for sports marketers. They need to understand how fans (virtual and physical) engage with sport in order to develop appropriate engagement strategies.

We need to take a wider perspective as to how fans consume sport. The most obvious way is by attending live sporting events. However, we have to recognise that it is not always possible for fans to make the physical journey to the stadium or arena. Even those who do so on a regular basis will also make use of a number of media outlets in order to engage further with their favourite sport, team or individual athlete. Many fans may not attend live sports events but none the less fully participate in watching and engaging with a sport through media outlets and technology-based platforms. We might label this category as “virtual fans”. If we observe successful English Premier League or La Liga clubs such as Manchester United or Barcelona, we can see that they have many millions of fans scattered across the globe. Many of them will never see a live game involving their team, (mainly due to geographic location or lack of finance to fund trips to the stadia). However collectively they represent a strong source of revenue for such clubs. They buy merchandise and directly influence the amount of investment TV and media companies lay out to purchase international media rights (discussed in detail in 7 Chap. 5). Without such commitment and interest, it is doubtful if the administrators of these leagues and competitions could attract the level of funding that is generated from this source. The ways in which fans consume sport has changed dramatically in the past decade or so. It is likely to change even more so over the next decade. What has caused this change? EVS (2015) produced a report which identifies two major influences. Firstly, we have to acknowledge the role that developments in technology has played. Secondly, such advances have led to a shift in fans use of media to engage with and consume sport. We can also identify the role that increasing amounts of and access to data has played in shaping the fans expectations. Let us put this in perspective. Sports fans above the age of fifty would have relied on traditional forms of media to engage with their chosen team or sport. Prior to the late 1980s football fans in most countries had very limited access to live games on TV. Media such as the  

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radio and newspapers were the main mechanisms by which fans engaged with their sport. Some of the larger clubs would produce their own in-house magazines. This provided another closer link for fans to their clubs. The era of the Internet and social media platforms did not exist until the mid-1990s for many people across Europe and other parts of the world. We witnessed great variation in the adoption of the Internet. Many regions had (and some still have) poor connectivity and Internet speeds. Sports marketers and administrators were relatively slow to adopt these platforms initially. However, since the early part of this century and allied to the increasing number of professional marketers entering into the sports sector, we have witnessed a major growth in the way in which sports organisations and fans utilise technologies and social media platforms to consume sport. This has led to a major shift in the way we consume sport. Let’s explore this in greater detail. 4.7.1

Change in Direction and Focus

The EVS report (2015) was significant because it was one of the first major studies to attempt to study the impact of such technological developments on sports consumption. The findings reveal major changes in sports consumption and have implications for sports marketers that we will explore more fully in 7 Chap. 5. The study interviewed over 1500 fans globally to explore the following questions. How they consumed sport? What they consumed? What they would like to consume? Interviews were conducted within stadia and in public spaces outside. Some of the key findings are captured in 7 Box 4.1.  

 

Box 4.1  How Fans Consume Sport 55 93% of fans follow sport on TV 55 51% of 18–24-year olds multi-task while watching sport 55 76% follow sports online

55 67% (18–24) prefer smartphones when consuming sport online 55 60% do so on mobile devices 55 of those who use smart phones: 60% consult sports news, 49% watch TV highlights and 41% watch games that are streamed live. Source: adapted from EVS Report (2015)

These general findings indicate the broad shift in direction with growing numbers of fans making use of technology such as smart phones to heighten their involvement with sport. In terms of what they would like to see happen when attending live events in sports stadia and arenas, the following points emerged from the survey and are highlighted in 7 Box 4.2.  

Box 4.2  Desired Levels of Engagement in the Stadium 55 73% would like to watch multi-angle replays of key activities on their smart phones –– 69% of which would like to do so during the live event 55 48% of season-ticketholders would be willing to pay for the right to access replays and highlights during the event 55 83% would be prepared to accept advertising on their mobile phones in order to access content. Source: adapted from EVS Report (2015)

We can see from these findings that people are indeed showing clear evidence of multi-­ tasking during the live event and desiring greater levels of content and features in order to enhance their in-stadia experiences. We have highlighted the increasing role played by social media platforms such as Facebook, Twitter and Instagram (to name but a few).

85 4.7 · Fans and Their Consumption of Sport

Box 4.3  Social Media Platform Usage 55 75% (18–24) follow sport on social media platforms (Facebook and Twitter mainly): –– of which 24% share video clips –– 52% share picture content –– 29% share sports news in text format 55 In terms of consuming sport: –– 55% consume video highlights –– 39% follow their favourite team/ player/league –– 35% follow sports news in text format –– 22% watch live streaming of the sports event 55 72% use mobile devices in the stadium. Source: adapted from EVS Report (2015)

7 Box 4.3 highlights some findings from this aspect of the fan’s consumption of sport. We have to inject a note of caution when interpreting these findings. Clearly this study was conducted in 2015. The pace of change moves on and we have to acknowledge that wide variations in consumption behaviour are likely to exist across different geographic regions. The general message from this survey is that fans are embracing the changes driven by technology and data. This is reflected in how they consume sport. Traditional media such as TV, newspapers and radio are still relevant. We should recognise that they too are adapting to the changing communications environment by developing new features and content to reflect the needs of sports fans to connect and engage with their chosen team/sport/event. The global fan, despite showing some degrees of variation in usage and application of the technologies and social media platforms demonstrates these characteristics to a much stronger degree than before. More recent studies (PwC Sports Survey 2018 and 2019) indicate that in terms of the devices that younger fans use to consume sport, 96 per cent use the smartphone, 84 per cent use laptops, while TV and radio still retain popularity (81 per cent and 71 per cent  

respectively). These studies also indicate that the most popular area of content is that of highlights/on demand video followed by live video content, team/athlete generated content and fan generated content. The same cautionary words about the accuracy of such data prevail: we will see variation across different geographic territories. However, these statistics indicate the criticality of content in terms of engagement and a perceptible shift away from traditional devices such as TV and radio. 4.7.2

Connectedness

It can be argued that fans, because of the range of tools and platforms open to them can become more connected and emotionally attached than was the case in previous decades. Apps and social media mean that they can engage with the club or sports organisation, the player and fellow-fans. This allows them to share experiences and opinions and become an even stronger part of the community or “tribe” that we referred to earlier in this chapter. Ironically it can be counter-argued that players are becoming more physically remote from their fans. This of course varies across different sports. In some cases, such as baseball and NFL in the USA, players engage in photo and autograph-signing sessions with fans. However, in the case of the top teams in the major football leagues in Europe, players are often protected from intrusions by fans at training grounds or after games. Back in the day when players were not as well remunerated as they are now, fans could meet them on the bus or subway on their way to the game or socialise with them after the match in the pub. While physical connectedness may be in sharp decline many fans connect virtually with players via Facebook and Twitter feeds from them. Virtual connectedness is alive and well and growing. 4.7.3

Empowerment

Fans, because of this greater degree of connectivity and attachment, can arguably become more proactive in their relationship with clubs

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and sports organisations. In times of discontent over a particular issue (e.g. poor on-field performance or weak management) they can leverage this mood of discontent to express the collective displeasure of the fan-­base with the management and administrators of the club. This can force change simply by virtue of the pressure and power exerted by the fans. 4.7.4

Drive for Enhancements and Data

The modern fans would appear to have an unquenchable thirst for more features and enhancements, largely built around content and information. This is captured in two specific areas: second screening and access to increased information surrounding the sports event. 4.8  Second Screening

As we discuss in 7 Chap. 5, consumers in general and fans in particular are changing the way in which they watch entertainment and sport. No longer are people dependent on the television as the main medium for consuming films and sport. A report by Accenture (2015) indicated that at any point in time 87 per cent of consumers use more than one device when watching TV, 61 per cent were expected to buy a connected TV (Internet Protocol TV). The message tells broadcasters that they need to develop multi-platform devices in order to satisfy the needs of consumers. The sports sector is no different and arguably this sector is even more driven by fans making use of multiple devices when engaging with their favourite sport. Second screening refers to this practice of watching sports events, either live or virtually, while making use of smart phones, laptops, tablets and so on at the same time. Why would fans want to do this? Firstly, by making use of second screens fans can share their passions, emotions and excitement during the event. When the team scores a goal, twitter or Instagram kicks into  

action for many fans as they post short messages, photographs or video clips to friends on social media platforms. Secondly, some fans want to be as fully briefed about the teams, competitors and so on while watching the event. In the context of a tennis match, a fan might want to call up details about a player’s performance during a set. How many first serves have gone in? What degree of success on the backhand shots? How did both players fare against each other in previous encounters? TV companies increasingly provide such information at various junctures during the match on the screen. However, fans are making use of tablets or smart phones where they can access such information as and when they want to. They are not dependent on the TV producer to put up information on the TV screen. Thirdly, we see the concept of moment marketing occurring when second screens are used. This is similar to the concept of in-game betting, where fans can place bets during the game or event as the betting companies amend and adjust the odds in light of what is happening on the pitch or in the sports arena. In the case of moment marketing, companies can interact with the viewer by posting funny comments or cartoons that reflect what is happening. Some fans react positively to this and share that message with fans via their smart phone connection. Paddy Power, the Irish betting company, is a frequent user of moment marketing. It allows them to engage with their target market and ensure that such messages are shared across the fans’ communities. Second screening and its continuing popularity in the future will largely be driven by the content that the brander/sports organisation/ club pushes towards its users as they watch the sports event. Irrelevant or intrusive interventions are likely to irritate fans and potentially encourage them to visit unrelated websites or social media groups to alleviate their irritation or boredom with the main event. Second screening might be a misnomer for this practice. Fans of the future may use third or fourth screening devices.

87 4.9 · Big Data and How Fans Engage with It

How to Make Money From Second Screening

A major challenge for brands is how to turn these engaged second screen fans into paying customers, a problem admitted by Arsenal’s head of marketing Charles Allen. He told The Drum: “B2C is an area of incredible opportunity for us. We have hundreds of millions of fans around the world but we have around 2 million who transact with us on a B2C basis, so how do we drive that transaction, how do we make our offer through our eCommerce platform, through our stadium tour business, through our ticketing business more attractive than anything else?” The way Arsenal and other clubs and sponsors are looking to achieve this is to utilise their exclusive content and access via social media to offer second screen fans something they can’t get elsewhere: “The real challenge is getting to the nuggets that people will really like,” he said. “In a world of free, most people can get their Arsenal fix out there somewhere, so given that all the content originates from here, which are the real nuggets that we hold back for ourselves? What are the really exclusive bits that are ours that will then drive numbers?”

??Do you think it is likely that fans would pay for such content? Why? If not why not?

4.9  Big Data and How Fans Engage

with It

We highlighted the importance of access to data and information in the sports context. This mirrors what is happening in other sectors of business such as retailing. In the latter case, shoppers and retailers can access and make use of information to aid better decision-­ making and provide more personalised forms of communications. Sport has also embraced what we refer to as “big data”. It impacts on many of the key stakeholders in sport. From a coaching perspective in many sports, trainers and managers make use of data collected on athletes and teams to devise relevant strategies to overcome the opposition.

Currently, social is still the king when it comes to second screen activity during sports events, because it offers fans what they most want from the experience while they are watching the game. For brands wanting to monetise this activity they have to take this into consideration, as anything that feels less authentic and more like corporate money-making will struggle to win over many users. Sports and the second screen remain a tantalising potential market to be conquered, but now, several years since the term was first coined, we are no closer to seeing a clear-cut model for success in this area. However, as with any audience this size, you can bet that marketers will keep on trying to capture our fleeting attentions as our eyes flit between screens, and someone will find a way to entice us to spend. (Adapted from Digital Marketing Innovation. (2017) “The Importance of the second screen in sport.” 22nd March. Available at 7 https://mporium.­com/blog/digital-marketing-innovation/importance-of-second-screenin-sport/)  

GPS trackers and sensors can capture data on athletes in both training sessions and games. The data collected is fed into analytical engines and the results can provide accurate data analysis on factors such as speed, distance covered, endurance and so on. Wearables are devices that the athlete can attach to the body or clothing. These allow coaches to monitor the conditioning of athletes and tailored training programmes and regimes can be devised to improve performance. The use of such big data analytics (BDA) tools is extensive in all forms of sport. This can be evidenced by the number of staff that are employed by sports clubs to generate and analyse the data with the overall objective of improving individual and team performance. From a fans perspective, big data allows them to interact with the sporting event more closely – particularly in terms of relevant statistics and data that are relevant to the teams and

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players taking part in the sporting event. Some sports such as baseball and cricket are “top– heavy” with statistics on individual players and teams. Some fans enjoy interacting with such data in order to enable them to immerse themselves more fully as the action takes place either virtually, via main and second screens, or through live participation at the event. Fantasy sports and leagues represent a very significant growth area where fans can further expand their immersion into specific sports. Larkin and Fink (2016) in their review of the extant literature posit the view that fantasy sports sit easily alongside a fan’s identity with a particular team or sport. Big data plays

a prominent part here in terms of generating the material to allow a fantasy sports fan to select teams, develop a strategy, monitor the opponents and make decisions on transfers and purchases of relevant players. In essence some of the fantasy games that have been developed allow the fan to proactively play the role of the manager or coach and experience the joys and despair that managers experience in the flesh. We should not underestimate the number of players involved in fantasy sports. For instance, in the USA and Canada it was estimated that as of 2014, around 40 million players were actively involved (FTSA 2015).

Big Data and Fantasy Sports

Fantasy Sports – Paving the Way for Analytics It’s not only professional sports that’s generating revenue, fantasy sports are making their name as nearly 57 million players are participating in this activity. Big Data has boosted the growth of fantasy sports, a true skill game based on live statistics. FanDuel and Draft Kings, two huge players in this business have partnered with several sports organizations. Extracting data from these websites is a potential avenue to see how players will perform in the future. Suppose a data analyst needed information about players to create a fantasy team. The data available could be used to build models for the standard performance of players over a period of time. You could also use the data to analyse your rival team such as their play history, past tactics and movements. This data can help to select teams or predict the outcomes to a reasonable degree. Reacting to real-time

4.10  The Fan Going Forward

In the previous sections of this chapter we have examined fan motivations and behaviours. What about the future? We have ­witnessed major changes in the manner with which fans consume sport, engage with sport and connect with their favourite teams, sports and athletes. Are we likely to see a similar rate of change going forward over the next 10–15 years?

player related data and making adjustments is another use of online data. Sports Betting – Free Markets at Work Online sports are a billion-dollar industry that is becoming bigger and bigger every day. It’s being transformed by Big Data and people are trying to win money by betting on sports. This is because a lot of sports outcomes can be determined by stats. Sites such as SharkScope gather data from millions of poker games daily and give data to players all around the world. Websites such as these are about historical data of players and monitoring the overall performance to make predictions in succeeding games, so there will be plenty of potential for collecting data. Source: Adapted from: Sports data: The rise of big data and analytics 2017. Available at 7 https://www.scrapehero.com/sports-the-riseof-big-data-and-analytics/

Before we address this question, we should acknowledge at the outset that we cannot be predictive about what will happen. We can only consider present evidence and project forward. The fluidity of social media platforms and technology development suggests that many changes are the order of the day. Platforms such as Instagram and Snapchat did not exist 10 years ago. They are likely to be superseded by more sophisticated tools as we move forward.

89 4.10 · The Fan Going Forward

In this section we focus on the fan. We will explore the implications for sports marketers in far greater detail in 7 Chap. 5.  

4.10.1

Key Drivers and Trends

A detailed report produced by Canvas8 (2016) provides us with some insight into the future fan. It identifies the key influences that will shape the fan of the future and in this section, we can consider some of the more salient features of this report. 4.10.1.1  An augmented and

enhanced viewing experience

Augmented and virtual reality are presently used in various industry sectors. We can experience this with retailers in the context of virtual changing rooms and window displays. In the context of sport, we will see greater use being made of such technologies to enhance the viewing experience for the sports fan. Virtual reality refers to the use of computer technology to provide the viewer with a simulated experience. In other words, you are presented with a totally different reality to the one that is in front of you. For instance, you could explore the layout and features of your favourite football stadium, using appropriate headgear, within the privacy of your own bedroom. Augmented reality provides an enhanced version of current reality by using computer technology to add digital information on a particular image that is displayed on your smart phone or tablet device. Such tools will be used more extensively by fans. It will allow them to switch their focus during a game. For instance, when viewing a tennis match, the fan can focus on the on-­court activities and interludes court-side or focus on the movement and shots of one of the players. Advances in camera technology will also augment the fans experience. We already see this in sports such as rugby, cricket, cycling and horse-racing where TV producers make use of on-bicycle, stump and drone cameras. This currently provides the viewer with an opportunity to see what the cyclist sees. In the

future we will see much more extensive and sophisticated use of personalised camera technology. For instance, the viewer, on the first or second screen, will be in a position to stick with a preferred cyclist and focus on that individual. We will see increasing use of 360-degree systems to provide the viewer with personalised and enhanced viewing. Smart, internet TV sets are beginning to increase in sales and popularity (although we should acknowledge that this varies across geographic regions). This will extend further over the coming decade and fans will be able to experience more extensive and sophisticated degrees of personalisation as to how they use the features. We will see greater synchronisation between the TV and the other devices. For instance, second screens will provide the viewer with more detailed data tracking of individual athletes or players throughout the game. Within the stadia we will also witness greater expansion of tools and technologies to enhance the fan experience. Currently, as I write this section, the Levi Stadium in San Francisco is arguably the most connected sports stadium in the world. For the 2016 NFL Super Bowl it laid around 400 miles of cables to manage the Wi-Fi system. During the event it transferred over 10 terabytes of data across this system. Using apps, fans attending the event spent an average of $88 on food and beverage. This level of technology will extend to manage and address key issues such as enhancing the quality and level of atmosphere and passion. The Canvas8 report (2016) notes that stadia of the future will be part of a wider package that will merge with retailing, tourism, entertainment and leisure. They cite the example of a recent partnership between Major League Soccer (MLS) and Tinder in the USA.  This focused on an initiative whereby fans who are single could connect with others, allowing them to meet up with the possibility of discovering love! Fans will also make greater use of tools such as FanCams to capture 360-degree angles and send them in real time to their followers via social media platforms. This is already happening but will grow exponentially over the next decade.

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4.10.1.2  The proactive fan

4

Presently, we are witnessing a change in the relationship between fans and their favourite teams. Increasing use of social media networks means that fans do not see themselves as passive recipients of communications and decisions that are fed down to them from the owners and Directors of teams and leagues/ competitions. They want to play a more proactive role. In the future we are going to see greater interventions by fans in areas such as ticket price decisions, player and manager signings and media rights deals. Fans no longer want to passively watch the event, they want to experience it “first-hand”. This is currently evidenced in many different sports. For instance, large numbers of cycling fans (who also pursue recreational cycling) want to replicate some of the routes experienced by the cyclists during the event. Currently there is a big tourism market for third-party operators who create this opportunity for people willing to pay for the privilege. In the future such immersive experiences can be developed through virtual reality tools, particularly as the technology improves and becomes more user-friendly. One of the biggest obstacles to the greater adoption of VR and AR is the need for individuals to place cumbersome equipment on their heads, this is off-putting to many. However, this is likely to change with advances in design. Fans are increasingly looking for extra content to supplement their viewing experience. Many of them want to “go behind the scenes” and learn more about their favourite players, what happens on the training ground and so on. Media broadcasters are increasingly investing in creating content-based material and developing narratives to satisfy this demand. 4.10.1.3  The 24/7 fan

Fans of the future will be even more disposed and demanding in the context of more constant engagement with their favourite teams and athletes outside of the actual games or competitions. ESPN estimates that two-­thirds of its audience access its material and sports coverage exclusively via mobile devices. This

trend is likely to increase substantially in the coming decade. Fans will demand more content, features and engagement from the clubs as they engage with their sport. They will no longer be willing to accept the restrictive subscriptions that they have to take out with Pay-to-view broadcasters such as Sky and ESPN. Currently we are witnessing changes in how people pay and access such material. As we note in 7 Chap. 5, the fixed monthly subscription, so beloved by Sky is being loosened up to include options such as the “daypass”, Sky on the Go and pay on a game-bygame basis. The arrival of other players such as Amazon, Yahoo, Snapchat and Facebook to this market space is also likely to see changes in how fans will access games and competitions. We are also witnessing other initiatives. Operators such as WWE Network in the USA, provide subscribers (around $60 per month) unlimited access to all the sports events. Sports such as Formula One, the English Premier League and UFC are exploring opportunities to sell their events and fights directly to fans. Will we see individual teams and/or sports entity holders continue to cut out the middle-­ man (TV operators) and go over the top (OTT) and sell directly to their fans? It is likely that at some point in the future, fans will prefer to purchase a virtual season ticket from their club to enable them to watch every one of their regular season games.  

4.10.1.4  Goodbye to ordinary: hello

to luxury

One of the interesting predictions emanating from the Canvas8 (2016) report refers to the probability that the average fan is likely to be priced out of attending live sport. Hopefully this is inaccurate but even now the evidence points to that direction. Despite revenue streams soaring from sponsorship and media rights, ticketing strategies are also rising, particularly in the case of the successful team with a large, global fan-­ base. While sports entity-holders are receiving heavy criticism from many quarters about their apparent indifference to the fan, the real-

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ity indicates that with a few exceptions such negative comments are being ignored. The quest for enhanced and unique experiences at live sports events is not likely to come cheap. As we shall see in 7 Chap. 5, sports marketers currently (and even more so in the future) are investing in the stadia infrastructure to cope with the heightened demands and expectations of fans. Such investment is likely to impact on ticketing prices. We will more than likely see more focus on fan segmentation with resulting diverse areas of the stadium to cater for the different categories.  

There is a danger that for the top games and competitions, the ordinary fan may be priced out of the market. As fans with higher incomes seek ever-more personalised and intense experiences, clubs and sports bodies will have to make appropriate changes to their “product”. It will also be potentially advantageous for them as such fans will be willing and capable of paying for such experiences. Source: adapted from The Future of the Sports Fan 2016. Canvas8: Performance communications. Available at: 7 https://www. fotball.no/globalassets/domer/the-future-sportsfan_spilleregler_english.pdf

Enhanced Fan Experience

In 2017 Manchester City; the English Premier League team created a £7500 category of season ticket. For this princely sum, fans are provided with a much more focused engagement with the team and coaches at match-day. Both teams can be observed by these fans through a glass tunnel as they emerge for the pregame warm up exercises. Interviews with home players are exclusively broadcast to this group. Members of the Manchester City coaching will discuss the rationale behind the match tactics also before the game. These initiatives together with immersive VR and 360-degree features highlight the way forward for sports clubs as they try to satisfy the appetite for fans who are willing to pay. We are likely to see further and more sophisticated initiatives over the next decade. 1. The inexorable rise of e-sports eSports are essentially video versions of various sports. It is currently (2017) the biggest game in the world with people globally spending around 1.5 billion hours watching Activision games being played. In the USA market for e-games women make up almost fifty per cent of the gamers. This trend was reinforced in 2014 when FIFA added its women’s teams to console play. Within 3  weeks the American striker Alex Morgan’s alter ego scored over a million goals. FIFA is the biggest seller across the sports (as of 2016). In that year over 2.3 million interactive World Cup qualifiers were played on screen and over 9 million games were played per day.

Creative individuals have developed their own personalities by playing v-games and e-games on channels such as YouTube. They have created such a persona that American franchises and football teams in Europe have recruited them to promote them online. The EPL team: West Ham United recruited Sean “Dragoon” Allen to represent them at FIFA events. As technology and software continue to develop in terms of sophistication and interaction, e-games and v-games will continue to grow in popularity. They also present even greater opportunities for revenue streams for sports organisations, clubs and athletes (The Future of Sport Report 2016). Allied to the growth in e-games and v-games we can also see the emergence of new games. Some based on fictional events. For instance, the sport of Quidditch featured in many of the Harry Potter novels which were written by J. K. Rowling. Since the success of these novels and subsequently the films, the game has evolved into something which is played by many people worldwide. It is a gender-inclusive game  – no more than four players (in a team of seven) can be males. A case perhaps where fiction becomes faction? This development is an example of how sports can evolve from fantasy to an actual sport that is played and watched across many countries. We are likely to see further development in terms of cross-overs from games that have been devised initially as e-games, to mainstream sports.

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4.11  Conclusions

4

In this chapter we have placed the fan as the unit of analysis for our discussion. This is critical for sports marketers as they strive to put in place programmes and strategies that resonate with their key stakeholder. Fans, in some ways, behave like typical consumers but the nature of sport and its associated characteristics ensures that certain facets of behaviour are different. The passion, excitement and fierce loyalty that drives fans to a particular team, competition or sport ensures that for many of them they remain loyal come what may. This means that they do not necessarily display the tendency to switch to another team or sport, as is the case with traditional consumers. In the latter case it is easier to switch to another brand. We assessed the different categories of fans and considered the importance of fan retention and fan development; in the latter case of new segments. We considered the key motivations behind fans attendance at live sports events and have identified some key influences. These ranged from family influences through the concept of eustress (a mechanism for enjoying stress and escaping from the everyday pressures that life brings to them). We observed that fans are no longer passive recipients of information and communication from clubs and sports entity holders. Instead many fans want to be more proactive and take control of aspects of their relationship. We assessed the changing ways in which fans consume sport. While traditional consumption centred on newspapers, TV and radio, the modern-day fan makes use of a range of tools and platforms to engage with their favourite teams, athletes and sports. The growth of social media and digital marketing has changed the landscape for fans. It is far easier now for them to interact, share and discuss their experiences with fellow-fans. While this is happening in all business sectors, it is particularly important within the sports sector. Fans in many ways have been the prime practitioners of tribal or community market-

ing. In essence they want to be part of and connect with their special community of fans. As we noted, this is reflected in the shirts they wear, their painted faces and tattoos, their chants and so on. New technologies and social media platforms act as enablers to allow such bonding and connecting to occur. Going forward, we are likely to see improvements in existing technologies and the emergence of new ones. Fan expectations are rising and centre on more immersive experiences that bring them ever closer to the action taking place in the stadia and arenas. This applies to both the fans who attend live events and those who choose to do so from a virtual location (home, office, with friends or on the move). The convergence of big data alongside the use of tablets, smart phones and laptops encourages a growing number of fans to engage with their sport by making use of second screens. Increasingly, service providers are bypassing traditional broadcasters (OTT) and supplying a range of material to heighten the experience for the fan. We are likely to see more of this over the coming decade. The traditional way in which pay-to-view broadcasters sell their sports package will also change (we discussed this in more detail in 7 Chap. 5). Fans are likely to seek more flexible and less restrictive ways of gaining access to view their favourite teams and athletes in action. The idea of fixed and rigid monthly payments to purchase a full package of football, cricket or rugby will change. It is possible that in some sports, the sports entity holders may set up their own channels to sell and distribute their products to fans globally.  

Learning Outcomes 55 Many fans display a degree of commitment, passion and loyalty that is difficult to replicate in other business sectors 55 Fans, in many cases, are no longer seen as passive recipients of communications and entertainment: they want to play a stronger role in their participation and engagement with clubs and athletes

93 4.11 · Conclusions

55 Social media has provided the glue to allow such interaction to take place 55 Technology has encouraged further, more immersive, experiences for fans both at live events and in  locations where they engage in a virtual environment 55 Modern fans are as likely to view a sporting event or spectacle as entertainment. This is a broader view than what the traditional fan once held. Sports like darts and cricket have recognised the benefits of investing in additional activities to complement the action taking place in the stadium or arena 55 Big data and second screening are gaining in popularity with fans globally, particularly in the case of younger fans 55 Fans following sports, either live or virtually are likely to seek extra material in the shape of video, multi-angle clips and picture-on-picture to augment their direct engagement with the event. Content management will play an increasingly strategic role going forward 55 More and more service providers will provide material OTT 55 New sports in the area of e-sports and fantasy sports will grow further in terms of participants and fans over the coming years. E-sports in particular, will overtake and usurp many of the established “traditional” sports 55 Shorter attention spans are likely to force changes in the duration and complexity of traditional sports. Possible dangers that might accrue from “dumbing down” to attract new fans need to be counter-balanced by making the particular sport or event more relevant for the younger fans. Sports such as golf are grappling with this challenge as membership of golf clubs is declining in many parts of the world.

??End of Chapter Discussion Questions 1. Assess the view that sports fans are not really consumers in the true sense of the word. Use examples to support your point of view. 2. Examine why it is important for sports marketers to have a good understanding of how to segment fans into different categories. 3. Evaluate the extent to which you would agree with the view that the overall entertainment spectacle has overtaken the actual sporting event in terms of importance. Use examples by way of illustration. 4. Some commentators argue that ­technology has allowed fans to become more empowered and proactive in their relationship with their favourite teams and athletes. How valid is this perception? Use examples to support your point of view. 5. Second screening has gained in popularity in recent years. Examine this concept and assess likely future trends. 6. Virtual and Augmented Reality have not really gained popularity with fans generally. Why is this the case? Discuss how they can be made more relevant for sports fans in their consumption of sport. 7. Television still plays a prominent part in the way in which fans consume sport. Assess its relevance as we project forward over the next 10–15 years. 8. Examine the extent to which you would agree with the view that the ordinary fan (lower levels of income) is being priced out of the top sports events and league games. Use examples to support your view.

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Appendix Flying Arrows

4

Introduction The sport of darts has undergone a transformation since its emergence on the scene as a popular TV form of entertainment in the 1970s and 1980s. Back then, despite its popularity with TV viewers, many people queried the status given to it as a sport. Sponsorship was dependent on tobacco companies. The top darts players epitomised everything that was not associated with an athlete: such as a large beer gut and no semblance of taking part in any form of exercise. They merely lifted their pint of beer, took a sip and then threw the arrow (dart). Due to the banning of tobacco sponsorship and declining TV viewers, the sport appeared to slip into decline as a major TV sport. It has to be said that it still retained its popularity as a social, pub-based sport throughout the 1970s and 1980s in the UK. However, in the last couple of decades there had been a noticeable decline in darts-playing: many pubs and bars no longer have a dartboard on their walls. In 2007, Barry Hearne, a well-known, London-based boxing and snooker promoter, spotted the potential of renewing darts as a TV sport and invested time, money and energy in rejuvenating the sport. He believed that darts could be repackaged as a form of sports entertainment which could benefit also from the razzmatazz associated with boxing (where he originally made his money). He also moved the Professional World Darts finals to the Alexandra Palace; an iconic venue for conferences, concerts and sport in the city of London. Around this time, the legislation loosened up in the UK to allow betting companies to advertise their value propositions on traditional media such as TV.  Opportunities also existed to attract such companies to the area of sports sponsorship. Darts fitted into this realm: it was a popular working class sport played by people who also liked to place a bet on horses and football and enjoyed a good night out in the pub.

2017 witnessed the tenth anniversary of the event at the Alexandra Palace: more commonly known as the “Ally Pally”. Key performance indicators such as increased ticket and merchandise sales, increased levels of promotion, higher TV viewing figures and live attendance plus increased prizemoney for the players, are testament to its enduring success. On a wider level the image of darts as a sport has also reinforced its emergence as a popular TV sport. A sports integrity index undertaken by Portland PR Company indicated that darts topped the poll in terms of people’s perception of it as clean sport, untainted by scandals, corruption and cheating. TV viewing figures rose impressively over the past decade since the re-location and re-­ vamp of the World Championships. It peaked in 2016 when it captured a viewing audience in the UK of 1.7 million. It has also expanded its popularity to other European countries such as the Netherlands, Belgium and Germany. The emergence of players such as Michael Van Gerven (2017 champion) created major interest in his home country (Netherlands). Successful players on the tournament circuit from Germany, Belgium and Scandinavia means that TV viewing figures have risen impressively. The 2016 championships generated figures of 1.8 million in Germany and over 2 million in the Netherlands. In the latter case, the TV viewers constituted around 12 per cent of the population of the Netherlands - an impressive statistic by any measure. The capacity at the Ally Pally is 3000. Seats for the two and a half week extravaganza sell out in the space of a day for the daily sessions: afternoon and evening. The promoters are contemplating moving the event into the main hall in the venue. This would double the capacity to around 6000 for the 2018 championships. Across Europe Hearn points to the success of darts, through capacity audiences in 3000 to 4000 seater venues. Ten years ago he states that

95 Appendix

he would struggle to sell fifty tickets in advance of the event and another 50 might be sold on the day as “walk-up”. Further evidence of such European interest can be found in the statistics which show that 7500 German fans bought tickets for the 2017 championship. Likewise over 4000 Dutch fans snapped up tickets as well. TV channels such as RTL7  in the Netherlands, Eleven Sports in Belgium and Sports 1 and Dern in Germany have helped by allocating space for TV coverage of local championships and competitions. Increased viewing figures attract TV coverage. TV coverage attracts sponsorship. This leads to a virtuous circle of increasing revenue pouring into a sport and increased p ­ rize-­money for the players. The sponsorship of the world championship by William Hill is perhaps unique in relation to major sports events. While global sports competitions such as the World Cup, Olympics and so on go for multi-partner sponsorship deals (rather than one exclusive one), the Professional Darts Organisation signed a sixyear exclusive deal with William Hill. Currently it is half-way through a six-year sponsorship, which will be reviewed in 2020. We can witness its growth in countries outside of Europe also. Hearn estimates that around 132 countries covered the 2017 event. He cites examples of ESPN in North America, ESPN LatAM in South America, CCTV in China and Dazn Sport in Japan. In addition to the actual coverage, it can be argued that this ultimately should help to promote the sport leading to increased participation and ultimately players who can compete and win major tournaments. The key to the success of darts in the UK and the Republic of Ireland has been Sky television. Darts does not fit into the typical sport that Sky covers in its portfolio. It does not have the week-to-week appeal of sports such as football or rugby; where there is a definitive season and the story unravels each week in the form of “Super Sunday” games and where a consistent narrative can be developed surrounding teams and players. While Sky covers a number of darts events, the prime one is the World

Championships which takes place over a two and a half week period before and after Christmas. The competition stops for a couple of days over the festive period. The importance of darts in the Sky portfolio is evidenced by the recognition that it receives from gaining a “pop-up” channel for the period, that is a channel that is dedicated to darts throughout. While audience figures are always subject to debate and conjecture, the British Audience Research Board’s figures indicate that darts is the second most popular sport after football on Sky television.  he Fan Experience T The success of darts over the past decade, nevertheless, still raises questions about ­ whether or not it is a form of entertainment or a sport or probably a mixture. Let’s examine the way in which the event is shaped and created in more detail. The marketers behind the World Championships first and foremost regard the event as an extravaganza of entertainment. When we bear in mind that all of the darts action takes place within a physical space of less than five metres, one has to question how close the spectator can actually get to the action. This is addressed by a range of big screens and TVs. However, to engage the audience and create an atmosphere, more has to be done to generate a positive experience for the fan. The first point to note is that the darts matches are only a very small part of the process. When entering the venue, the fan is introduced to a wide range of eateries: from the traditional burgers, fish and chips through to German sausages. Beer is a crucial part of the event and clearly helps to generate the frenzied atmosphere. Beer supply points are clearly signposted and comprehensive. Fans can buy beer tokens when entering the venue. This speeds up the process for ordering and receiving beer because no cash needs to be taken at the selling point. Beer is sold in large containers, again to speed up the process and reduce the number of visits that people have to make to the vending points.

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The sponsor, William Hill (betting company), activates its sponsorship by engaging with fans via competitions around the periphery of the auditorium. Fans can win a tee shirt if they can achieve a certain score by throwing three darts. They also dole out thousands of banners with “one-hundred and eighty” on them: fans wave these banners when the darts player achieves the maximum score with three darts (an increasingly frequent occurrence due to the skill levels of the players). They also provide blue Santa hats to all those who enter the venue. Fancy dress is a ubiquitous element of this event. A very high percentage of fans dress up in a bewildering array of outfits. Sky television plays its part by frequently panning in on fans during gaps in the games. The venue is laid out in different ways to cater to the different segments of fans who come to the event. There is a family enclosure, corporate hospitality centres, tiered seats towards the back of the hall and drinking tables for fans to watch the action on the big screen. There is also an area where fans can pose for selfies with players (both past and present). Pinching concepts from boxing, each player, accompanied by female models enters the arena via a catwalk, with bright lights flashing and individual signature tunes to capture their personalities. Many of the top players are allocated a personal piece of theme music to emphasise their identity and brand. This is an important aspect of marketing, as fans have high levels of recognition and engagement with individual players. Narratives and caricatures are developed. We have Phil “The Power” Taylor, “Barney” aka Raymond van Barneveld and Gary Anderson aka “The Flying Scotsman”. The arrival of the players, allied to the glamour, lights and music drives the fans into a frenzy of passion and excitement. This is further heightened by the dress sense: gorillas, teletubbies, carrots, and tutus to name but a few of the outfits. The beer encourages the fans to sing and chant, similar to what we might experience in a football stadium.

Typically the evening session commences at 7 pm. However, fans enter the hall for this session around 5.30 pm: there is plenty of time for them to lubricate their throats and create a jovial and friendly atmosphere. There is little or no danger that this could break out into fighting and rioting (as can happen in other sports). It is difficult to be accurate as to why this should be so. In the main, it is probably due to the fact that nobody takes it seriously. Indeed fans are happy to be seen to make fun of themselves and their colleagues. As the night wears on, the chanting and singing becomes even louder. In between sets the music is pumped louder and louder as well. The big screens act as a point of focus as the fans follow the fortunes of the players. This ensures that engagement takes place and markedly reduces the dangers of fans becoming distracted by the singing and other activities. Maximum scores are cheered to the echo. The announcer (the person calling out the scores) stands beside the players and also engages in frantic shouting out as each three-dart score is recorded. This also whips the crowd into a frenzy and heightens the atmosphere: especially when a maximum score occurs or when the final “double” is thrown, to win a leg, set or match. All of the action and live viewing takes place in a situation where it is not visible to the naked eye: the big screens address this issue to some extent. It allows fans to track the throws of the arrows and engage with the match between the two competitors. The event attracts females as well as males: it is not made up of an exclusively male audience. For TV viewers the quality of the coverage takes them even more close to the action. The camera focuses on the board and with technology improvements such as HD and Ultra vision, the viewer can replicate the view that the actual player commands of the board and the shot that needs to be executed. Further challenges for the promoters of darts revolve around developing key markets such as North America, China and India. These regions are vast in terms of population and the demographics that darts appeals to.

97 Appendix

Will we see a Chinese or Indian World Darts champion by 2025? Snooker: a sport that Barry Hearn has also been instrumental in rejuvenating, has made major inroads in China, India and Eastern Europe. China has already produced a number of players that rank consistently in the top fifty

players and one of them has contested the World Championship Snooker final. At the moment it is a case of “onwards and upwards” for the sport of darts and its flying arrows. (Source: Developed by the author)

??Discussion Questions

3. To what extent do you feel that cultural influences predominate in the case of darts from the perspective of making it attractive? 4. Can you envisage the sport of darts gaining in popularity in countries such as China and India?

1. From your understanding of what motivates fans to watch and attend sports events, how would you assess motives of the darts fan who attends this event? 2. Assess the view that the event and its focus on entertainment means that the actual sport plays a peripheral role. RIO Olympic Games and Fan Consumption Patterns

Introduction The increasing emergence of new technologies and tools to consume sport is undoubtedly changing the way in which fans will continue to engage with their favourite sports. This has major implications for sports marketers and organisation as they try to remain relevant to their present and future generations of fans. This case is based on a study commissioned by the SportBusiness Group and the Budapest 2024 committee. We look at how fans, across thirteen countries, engaged with the Olympic Games of 2016 which was held in Rio de Janeiro. The data was collected from a survey of 1000 fans (over eighteen) in each of the thirteen countries. The countries selected were as follows: Australia, Brazil, China, France, Germany, Great Britain, India, Italy, Japan, Russia, South Africa, Spain and USA.  These countries represent thirteen of the largest sports markets in the world. The Olympic Games is arguably the biggest sporting event in the world. It is held every 4 years. While the World Cup Finals also has a similar global footprint: it focuses on only one sport. The summer Olympics caters for around twenty-eight separate sports. The potential challenge for the International Olympics Committee (IOC) is to keep their

product relevant for the younger generation of sports fan going forward into the coming decades. From the survey of fans across the thirteen countries over half of them stated that they were either interested, very interested or passionately interested in the Olympics, with the 25–34 age bracket displaying the most interest. More worryingly, those in the 18–24 age group expressed the least interest. Many people argue that the consumption patterns of this group will change as they move from teenage through university and then onto marriage and parenthood. Likewise their interest in sports tends to fluctuate. A key challenge in appealing to sports fans with respect to the Olympics is that it takes place every 4 years. What happens in between? With the World Cup, people’s interests are constantly being cultivated by the qualifying games which runs for 2 years prior to the staging of the finals. Fans are constantly being drawn to these games and the involvement of their national team and favourite players. It is difficult to connect and build relationships with sports fans who are interested in the Olympics. The other challenges revolve around the high levels of bad publicity and negativity about the various scandals which appear to

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constantly overshadow the event. Cheating; mainly through doping has been a constant over the past 30–40  years (exploding in the 1988 Olympics with the disqualification of Ben Johnson in the 100 metres final). Since then it has been proved that six of the eight athletes who competed in that event failed a drugs test. Many fans have become cynical about many of the events in the Olympics. This has led to a loss in trust and confidence. Are we seeing genuine winners or cheaters? Other criticisms of the event surround the way in which cities are asked to bid to stage the event. The costs of hosting such an event: with the requirement for many stadia and arenas to cover the events, often leads to countries and cities generating large levels of debt. Ultimately, the tax payer has to pick up the bill. The many predicted benefits accruing from staging the games often do not meet expectations. It is against this backdrop that the IOC has to consider its approach to retaining and building its fan-base globally. In order to do so they need to make an assessment of consumption patterns across the main markets. Channels During the Rio games, seventy-three per cent of fans watched coverage of the games on conventional TV channels. This was less so in the case of the younger segments - where the smart phone was used to a far higher degree, with forty-three per cent of the 18–24 group using this channel. Ultra HD was seen to be more relevant than Virtual and Augmented reality. In the context of digital tools and social media platforms, 59 per cent of adults across the thirteen markets found them to be interesting and compelling during the Rio games. The 18–24 segment found these platforms more compelling than their older peers: 66 per cent of them found it either interesting and compelling as mechanisms for engaging with the games. Facebook was the most used of the social media platforms in eleven of the thirteen countries. Other popular platforms were Google +, Instagram, Snapchat and Twitter. The multi-sports feature of the Olympic Games highlights the importance of having a

diversity of different media for communications and social engagement. One commentator described the last three Olympics in the following way. “Beijing was the first HD Games, London the first digital Games and Rio was the first social Games” (p 26). On-demand content was very popular across the thirteen countries. This allows fans to view events not necessarily when they happen but when they want to see it. In a multi-sports format, this provides fans with the opportunity to catch up with events that are lower down in terms of their priorities while focusing attention on a particular event that they want to see “live”. The 18–24 age bracket favoured this method much more than their older counterparts. Also, watching it with friends was most popular in eleven of the thirteen countries. While live viewing is still the most popular, on-demand is making inroads and going forward it is likely technological developments will make it an even more significant channel. Live streaming of events will also continue to grow in importance. This is not just confined to tablets, laptops and smart phones. More advanced streaming also allows it to be used on bigger screens. It is also likely that fans will expect a range of extra features to augment the fan experience. These might include multiple live streams, picture-­in-­picture, in-app alerts, multiangle content, synchronised video and data. These developments are shaping the way people use second screening when they are watching the main event. Interestingly, it would appear that fans watching sports events on the primary screen (e.g. TV) are less likely to change channels when the ad breaks arrive. This does not mean that they passively watch such messages, they are more likely to engage with their second or third screens. Fans are more likely now to watch events from the Olympics at locations other than at their homes. This varies across the thirteen countries. For instance, in China, 59 per cent watched events from the Rio Games while they were travelling. Also in China, 63 per cent watched at work.

99 Appendix

Over the top (OTT) will also enhance the experience for fans as they engage with second and third screens. This refers to the situations where a streaming content provider can sell or provide a range of audio and video services to fans without having to go through traditional broadcasters and subscription channels. This will further the immersive experience for fans. This is a critical consideration in the Olympics where individual athletes may be representing a fan’s country in a certain event. That fan may want to engage exclusively with that event. The introduction of such a wide range of material and support data helps fans to shape their experience. A key issue, which has yet to be fully addressed and overcome by technologist, is that of synchronisation. OTT material and live coverage on the main screen are not in synch. This is irritating and clearly degrades the experience. Going forward to future Olympics it is likely that this will be resolved with more sophisticated technology being applied. Social Media The Rio Games pushed social media to the forefront. As mentioned earlier, Facebook proved to be the most popular channel across the countries (China was excluded due to some of the channels not being available there). Content is key to social media. It provides the glue through which people consume, share and discuss with their friends. In the case of the Rio games the most popular provider of content was the official Olympic Games broadcaster. Over 60 per cent of the 18–24 bracket found individual athletes to be inspiring. Their accounts proved to be popular sources of reference. Other sources proved to be less popular. These included brands, independent websites and bloggers. No one form of content dominated across the countries. Again the multi-sport nature of the Olympic Games poses challenges for those who manage social media content and channels. Traditionally, a competition is centred on one event. Twentyeight different sports means that there are potentially twenty-eight different sets of sports fans: each with specific needs and requirements.

Advertisers push video content as a key to drawing fans to specific sites and platforms. Social media platforms provide them with a rich vein of information on the fans behaviour and preferences in real time. They can respond quickly and intervene with personalised messages and content. New Technology The responses of fans across the thirteen countries was decidedly mixed with respect to AR and VR technology. The main reason for this negativity was based around the headgear and “wearables” that were required to access and make use of them. On a more positive note, around fifty per cent expressed the view that they would be interested in using such tools to watch Olympic events. This suggests that if the “wearables” can be improved then more adoption is likely. The 18–24 age bracket expressed greater interest in using such tools than the older segments. However, they were the most negative in their responses about having to wear cumbersome headsets and goggles. It is possible that such tools will be seen as supplemental to those that create and shape the experience for fans. Something similar occurred when 3D was introduced to sport and cinema. Fans saw little merit in adopting them and instead almost viewed them as obstacles to the reality of enjoying the experience. Gamers are very comfortable with using headsets. It is possible that this may expand to the consumption of more mainstream sports such as the Olympic Games. In summary, the Rio games moved the agenda forward for numerous developments including second screening, digital and social media, particularly so in the latter case. Fans expect immersive experiences as they engage with the Olympic Games. They require content in the form of video, extra features and data to enable this to occur. Second screening is on the rise but there are mixed signals about AR and VR technologies. (Source: adapted from: SportBusiness Group (2017) The Future of Olympic Games Consumption (2024) produced in association with Budapest 2024.)

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??Discussion Questions

4

1. Are we witnessing gradual and radical change in the way in which fans engage with the Olympic Games? 2. Assess the implications for the marketers and administrators who work for the International Olympic council. 3. In your view is the IOC being proactive enough in responding to changes in fan behaviour? 4. What recommendations would you make to senior management?

References Accenture. 2015. Digital video and the connected consumer. Agas, Konstantinos, and Chrysanthi Georgakaraku. 2012. Travel abroad internal and external motives toward different sport fan types. International Journal of Business and Management. 7 (3): 111–126. Cova, B., and V.  Cova. 2002. “Tribal marketing”: The tribalization of society and its impact on the conduct of marketing. European Journal of Marketing 36 (5/6): 595–620. Digital Marketing Innovation. 2017. The importance of the second screen in sport. 22nd March. Available at https://mporium.­com/blog/digital-marketinginnovation/importance-of-second-screen-in-sport/. Dionisio, Pedro, Carmo Leal, and Luiz Moutinho. 2008. Fandom affiliation and tribal behaviour: A sports marketing application. Qualitative Market Research: An International Journal. 11 (1): 17–39. EVS. 2015. Return on emotion: Creating an immersive experience for connected sports fans. White Paper 12/2015. Fantasy Sports Trade Association. 2015. Fantasy Sports Trade Association 2015 Media Kit. Available at http://c.­y mcdn.­c om/sites/www.­f sta.­o rg/resources/ research/industry-demographics/. https://www.­s crapehero.­c om/sports-the-rise-ofbig-data-and-analytics/. James, J.D., and S.D. Ross. 2002. The motives of sports consumers: A comparison of major and minor league baseball. International Journal of Sport Management. 3: 180–198. Larkin, Ben A., and Janet S. Fink. 2016. Fantasy sport, FOMO and traditional fandom: How second screen use of social media allows fans to accommodate multiple identities. Journal of Sports Management. 30: 643–655.

Madrigal, R. 2002. Social identity effects in a belief-­ attitude-­intention hierarchy: Implications for corporate sponsorship. Psychology & Marketing. 18 (2): 45–165. Performance Communication. 2016. The future of the sports fan. Pimentel, R.V., and K.E.  Reynolds. 2004. A model for consumer devotion: Affective commitment with proactive sustaining behaviors. The Academy of Marketing Review 5: 1. PwC Sports Survey. 2018. How to call the shots in transition. Available at https://www.­pwc.­ch/en/insights/ sport/sports-survey-2018.­html. ———. 2019. Sports industry: time to refocus. Available at https://www.­pwc.­ch/en/insights/sport/sportssurvey-2019.­html. Richardson, B. 2004. New consumers and football fandom: The role of social habitus in consumer behaviour. Irish Journal of Management. 25 (1): 88–100. Samra, Balvant, and Anna Wos. 2014. Consumer in sports: Fan typology analysis. Journal of Intercultural Management. 6 (4): 263–288. Smith, A.C.T., and B. Stewart. 2007. The travelling fan: Understanding the mechanisms of sport fan consumption in a sports tourism setting. Journal of Sport and Tourism. 12 (3–4): 155–181. Solberg, Harry Arne, and Inger Mehus. 2014. The challenge of attracting football fans to stadia? International Journal of Sports Finance. 9: 3–19. SportBusiness Group. 2017. The future of olympic games consumption (2024) produced in association with Budapest 2024. Sports Data: The rise of big data and analytics. 2017. Available at: https://www.­scrapehero.­com/sportsthe-rise-of-big-data-and-analytics/. Accessed 16 Nov 2017. Stewart, B., A. Smith, and M. Nicholson. 2003. Sports consumer typologies: A critical review. Sports Marketing Quarterly. 12 (4): 206–216. The Future of Sports Report. 2016. Available at http:// futureof.­org. The Future of the Sports Fan. 2016. Canvas8: Performance communications. Available at https:// www.­fotball.­n o/globalassets/dommer/the-futuresports-fan_spilleregler_english.­pdf. Wakefield, Kirk L., and Daniel L. Wann. 2006. An examination of dysfunctional sports fans: Method of classification and relationships with problem behaviors. Journal of Leisure Research. 38 (2): 168–186. Wann, Daniel L., Merrill J.  Melnick, Gordon W.  Russell, and Dale G. Pease. 2001. Sports fans: The psychology and social impact of spectators. New York: Routledge. Wann, Daniel L., Frederick Grieve, Ryan K.  Zapalac, and Dale G.  Pease. 2008. Motivational profiles of sports fans of different sports. Sports Marketing Quarterly 17: 6–19.

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Sports Distribution and Media Rights Contents 5.1

Introduction – 103

5.2

The Scale and Scope of Sports Media Rights – 104

5.2.1

The Global Sports Media Rights Market – 105

5.3

 rends and Developments in Sports T Media Rights – 105

5.3.1 5.3.2 5.3.3 5.3.4

Emergence of Subscription-­Based TV Channels – 105 E xercise – 107 Shifts in the Wind – 107 Further Straws in the Wind – 108

5.4

OTT – 109

5.4.1 5.4.2 5.4.3

 dvantages of OTT Operators – 110 A Disadvantages with OTT Operators – 110 OTT and Niche Sports – 111

5.5

The Arrival of the Faangs – 112

5.6

Business Models for Selling Sports Media Rights – 113

5.6.1

Exercise – 115

5.7

Live Streaming: Boom or Bust? – 115

5.8

Protected Events – 116

5.9

Piracy – 118

5.10

Periscope and Meerkat (and Others) – 119

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_5) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_5

5

5.11

 rotecting Sports Media Rights: Legal Responses P and Actions – 120

5.11.1 5.11.2

 eo-Blocking – 121 G Exercise – 122

5.12

Conclusions – 122 Appendix – 124 References – 126

103 5.1 · Introduction

nnLearning Objectives On completion of this chapter you should be in a position to address the following objectives: 55 To understand the role that media rights play in the distribution and consumption of sport 55 To identify the scale and size of the global sports media rights market 55 To assess the relationship between the key stakeholders in the process 55 To examine the trends and developments that are taking place in sports distribution and media rights 55 To understand the various business models used when selling and purchasing sports media rights and their implications for the stakeholders 55 To evaluate the legal issues associated with sports media rights 55 To identify the potential impact of OTT on the consumption of sport 55 To assess the role that technology is playing in the consumption of sport 55 To examine the changing role of social media and its implications for the distribution of sport.

5.1  Introduction

Fans consume sports in a number of different ways, as we discussed in 7 Chap. 4. One of the key challenges facing sports property owners revolves around how their event, competition, league or team is distributed to the wider target market(s). Traditionally, fans accessed their favourite team or event through a combination of the following: attending the event physically, listening to the radio for coverage, watching it on TV (if it was available) and reading about it in the newspapers. Over the past 20 years we have witnessed a revolution in terms of how sport is distributed and how fans consume it. Historically, clubs and property owners adopted a posture of protectionism  – fearful that live coverage on television would have a seriously negative impact on the attendances, and by default, the revenue stream from ticket sales. This was marked in many countries by a  

reluctance to make available live coverage to traditional terrestrial (state-owned) public broadcasters. The end result for sports fans growing up in the 1960s and 1970s (as I did) was very little exposure to the main competitions and tournaments across the most popular sports. For instance, in the 1970s the English Football League did not allow full coverage of a particular league game on the BBC radio  – only announcing shortly after the traditional 3  pm kick-off on a Saturday which game would be featured. Only the second half of that game was covered live on the radio. The only games shown live on terrestrial TV were the FA Cup Final, the European Cup Final (a predecessor of the UEFA Champions League competition) and the Home Internationals (an end-of-season competition between the four home nations of the United Kingdom). Every 4  years football fans had access to the World Cup and initially some of the European Championships. The first live league game in the UK was shown in 1991. Public broadcasters such as the BBC of course had other critical objectives to address besides the coverage of sporting events. It is fair to say that sport was not one of the items at the top of their agenda: issues such as news, drama and culture tended to dominate (and probably still do). When sport was covered the attitude among programmers was that sport had to fit in with the scheduled list of other programmes to be covered. Typically, public broadcasters paid very little for the right to cover such events. Indeed, it could be argued that many sports bodies and property holders were very grateful for any coverage that could be generated on mainstream television and radio media. For the sports entity holders the main revenue stream accruing to them emanated from ticket sales. Sponsorship, corporate hospitality, media rights and other commercial activities played an inconsequential role in generating attendance levels and in their view threatened the future of the sport from a financial perspective. We have moved on since then. The arrival of subscription television companies – referred to in this chapter as Pay TV, changed the scene totally. When this development is factored in against the emergence of

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104

5

new media, and spurred on by technology innovations, it is not an over exaggeration to state that a “sea-change” has (and continues to) occur in the area of sports distribution and the sale and purchase of media rights. In this chapter we begin by identifying the scale and scope of media rights and discuss the key trends and developments that have led to this transformation. We consider the relationship between the key stakeholders such as sports property owners, sports media rights holders, various intermediaries, that participate in the buying and selling of sports media rights, and of course, the overall implications for sports fans (both physical and virtual). We assess the thorny issue of who ultimately controls various sports and how this may have changed as a consequence of these trends and developments. We also look at legal issues surrounding the topic and examine the impact that issues such as geo-blocking and illegal streaming, are having on the economics and financing of various sports. In the later sections of the chapter, we review the drivers which have led to a confluence of technology, social and digital media and the impact that it has on the stakeholders. We make use of short case studies and exercises to encourage you to engage with the topic and expand the discussion on the issues raised in this chapter. 5.2  The Scale and Scope of Sports

Media Rights

In order to gain an understanding of the global market for sports media rights, it may be useful to consider one of the most successful sports property brands: The English Premier League. . Table  5.1 provides us with a historical perspective on the value of media rights for the English Premier League (EPL) since its inception in the 1992/1993 season. The inaugural rights deal generated £191 million for the teams and was negotiated with Sky Television. Since then we have witnessed eight further deals (each one typically covering a three-year perspective).  

..      Table 5.1  EPL media rights deals from 1992/93 to 2019/22 Deal

Value (£)

1992/97

191 million

1997/01

670 million

2001/04

1.26 billion

2004/07

1.024 billion

2007/10

1.706 billion

2010/13

1.773 billion

2013/16

3.018 billion

2016/19

5.136 billion

2019/22

4.46 billion

Source: Compiled by the author from various sources on the Internet

This table highlights some interesting points. The deal for the period covering 2013/16, almost more than doubled. This is most likely reflected by the fact that British Telecoms (BT) entered the fray in addition to Sky. Prior to that, the latter broadcaster had a monopoly on the bidding rights. Sky clearly increased their bid by a substantial amount to retain most of the attractive games for the upcoming period. The 2016/19 deal also witnessed a further substantive increase—again driven by competition from BT. It was also heavily rumoured that other organisations such as Amazon and Facebook might join the bidding process. This did not happen. The last deal (2019/2022) produced a decrease in the value of the deal. It also saw the involvement of Amazon. The latter organisation purchased a small package (two bank holiday weekends) where all of the Premier League games started at the same time and were all available for fans by using the “red button” on the remote control. We should bear in mind that the deals covered in . Table  5.1 only cover the domestic market that is the UK.  They do not reflect media rights deals with geographic regions outside of this market.  

105 5.3 · Trends and Developments in Sports Media Rights

While the domestic deals may be showing evidence of a plateau effect or possibly a long-­ term decline, the good news for the EPL is that the value of deals across the globe, has increased exponentially. For the period 2019/2020, international sales brought in a revenue stream of around £5 billion. This generated a total of approximately £9 billion in total. While traditionally, and still to this day, television still features as the most popular mechanism for accessing live sporting events. This is changing gradually due to the emergence of a number of different devices such as smart phones, tablets and PCs. The pace of the change and the shift to other devices varies geographically. For instance, in China, the PC and tablet are in more prevalent use while in India the mobile and smart phone is the most popular mechanism for accessing live sporting events. Smith et al. (2016) note that the traditional term “sports broadcasting” is somewhat of an anachronism and does not fully capture the extent and scope of media rights. They prefer to adopt the following definition of what might be called Sports “media rights” as a term that “encompasses the rights to transmit audio-visual material across all transmission devices” (Asser Institute 2014, p. 62). 5.2.1

 he Global Sports Media T Rights Market

The scale and strength of the sports media rights market cannot be under-estimated. The overall global value of this sector in 2017 was estimated to be worth $49.55  billion. By far the biggest geographic market is the USA. However, the sport of football (soccer) was the most dominant one, representing around forty per cent of the overall value. The NFL (American Football) however was the most valuable—generating media rights sales of around $7.7 billion. The UK market is valued at $4.1 billion. (SportBusiness Consulting Global Media Report 2018).

5.3  Trends and Developments

in Sports Media Rights

In this section we consider the main drivers of change that have led to the transformation of the sports media rights sector. We have noted previously the emergence of large and powerful subscription or Pay TV channels such as Sky, Foxtel, ESPN and Star across different geographic areas of the world in the 1990s and 2000s. We explore their entry in more detail in the next section. 5.3.1

Emergence of Subscription-­ Based TV Channels

Powerful media operators such as Rupert Murdock spotted opportunities in the context of the sports industry in the latter part of the twentieth century. Through his Sky TV operations, he was one of the initial entrants into the sports sector. Other Pay TV operators quickly followed suit. The rationale for their entry can be summarised as follows: 55 Sport is seen as a global activity that attracts large and diverse audiences with certain sports building up large followings among desirable demographic groups such as young, mid-to high-income individuals 55 Because of the popularity of sport, the acquisition of sports media rights allows TV companies to build up a critical mass of subscriptions, thereby creating the opportunity to make sizable profits. This is encapsulated in the words of Rupert Murdock who observed that sports rights have been used as a “battering ram” to gain access to potentially lucrative Pay TV markets world-wide 55 A sense of complicity existed with public, terrestrial broadcasters who clearly assumed in many cases that major sporting events could be bought cheaply and (prior to the arrival of Pay TV operators) faced little or no competition

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55 A lack of awareness among sports administrators of the real potential value of the sports properties which they owned 55 Lack of sufficient marketing expertise among sports organisations to exploit the value of their assets.

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Thus, it was relatively easy for operators such as Sky to acquire the initial media rights for properties such as the English Premier League. Quite simply they had the resources, scale and expertise to outbid traditional state broadcasters who were reliant on public funding, in the case of the BBC. The dominance of the subscription-based TV players quickly led to a number of criticisms and accusations. For instance, they have been heavily criticised for effectively disenfranchising sports fans who cannot afford the monthly charge to enable them to receive the channels. This would appear to go against the argument that sport should be for everybody and should be accessible for all members of society: not just those who can afford it. By restricting access to certain demographic groups, some commentators argued that this would provide a lack of opportunity to encourage people to take up participation in the sport as many people would not see or become familiar with sports stars. Because of the power of subscription-­ based channels it was feared that this would lead to a quasi-monopoly situation where sports could be controlled and manipulate by one or two key players. In a similar vein, it was argued that control of the sports property would inevitably shift away from the sports property owners and administrators and move quickly to the Pay TV channels. This actually became a reality when Sky demanded changes to the timing of games to suit their TV channels. However, because of the increasingly large amount of revenue falling to the league and clubs this situation was quickly accepted as the mantra of “he who pays the piper calls the tune”. In the intervening years, the sports property owners in Europe recognised that they needed marketing and negotiating expertise to enable them to exploit the full potential of their respective sports assets. As a result, we

have seen a major shift in terms of the type of personnel who run sport. Whereas up to the 1990s many sports in Europe were run by enthusiasts or individuals who had worked their way up through the organisation, the last two decades have witnessed the arrival of many administrators, CEOs and Marketing Directors who have been recruited from industry. This has led to a much more aggressive approach on the part of clubs and sports bodies in terms of running the organisation as a business as opposed to a sport. This has led to accusations of exploiting perhaps the main stakeholder in the process: the fan - particularly in terms of ticket prices for attending the events. We will examine this in greater detail in 7 Chap. 7. This aggressiveness is certainly evident in terms of their ability to negotiate more and more lucrative deals with the media operators. Depending on the sport and the stature of the club or competition, the contribution of revenue generated from the sale of media rights often has overtaken the contribution of ticket sales and sponsorship (other key areas of revenue generation for a sports club). . Table 5.2 highlights the contribution of revenue from media rights, as a percentage of total revenue, from the top five football leagues in Europe.  

 

..      Table 5.2  Media rights revenue as a % of total revenue League

Media rights as a percentage of total revenue

EPL (England)

58.9%

Serie A (Italy)

57.5%

La Liga (Spain)

53.2%

French Ligue (France)

47.1%

Bundesliga (Germany)

39.4%

Source: Adapted from Football Benchmark KMGP (2020) available at 7 https://www. footballbenchmark.­com/library/will_ott_shake_ up_the_football_broadcasting_industry  

107 5.3 · Trends and Developments in Sports Media Rights

5.3.2

Exercise

??In your region, examine the amount of sport that is currently shown on terrestrial broadcasting channels as opposed to PayTV.  Assess the view that more should be done to get a more balanced coverage of sport.

5.3.3

Shifts in the Wind

While fans are adapting to the ways in which they engage with their favourite sport, we are also witnessing changes in the nature and structure of the key players involved in bidding for and winning the right to transmit sports events. We have seen the entrance of large telecommunication companies onto the scene. Companies such as BT (UK), Belgacom (Belgium), Deutsche Telekom (Germany) and Telefonica (Spain) have all entered the sports

media rights market and made successful bids for sports events. Why has this happened? Smith et al. (2016) highlight the importance of the “quadplay” concept in the respective business strategies of the telecommunication companies. The genesis of this idea rests on the belief that by building up a subscription base through involvement in sport, it can allow such operators to put together a package bundle that revolves around four main areas: Internet access, digital television, smart phones and fixed line telephony. As well as seeking new customers it also provides an opportunity for a telecoms company to build loyalty with its existing customers. When BT entered the market in 2012 with a winning bid for some of the packages available from the English Premier League it gave free access to its games to its existing customers who had a landline with BT. Telecom companies can also use subscriptions to lock customers into the deal and make it difficult for them to switch their accounts.

BT and Sport

British Telecoms first entered the sports media rights market in 2012 when it made a bid for some of the packages available from the English Premier League. It won the right to show 38 live Premier League games for three seasons: beginning in 2013 and ending in 2015. It paid around £738  million for this privilege. It also bid for media rights in other sports such as Premiership Rugby and Women’s tennis. It established two dedicated BT sports channels: BT1 and BT2. It provided free access to its existing customers and new customer who had switched from other operators. It is estimated that the overall cost was in excess of £200 million per year. In 2015 it acquired the rights to show UEFA Champions League games. It established another channel BT Sport Europe to cover this competition and charged its customer base for this product. This cost BT a

sum of £900 million for three seasons (2015/16 to 2017/18). It is estimated that this move to the European Champions League has helped BT to increase its revenue by seven per cent. They expanded quickly into the “pubs and clubs” market by offering personalised pricing structures that were customised around what they could afford. In under 9  months they acquired access to around twenty-four per cent of pubs and clubs in the UK, just short of the Sky penetration figure. It was estimated that by the end of 2013, BT had attracted over two million subscribers (mostly from its existing customer base) and perhaps due to its investment in sport, also attracted nine out of ten new broadband users. By 2015 BT had reached a market share of 32 per cent of the UK broadband market -

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giving it a figure of around eight million subscribers. In 2015 BT further reinforced its long-term commitment to sport by paying £960 million to show forty-two premier league games per sea-

5.3.4

5

Further Straws in the Wind

Around the time of BT’s entry to the sports media rights market, strong rumours also suggested that companies from far outside the traditional broadcasting and telecommunications market were also expressing interest in this area. Yahoo, YouTube and Amazon were foremost in such speculation. As we noted earlier, sports fans no longer rely on television as the main mechanism for viewing sport. Tablets, smartphones and iPads now feature prominently in the consumption of sport. Fans no longer necessarily want to watch sport in a fixed position that is sitting in a room looking at television. The broadening range of devices means that the likes of YouTube can look carefully at the sports

son for another 3  years - taking them up to 2019. (Source: Adapted from various sources but mainly from Smith et al. (2016)).

media rights market to further develop its business model. The role of social media platforms cannot go unnoticed in this discussion. What better way for companies such as Twitter and Facebook to engage with its customers than to become involved in the active transmission of sports events? The ability of companies such as YouTube to stream sports events means that sports fans are not obliged to sit in front of a television in a prone position. Rather, they can access the sporting event where they want to. All that is needed is an Internet connection. However, the entrance of operators such as Twitter, YouTube and Facebook into the sports sector has fundamentally challenged the way in which we are likely to consume sport in the future.

Twitter and the NFL

Twitter is a social networking service that allows its user to communicate with very short messages (maximum of 140 characters) called “tweets”. It was established in 2006 and by 2012 had acquired over 200  million users world-wide posting over 340 million messages per day. By 2016 this increased to around 310 million active users. Over this period, it launched a number of different products and services including a music app called Twitter Music in 2013. In this year it was also listed on the New York stock exchange. In 2016 it was rumoured to have received several offers of takeovers from companies such as Verison and the Walt Disney Company. It also plays a role in making television more interactive-encouraging users to post

comments and observations as they watch movies, TV programmes and sports events. This is referred to as second screening; a topic that we addressed in 7 Chap. 5. In mid-2016, Twitter announced a partnership with CBS News to live stream both the 2016 Republican and Democratic National Conventions. In its first move directly into the sports sector, Twitter acquired non-­ exclusive streaming rights to National Football League broadcasts of Thursday Night Football for the 2016 NFL season. It will simulcast coverage on Twitter alongside coverage of the games by NBS and CBS; two of the US major broadcasters. It is reckoned that this development will allow Twitter to reach out to a potential audience of over 800 million. This includes individuals who are not necessarily registered with  

109 5.4 · OTT

Twitter. It acquired the rights for a figure estimated to be around $10  million - a bargain price in the eyes of some commentators. The NFL (American football) as we noted earlier in this chapter is the most valuable sports property in the world. Started in 1920 it has evolved into a game that is played across the American states. It comprises thirty-two teams overall and culminates in the Super Bowl – the final, which takes place in late-January each year. Around 120 million people tune in to watch this iconic event annually. Advertisers typically pay around £5  million for a thirty-­second advert and in total it generates between $350 million to $400 million in advertising. The three big North American broadcasters: Fox, NBC and CBS pay up to $1 billion per year for a games package and in a nine-­year cycle, each broadcaster gets the right to show three Super Bowls. So, what are we to make of this deal?

??1. Why would the NFL move in this direction by setting up a deal with Twitter as opposed to focusing more on deals with traditional media operators? 2. How is Twitter likely to benefit from this deal, apart from possibly building user numbers? 3. Would you say that there is evidence of a “strategic fit” between both the NFL and Twitter? If so, why? If not, why not?

5.4  OTT

The synonym “OTT” refers to “over the top”. The advent of Twitter, Amazon and YouTube as mentioned in the previous section is challenging the traditional way in which ­ sports media rights packages are sold and indeed the traditional business models for buying the rights. In a broader context good examples of this practice would include Netflix and Amazon Prime.

It certainly surprised many commentators who felt that it was more likely to see players such as Amazon becoming involved. Amazon certainly has the scale and resources to make a big offer. Yahoo in the previous NFL season paid $20 million to show the first game of the season online. The $10 million paid by Twitter was not the largest bid: rivals were estimated to have bid of around $15 million. For Twitter it presented a potential opportunity to build user growth: since 2014 its numbers had been falling. NFL shied away from doing a deal with Facebook because the latter organisation wanted to sell all the advertisements that would air during the football games, essentially cutting out the sales relationship between the NFL and marketers. (Source: adapted from Jackson (2016) “Twitter to live stream NFLs Thursday night football” The Guardian, 5th April 2016)

In essence, OTT providers go direct to the customer with their offerings and tend to bypass traditional PPV broadcasters. Over the top (OTT) refers to situations where viewers can watch programmes, movies or sports events without a cable or satellite subscription. In other words, in the context of sport, fans can “cut the cord”. This potentially frees them up from having to sign up to rigid monthly fees to gain access to a particular sport, largely over which they have little control. Let us consider this in more detail. A monthly subscription to Sky typically costs around £60 for access to their sports channels. This allows the subscriber to watch the games that are shown weekly at the various times and days fixed by Sky. However, typical sports fans may only watch a small number of these games for various reasons: lack of interest in some games or teams, only wanting to watch the team that they support and so on. They have little or no control over precisely what they want to watch. Live streaming by compa-

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nies such as Twitter moves the fan away from having to fully subscribe to the total package. Russo (2016) observes that initially OTT offerings revolved around what is referred to as ancillary programming. This would include highlights of a game, interviews with players, coaches and managers, previews and features on players, past players or historical action over the years. However, with the advent of deals such as Twitter and the NFL, fans can move away from the traditional model of linear rights—where the viewer does not have a choice to non-linear rights such as on demand content. DAZN, a UK-based operator, was one of the first OTT companies to branch away and acquire the rights to live events. In recent years it acquired the domestic rights to show Bundesliga league (Germany) and Serie A (Italy) matches live. It has also entered into deals in the sport of boxing, with Matchroom. We are likely to see further movement by the OTT operators in the area of providing live sport. Indeed, the CEO of DAZN, Len Blanvatnik wants to ultimately position the company as being similar to the doyen of OTT - Netflix. Russo also notes that the streaming of the Jacksonville Jaguars versus Buffalo Bills NFL game in October 2015 arguably was the first instance of a live major sports event being streamed world-wide via Yahoo, without traditional television coverage (except in the domestic market). It was estimated that over 15 million unique viewers watched some portion of that game world-wide. Other sports have introduced OTT offerings in the past couple of years. Examples include the following: 55 The PGA Tour (American Golf) launched PGA Live Tour Service in 2015. This allows subscribers access to Thursday and Friday live coverage of over thirty PGA tour events. The subscription costs $4.99 per month 55 UFC (Ultra fighting) introduced its UFC Fight Pass in 2013. This includes live events, archival material and original programming at a cost to subscribers of $9.99 per month.

5.4.1

Advantages of OTT Operators

OTT operators offer fans more flexibility in terms of how they engage with their favourite sports. The traditional packages from broadcasters such as Sky and ESPN are quite rigid - in terms of expensive monthly packages that do not necessarily offer the personalisation that younger fans in particular demand. To be fair, Sky, ESPN and the other PPV broadcasters have quickly moved into the OTT business themselves. Traditional broadcasters have relied on satellite, terrestrial aerials and cable to transmit their broadcasts. OTT transmit their material online and make use of a wide range of devices such as smart phones, smart TVs and tablets. This flexibility extends to the range of devices that they use to connect with fans. Tablets, smart phones and smart TVs (Internet enabled) are used to deliver the services. They have the resources to create ancillary services - particularly in the area of content and material from the archives. Arguably, OTT operators only pay for the services they use, rather than having to maintain a costly production and marketing infrastructure. This leaves them in a more agile position to develop content for various sports. 5.4.2

Disadvantages with OTT Operators

The biggest problems occur in a couple of areas - mainly due to the capabilities of the streaming services. In many cases, companies like DAZN have been accused of failing to provide a service that meets the basic demands of fans. Buffering and outages happen with embarrassing frequency. Allied to this is a significant time delay between the live action and what the individual fans witness on their devices. Outages (where the streaming breaks down completely) are particularly annoying for subscribers. These problems are further exacerbated by variations in the broadband widths and speeds in different countries.

111 5.4 · OTT

OTT and the European Experience

The Western European Pay TV market is undergoing some changes, some of which are likely to be far-reaching for the key stakeholders involved and of course the sports fan. Canal Plus, the French premium cable television company was founded in 1984. It quickly became one of the biggest cable channel subscription-based operators in Europe and moved into the sports sector by acquiring the rights to a number of properties. These included Formula One and coverage of the English Premier League. However, it has had to address a number of challenges and threats from groups formed through various mergers and acquisitions as well as OTT operators. In 2015 it lost over 260 million Euros. Examples of such threats are evident from the example of YouTube which in May 2016 acquired the rights to live-stream the finals of the UEFA Champions League and the Europa League club football tournaments in the UK from the rights-holder BT Sport. Also worthy of mention is the emergence of DAZN (formerly known as the Perform Group): a British company established by a Russian billionaire. It is using a low-cost provision of sports to potential fans. It has acquired exclusive rights to Spain’s La Liga and Italy’s Serie A as well as the NBA and the NFL.  It captured the rights to show the English Premier Football in Germany from Sky Deutschland. It also plans to bid for the rights to show the Bundesliga games in Germany. It rolled out its

5.4.3

OTT and Niche Sports

Niche sports could be described as those sports that have a limited number of participants and receive (relatively speaking) limited coverage across the mainstream media, particularly on television. They tend to involve a smaller sub segment of the population and do not tend to appeal to the wider market (Miloch and Lambrecht 2006).

service in Germany, Austria and Switzerland at the beginning of the 2016–17 season. Traditional players have responded by engaging in a number of mergers and acquisitions. Rupert Murdock has merged his Pay TV operations in the UK, Germany and Italy to establish Sky Europe. Canal Plus entered into a strategic alliance with the Qatari-owned BeIN Media group. Pay TV penetration (in terms of new subscribers) has slowed in recent years across Western Europe and is likely to grow only by about 5 per cent from sixty to sixty-five per cent by 2024. It is possible that OTT low-cost providers might capture some of this growth as well, as they tempt fans with deals. At the moment large OTT players such as Netflix have not entered the sports rights market. Facebook has set up a product called Facebook Sports Stadium aimed at the platform’s 650  million sports fans. We have noted Twitter’s entry earlier. Much will revolve around the willingness of the new player’s to pay the large up-front fees necessary to acquire the rights. A “full-fat” pay television operator such as Sky Deutschland has already lost out to DAZN. If these new potential entrants emerge then it is likely that the cost of acquiring the sports media events to premium sports events will continue to rise. (Source: Adapted from Dunne (2016) “OTT’s European Power Struggle” Sport Business ~International, June, pp. 16–19).

One of the biggest challenges for sports marketers involved in niche sports is to build an audience who will watch and engage with the elite events and competitions. This is necessary to spark off what might be called a “virtuous circle”. The mainstream TV companies—particularly the Pay TV companies focus largely on the most popular sports. This allows them, if the media rights are secured, to build their sub-

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scription base and thereby increase revenue from advertising. The small audiences that are a feature of niche sports are obviously a “negative” from the perspective of programmers. However, all is not necessarily lost. Pay TV broadcasters have many hours to fill and it is not possible to show premium sports properties on a “24-7” basis. Hours have to be filled and companies such as Foxtel, Sky and Eurosport may be interested in covering niche sports at certain times and to provide some form of diversity. Terrestrial or public broadcasters, not having the financial resources to win the media rights for the premium sports, may also focus on minority or niche sports in order to address their social objective of covering sports activities. Examples of this would be the coverage of triathlons, canoeing and squash. Channel Four, a UK terrestrial broadcaster generated a lot of interest and built up impressive viewing figures from covering poker events during a late hour slot. By using technology and diverse camera angles, they made it attractive for viewers, who could see the hands of cards of each player and could also monitor facial expressions. OTT provides many opportunities for niche sports to develop their audiences. By “breaking the cord” with expensive subscription-­ based companies such as Sky. Instead a niche can either engage with companies such as YouTube, Twitter, Facebook and so on, where it can show live streaming of events and/or ancillary programmes. They could also set up their own dedicated channel to show events. All that is required is an Internet connection. Such initiatives can build up interest and expand the target market. This in turn attracts advertisers and sponsors and the revenue stream also increases. In order to attract the interest of the traditional subscription-based channels, niche sports may need to simplify the rules, length and duration of the event and engage more fully with the concept of “sportainment”: a concept which we discussed in greater detail in 7 Chap. 4.  

5.4.3.1

Exercise

??You have been asked by the International Chess Federation – Federation Internationale des Echecs (FIDE) to come up with a set of recommendations as to how the sport could be improved in order to attract more interest from subscription-based TV companies. Outline the initiatives that you would come up with. ??1.  Assess the strategy employed by the PSA to expand the sport of squash globally. 2. Do you think they have done enough to convince the International Olympic Committee to include squash in future Summer Olympic Games? 3. Identify other initiatives that could further enhance the profile of squash, particularly with respect to the value of its sports media rights.

5.5  The Arrival of the Faangs

For the past 5  years or so, the main area of concern and debate among the key stakeholders in the sports sector in general, and media rights in particular, has revolved around the way in which major media operators: collectively known as the “FAANGs, are likely to engage with the sports sector. By using this term, we are referring specifically to the following companies: 55 Facebook 55 Amazon 55 Apple 55 Netflix 55 Google. As you might expect, these companies, collectively and individually have built up major financial reserves. Between them, they have conquered all of the business space across the music, movies, IT, social media and digital sectors. Arguably, they would dwarf the

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113 5.6 · Business Models for Selling Sports Media Rights

resources of traditional operators such as Sky and ESPN, and even more so in the case of high-profile OTT operators such as DAZN. The major sports, such as the NFL, MLB, NBA and the EPL, have been concerned by the likely involvement of these players. What has happened so far? The largest and most established OTT operator, Netflix, which has dominated the movies and music sectors, has not engaged in the bidding for any of the major sports media rights. Commentators are somewhat surprised that they have not entered this sector so far. Others feel that they are deliberately stepping back to review the developments and monitoring what the other members of the FAANG group are doing. Arguably, the investment required (even though they can afford it) is unlikely to bring any significant profit to Netflix. For starters, it would have to invest in substantial production and technology infrastructure to meet the standards set by the established broadcasters such as Sky and ESPN. Netflix however, has made a documentary on the English football team, Sunderland. Called “Sunderland ‘Til I die” proved to be very popular with its subscribers. Amazon Prime has also produced similar football-based documentaries. These include “Take us Home” (Leeds United), “All or Nothing” (Manchester City) and “Inside Borussia Dortmund”. Amazon has been active in recent years. It acquired the rights to the US Open tennis and also paid £50 million for NFL Thursday night football games. In the last round of bids for the EPL, it paid £90 million for a three-year package for two sets of games to be covered over bank holiday weekends. It acquired the rights to show European Champions League games in the German market. Like Netflix, it has a substantial subscriber base for its Amazon Prime service. In the UK, it has around nine million such subscribers. Arguably, this has been bolstered by new members joining during the Coronavirus crisis. Facebook has cut back on its budget for acquiring live events. It has positioned itself as the distributor of highlights from major sports. For instance, it covers highlights of

the PGA American golf tour, the NFL games and it has partnered with the International Cricket Board to distribute highlights of cricket to the Indian sub-continent. In recent years it has made a failed bid of $600 million to show live games from the Indian Premier League. Google has recently moved into the eSports market by signing a deal with Activision to cover leagues such as the Overwatch League and Call of Duty Leagues. It has also been active, through its YouTube subsidiary. Other tech companies such as Twitter and Twitch are also active in various areas of the sports media rights market. Indeed, Twitter was the first such tech company to move into this area, when it acquired the rights to show the NFL Thursday night football game, in 2016. In summary, the impact of the FAANGs has not been as significant as the experts predicted 2 or 3 years ago. Arguably, they are taking a measured approach to their assessment of investing in the sports media rights sector. Some of them are “playing the long game”. “Let’s wait and see”, would appear to be their mantra. As we have noted, some of them are focusing more fully on the area of content management and developing creative and relevant packages for the modern fan. We highlighted the fact that “content is king” in 7 Chap. 4. Younger fans do not necessarily want to watch the full live games. That is not to say that the FAANGs will desist from purchasing the rights to show live games. Arguably, they will apply a selective approach, with the objective of maintaining their strong positions in their original core areas. Sport may, or may not, play a significant role in their portfolios going forward.  

5.6  Business Models for Selling

Sports Media Rights

Sports property owners have a number of options open to them when selling the rights for coverage to their competitions and events. We consider them briefly here.

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1. In-house selling of collective rights: In this case sports property owners of leagues or competitions seek bids from prospective buyers for the rights and act as representatives of the individual clubs who make up the particular league or competition. The final figure achieved by the sports entity holders may be shared out equally among each of the clubs. Another option includes a proportion of the sum shared out equally and the rest based on performance. For example, in the English Premier League there is a weighted allocation of part of the revenue which is merit-based i.e. the higher or lower a team finishes in the league, the more or less it gets. The money is distributed as follows: 50 per cent is shared equally, 25 per cent is based on merit (the position in which club finishes the previous season) and 25 per cent is allocated on the basis of a facility fee. This is a standard fee that is paid to the individual club, every time it hosts a live game that is shown on TV. Typically, this fee would be around £800,000 per game. The revenue from international rights up to 2019, was shared equally. The top six teams successfully argue that they should receive a higher proportion of this, as they engender far stronger global appeal. They won their argument. In the Spanish football league (La Liga) up until recently a higher proportion of the total sum was allocated to two teams: Real Madrid and Barcelona because of their success and the size of their support. This has changed since 2015. Now the money is distributed in the following way: 50 per cent shared equally and the rest is weighted according to the results of teams over the past 5 years and the degree of social influence. The latter is somewhat nebulous but is assessed on the basis of the number of its followers, social media activity and global appeal. In the case of Serie A (Italy), the ­administrators are in the process of entering into a partnership with Mediapro (a Spanish-based TV production Group). This would have the effect of increasing the revenue from roughly $1.05 billion per sea-

son (over a three-year deal) to $1.45  billion. Presently Serie A is tied into an arrangement with Sky Italia TV and DAZN. Under the proposed new deal, it would distribute its live games through a League-owned network. Individual TV companies would pay for the right to show games. This is different to the present arrangement, where Serie A sells the rights to the TV Companies. In terms of distribution of revenue, Serie A adopts the following practice. Fifty per cent is shared equally between the teams in Serie A.  Thirty per cent is based on performance. This is broken down to fifteen per cent over where the club finished the previous season, ten per cent over where it finished over the past 5 years and five per cent on historical contribution to football (measured in terms of trophies won). The remaining twenty per cent is based on the number of supporters each club has (measured in terms of metrics such as season ticket holders, Facebook followers and social media activity nationally and globally). Over the years the EPL administrators have become more proficient at negotiation and designing the packages that are available for purchase. At the last sale of rights in 2015 the EPL put up seven packages. These packages were related to the time of week that games were played. These range from Saturday lunch-time kick-offs, Sunday afternoon (Super Sunday), Monday night and more recently Friday night games. The EPL has used blind auctions, where none of the bidders know what their competitors have bid. This probably allowed BT the element of surprise when it entered the market in 2012. In the early days it was rumoured that Sky had an informal deal with the EPL whereby it had the right to come back with another offer if it happened to be outbid. By designing multiple packages, the EPL ensured that it was able to get maximum value for its overall product. The English government became very wary of anti-competition practices and involved its regulator Ofcom to monitor

115 5.7 · Live Streaming: Boom or Bust?

the situation to ensure proper competition took place in the bidding process. 2. Using an advisor: In Serie A, the Italian football property owners have worked in the past, in partnership with a large international sports media advisor; Infront, to design the package of offerings. This approach works on the principle that it is best practice to use the services of an expert in the field of sports media rights to extract the best possible deal for the clubs. The advisor in this case is paid on commission. It can be argued that this incentivises the advisor to get the best possible deal. A variation on this approach is where the agent may negotiate with the sports property owner before putting the rights out to tender and guarantee the rights holder a minimum sum in order to acquire the ­business. UEFA uses a similar approach, in this case it links up with two sales agents (again paid on a commission basis). One deals with the club competitions – the Champions League and the Europa Cup and the other handles the national competitions such as the European Championship. 3. Buy-out of the media rights: Another approach is to allow another agency or media player to buy-out the rights from the sports property owner. This may be the result of having long-term relationships with an individual company but may raise questions with legislators due to the lack of possible transparency with such an arrangement. Clubs may question whether this is the best way to maximise the potential revenue from the deal. When the agency or media player buys out the rights it in turn sells rights to other companies in other geographical markets. 4. Set up an in-house model: Some sports property owners such as NFL, have established a season pass, which they make available to fans (with different bundles of service) both domestically and globally. They would partner with domestic and PPV broadcasters to deliver the product. The EPL has considered the possibility of investing in the required production and ­technology infrastructure to operate a

full model. However, it has backed away from the idea because of the costs involved. Of course, other factors come into play when selling sports media rights. Property holders may have to take account of government intervention on issues such as the need to make certain elements of the packages, e.g. highlights available to public broadcasters. Nicholson (2007) discusses some of the reasons as to why there may be a need for such intervention. Primarily it is about balancing social, cultural and economic objectives. It can be argued that this is necessary to prevent an over-emphasis on the commercialisation of sport to the possible detriment of stakeholders. It is a moot point as to whether this works in practice. 5.6.1

Exercise

??Assess the way in which the EPL, Serie A and La Liga distribute the media rights revenue to their respective clubs.

5.7  Live Streaming: Boom or Bust?

The shift to OTT and the increasing emergence of players such as Facebook, Yahoo, YouTube and Twitter, allied to the potential involvement of operators such as Netflix, has undoubtedly changed the way in which sport is distributed and sold and how fans consume sports events. The concept of television and its central role in sports engagement, while still relevant, is likely to change over the coming decade. Joseph (2016) notes that social video is becoming more and more like TV.  Whereas up to now social media platforms have tended to be used in a second screening manner by sports fans. As they watch the sports event on TV they are also engaging with fellow-fans, colleagues and ancillary services provided by the sport administrators or TV companies, via other devices. Some of the established companies like Sky have already formed partnerships with social media companies. Ancillary material

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such as “behind the scene” videos and interviews with players are shown on social media platforms. This helps companies such as Facebook and Twitter to provide richer and more current sports content. This in turn stimulates further engagement and sharing of opinions and experiences. It can be argued that this is of significant benefit to sports fans. They no longer have to rely on expensive monthly subscription packages from the established Pay TV broadcasters. They can gain a very positive experience from watching sports events that they want to see ether at home or in other locations via significantly improved picture quality on the social media sites. The NFL/Twitter deal arguably was the forerunner for further developments between sports property owners and media players. For the established players such as Sky and ESPN, they will have to respond by continuing to enter into partnerships or acquisitions with companies who have expertise in this area. As long as OTT players continue to offer free or low-cost deals to fans to enable them to watch specific games or events, they will probably make increasing inroads on the traditional media players. The established broadcasters, and indeed terrestrial and state-owned broadcasters have rapidly embraced the OTT principles and reinvented themselves in the past few years. A report published by Delaware North (2016) suggests that the likes of OTT players like Google will gradually outbid the traditional subscription-based broadcasters and offer the games free, thus placing a major threat to the Pay TV, paywall-based business models. This is a matter of some debate. We have discussed in a preceding section that the entry of the Tech companies (e.g. the FAANGs) has been slower and more selective than predicted in the middle of the last decade. These operators will provide many different services delivered in many different ways and the traditional broadcasters will struggle to catch up with them. The report argues strongly that the younger fan expects free and easy access to all forms of content online and this is no different in the context of sport.

In summary, we are witnessing the end of the rigid, “one-size-fits all” business models that have been so prevalent in the context of the way in which companies use their sports media rights to distribute sport. Increasingly, fans will access sports events on demand and only the elements that they wish to view. In essence, control over how we want to watch sport will move more strongly in the direction of the fan. 5.8  Protected Events

Much of our preceding discussion has focused on the emergence of PayTV and the arrival of new entrants into the sports media rights space. As we noted earlier these developments have been criticised by many individuals because the subscription-based models restrict access to certain demographic groups who cannot afford the cost. Within the context of sport and its role in society, it is often argued that this can act as a disincentive to people to watch or indeed participate in certain sports. Some sports such as cricket, in the context of the UK, have sold all of the rights to subscription-­ based TV companies. Critics might argue that they are “supping with the devil”. This means that at no time is that sport gaining any coverage on terrestrial TV.  The cricket administrators argue that the scale and size of the financial deal means that they can use the revenue to invest in “grass roots” development of the game. They claim that this is evidenced in the number of coaches employed and the range of community-based activities which they promote to ensure that the game will continue to be popular and grow. Critics argue that while this may happen, the bulk of the money is used to pay inflated salaries Plunkett (2015) notes that Sky claims to have over 12 million customers across its UK and Irish markets. However, the combined population of both countries is between seventy and seventy-five million people. Although it has grown its business (with a customer churn of around 9–10 per cent annually), the figures indicate that a large majority of the populations of these countries do not hold a

117 5.8 · Protected Events

subscription. The customer base for Sky has most likely decreased in the last couple of years due to fans preferring to purchase games on demand and the effects of the Coronavirus crisis, where no live sport took place for a number of months. Free to air coverage (FTA) opens up access and reach to the general population. This is evidenced by the statistic that when Andy Murray won the Wimbledon Championship for the first time in 2013, the BBC (public and FTA broadcaster) captured an overall audience of seventeen million people. Ninety per cent of the population of the UK watched some part of that match. As far back as 1995, the government of the day in the United Kingdom took some action to protect certain sports properties and events that they deemed to be critical and central to the sporting enjoyment of society as a whole and were of “significant national resonance”. In 2009 a list was drawn up. 7 Box 5.1 identifies the ten major events that must be shown on terrestrial television (FTA) in the UK.  

Box 5.1  Sports Events 55 55 55 55 55 55 55 55 55 55

Olympic Games Football World Cup Football European Championship FA Cup final Scottish FA Cup final (in Scotland) Grand National The Derby Wimbledon finals Rugby League Challenge Cup final Rugby Union World Cup final.

Source: Compiled by the author from various sources on the Internet

The problem with such an initiative however was that it failed to recognise the right of sports property holders to seek out the best possible financial deal for their respective sports. The emergence of powerful subscription TV channels meant that much more money was on the table than could be met by public broadcasters.

Likewise, as successive governments cut back on funding for public broadcasters, the retention of some of these events came under threat. Public broadcasters such as Germany’s ARD also encountered the same experiences. The European Broadcasting Union (EBU) argued that all member-state European broadcasters should put together a strong initiative for listed sports properties to be protected and shown live on FTA television. In the context of the twenty-seven-­member states of the European Union, individual members submit their lists of protected sports to the Commission for approval so that they can be recognised by the other member states as being in force. These events cannot then be subjected to exclusive broadcasting licences if this would prevent the event from reaching a wider interested audience. The UK list was formally approved by the Commission in 2007. FIFA and subsequently UEFA challenged the validity of these decisions. They argued that at events like the World Cup finals, not all of the games would be treated as being equally important in a specific country. Their arguments were rejected as it was counter-argued that it would not be practical or possible to establish in advance which matches would turn out to have an impact. There is in fact no uniformity across the Member States of the European Union about the practice of submitting lists. Only eight states have carried out this exercise. The ability of the European Broadcasting Union to continue to try and protect sports events took a hit when it lost European rights for the Winter and Summer Olympics from 2018 to 2024 to Discovery. This may be a sign of things to come. On the other hand, the administrators at Wimbledon still have a strong loyalty to the BBC and are happy to allow it to continue to show it live. However, the Open golf championship which had been shown for over 60  years has been lost to Sky television. Commercial value and reality are beginning to hold sway. Australia is perhaps the most protective of all sports markets. Successive governments have maintained what it calls “anti-­siphoning”

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laws which cover over 1300 events ranging from cricket to netball and rugby league. It can be strongly argued that adopting an overly rigid approach to the concept of protecting certain sports disregards other critical factors which are in play. The extra revenue that can be generated from Pay TV platforms gives sports property owners more authority and control over their assets and allows them potentially greater resources to invest in grass roots sport. Asser Institute (2014) explicitly recognises that it is not a one-dimensional legal issue and that it needs to be framed in a broader socio-economic context. 5.9  Piracy

One of the biggest threats to the various business models employed by Pay TV companies and the newer entrants is that of piracy. Put simply, many sports fans world-wide access various sports events, competitions and leagues by illegal means. They make use of a wide range of illegal websites who provide live streaming of sport. By utilising such sources fans can avoid having to make a payment for the right to watch their favourite teams or events. We have witnessed similar experiences in the case of the music industry going back to the early days of operators such as Napster. Legal battles ensued between illegal downloaders of music and the large music companies. We have experienced similar activity in the sports context as well. Swains (2015) highlights the ease with which illegal platforms can evade the reach of legislators. One of the most popular platforms: Wiziwig, closed down in Spain under the threat of legal retribution. However, as was the case with the illegal distribution of music, other such sites open up almost on a daily basis to replace them. Supporters of this policy of streaming premium sports events for free argue that it is a justifiable response to the excessive profits that media operators such as Sky and ESPN

generate as a result of acquiring sports media rights and charging high subscription rates to its customer base. However, this viewpoint ignores the investment needed to provide access to sports events and the resulting ability of sports clubs and organisations to attract better quality players and provide a higher quality product for fans to enjoy. Swains (2015) notes that the people who are responsible for illegal streaming are not the classic profiteers but instead are likely to be idealistic computer-savvy individuals who see themselves almost as charitable providers of sport to people who cannot afford the subscription fees. It can be argued that the problem is getting worse. In the early days of illegal streaming of sports events the quality of the picture was unreliable and poor in terms of definition. However, as technology moves on, this issue has been partially addressed: with the picture quality and the stability of the streaming improving. The cost of trying to protect sports media rights on the part of the Pay TV companies should not be underestimated. Boyle (2015) notes that the Spanish Football League estimates that piracy in the Spanish market was costing the league 300 million Euro a season. The problem becomes even more complex as other aspects of distributing and streaming specific elements of a game or event become popular. For instance, over the past couple of years vines were very popular on the social media platforms. These are (6  second) files which can be shared among individuals via a social media platform. In the context of the sports sector this became very popular during the 2014 World Cup in Brazil. Boyle (2015) notes that fans found it easy to pause and replay live television instances and started posting vines of goals and key moments from games on micro-blogging sites such as Twitter. The English Premier League instigated a number of measures to prevent such activity, arguing that the practice infringed copyright law. However, the law is unclear on this and vines continue to be posted.

119 5.10 · Periscope and Meerkat (and Others)

The problem of illegal streaming extends to governments. In 2020, the Saudi government, via its ruler, put in a bid of over £300  million to take over Newcastle United, an English Premier League. The Qatari-owned broadcaster BeIN has complained to the EPL CEO about the illegal streaming service that is provided by Arabsat (via its network called beoutQ). Since 2017, this service has streamed EPL games live to the MENA region. At the time of writing, the proposed bid has not yet received clearance from the EPL authorities. 5.10  Periscope and Meerkat (and

Others)

Around 2014 and 2015, live streaming apps that allow people to live stream to their Twitter account and their contacts on that app became hot products. Two main players emerged: Periscope and Meerkat. For a couple of years, they enjoyed great popularity and usage among consumers across sectors such as music and sport. Think of its potential attractiveness? You are attending a live sports event and you can broadcast live coverage to your friends. Of course, it is illegal and you may be prevented from doing so by security officials. Meerkat encountered a serious obstacle when Twitter elected to go with the Periscope version. This app proved to be more popular with fans. Both companies faced potentially fatal threats when some of the big tech companies decided to encroach on this sector. The most prominent was Facebook live and YouTube live. In 2016, Meerkat went out of business. Periscope has survived but is struggling to survive in relation to the resources of “the big guys”. Both Periscope and Meerkat are live video streaming apps and were launched within weeks of each other in 2014 (Williams 2015).

By the time you read this they may have disappeared or been acquired by other companies. Such apps are proving to be very popular with sports fans, particularly in the context of viewing sports content. They pose further threats to sports media rights owners and add another layer of complexity to the challenge of trying to protect the value of such assets. The reason why the apps are so popular is that they allow fans to broadcast live video by using their smartphones directly to a social media network platform such as Twitter. These clips tend to be short, such as goal action in football, a catch in cricket or a sustained rally between two players in tennis. Not just fans use them. Sports clubs can also make video clips of interviews with players, shots of players in training or “behind-the-scenes” shots in, for instance, dressing rooms. This material can draw fans to the club’s website and help the club to engage more strongly with the overall fan-base. However, the use of these apps by fans for transmitting live action effectively makes them broadcasters. The phenomenon has become so popular that Twitter bought out Periscope in 2015. Of course, problems remain in terms of the ability of fans to capture smooth and stable video: in many cases there is a “shaky” configuration to what can be seen. However, technology in the form of high-quality cameras that are in-built in the smart phone can alleviate this issue to some extent. YouTube scans uploads to check for copyright infringement, which can enable the rights holder to remove the content. However, if the material goes out live it makes it very difficult to remove such material in such a short space of time. The threat of piracy raises interesting questions about the legal position and the likely response of sports media rights owners and the sports property holders who sell on such rights.

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The Fight of the Century

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Arguably the most lucrative fight of all time took place in May 2015. This involved Floyd Mayweather and Manny Pacquiao. It took place in Las Vegas and the only official way to view it was through “pay-per-­view (PPV). A record fee of $99 was charged for the privilege of accessing this fight. It generated over $400  million from over 4.4  million customers who paid the subscription fee to watch it “virtually”. This excludes revenue generated from ticketing sales, sponsorship and corporate hospitality. However, the term “Periscope” featured a lot on the social media chitter-chatter. It was mentioned over 90,000 times on Twitter - the highest since the app was launched. ESPN estimated that certain streams of the fight has more than 10,000 viewers on social

??Who is the winner here? The boxing fans who accessed the fight through Periscope and Meerkat? The boxing fans who paid the official fee to PPV? The sports media right holders such as Showtime?

5.11  Protecting Sports Media

Rights: Legal Responses and Actions

The confluence of social media platforms, technology and apps as you might imagine, has challenged the sports entity owners and rights holders. Their responses have been varied and reflect their own concerns and confusion about how they might deal with the loss of control over the sports content from events that they in theory own or have purchased the rights to. At one end of the scale of response, the Association of Tennis Professionals (ATP) Tour administrators began some legal actions against fans who violated copyright by posting gifs and vines. This attracted a predictable level of critical response from fans who complained about the pettiness of such an approach (Myles 2015). The ATP subsequently claimed their legal actions were not

media at their peak. This infringed copyright rules and people who accessed such material faced exclusion from their Twitter accounts. The right-holders (most likely Showtime) contacted Twitter and it was able to act on thirty of the streams. The rest had either ended or were no longer available. It should be pointed out that pre-fight coverage, using Periscope included access to one of the fighter’s dressing rooms was used by one of the sports rights-holders. They felt that such activity helped to build a rapport and relationship with the viewers. Source: Adapted from: Hochberg (2015) “Up Periscope”. SportsBusiness International. June, pp. 18–19.

widespread and were carried out more as an attempt to discourage further postings of such materials. It can be argued that technology and the way in which it evolves at a transformational rate means that the sports rights holders and property owners are always at least a couple of steps “behind the posse”. We can draw a similar analogy with the sports drug testers. Many commentators argue that they too are a long way behind scientific advances in drugs and are failing to provide adequate or appropriate testing devices for potential cheating athletes. In many ways the attempts by the property owners and rights holders to take legal action is also similar to the initiatives used by authorities to prevent ambush marketing (examined in detail in 7 Chap. 10). While legislation can reduce the amount of illegal activity it can never eliminate it. As is the case with ambush marketing, creativity and ingenuity can overcome the best efforts of many legal provisions. When we relate this to the case of illegal streaming and distribution of sport media rights and add it to the way in which technology develops so quickly we can make the observation that it will likewise never be eliminated. If one site or operator is closed down, others spring up almost immediately.  

121 5.11 · Protecting Sports Media Rights: Legal Responses and Actions

5.11.1

Geo-Blocking

Geo-blocking refers to technology that restricts the transmission of content to a specific geographic territory and prohibits access to it from other countries or regions outside that specified territory. For instance, a football fan living in Portugal cannot take out a subscription to Sky TV to access football matches that are transmitted in the UK. That fan would have to make do with whatever coverage of the EPL is legally available in Portugal. Geo-blocking protects the rights and interests of key stakeholders such as sports property owners and traditional and OTT broadcasters and service providers. It is becoming increasingly easier to transmit live sports and defenders of the practice argue that it is necessary to deter illegal streaming. Of course, it is not totally fool proof. Fans can use technologies such as VPN to disguise where they are located. As mentioned earlier, illegal streaming services are prolific and already pose a threat to the stakeholders. One of the key areas that sports rights holders strive to manage aggressively is that of territorial protection. For instance, rights holders of the EPL in the UK market take legal initiatives open to them to block coverage in other geographic markets. The European Union, in 2014 argued that this was contrary to the spirit of single market that professed to have no boundaries. Indeed in 2012 the European Court of Justice ruled that it was not possible to enforce copyright on a country-by-country basis. However, it has rowed back on this view. The Sports Rights Owners Coalition produced a paper arguing strongly for the retention of geo-blocking which was submitted to the EU (2012). They noted that the structure and make-up of the European sports market (different cultures, different preferences for sports among fans and competitive issues) militated against the introduction of the lifting of territorial blocking. An end to the practice of sports rights operators bidding on a country-by-country basis would presumably suit the media

­ rganisations with the “deepest pocket” such o as Sky, Netflix, and Amazon and so on. For the moment, however, it suits the likes of Sky to continue with the practice of geo-blocking. It remains to be seen what type of legislation will emerge in the coming years. People who argue against geo-blocking make their case around the fact that it is undemocratic and unfair to fans, who have to pay high fees in order to access their favourite teams and sports. The European Commission (EC) has expressed concerns about the restrictions that geo-blocking imposes on fans. For the past number of years, it has moved in the direction of what it calls a “digital single market”. This envisages a situation where all citizens living within the European Union should have the same level of access to the range of online products and pay similar prices for such services. The sports sector has proved to be controversial and problematic. This is mainly because of the high value of the top sports properties and the equally high amount of investment that is wrapped up in the sale of sports media rights. Fitzgerald-Morgan (2019) notes that the European Commission carried out an investigation into the licensing practices of Hollywood Studios and Sky TV with respect to the film industry. They were concerned that key players such as Hollywood Studios and Sky utilised a number of “blocking clauses” to restrict the distribution of movies across geographic territories. Both of these companies responded by indicating that they would be committed in the future to not imposing such clauses. This of course does not translate automatically into law. A commitment is simply an expression to do something and nothing else. However, it indicates a degree of agreement with the general sentiments expressed by the EC. Sport is not included in this report (it focused only on the film industry). Houssain and Chan (2019) reported on changes to the EU’s broadcasting rules in the area of sport. It agreed to allow radio coverage of sport to become pan-European (citizens in EU countries can get access to domestic coverage of live sports events).

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Arguably, this is the first move to the loosening of geo-blocking in the area of sport. We should note that such agreements work slowly in the context of EU operations. It has implications for the key stakeholders in the sports sector going forward. It is unlikely in the medium term that we will see legislation being introduced that prohibits the policy of geo-blocking. We should however monitor the situation closely. 5.11.2

Exercise

??Assess the impact of geo-blocking on the sports fan.

5.12  Conclusions

In this chapter we have examined the importance of sports media rights in the context of distributing sport to the target audiences and as a major source of revenue stream for sports entity holders. We have noted the major transformation that has taken place world-wide in the way in which media rights for sports properties are sold. The emergence and dominance of powerful Pay TV media operators such as Sky, Foxtel and ESPN has changed the nature of the product that fans witness on their TV screens and other devices. Whereas the traditional means of distributing sport in many parts of Europe revolved around limited coverage by the public (state-owned) broadcasters, the modern method has spun that model on its head and we can now see virtually all sport on our devices, albeit at a price (some people argue an extortionate price). The sale and purchase of sports media rights has evolved hand-in-hand with the emergence of social media platforms and associated technology developments. This has also heavily shaped the way in which fans consume sport. Fans are no longer dependent on limited availability of sport on television. They can access their favourite teams and

competitions via a range of channels and determine when and where they wish to view it. Access points such as bars and homes have expanded greatly. As long as there is an Internet connection available people can view sport where they want to. The cost of Pay TV has risen over the years. Strong debates continue over the efficacy of this type of arrangement. Some commenters argue that it isolates a large proportion of individuals in society such as low-income people. Others argue that it encourages greed, leading to salaries for sports stars that are not deserved and indeed are obscene. Counter-arguments put forward revolve around the view that the quality of the product has risen exponentially as a result and that the technology used by TV companies has transformed sport into the most absorbing and immersive sector within the leisure and entertainment industry. We examined the emergence of operators such as Periscope and Meerkat and their subsequent decline, due to the arrival of major players such as Facebook. These apps allow fans to stream live material from sports events as they video the action or film direct from TV coverage of the event. In effect fans can become broadcasters and play a much more proactive role in their relationship with key stakeholders such as sports property owners and media rights holders. We evaluated the concept of “protected sports events” where governments identify certain sports property that have national importance and resonance with society and where everyone had the right to have free access to such events. We also considered the legal response of the main players in the sector to illegal streaming and transmission of events. However, as soon as one such operator disappears, others pop up. Even in areas such as geo-blocking in the context of the European market, it is still unclear as to the direction the European Union is likely to follow.

123 5.12 · Conclusions

Learning Outcomes 55 Sports media rights play an increasingly more important role as a revenue stream for sports property owners 55 Pay TV companies are increasingly coming under threat from new and potential entrants to the sports media rights sector. These include telecommunications companies such as BT, social media platforms such as Yahoo and Twitter, entertainment media companies such as Netflix and file sharing apps such as Periscope 55 Some sports properties deemed to be of national importance and significance are protected by governments. This means that they have to be made available free-to-air to sports fans 55 Illegal streaming threatens the business models employed by the media players in this sector. Even fans can transmit live sport by making use of apps such as Facebook and Periscope 55 Over the top (OTT) operators have seriously threatened the way in which Pay TV companies build their customer base. Such companies ensure that a sports fan no longer has to necessarily take out a monthly subscription to access a particular sporting event 55 Legal intervention only partially addresses the problem of illegal streaming and broadcasting. It is unlikely ever to eliminate this problem 55 Practices such as geo-blocking i.e. territorial protection, by media rights holders has an uncertain future. Legislators within the European Union have not yet come up with viable proposals for addressing the issue.

??End of Chapter Discussion Questions 1. Assess the view that the fan is victimised by Pay TV companies. Use examples to support your point of view. 2. Examine the extent to which you agree with the view that governments should not become involved in regulating sports media rights. 3. Evaluate the role played by OTT operators in the relationship between sports fans and their consumption of sport. 4. Some commentators argue that it is impossible to eliminate the problem of illegal streaming of live sports events. Assess the validity of this viewpoint. 5. Discuss the perception that technology has shifted control of the sports property from the media rights holders to the fans. Use examples to support your line of argument. 6. Instead of sports property-owners negotiating on behalf of clubs, it can be argued that the individual clubs should be allowed to capitalise on the value of its own assets by selling its own property rights. Examine the extent to which you would agree with this argument. Use examples to support your point of view. 7. You have been asked by the CEO of your National field hockey federation for advice as to how they can make the sport more popular. In particular the Federation wants guidance on using social media to enhance its popularity. Detail the recommendations and initiatives that you would make.

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Appendix Squashed. Anyone for Tennis?

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The sports of tennis and squash are very different in terms of the number of people who participate in these sports, particularly in areas such as the popularity of the sports, the level of exposure that the sports generate in the media and the awareness that sports fans have of the top players. Tennis is a global sport (but not at the ubiquitous level of football). Squash is a niche sport, although played by many people globally. Squash has suffered traditionally from challenges in making it an attractive sport to watch on television. How can you make it interesting when it involves players repeatedly hitting the ball up against a wall? Due to the speed of the action in such a confined space, it has been difficult for TV viewers to sight the ball. The 1980s and 1990s could be described as its peak period in terms of popularity. Administrators moved to the use of glass walls which allowed TV cameras to come up with a more diverse and interesting use of cameras and angles. It also had very marketable superstars such as Jahangir and Jansher Khan. It continues to be a very popular sport in the Asian market. Gaining TV coverage tended to be problematic in key markets such as Europe and North America over the past couple of decades. Audiences declined and sponsors dropped out and were not replaced to any significant extent. Despite applying on a regular basis for inclusion as an Olympic sport, it has consistently failed to achieve this distinction. This means that the sport misses out on a regular opportunity to showcase its merits (a skilful, strenuous and challenging sport) to a global audience. In some key markets (in terms of media coverage), it is perceived as an elitist sport. For instance in the USA it is a sport that mainly features in the top universities sports arenas (the Ivy League). On a positive note, in the US market, because it appeals to the elite segment of the

market, it has attracted a number of prestigious brands as sponsors. These include companies such as J.P.  Morgan and Delaware Investments. The Tennis Channel is an American sports-­ oriented digital cable and satellite television network that is owned by The Tennis Channel, Inc., and a subsidiary of Sinclair Broadcast Group. It is devoted to events and other programming related to the game of tennis, along with other racquet sports such as badminton and racquetball. In March 2015, the Tennis Channel partnered with the Professional Squash Association to cover some of the major events and competitions. Some commentators queried the rationale for this partnership. Although both sports come under the general heading of “racquet” sports, as we mentioned at the beginning, they are quite different in terms of their global reach and appeal. From the perspective of the Tennis Channel programming, it did not disrupt or reduce their coverage of tennis tournaments. It simply extended its product line, and in their view, allowed them to cover a complementary sport. The deal was designed to cover ten Professional Squash Association (PSA) tournaments throughout the year; covering male and female events. The Tennis Channel reaches out to thirty-­ five million viewers globally. This rises to around fifty-five million during the four “Grand Slam” tournaments. For the PSA, it provides an opportunity to go beyond their traditional fan-base and give it more coverage. They also hoped that by acquiring a higher profile it would help the sport to achieve its long-running goal of achieving Olympic status. While it is difficult to assess the potential financial arrangements, the Tennis Channel has stated that the PSA will take a share of any advertising that comes from the squash programming. This would not initially be very

125 Appendix

high, due to the relatively limited appeal and reach of squash, but both parties are working on the expectation that this will build over time. This raises the issue of balancing the potential revenue that might be generated from such a partnership, against the need to build the viewer base and widen the appeal of the sport of squash. The PSA also runs its own online TV channel: Squash TV. This provides live streaming of events to its existing squash viewers. In late 2015 the PSA entered into a partnership with Eurosport to provide an OTT media rights deal. As part of the five-year deal, which was signed in conjunction with Broadreach Media, Eurosport will effectively migrate the PSA’s Squash TV player onto its own digital ondemand platform, Eurosport Player. The deal guarantees coverage of 500 hours of squash per year. From 1st January 2016, all Squash TV tournaments will be shown live and exclusively in their entirety throughout Europe via Eurosport Player, while selected highlights from major tournaments such as the British Open, US Open, PSA World Series Finals and PSA World Championship will be broadcast throughout Europe via the ­ network’s mainstream linear channels. “Eurosport is committed to fuel fans’ passion everywhere by delivering the best sport’s experience all year round and Eurosport Player is the perfect platform to deliver on this commitment to squash fans across Europe.” PSA chief executive Alex Gough said, “Since taking responsibility for TV rights ‘inhouse’ in January, our global television reach has more than doubled as we have added major networks such as BeIn Sport, BT Sport, Super Sports, Ten Sports, Tennis Channel and more to our portfolio and Eurosport is the latest topclass network to join this growing list. The agreement will take our product and the exploits of our players into millions of new homes and expose the sport to an entirely new audience across Europe in what is a massive moment in the history of squash broadcasting.”

Evidence of how successful their arrangements have been is captured in the following quote from the PSA. “Six months after taking responsibility for broadcast rights in-house in partnership with Broadreach Media, the Professional Squash Association (PSA) has announced record growth in television exposure during the first half of 2015”. The PSA’s global reach has more than doubled since January with major networks such as Astro, BeIn Sport, BT Sport, Fox Sports Australia, Sky Sports NZ, Super Sports, Ten Sports and Tennis Channel having already signed agreements that sees televised coverage of semi-finals and finals from the sport’s biggest events taken to over 200  million homes across 88 countries worldwide. With that growth set to continue throughout the 2015-16 season, squash will be taken to more homes around the world than ever before as men’s and women’s professional squash continues to expand its global presence and the sport continues to push for inclusion within the 2020 Olympic Games Programme. (PSA press release; August 2015). Additionally, the PSA has also announced that squash would become the first racquet sport ever to be broadcast live in UltraHD in the UK. The historic broadcast occurred during the 2015 AJ Bell British Squash Grand Prix, which took place in Manchester in September, when the semi-finals and final were shown live on BT Sport in HD and UltraHD on Sunday, 13 September and Monday, 14 September. Jamie Hindhaugh, Chief Operating Officer, BT Sport and BT TV, said: “BT Sport has enjoyed supporting the PSA since our broadcast partnership was announced in January this year. We look forward to bringing squash fans the 2015 AJ Bell British Squash Grand Prix in ultra-high-­definition later this year.” The PSA World Tour began a new partnership with production company MOOV.tv in January introducing many enhancements to the sport’s coverage, including radio and

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robotic cameras. However, this latest advancement is set to really showcase the sport in a new light. “UltraHD is 4 times the detail of the current HD format and will bring squash to life on television like never before,” said MOOV.tv Director, Nev Appleton. “The picture quality is stunning, you feel like you are actually at the event, giving the viewer the best seat in the house is always the objective. It doesn’t stop there, The BT Sport UltraHD truck is equipped

??Discussion Questions 1. Assess the strategy employed by the PSA to expand the sport of squash globally. 2. Do you think they have done enough to convince the International Olympic Committee to include squash in future Summer Olympic Games? 3. Identify other initiatives that could further enhance the profile of squash, particularly with respect to the value of its sports media rights.

References Asser Institute. 2014. Study on sports organisers’ rights in the European Union. Final report for the European Union. Available at: http://ec.­europa.­eu/sport/ news/2014/docs/study-sor2014-final-report-gc-compatible_en.­pdf. Accessed Oct 2016. Boyle, Raymond. 2015. Copyright, football and European media rights. CREATe Working Paper. Dunne, Frank. 2016. OTT’s European power struggle. SportBusiness International, 16–19. Fitzgerald-Morgan, Ciaran. 2019. The legality of geo-­ blocking: Could Sky’s recent commitments in the Pay TV case impact European sports broadcasting? LawinSport. Available at: https://www.­lawinsport.­ com/topics/item/the-legality-of-geo-blockingcould-sky-s-recent-commitments-in-the-pay-tvcase-impact-european-sports-broadcasting Football Benchmark KMGP. 2020. Available at https:// www.­footballbenchmark.­c om/library/will_ott_ shake_up_the_football_broadcasting_industry Hochberg, Matthew. 2015. Up periscope. SportsBusiness International, 18–19.

with the world’s first UHD ChyronHego graphics engines offering razor sharp graphics certainly adding to the ‘wow’ factor.” Sources: adapted from: Emmett, James (2015) “Eurosport signs landmark squash deal”. Sports Pro. Available at 7 http://www.­ sportspromedia.­c om/news/eurosport_signs_ landmark_squash_deal. PSA (2015) “Record numbers exposed to squash in 2015”. Available at: 13th August. (Accessed October 2016)  

Houssain, Elsa Haj and Dickie Chan. 2019. Unexpected win for English football enthusiasts around the EU and heavy defeat for rights holders wallets. Sports shorts: Insights on sporting developments. Available at: https://www.­sports.­legal/2019/02/unexpectedwin-for-english-football-enthusiasts-around-the-euand-heavy-defeat-for-rights-holders-wallets/. Jackson, Jasper. 2016. Twitter to live stream NFLs Thursday night football. The Guardian. Joseph, Seb. 2016. Live streaming  – the ticking time bomb for sports broadcasters. The Drum. Available at: http://www.­thedrum.­com/news/2016/04/11/livestreaming-ticking-time-bomb-sports-broadcasters. Accessed Oct 2016. Miloch, K., and K. Lambrecht. 2006. Consumer awareness of sponsorship at grassroots sports events. Sports Marketing Quarterly, [e-journal] 15: 147–154. Available through: Taylor & Francis Social Science & Humanities with Science & Technology http:// citeseerx.­ist.­psu.­edu/viewdoc/download?doi=10.­1.­1.­ 392.­4265&rep=rep1&type=pdf. Accessed Oct 2016. Myles, Stephanie. 2015. Periscope ushers in wild-west era for sports broadcasting. The Guardian. Available at: https://www.­theguardian.­com/sport/blog/2015/ may/16/periscope-ushers-in-wild-west-era-forsports-broadcasting Nicholson, Matthew. 2007. Sport and the media: Managing the nexus. Amsterdam: Elsevier. Plunkett, John. 2015. Sky profits rise as it passes 12 million UK and Ireland customers. The Guardian. Available at: https://www.theguardian.com/media/2015/jul/29/skyprofits-rise-customers-germany-italy. Accessed Oct 2016. Russo, Chris. 2016. Sports and the OTT revolution. Available at http://www.­mediaentertainmenttech outlook.com/cxoinsights/sports-and-the-ottrevolution-nid-39.­html. Accessed Oct 2016. Smith, Paul, Tom Evens, and Petros Iosifidis. 2016. The next big match: Convergence, competition and sports media rights. European Journal of Communication 31 (5): 536–550.

127 References

SportBusiness Consulting Global Media Report. 2018. Available at: https://www.­sportbusiness.­com/2018/11/ sportbusiness-consulting-global-media-report/ Swains, Howard. 2015. Free football streaming: How illegal sites keep outpacing broadcasters. The Guardian. Available at https://www.­theguardian.­ com/football/2015/aug/01/faster-easier-free-illegalfootball-streams

Delaware North. 2016. The future of sports. Available at http://future-of-sports-2016. Accessed Oct 2016. Williams, Rhiannon. 2015. What’s the difference between meerkat and periscope? The Telegraph. Available at: http://www.­telegraph.­co.­uk/technology/social-media/11503574/Whats-the-differencebetween-Meerkat-and-Periscope.­html

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Formulating and Implementing Sports Marketing Strategy Contents 6.1

Introduction – 131

6.2

Placing Strategy in Context – 131

6.2.1 6.2.2

S trategy Defined – 132 Benefits and Limitations of Strategy Development and Formulation – 133

6.3

 he Relationship Between Marketing and the Strategic T Planning Process – 135

6.4

The Strategic Market Planning Process – 136

6.4.1 6.4.2

 ission and Values of the Organisation – 137 M Mission Statements – 138

6.5

Analysis of the Business Environment – 139

6.6

Pestel Analysis and Appraisal – 139

6.6.1 6.6.2 6.6.3 6.6.4 6.6.5 6.6.6 6.6.7

 olitical Environment – 140 P Exercise – 141 Economic Environment – 141 Social Environment – 142 Technological Environment – 143 Environmental Issues – 144 Legal Environment – 145

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_6) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_6

6

6.7

SWOT Analysis – 145

6.8

Competitive Positioning – 146

6.9

Developing the Core Marketing Strategy – 146

6.10

Evaluation and Control – 147

6.10.1

Exercise – 148

6.11

Conclusions – 148 Appendix – 149 References – 151

131 6.2 · Placing Strategy in Context

nnLearning Objectives On completion of this chapter you should be able to address the following objectives: 55 Understand what is meant by strategy and its relevance for sports marketers 55 Examine the different approaches to strategy development and implementation 55 Assess the role played by the marketing function in strategy development within the sports sector 55 Assess the pros and cons of strategy development in the context of the sports sector 55 Understand the different level of strategy development 55 Examine the different components of a sports marketing plan and its link to overall strategy development and implementation.

6.1  Introduction

As we have noted in earlier chapters, the sports sector in many parts of the world has recognised that at the elite end it has become a business. The arrival of executives and directors from traditional commercial organisations has led to a recognition of the importance of devising plans and strategies in order to monetise the business, expand revenue streams and grow the business within the global context. Sports bodies closer to the “grass-roots” domain of sport also have to adopt a business-­ like approach to planning for their growth and development. It is not just the preserve of elite sports clubs, organisations and bodies. For instance, even the smallest of clubs is required to put a plan in place if they apply for sports funding from government bodies or when seeking a loan from a financial institution. Representatives of such organisations demand to see evidence and justification for the granting of such funding. Sports organisations at every level have to outline the rationale for funding in general but also to their stakeholders in terms of where they want to be in future years.

Plans and strategies explicitly capture how the rationale is articulated in writing for both internal and external scrutiny and overview. In this chapter we examine what is meant by the term “strategy” and assess the role that the marketing function plays in strategy formulation and implementation. We consider some of the characteristics of sports marketing, how they might differ from businesses in other industry sectors and the implications for strategy development. We assess the implications for the successful formulation and implementation of sports marketing strategy for the specific sports organisation and the constituent stakeholders that are also involved in delivering the “sports product” to the target audiences. We look at some examples of how sports organisations develop their approach to strategy development and assess how this takes them forward. One of the key mantras that we revisit in this book is the link between theory and practice. All organisations struggle with planning and strategy development. It is not easy to lay out the principles of strategy development and planning without appropriate analysis and appraisal. The sports sector specifically throws up some unique challenges and issues which arguably make the implementation of plans more complex. As Mike Tyson, the former World Heavyweight champion so succinctly put it: everybody has a plan until someone punches them in the face! 6.2  Placing Strategy in Context

The term “strategy” is arguably one of the most overused words in the business lexicon. While many commentators argue that it is an essential prerequisite for a successful business, it also conjures up many difficulties and obstacles in its formulation and implementation. It is not our intention in this chapter to denigrate the role of planning or strategy ­necessarily. However, it is important that we place the topic in context and assess the pros and cons associated with it. We also need to

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get a clearer understanding of what we mean by the term “strategy”. This is also important because many people (including the so-called “experts”) put forward many different interpretations of what they understand it to mean. Piercy (2017) provides some useful analysis of what strategy is all about and also what it does not represent. He argues that strategy is not necessarily about strategic planning and the adoption of various prescriptive models and frameworks. Such prescriptive approaches were very popular with corporations in the 1970s, 1980s, and up to the turn of the century. Indeed, many consultancy groups such as the Boston Consulting Group designed their own models which they used to develop such prescriptive plans and strategies for companies. In hindsight, while companies derived some benefits from such a disciplined approach to strategic planning, they tended to be overly simplistic and failed to consider the complexities and oscillations that typically occur in many industries. A healthy degree of cynicism has existed for many years about their effectiveness. Arguably, the advent of the Coronavirus pandemic exacerbated such cynicism. It can be argued that many organisations such as Amazon, Uber and Google did not become successful simply because they invested in strategic plans. Indeed, many entrepreneurs eschew the use of such frameworks and rely more on strategic thinking in order to develop their value propositions. The concept of strategic thinking is an important one in the context of strategy development and implementation. Arguably it is the ability of the company founder or senior executives to assess the future. This entails having a grasp of the likely ways and directions in which the industry is going to map out. Not many managers have the analytical, empathic and creative skills to do this successfully. It can be argued that entrepreneurial types and mavericks tend to “think outside of the box”. This allows them to have a “wider” and more long-term perspective of their respective businesses. Such thinking and behaviour can

generate more innovative initiatives that place the organisation ahead of the competitors. For instance, it can create what is referred to as “first-mover” advantage that ensures competitors struggle to catch up with that organisation. Crucially it allows the company to build up scale and expertise in that area. Such people are often referred to as visionaries, in so much as they have a clear picture of where they see the organisation going in the future. Crucially, they are able to create a corporate culture where they can drive such change within the organisation concerned. In essence they are able to take the organisation out of the mundane, day-to-day operational thinking and infuse senior management with an enthusiasm to drive the company forward. Arguably, strategic thinking is more important than simply relying on the formulaic approach that is reflected in complicated and detailed plans. However, we have to be careful in dismissing the role of plans and strategies. If a company or organisation relies exclusively on the strategic thinking and machinations of one individual, it can quickly encounter problems. For instance, if such thinking is not articulated in writing in the form of a plan or strategy then it will inevitably lead to confusion, a lack of transparency and in the worst-case scenario, potential for fraudulent behaviour. If the so-called “visionary” or “strategic thinker” leaves the organisation or dies, then there is a significant risk that the organisation will struggle because of the absence of that person’s clarity or communication. Without articulated plans in the form of documentation, it makes it easier for individuals to operate in a dictatorial manner leading to various forms of unethical behaviour. In the context of sport, we have seen such behaviour in organisations such as Formula One motor racing and FIFA, to name but a couple. 6.2.1

Strategy Defined

As is the case with much of the business and marketing literature, it quickly becomes clear that there are many alternate and conflicting

133 6.2 · Placing Strategy in Context

views about what exactly is meant by the term “strategy”. It is not our intention in this book to spend an inordinate amount of time dissecting the different interpretations. However, a quick perusal can give us insight into some of the main lines of thinking. Porter (1996) argues that strategy revolves around focusing on how an organisation can differentiate itself from the competition. A clearly defined value proposition that highlights such points of differentiation will place that organisation in a significantly stronger position than its competitors. Mintzberg (1994) challenged much of the conventional thinking about strategy. He suggested that many commentators viewed strategy as a means to an end: getting from here to there; with the focus on how this might be achieved. Others, he argued saw strategy as a pattern of initiatives and activities over time, that reflect that company’s target markets. Some companies focus on the concept of position. This revolves around the products it develops and the markets it targets. He also identified other commentators who view strategy as a position that the company adopts, largely based on its vision and direction of the future. In a later publication Mintzberg et al. (1998) identified ten schools of thought that reflect different perspectives of strategy. These approaches reflect in some cases a prescriptive approach, with the emphasis on formal planning. Others, an entrepreneurial approach, which focuses more on how strategies get made. He describes a final grouping as the learning school. This emphasises that strategy emerges in incremental steps as the organisation evolves and adapts to changes in the sector, the environment and so on. Mintzberg is of the belief that strategies emerge over time. They evolve, adjust and align with the realities of a changing business environment. Formal written strategies capture such changes and have a role to play in communicating developments to the key stakeholders in the organisation. In essence, strategy can be defined as providing direction for an organisation as to when and where it wants to be, over a period

of time, why it is pursuing this approach and how it intends to get there. Incorporated into this way of thinking are specific plans and initiatives to address these objectives. In terms of evaluating the success or otherwise of the strategy, companies develop various “control” devices such as key performance indicators, metrics and targets. 6.2.2

 enefits and Limitations of B Strategy Development and Formulation

Before we consider this issue in detail we should recognise at the outset that the absence of any strategy is likely to lead to the demise of organisations. Even in situations where it has a very clear and differentiated value proposition, it is inevitable that over time, competition will catch up and new entrants will emerge to overtake the organisation. This may happen with or without clear evidence of a strategy. However, without one it can be argued that the organisation is like a ship without a rudder. Without a strategy it is likely to drift along aimlessly and eventually disappear. In addition to providing direction for an organisation, we can identify the following potential benefits as well. 1. Provides a focus for management: A clearly articulated strategy which reflects the thinking of the CEO and senior management can act as a point of focus and commonality of purpose for the company. Such a document helps to identify the agenda for the future and the rationale behind the thinking. 2. Provides consistency: A strategy provides consistency from the point of view of decision-making, across the different business functions in the organisation. It makes it more difficult for a departmental plan or initiative to deviate significantly from the overall strategy of the organisation if the plan is clearly articulated and communicated to the various management teams. 3. Reduction of risk: All businesses are potentially exposed to some form of risk.

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This can fluctuate and oscillate, depending on the nature of the industry sector. A strategy can certainly pinpoint the areas of current and potential exposure to risk. It can identify responses for addressing such risk. 4. Helps to refine existing objectives: A strategy, when combined with regular reviews and assessment, helps the organisation to revise its objectives and alter direction (if necessary) in response to potential threats and opportunities in the environment. 5. Better allocation of resources: One of the strongest arguments in favour of strategic planning rests with the way in which an organisation allocates resources across its product portfolios. Clarity of thinking can identify priority areas where investment is needed. For instance, in the context of the sports sector, sports administrators increasingly have to allocate more resources to the development of women’s leagues or competitions. In the case of rugby and football, some clubs and national associations have increased expenditure on the establishment of full-time professional ladies teams to complement their male counterparts. Companies can make mistakes from blindly accepting the benefits associated with strategy development. It might be naïve to suggest that there are clear disadvantages involved with such an exercise. However, organisations can make mistakes and potentially ignore possible pitfalls. We identify some potential limitations as follows. 1. Tablets of stone: Some organisations adopt the view that once the strategic plan is developed it becomes the mantra for all subsequent activities and initiatives. As a consequence, it becomes very reluctant to make any amendments (either major or minor) to the predetermined strategy. This can lead to inertia at best, and a dereliction of duty at worst, if the company fails to adapt in time when something happens that the industry was not expecting. This limitation is also evidenced in the rigidity which is imposed on the strategic plan. This further exacerbates the lack of adaptability and

2.

3.

4.

5.

agility that is often required from organisations and their senior personnel. Costly: Unless the organisation employs a disciplined approach to the process of developing the plan, it is likely that it will become a costly exercise in terms of setting up committees and sub-committees. It will also be costly in terms of management time and effort. Succession: Within most organisations, CEOs, Managing Directors and key senior personnel come and go. They move on to other companies, other sectors in order to advance their careers. Realistically, strategic plans often take 3–5 years before the implications of their objectives and decisions begin to take effect. By that time the individual(s) responsible for the formulation and implementation of the plan have moved on. This can create at best, a fracture in the organisation, as new people move into the position. Legacy: Closely related to succession is that of legacy. New CEOs find it difficult to make any significant change to the organisation because they increasingly have to engage in firefighting tactics to address problems caused by the previous input of the last CEO. Resistance to change: The arrival of a new CEO, full of vision and new ideas can encounter major resistance from existing management personnel within the organisation. This is very noticeable in the sports sector. Many clubs and organisations are actively recruiting people from traditional manufacturing and services industries. These people bring ideas and theories which have been honed in the “white heat” of competitive battle and activity. Clubs and organisations, steeped in the heritage and tradition of their sport often put up stout resistance to proposed radical changes in direction. While the new CEO or Marketing Director wants to monetise the business by developing new revenue streams, existing management may express distain for such proposals. Another key constituent stakeholder; the fans, may also provide some strong resis-

135 6.3 · The Relationship Between Marketing and the Strategic Planning Process

tance to such developments. We have seen such resistance in situations where fans rebel against the club selling naming rights for the stadium or where the owner of a club may want to change the colour of the team’s shirt or even the name of the club, in order to exploit opportunities in other geographic markets. Within English football for instance, the Asian owner of Cardiff City wanted to change the jerseys from blue to red, in recognition of the cultural importance of this colour in many Asian countries. The Egyptian owner of Hull City wanted to change the name of the club to Hull Tigers, in recognition of the importance of that animal in certain parts of the world. 6. Achieving the correct balance: In sport we have to balance the desire to increase revenue and widen exposure within new international markets with tradition and heritage. We also have to take into consideration the views and perceptions of stakeholders such as fans, media broadcasters and sponsors. In the case of fans, many prefer to see the club spend money on players in order to achieve success - even if this threatens the very survival of the club. They are resistant in many cases to owners and management employing strict financial protocols to ensure that the club is profitable. Entertainment is often placed higher than profitability in the minds of fans. The recent Coronavirus crisis vividly highlighted the precariousness of many sports clubs and organisations. Likewise increasing demands placed on sports entity owners by the media can often lead to decisions that are not accepted with any fervour by fans. This is exemplified in practices such as changing the timing of games to suit international time-zones, reducing the length of the sports event to meet existing TV schedules and so on. In essence, a company without a strategy lacks direction and focus. We now consider the process of strategy development and implementation.

6.3  The Relationship Between

Marketing and the Strategic Planning Process

Before we consider the different steps involved in the planning and strategy development process we should examine the role and influence of marketing in this exercise. From the lense of a marketing practitioner, it is strongly argued that marketing is central in the development of a relevant and coherent strategy for the organisation. This is based on the premise that the marketing profession is customer-centric and customer-facing. Without a clear understanding of the needs and requirements of the customer base, it is highly unlikely that any subsequent machinations built around a plan will reflect the reality of the market and the business environment. It will fail to track and identify potential threats and opportunities and potentially ignore competitive activities and initiatives. In essence, without marketing playing a key role, organisations are likely to misalign their strategies with the market conditions that prevail. The focus on the customer is therefore seen as being the fulcrum or central point for the subsequent formulation and implementation of the strategic plan. However, this perception of the role of marketing in overall strategic planning as espoused by marketing practitioners and experts, is not necessarily accepted with such enthusiasm by organisations in practice. This is exacerbated by the reality that many large organisations do not select or recruit their CEOs from the marketing field. The majority come from the financial discipline. Perceptions of the marketing profession are often not that positive. Some companies perceive marketing as a discipline that focuses on demanding and spending money on spurious initiatives such as advertising. This perception is arguably supported by the difficulties of measuring the effectiveness of such expenditure. Whereas marketers see such activities as an investment in the products, others see it as a cost.

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Other negative perceptions revolve around the view that marketers are strong in “style” (sharp presentations and arguments) but weak on “substance” issues (providing financial evidence for their proposals). Other organisations do not fully understand the roles and responsibilities of the marketing function. Many perceive marketing as being almost exclusively about selling and promoting the brands and products. While these aspects are an important component of marketing there is a danger that other dimensions are not recognised. This is particularly the case in areas such as customer relationship management, data analytics and responding proactively to changes in the overall business environment. Such perceptions are manifested in the “selling concept” and an obsession with new product developments that bear little relevance for the target market(s). There is a compelling argument to advocate the importance of marketing in the strategic planning process. Everything begins and ends with existing and potential customers. Without detailed assessment of the target markets in relation to the overall environment, it is unlikely that organisations will deliver a value proposition which is relevant and which resonates with changing perceptions, attitudes and expectations. In summary, marketing should play a central role in the strategic planning process. In this chapter we use the terms “strategic marketing planning” and “strategy development” interchangeably. 6.4  The Strategic Market Planning

Process

If you read many of the texts and articles on planning you will discover many different frameworks put forward by authors. This can be confusing. However, most of the approaches address the fundamental areas that have to be addressed in such an exercise. One way of gaining an insight into what constitutes effective planning is that of highlighting the strategic and operational dimensions.

The term “strategic” implies that the organisation is taking a long-term view of the business and its operations. The premise for this approach is based on the view that over time, business environments change. This can occur because of developments in areas such as technological, social, economic and environmental condition. Without a proper appraisal and monitoring of such areas, any specific marketing initiatives run the risk of not reflecting the realities of the marketplace. The Coronavirus crisis has introduced the concept of planning in an era of “radical uncertainty”. A long-term, strategic focus is seen as being critical in the overall process of strategic marketing planning. This part of the strategy development process provides a rationale for subsequent specific initiatives and tactics that feature in the detailed marketing strategy. It also provides coherence and consistency within the planning framework. While we have acknowledged earlier that there is a danger of adopting an overly rigid approach, a strategic focus provides boundaries for the organisation to adhere to. Any subsequent “drifting” from these boundaries may be necessary on occasion but requires a strong degree of justification on the part of senior management. As we move through the next stages in the process we are in effect funnelling down to the specific operational details contained in the plan. This takes us into the specific marketing decision areas. Business schools tend to use the ubiquitous “Four P’s” (product, price, promotion and place), or the extended “Seven Ps” (adding in people, process and physical evidence). We should be careful about becoming too prescriptive in terms of how we use such frameworks. While they provide a simple way for us to identify the key areas, there is a danger that we ignore some critical dimensions such as customer relationship management, partnership development (with key stakeholders) and digital marketing. For instance, in the case of sports marketing, we cannot underestimate the importance of sports organisations having a structured approach for developing and management partnerships with stakeholders such as media owners, governments and sponsors.

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137 6.4 · The Strategic Market Planning Process

MISSION STATEMENT

ANALYSIS OF ENVIRONMENT

Political

Economic

Technological

Social

Economic

Legal

ASSESSMENT (SWOT Analysis) COMPETITIVE POSITIONING (STRATEGIC DIRECTIONS)

CORE MARKETING STRATEGY

Product Management

Marketing Operations Management

Ticketing & Channel Management

Data Analytics

Integrated Communications Management

Partnership Management

EVALUATION CONTROL AND REVIEW

..      Fig. 6.1  A framework for strategic marketing planning. (Source: Developed by author)

The extent to which an organisation is in a position to answer these questions will vary. In situations where it has never undertaken such an exercise before, it will require the introduction of initiatives to help provide answers to such questions. Typically, this will involve working groups, workshops, brain-storming sessions, away-­days and review meetings in order to encourage personnel from different depart6.4.1 Mission and Values of the ments to reflect and address these questions. Organisation External consultants may be used to provide The starting point for strategic marketing expertise, guidance and an independent “set planning is the identification of the overall of eyes”. For organisations that make use of stradirection of the organisation and its core valtegic planning frameworks, such activities ues. This can be summed up in the following would be a regular feature in the process. questions. They may have annual or bi-annual exercises 55 What are we all about? in an attempt to monitor changes in the 55 What best describes or core values and overall business environment. This is essenbeliefs? tial in order to be in a position to proactively 55 Where are we now? anticipate the impact of threats and oppor55 Where do we want to be in the longer-­ tunities. term?

. Figure 6.1 provides us with a framework that can be utilised in the context of strategy development and implementation in the sports sector context. While this is a generic framework for strategic marketing planning (it can be used for any business organisation), we will link our discussion and analysis to the sports sector.  

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6.4.2

Mission Statements

Part of the exercise of assessing and determining where the company is currently and where it wants to go in the future can involve the use of a mission statement. This is usually a “one sentence” statement that attempts to concisely sum up how the company wishes to be perceived by its various stakeholders. While there is some logic to this concept, it has to be said that it engenders mixed and diverse views across the business communities. Detractors suggest that such statements are often trite and meaningless, when actually put to some form of scrutiny. Often, they fail to capture any relevant concept of the values of the company and are treated with some distain by senior managers. Common mistakes include the following: lengthy and verbose statements that add confusion rather than clarity, statements which reflect the thoughts of the CEO rather than the organisation as a whole and lengthy pontification and reflection leading to confused and obtuse statements. These are often reflected in “pie in the sky” statements such as: “We want to be the number one football club in the world”. Such a

sentence conveys no sense of what the club is about or its core values. By contrast, effective and meaningful mission statements should address the following issues: 55 Identify the core purpose of the organisation 55 Highlight the core values of the organisation 55 Indicate its intent as to where it wants to be in the future. If the mission statement broadly follows these guidelines then it is likely to have more resonance and relevance for the stakeholders. Such short statements sharpen the focus on the core values of the sports organisation. The values of the organisation reflect the core value proposition that it brings to its target markets. Thus, these two elements are inextricably linked. While the mission statement might be seen as a useful synthesis of the values, the latter are central to the overall direction and thrust of the organisation. ??1. Assess the relevance of this statement by the organisation, using appropriate criteria for this exercise. 2. What changes would you make to it?

Chicago Bulls

Chicago Bulls is a well-known basketball team which plays in the US National Basketball Association competitions (NBA). Its overall direction is captured in the following mission statement: “The Chicago Bulls organisation is a sports entertainment company dedicated to winning NBA championships, growing new basketball fans, and providing superior entertainment, value and service”. We aim to achieve our mission by working hard to emphasise the following core values: 55 Mutual respect for each other, and a commitment to excellence, innovation, integrity and quality in everything we do 55 By providing our guests with superior entertainment value in a clean, secure, and

55 55

55

55

comfortable environment – win or lose – regardless of their interest level in basketball By helping our sponsors build their brands and grow their business By treating our respective constituencies with respect, appreciation, and as we ourselves would want to be treated and serviced. In other words, by putting our fans and sponsors first every single day – and meaning it By making our community a better place to live through our support of worthy social causes By involving our guests in the game as active participants – not merely spectators

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139 6.6 · Pestel Analysis and Appraisal

55 By knowing who and where our fans are, and reaching out to them 55 By working hard to make NBA basketball the most popular sport in our community and by selling and humanizing our players to everyone we meet

??Exercise Making use of identified sources on the Internet. Assess the way that the sport called Ultimate Fighting Championship has evolved since its inception in 1993. Its mission statement is captured in the following statement. “To help and promote the sport of MMA evolve into a major world sport”.

6.5  Analysis of the Business

Environment

The development of the mission statement and associated values of the sports organisation is meant to reflect its future direction and its values. While these elements are not likely to change with bewildering frequency, we should recognise that over time they may need to be adjusted to reflect changes taking place in the environment. The role that marketing plays in this exercise is crucial. The sports product has to evolve and align with the changing environment. Very few, if any, sports can remain rigid and unyielding in the face of such changes. Sports fans in particular change the ways in which they ­consume sports or change their allegiance to a specific sport in light of developments across the different aspects of the environment. ..      Fig. 6.2 Business environment analysis. (Source: Developed by author)

Political

55 By being proactive and accountable in carrying out our mission. Source: 7 https://www.­nba.­com/bulls/news/mission_statement.­html (accessed October 15th, 2018).

One of the key roles of marketers in their customer-facing interaction and engagement, is to monitor and identify such trends. This may lead to mission statements and associated value requiring to be changed. Therefore, there is an on-going linkage between the mission of the sports organisation and the process of analysing the environment.

6.6  Pestel Analysis and Appraisal

We now move on to consider the specific elements that make up the overall business environment. I have adopted the approach which is often referred to as PESTEL. This translates into the following dimensions: political, economic, social, technological and legal. When we assess each element of the business environment we should recognise that there are macro and micro levels of analysis required. For instance, some of the trends, drivers and triggers occur at a global and/or national level. Also, such influences can occur within the context of a particular competition, league or specific event: likewise, at an organisational or at club level. . Figure 6.2 highlights the different dimensions for this analysis and appraisal.  

Economic

Social

BUSINESS ANALYSIS

Technological

Environmental

Legal

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6.6.1

Political Environment

It can be argued that sport and politics are inextricably intertwined. Others argue that they should be separate. Whatever your view, the reality is that at various levels, sports marketers have to recognise that both politics and sport enjoy a symbiotic relationship. Depending on the particular sport and form of government, the nature of this relationship can be a force for good or bad. In terms of preparing a strategic plan, it would be foolish to ignore the changing nature of this relationship. Government and state agencies play a number of roles in shaping national sports policy. This is reflected in the level of public funding that it provides to sports bodies and organisations. This can fluctuate. Some sports are more dependent on such funding than others. Some governments, via their sports agencies, allocate funding depending on how successful a particular sport is, with respect to winning medals at global sports events. One of the key aspects of strategic marketing planning is the extent to which a sports organisation pursues a policy of active engagement and networking with key individuals in the political arena. Such active networking and lobbying can lead to that sport, organisation or club being viewed in a more favourable light by key political personnel. The nature of such relationships can vary depending on the level of power-dependency

that exists between sports organisations and government bodies. High-profile sports in particular countries have a certain level of leverage with governments. By contrast more peripheral sports lack the necessary influence to attract more funding. Sporting bodies can pursue a symbiotic relationship, for instance, in cases where the government agencies are addressing wider issues affecting society, such as obesity and exercise. Marathons, half marathons and 10 kilometre runs are growing in popularity in many countries. By working in partnership with government agencies, a sport gains a higher profile and attracts greater participation levels. Within organisations, particularly at a global level, some countries wield greater influence than others. Arguably organisations such as the International Olympics Council are heavily influenced by the power of certain countries. For instance, doping and cheating controversies surrounding the Russian Olympic Federation resulted in suspensions of their athletes from the 2016 Olympic Games. However, such sanctions were eased in 2018 without clear and transparent evidence that the sports authorities in Russia had fully addressed many of the original concerns. They were re-imposed subsequently as further evidence of cheating was uncovered.

Bend the Knee

In 2016 an NFL player by the name of Colin Kaepernick, who played for San Francisco 49ers, captured global attention when he refused to stand to attention for the American national anthem. Instead he kneeled down, expressing his discontent about social justice in the USA. The President of the USA, Donald Trump, took umbrage at this and argued strongly that any player engaging in this behaviour should be sacked. This resulted in well over 150 players staging similar protests.

In response the NFL authorities made changes to their overall strategic plan by allocating over $100 million to be spent on social justice causes for the next 7 years. Some commentators felt that this was a “knee-jerk” reaction that only attracted criticism from both conservatives (mainly members of the Republican Party) and liberals, who argued that this was only a gesture and not a long-term solution. This example shows the importance of a sports organisation being able

141 6.6 · Pestel Analysis and Appraisal

to adjust its strategy in light of changing conditions in the political environment. The overall issue was about social justice imbalances for certain categories within the US population. The problem was exacerbated by the reaction

6.6.2

Exercise

??Assess the rationale for Nike marketing strategists, pursuing this policy of featuring Colin Kaepernick in their advertising campaign (make use of material that is available on the Internet to develop your response).

Changes in leadership within sporting bodies can also affect the long-term direction of the sport and has implications for individual clubs or national sports organisations. Politics can also play a critical role in the allocation of mega sports events to certain countries. Arguably the awarding of the 2022 World Cup to Qatar was made on political grounds, as was the case with the Sochi Winter Olympics. In summary, political interference and intervention occurs to varying degrees in all business sectors. Sport is no different. Shifts in policy, changes in political parties and leadership can affect the long-term direction of sport. Sports marketers are obliged to monitor such drivers and triggers and factor it into their strategic plans. 6.6.3

Economic Environment

Some sectors such as retailing arguably are at the forefront of any change in economic conditions and performance in a particular country. If the economy is performing creditably then retailing is one of the first sectors to respond: people have more disposable income and are likely to spend more in the shops. For sports marketers the economic trends are an important “bellwether” for monitoring the likelihood of attendances either rising or falling, renewal of season tickets and so on. Decrease in attendance can also have a further

of a volatile president. Subsequent to this case, Colin Kaepernick’s contract was not renewed. In 2018 Nike signed him up for involvement in one of their campaigns. This also generated controversy.

“knock-on” impact on the ability of that sport or club to attract sponsors or indeed retain them. Economic downturns can create major problems for sports marketers and not just at the level of the fan. The global recession of the late noughties lasted for approximately 8 or 9 years. Certain sports suffered adversely as a consequence. For instance, the NFL decreased its workforce by over ten per cent. Honda pulled out of its involvement with Formula One. Vodaphone withdrew its sponsorships of the English cricket team and the ­English Derby (horse racing). By contrast, it can be argued that certain sports are recession-proof. For instance, English Premier League fans, because of their loyalty to their respective clubs will always find the money to purchase tickets. This argument is bolstered by the perception that sport is an antidote to boredom and the mundane nature of people’s lives. It is a form of escapism and as such, some fans are more resistant to cutting back on their sporting “fix”. Evidence across various sports is mixed in terms of assessing the economic impact on sport. Kim et al. (2017) argue that in the context of Formula One motor racing, the challenge is to attract increasing numbers of international attendees in order to increase revenue from such events. It is estimated that it costs over £1 billion to stage a Formula One event. Economic conditions can affect the future participation of certain countries and cities in this event in the future. The economic environment plays a strong role in shaping ticketing decisions by sports marketers. It is critical that sports clubs and bodies monitor trends in the economic environment in order to present pricing strategies

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that are reflective of people’s earning power and ability to pay. As we discuss in 7 Chap. 7, some clubs and organisation do not pay as much attention to this imperative as one might expect (discussed in greater detail in 7 Chap. 7). Without proper research and monitoring it is likely that ticketing strategies do not reflect the realities of the market and can also lead to unethical behaviour as sports marketers exploit the inherent loyalty of their fan-base. Economic conditions also have a major impact on investment decisions for sports organisations. For example, weak economic conditions can make it difficult for such bodies to gain access to necessary loans for developing facilities such as a new stadium, revamping existing or building new infrastructure. This has a resulting “knock-on” effect in terms of being able to cater for larger attendances and so on. On a more positive note, new and exciting markets can emerge as a consequence of significant economic development and prosperity. We can clearly see the power and influence of countries such as China and India in this case. Both countries have a very large number of middle- to high-income professional people with significant disposable income. Many of them are interested in sport and want to experience high-quality sport either in their own country (via staging global, high-profile events) or by travelling to other geographic regions. Sports such as rugby, cricket, football, basketball and NFL, to name but a few, have been developing long-term strategies to target such customers. 6.6.4

Social Environment

We can broaden the analysis under the heading “social environment” to include the influence of culture and demographics. Sport is fundamentally a social product: it is consumed by a vast range of people in a social context. It is critical that sports marketers monitor trends and triggers of changes taking place in the way in which fans consume sport. Changes in the social environment have major implications for sports marketers. The challenges lie in anticipating and developing

proactive responses to such changes. Many of the developments in the social environment do not take place in the shorter-term. Rather they tend to be generational in some cases. An example of this can be seen in the changing way in which some sports fans consume sports. This is manifested in the way in which fans watch sport. In many parts of the world young fans no longer consume sport via traditional channels such as TV, press and radio. Instead we have witnessed high levels of growth in the use of tablets, smart phones and streaming. This has major implications for sports marketers in terms of how they connect with their fan-base, sell media rights and sell tickets for various sporting events. We have also seen major change in the preferences of fans for particular sports. Sports organisations have to take cognisance of another key trigger in the social and cultural environment: the changing expectations of fans globally. Generally, fans expect more from the sports experience. They are no longer prepared to put up with inferior comfort at sports stadia and arenas. This extends into areas such as seating, food and beverage, parking, toilet facilities and so on. The issue is compounded by the range of alternative leisure activities that are available to fans. This places pressure on sports marketers to create a more positive and relevant sports servicescape that can address such concerns. In terms of strategic marketing planning many sports organisations have placed this driver at the heart of their strategies. The emergence of “new” sports has also changed the way in which consumers engage with traditional sports. Nowhere is this more evident than in the emergence of eSports. This area of sport is expected to grow to around $1.5 billion globally by 2020. The number of players who actively engage with this sport was estimated to be around 400 million globally in 2017. This is expected to grow by a further fifty per cent by 2020. Such figures suggest that this category of sport is no longer a peripheral activity played by nerds and loners. It has become the standard leisure activity for many young people - particularly in key markets such as South Korea.

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What is disconcerting for sports marketers involved with traditional sport is that eSports is primarily a static activity played by fans as they sit in their chairs. Many young people are eschewing traditional sports such as football, cricket, and rugby and so on. This social trend in behaviour is likely to have major implications for such traditional sports. What is likely to happen to attendance at live events? What is likely to happen to the level of engagement with traditional sports? How can such sports respond to these potential threats? How can they build their product to retain their existing fan-base? These questions are easy to pose but far more difficult to answer. Strategic market planning has to address such issues as management takes their respective sports forward in the future. In the context of the strategic planning process we should acknowledge that sports have had and continue to re-focus their approach to engaging with fans and building relationships by investing in such tools This extends across many areas such as website development, social networking and fan relationship-­ building, ticketing policy and promotional activities to name but a few. Analysis and assessment of social, cultural and demographic triggers and drivers is an essential part of the strategic marketing planning process and should not be underestimated by sports marketers. 6.6.5

Technological Environment

This is an area that has critical implications for many sports organisations and sports property owners. We have examined various technological developments in other chapters. In this section we focus on the need to incorporate such developments into the strategic marketing planning process. The most visible impact of technology can be found in the way in which sports fans and sports organisations engage with each other. This has fundamentally changed the roles played by both parties in such relationships. This has been discussed elsewhere. Increasingly, sports bodies and organisations are utilising technology in two critical

areas: enhancing the fan experience and eliminating errors by umpires and officials in the context of matches and events. Enhancing the fan experience is seen as being critical in taking a sport forward in terms of evolution. This spans many areas including the following (to name but a few): 55 Air conditioning in stadia 55 Miniature screen in front of seats 55 Ticketless pricing strategies 55 Use of Augmented and Virtual Reality technologies 55 Second screening devices 55 Data analytics for fans as they watch the event (either live or virtually) 55 Increasing the development of smartphones - currently experimenting in some countries with 5G devices. Sports administrators are making increasing use of technology to reduce errors including 55 Hawkeye (Tennis and cricket) 55 VAR (football) 55 TV referee (rugby) 55 Line review systems (Tennis) 55 Cameras on goalposts (e.g. to determine whether the ball has crossed the line) 55 Replacement of human referees and umpires with technology (likely to happen more frequently in the future) 55 Digital technology which can be used by sponsors to engage more interactively with their fans at events. Broadcasters are also embracing technology with a vengeance in order to enhance the fan experience. This includes developments in the following areas: 55 Augmented and Virtual Reality 55 Ultra-definition cameras 55 Increases in Internet speed 55 Multi-camera use which provide fans with various viewing options 55 Digital replacement technology - advances in virtual advertising (for instance on perimeter advertising boards) 55 On-player camera feeds (enabling the fan to watch from the perspective of the player).

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Technology will also continue to play an everincreasing role in the context of players and coaching. Examples include: 55 Intelligent pads, helmets and gloves 55 Monitoring of the performance and on-going health of players in-play and post-game 55 Electronic medical cards 55 Increasing sophistication in the area of “big data analytics”.

6

Sports marketers and administrators cannot ignore such drivers and impacts. Projecting such developments into the future is always hazardous, given the speed with which technological innovations can impact on various dimensions of sport. In summary, technology impacts upon all of the key stakeholders in the sports sector: fans, sports property owners, sponsors, advertisers, media, broadcasters, players and coaches.

6.6.6

Environmental Issues

Across all business sectors we have seen increasing and unremitting pressure placed on organisations to comply with a raft of legislation designed to protect the environment and by definition, the planet. The sports sector is no different. Sports bodies have two choices by way of response. 1. Initiate activities from within the organisation proactively. 2. React to legislation by dint of compliance. The environment spans all aspects of the business of sport: from the use of paper to the use of energy, to stadium design, to recycling. Arguably, sport along with the retail sector is at the forefront in terms of causing potential damage to the environment. Large stadia need to be heated, lighted and cooled. Turf pitches need to be watered and treated with chemicals to preserve the playing conditions to the best effect. Thousands of people consume a wide range of food and beverages,

leaving many tons of rubbish at the end of the game or event. At competition level major organisations such as FIFA, UEFA and the IOC lay down extensive (some would say exhaustive) rules and regulations about how host cities should plan and manage the staging of mega events with the protection of the environment at the centre of their plans. Sports bodies can take a proactive approach and address such concerns by developing initiatives and, in so doing, becoming an innovative operator. Many have adopted this approach in their strategic planning. Reducing carbon emissions and the carbon footprint, designing zero-emission stadia, using solar panels to generate sustainable energy, adopting LED floodlighting systems and implementing extensive recycling programmes are at the heart of many strategic plans. In the context of sport in the UK for instance, studies on climate change have pinpointed problems for sports such as cricket, golf and football. Campelli (2018) reports on the impact that major flooding has had on playing conditions and the amount of time available for players to play sport in recent years. Sports bodies such as the R&A (golf), the EPL (football) and the ECB (cricket) have moved the issue of sustainability to the top of their respective planning agendas as a consequence. Many businesses however play down the importance of addressing environmental concerns. Sport is no different. However, it has to be recognised that such an approach is no longer viable as legislation and regulations are swamping such behaviour. In essence, sports organisations have no choice but to place the environment high on their respective strategic agendas and plans. In summary, every facet of a sport organisation’s operations and engagement with stakeholders is affected by environmental concerns. Going forward, sports organisations will increasingly have to formally identify their initiatives and commitments towards the protection of the environment.

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6.6.7

Legal Environment

Legislation impacts on all sports bodies at various levels. This may be at international, national, competition or league level. Most, if not all, sports bodies have to address legal issues at all of these levels. At international, national and local levels the governing bodies of a particular sport will lay out the rules and regulations to which individual sports clubs have to adhere to. Within specific leagues or competitions, the same procedures also apply. While many of these pieces of legislation relate to the administration and implementation of the sport, we should also acknowledge that further legislative measures can also impact on the future development of the sport and have consequences for individual constituent clubs. This is likely to involve government agencies, either at national or international level (e.g. European Union). 7 Box 6.1 pinpoints an extensive (but by no means conclusive) list of areas that impact on the future direction and planning process with respect to sports organisations, bodies and clubs.

Box 6.1 Areas where Legislation Impacts on the Sports Sector Gambling legislation 55 Health and safety - affecting stadium design, players and fans 55 Restrictions on involvement of certain products with sport e.g. alcohol, betting companies 55 Labour laws e.g. salary caps, movement of players 55 Intellectual property rights - brand ambassadors endorsing brands and merchandise 55 Image rights - clubs using images of players to promote merchandise and game 55 Environmental issues (discussed earlier in this chapter). Source: Developed by author

It is critical for sports bodies to monitor legislative trends and triggers in the context of strategic marketing planning. The issue is made more complex by changes in government, influential opinion-forming reports and studies, special interest groups and lobby groups. The combined initiatives and contributions of these organisations can lead to changes in legislation. A good example of this is the disappearance of tobacco advertising in all forms of sporting activity. Sports such as snooker, darts and Formula One, were largely dependent on sponsorship from tobacco companies from the 1960s right through to the later 1980s. The combined effect of changing government attitudes to smoking, in the context of damaging the health of citizens, led to its eventual ban. This arguably took a generation (20 years or so) to “kick in”. We are currently witnessing the increasing tightening of legislation in many countries with respect to alcohol, most notably in France where sports clubs are not allowed to feature alcohol brands on their shirts. It is likely that over the next 10 years or so the involvement of alcohol in sport will further diminish. Betting companies are currently taking over from alcohol brands in terms of prevalence. 6.7  SWOT Analysis

The previous stage in the strategic planning process involved a detailed assessment of the different elements of the overall business environment. The next step is to provide a synthesis of this analysis. This should clarify the critical issues that need to be incorporated into the specific marketing strategy component of the plan. One frequently used tool is the SWOT analysis. This refers to the strengths and weaknesses of the organisation (internal focus). This exercise needs to be linked to two external dimensions: opportunities and threats. The latter crystalize the critical outcomes that have emerged from the analysis of the business environment.

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This exercise, although based on a simple framework, means that the attention of senior management is drawn to the issues that will have major importance for the future direction of the organisation. We should recognise that this is not simply a “listing” of points under each of the headings. Strengths refer to specific areas where the organisation holds capabilities that place it ahead of potential competitors. Weaknesses refer to specific aspects of the organisation which leaves it vulnerable. Opportunities may exist but need to be prioritised in relation to the specific strengths and weaknesses of the organisation. Likewise, threats will impact on the ability of the organisation to develop its business operations going forward. In essence, it aligns the capabilities and deficiencies of the organisation with potential opportunities and threats that possibly exist out there. 6.8  Competitive Positioning

The previous steps in the strategic planning process should leave the sports organisation in a position to identify the most appropriate way in which it positions itself in the market. This is becoming even more important in the context of the sports sector as it becomes more competitive and commercially focused. Positioning is concerned primarily with how the organisation’s target markets perceive the value proposition in relation to other competitive offerings. It is important to note that it is NOT about how the organisation perceives itself, from an internal perspective. To follow this approach would clearly not reflect the realities of the market and can lead to myopic or “tunnel vision” on the part of senior management. Competitive positioning also pinpoints the target markets. This refers to the markets where the organisation will compete within, its differential advantage and how the company will compete (Hooley et al. 2017). For instance, a football team with a strong global franchise such as Manchester United, will identify further geographic markets that thus

far it has not really addressed. This provides it with a potential differential advantage over other football clubs who do not have the same global awareness or exposure and one which it can capitalise upon to drive further revenue streams from areas such as merchandise sales. In essence, it lays out the specific directions that the company will follow over the next few years. It provides the framework for the subsequent focal points of the marketing strategy. 6.9  Developing the Core Marketing

Strategy

This stage in the planning process takes the organisation to the operational detail in the various dimensions of marketing strategy. As we saw in . Fig. 6.1, a number of critical decision areas can be identified. These can be broken down into the following areas. Product 55 Management of existing product(s) 55 Development and refinement of new products 55 Brand-building (domestically and internationally) 55 Management of product accessories (merchandise, logos). Ticketing and Channel Decisions 55 Managing the ticketing process (price levels, adoption of relevant technologies) 55 Managing and implementing changes to the channels through which fans can gain access to tickets for games and events. Data Analytics 55 Managing and implementing procedures and technology for collecting, analysing and disseminating data to relevant personnel 55 Linking and integrating data to Customer (fan) Relationship Management 55 Investing in appropriate technology and software to effect progress in the area of CRM. Integrated Marketing Communications 55 Implementation of relevant promotional strategies

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55 Implementation of relevant digital marketing campaigns 55 Managing social media platforms 55 Managing and implementing changes to the design of the website. Partnership Management 55 Implementing appropriate procedures for managing strategic partnerships and relationship with relevant stakeholders such as sponsors (existing and potential), corporate hospitality, naming rights sponsors, media (broadcasters, press, radio), competition/league officials, third-­party agencies (agents, media rights negotiators), players and coaches. Marketing Operations Management (in Collaboration with Facilities or Operations Management Department) 55 Implementing systems and procedures for managing the fan experience 55 Such areas would include: food and beverage, parking, seating and viewing areas 55 Implementing footfall flow at key points in the stadium (entrance to stadium, queuing for food and beverage, access and exit). We discuss these specific areas in various chapters in this text. Our objective in this section is to identify the span and scope of the areas that come within the overall umbrella of marketing strategy. We should acknowledge that some of these dimensions may not be relevant for certain sports clubs and associations. For instance, much will depend on the size of club or organisation and its potential scale and global/ national/regional involvement. 6.10  Evaluation and Control

Key to the success of any plan are the mechanisms that the organisation employs to assess its effectiveness. It is all very well to set objectives. If there are no benchmarks or metrics identified, it is virtually impossible for management to measure the effectiveness of the strategy that has been implemented. Evaluation measures also allow management

to pinpoint areas where, for whatever reason, targets have not been met. Such deviations from target might be explained by events such as bad weather. This might apply to an event where the projected attendance is 50,000 but only 30,000 turn up. The club has little control over such factors. Senior management has to ask the question. Does our plan measure up? Is it doing what it is supposed to do? Such questions have become more important in recent years due to the financial crisis. Key stakeholders have to be satisfied that the company is going in the right direction. Without adequate and relevant control mechanisms, such questions are difficult to answer. Failure to achieve a particular metric may also occur because of over-optimistic predictions or expectations. This will require a re-­ appraisal of targets. Arguably, sports organisations have become one of the most enthusiastic adopters of sports metrics. In part, this is driven by the need to win and perform well across all aspects of the business. This is evident in the various tools used to monitor the performance and conditioning of the athletes. However, our interest in this chapter is more to do with the evaluation of the overall strategic business plan. Let us consider some of the typical metrics or key performance indicators used by sports organisations in one particular area: customer/fan relationship management. Customer/fan relationship management: 55 Number of season ticket-­holders 55 Season ticket-holder churn (numbers lost year-on-year) 55 Customer lifetime value 55 Profitability of each fan 55 Cost of acquiring a new season ticketholder 55 Number of fans visiting the official website (website traffic) 55 Level of sentiment (percentage of negative/ positive comments posted online) 55 Number of likes, tweets and retweets. 55 Level of complaints. 55 Fans by segments (male, female, family, age, location, domestic, international)

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55 Level of customer satisfaction (seating, food & beverage, parking, public transport, ticket purchase process, website, merchandise store) 55 Average expenditure on merchandise by the individual season ticket-holder.

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This list is by no means exhaustive and is for illustrative purposes only. Our learning point here is that such targets and indicators help sports organisations to monitor the progress of strategy, identify areas where there are deviations from the original targets and the subsequent need to refine or make adjustments. 6.10.1

Exercise

??Identify key performance indicators which would be applicable to measure the effectiveness of a shirt sponsorship deal.

6.11  Conclusions

In this chapter we have examined the concept of strategy and the role that it plays in shaping the future direction and progress of a sports organisation, club or body. We considered the different stages involved in the strategic planning process; noting that the term “strategic” equates to the sports organisation adopting a long-term view of its operations. Organisations can make different interpretations of what constitutes “long-­ term”. In practice most organisations would take a three to five-year view. We assess the link between marketing and its role in strategic planning. We have argued that it should play a significant and proactive role as it is the one area within an organisation where it has a direct and on-going interface with its target market(s). Thus, it is in a key position to identify the changing trends and developments in the market. This in turn should be “fed” into the overall planning and strategy development process. We examined the importance of analysing the overall environment within which the sports organisation operates. We identified six

key areas: political, economic, social, technological, environmental and legal. As is the case with every organisation, irrespective of whatever business sector, sports organisations need to have a deep understanding of the underlying issues and trends taking place in each of these areas. We considered the importance of competitive positioning. This component of the planning process evolves from the previous analysis of the environment and essentially shapes the strategic directions and themes that need to be subsequently addressed in the core marketing strategy. In the final sections we stressed the importance of the role that control and evaluation plays in assessing the effectiveness (or otherwise) of the strategy. Without key performance indicators or metrics, it is impossible to undertake such an assessment. Learning Outcomes 55 Without a strategy, the sports organisation is like a ship without a rudder: it is directionless and drifting 55 Without a customer focus and understanding, any plan is likely to ignore the realities of what fans want, and will fail to pick up on significant trends and developments taking place in the environment 55 Mission statements, if used correctly can pinpoint the future direction of the organisation 55 Competitive positioning forces the organisation to take account of how fans perceive their core values and how this compares with their direct and indirect competitors in their sports sector 55 Sports organisations can benefit strongly by engaging in formal and on-going analysis and appraisal of the different aspects of the overall environment. 55 A synthesis of this deep analysis (e.g. a SWOT analysis) can accurately pinpoint the strategic direction that the sports organisation needs to follow

149 Appendix

55 In shaping specific elements of the marketing strategy, we should note that a simple use of the “4Ps” as a framework is too simplistic. Key decisions in areas such as partnership management and marketing operations management are features of the sports sector and ones which sports marketers need to have a direct input 55 In an era of “big data” the organisation also needs to pinpoint key performance indicators in the key marketing areas in order to assess the overall effectiveness of the plan 55 Where there is a large deviation between the projected targets and the actual performance, the organisation can take remedial action to re-focus the plan.

??End of Chapter Discussion Questions 1. How would you respond to the view that formal strategic planning can make the exercise of understanding the market more complicated and lead to “paralysis by analysis”? 2. Examine the extent to which you would support the view that mission statements are created by academics and have no connection with the realities of the sports marketing environment.

3. You have been asked by the CEO of the sports organisation that you currently work for to justify the need to undertake a formal appraisal of the environment. Detail the responses that you would make to this request. 4. The sports club that employs you is owned by an individual who is totally against the idea of becoming involved with betting and alcohol brands. What points would you make to convince this person that the club is likely to lose out on lucrative deals if it continues to reject such partnerships? 5. Why is it important to develop appropriate metrics and key performance indicators when assessing the effectiveness of a strategic marketing plan? 6. A fans forum group has expressed anger at the focus on generating revenue streams and treating the club as a business at the expense of investing in better players and facilities. As a senior Marketing Executive, outline the points you would make to this group by way of a response.

Appendix

Twenty-Twenty or One Hundred Vision

In the sport of cricket, we have seen the international administrators introduce new products such as “20:20”. In 2018 the English Cricket Board (ECB) also proposed a new product, due to launch in 2020 called the “100 ball”. This is a variation of the original “20:20” and is designed to attract a greater family attendance, both live and on TV. It will also be based on a city by city basis; rather than the traditional format of the eighteen first class counties. It has attracted variable levels of response. However, the ECB in terms of their long-­term planning for the sport, see it as an important mechanism for attracting this younger familydominated audience - something which is miss-

ing in the more traditional formats of the game. Attendances are in sharp decline in the traditional four-­ day championship product. This latter championship is popular with retired people - who unfortunately over time will literally “die off ”. Globally, perhaps the most traditional of the cricket formats: five-day test cricket, is also attracting less and less attention from fans. With honourable exceptions such as when England play Australia, attendances at some international venues barely reach a couple of thousand per day. Another key stakeholder - the broadcast media, also want a value proposition that fits

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within their overall scheduling. A three-­hour product suits them better. Attention spans and levels of younger people are getting shorter and shorter. They no longer wish to give up a day to watch a test match or a one-day game, where over 5 days the game might not even produce a winner. The ECB argue that this new product will provide a relevant experience for fans. The city team format for the first time sets up the concept of using franchises - very popular in the context of Indian cricket and other sports, for example NFL and basketball in the US market. The ECB claims that it has undertaken extensive marketing research with fans throughout the UK. This research has probed fans as to their experiences with existing products and their perceptions and opinions of this new venture. They have road-tested the format by setting up trial games with current county players.

??Discussion Questions 1. In terms of changing social patterns of behaviour among cricket fans, how would you respond to the view that this new product is a panic reaction on the part of ECB administrators and marketers?

Although not due for formal launch until the 2020 season, it currently has a working title of “The One Hundred”. The administrators and marketers see it as potentially one of its most exciting products. Other products include the following: five-day test cricket, four-day championship cricket and one-day cricket. The intent and strategy of the ECB is captured in the following statement. “This is a fresh and exciting idea which will appeal to a younger audience and attract new fans to the game. Our game has a history of innovation and we have a duty to look for future growth for the health and sustainability of the whole game” (Tom Harrison: CEO of the ECB). (Source: Adapted from Martin, Ali “ECB unveils plans for tournament with 100-ball format and 10-ball over special”. The Guardian, 8th May).

2. Assess the way in which the ECB has brought this product into its overall strategic planning for the future of the game.

Vapourised

In 2019, Nike launched a new running shoe that they branded as “The Alphafly”. This was a further improvement on a shoe that was launched by them in 2016. They labelled this shoe as the “Vaporfly”. It was a shoe with a spoon-shaped carbon fibre blade embedded in a thick midsole made from hyper-springy Pebax foam. Enough of the “technical discussion”. Its product launch created a remarkable impact on the sport of running, at all levels of the pyramid, from the elite end to the casual runner. Why? At the top end, we have witnessed the women’s world record in the marathon (set by Paula

Radcliffe) of 2 hours, 15 minutes and 25 seconds, smashed by Brigid Kosgei by 81 seconds. Average runners have noticed an improvement of between four to six per cent in respect of their performances, because of adopting this shoe. Other brands such as ASICS have witnessed a decline in sales, as runners rush to purchase the Vaporfly. Experts state that for elite marathon runners, they can generate 2 minutes of improvement in their respective finishing times. For a runner who typically runs the marathon in 2 hours and 4 minutes, it can mean the difference between a Gold Medal at a major event and a top ten finish.

151 References

Runners who have adopted the Vaporfly and who do not want to upset their sponsors are painting the brand to avoid embarrassing their sponsors. This has posed a dilemma for the athletics administrators. The rules of the sport state that shoes “must not be constructed to give any unfair assistance or advantage”. It also specifies that it should “be reasonably available to all” (runners). The VAPORFLY shoe first emerged in 2016. Some athletes sponsored by Nike wore them at the Rio Olympics in Brazil, long before they reached the shelves of sports retailers. Some commentators and coaches adopt a positive perspective on such innovation and improvement in “technology”. Such views are reflected in the argument that innovation is at the heart of all product development and that we see it in the design of cars, laptops, tablets and so on. Others argue that major branders such as Nike and Adidas seek improvement as part of their reason for existence and that prior to the Vaporfly, Adidas held a competitive advantage with its “Boost” shoe. Other commentators put forward the alternative view that such a shoe provides an unfair

??Discussion Questions 1. You are a consultant who has been asked to advise the main Board of Directors of World Athletics. Specifically, they would like a response from you on the following issues: (a) What would the implications be for existing sponsors if this brand were to gain widespread acceptance? (b) What are the implications for runners of all ages and ability? (c) How should the governing body respond to this development?

References Campelli, Francis. 2018. Reduce environmental impacts, UK Sports Bodies told. Sport Sustainability Journal. Available at: https://sportsustainabilityjournal.­com/

advantage and denigrates previous records and performances in long-distance running events. The International Association of Athletics Federation (IAAF) has investigated this shoe since 2017. Its president, Sebastian Coe adopts the view that “his natural instinct is never, in any sector, try to close down innovation, but clearly there is a balance”. The technical group comprises of two former athletes, alongside experts in science, ethics, footwear, biomechanics and law. Nike has positioned itself since its beginnings in the 1960s, as a company that seeks to drive excellence in all things that it does. It argues that the Vaporfly and its successors such as the Alphafly are simply manifestations of its brand essence and differential advantage. This latter brand will appear in the shops and online from April onwards in 2020. In a sport, which suffered from athletes who use illegal drugs to improve performance, it will now potentially be the recipient of negative perceptions among its stakeholders from the impact of technology. (Source: adapted from Dennehy, Cathal (2020) “Nike’s Vaporfly shoe is giving some athletes an unfair advantage in distance events”. Irish Independent, December 30th.)

news/climate-coalition-calls-on-uk-sports-organisations-to-reduce-environmental-impacts/. https:// www.­nba.­com/bulls/news/mission_statement.­html. Accessed 15 Oct 2018. Hooley, Graham, Piercy, Nigel, Nicoulaud, Brigitte and Rudd, John M. 2017. Marketing Strategy and Competitive Positioning. Pearson. Harlow: United Kingdom. Kim, Min Kil, Suk-Kyu Kim, Jae-Ahm Park, Michael Carroll, Jae-Gu Yu, and Kyunga Na. 2017. Measuring the economic impact of major sporting events: The case of Formula One Grand Prix (F1). Asia Pacific Journal of Tourism Research 22 (1): 1–10. Mintzberg, Henry. 1994. The rise and fall of strategic planning. Basic Books. Mintzberg, Henry, Bruce Ahlstrand, and Joseph Lampel. 1998. Strategy safari: The complete guide through the wilds of strategic management. London: FT Prentice Hall. Piercy, Nigel F. 2017. Market-led strategic change: Transforming the process of going to market. 5th ed. London: Routledge. Porter, Michael E. 1996. What is strategy? Harvard Business Review 74 (6): 61–78.

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Ticketing Strategies in the Sports Sector Contents 7.1

Introduction – 155

7.2

Pricing in Context – 156

7.3

Pricing in the Services Sector – 156

7.4

Understanding the Concept of Price – 157

7.4.1 7.4.2

 alue Defined – 157 V Value Drivers and the Value Triad – 158

7.5

 pproaches to Pricing Within the  A Services Sector – 159

7.5.1 7.5.2 7.5.3

 ost-Based Approaches – 159 C Competition-Based Pricing – 159 Demand-Based Pricing – 160

7.6

Ticketing in the Context of the Sports Sector – 160

7.6.1

 haracteristics of the Sports Sector and Implications C for Ticketing Strategy – 160 Sports Economics – 161 Fan Loyalty and Behaviour – 161

7.6.2 7.6.3

7.7

 he Evolution to Ticketing Strategies Based on Demand T and Value – 161

7.7.1 7.7.2 7.7.3 7.7.4

L ocation-Based Ticketing – 161 Variable Ticket Pricing – 162 Bundling Strategies – 162 Exercise – 163

Electronic Supplementary Material The online version of this chapter (https://doi.org/10.1007/978-­3-­030-53740-1_7) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_7

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7.8

 ther Discriminatory Pricing Tools O and Techniques – 165

7.8.1 7.8.2 7.8.3 7.8.4

 roduct Line Pricing – 165 P Premium Pricing – 165 Life-Cycle Pricing – 166 Equitable Pricing Strategies – 166

7.9

Dynamic Pricing – 167

7.9.1

Prerequisites for Dynamic Pricing to Work – 168

7.10

 ig Data and Technology: The Glue B That Helps Dynamic Pricing Strategies Work – 169

7.10.1

Data Analytics – 169

7.11

Dynamic Pricing: An Appraisal – 170

7.11.1 7.11.2

 dvantages – 170 A Disadvantages – 171

7.12

The Secondary Ticket Market – 172

7.12.1 7.12.2 7.12.3 7.12.4 7.12.5 7.12.6

I mplications for the Various Stakeholders – 172 Problems with Secondary Ticketing – 173 Exercise – 173 Managing the Relationships Between Primary and Secondary Ticket Sellers – 173 Exercise – 175 Primary and Secondary Ticket Markets - Future Trends – 175

7.13

Conclusions – 176 Appendix – 180 References – 185

155 7.1 · Introduction

nnLearning Objectives On completion of this chapter you should be in a position to address the following objectives: 55 To understand the concept of pricing within the context of the services and sports sector 55 To assess the role played by value-based pricing in the context of developing ticketing strategies 55 To examine the challenges of formulating and implementing ticketing strategies in the sports sector 55 To trace the evolution of ticketing strategies from traditional approaches to demand-­based approaches 55 To assess the effectiveness of ticketing strategies in the context of overall revenue streams in the sports sector 55 To evaluate the use of variable and dynamic pricing in the context of demand-based pricing 55 To examine the role played by secondary ticketing operators in the sports sectors.

7.1  Introduction

In this chapter we assess the importance of ticketing within the overall context of deriving revenue for the sports organisation. Pricing (or ticketing as it is referred to in the sports context) represents a significant element of overall revenue streams for sports bodies, organisations and clubs. Traditionally (going back in time) it was the main (or only) source of revenue. As we have noted in previous chapters, this has changed dramatically in the context of elite sports over the past decades. Mainly motivated by adopting a commercially driven approach to running sport, administrators and marketers have developed major revenue streams from sources such as media rights, sponsorship, merchandise, internationalisation and corporate hospitality. In many cases the contribution of ticketing to overall revenue might only make up as little as thirty per cent of income.

While this might suggest to us that revenue from ticketing has less significance for sports bodies, this would be an erroneous presumption. One of the major characteristics of sport is that it does not follow conventional financial management or practice. While many sports bodies and clubs derive major revenue streams from other sources, the reality is that salaries, transfer fees and increasing administrative costs, ensure that there are very large outgoings as well as incoming revenue streams. Because of the relatively low net income, marketers cannot ignore the importance of generating as much cash as possible. The strategic imperative for devising and implementing relevant and appropriate ticketing strategies is as critical as it ever was. In this chapter we examine the various approaches to ticketing within the context of the services and sports sector. We focus on the critical importance of developing what is called a “value-based” approach to pricing. As with other business sectors, technology and “big data” play a significant role in shaping ticketing strategies in sport. As we might expect, these developments pose opportunities and challenges for sports marketers, as they attempt to develop relevant and effective ticketing strategies. We trace the evolution of pricing strategies from traditional cost and competition-based approaches to one which can generally be described as demand-based. This change reflects the importance of recognising a key stakeholder: the fan, as being the fulcrum upon which effective ticketing strategies are crafted. In the later parts of this chapter we specifically address the concept of dynamic pricing. This takes account of developments in the twin areas of technology and data. Again, this poses opportunities and challenges. Within the context of sport (as with other sectors such as the entertainment industry) we assess the increasing role played by secondary ticketing. This phenomenon has led to the emergence of powerful third-party operators such as StubHub and Viagogo. As we shall

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see, perceptions on the contribution of such operators, raises questions about the impact on fans (as they strive to acquire tickets for sports events and games). It also queries the effectiveness of the ticketing strategies employed by sports marketers and administrators. Put simply, if they designed and implemented effective ticketing strategies, there would be no need for third-party operators to enter the arena. 7.2  Pricing in Context

7

Pricing in the context of overall business and marketing strategy is perhaps the most challenging and complex decision area for companies and organisations. It takes on even greater significance because the eventual decisions made in this area shape the ultimate revenue streams that can be generated for the organisation. Make the wrong decisions and income will be significantly decreased. While other marketing decisions in areas such as product development and advertising involve expenditure, pricing decisions affect revenue. It is further complicated by the fact that in many cases marketers do not fully understand the complexities associated with pricing. A failure to understand the views, attitudes and perceptions of customers to price can lead to serious errors being committed in strategy formulation and development. Such errors can lead to companies significantly under-pricing their products and services. A failure to recognise and identify different segments can also lead to pricing strategies that fail to capture revenue from customers who may be willing to pay more than others for the said items or services. A failure to analyse data can also lead to decreased overall revenue. 7.3  Pricing in the Services Sector

The services sector (within which the sports industry sits) exhibits some characteristics that are different from the manufacturing sector. Wilson et al. (2012) identify a number of characteristics of services; two of which

have significance in particular for pricing decisions. The heterogeneous nature of services means that it is very difficult to manage the quality of the product and the perceptions that people hold about its quality. The company cannot guarantee that the service that is delivered actually matches the planned delivery. It can also vary. This is particularly the case with many sports products. For instance, sports marketers have to grapple with the general uncertainly surrounding their products. While a car manufacturer can guarantee to virtually zero defects if it produces 100,000 cars per month off its assembly line, a football club cannot guarantee that over the course of a season that a certain quality and style of football can be delivered to its fans. Perishability is also a feature of the services sector. Put simply, you cannot store a service. Whereas (going back to our car example in the previous paragraph) a manufacturer can build up an inventory to meet demand fluctuations, a sports organisation cannot. If a stadium has a capacity of 40,000 and the match is due to take place next Saturday, then the crowd that the game attracts, happens on the day. If only 20,000 turn up then that is it. You cannot rewind the tape or replay the game again in order to attract more fans to that game. The product dies on the day. Maximisation of revenue is dependent on what happens by way of ticket sales. Thus, it is difficult to synchronise supply with demand. In the case of manufacturing, a company can assess the demand patterns and adjust production and inventory accordingly. However, we should recognise that while these characteristics pose challenges, it does not make the task of pricing a service insurmountable. Fans, by dint of their knowledge and experience of dealing with their club or organisation, can establish references and standards that they expect from their club in terms of performance. Their behaviour with respect to purchasing tickets is shaped by many factors such as prior experience and the level of affinity or commitment that they hold about the club. Likewise, clubs can use a number of factors to shape their ticketing strategies. For instance, they can look at historical atten-

157 7.4 · Understanding the Concept of Price

dance patterns for different types of games (mid-week versus weekend, top versus bottom teams) and predicted weather conditions, to develop more accurate pricing strategies. 7.4  Understanding the Concept

of Price

As mentioned earlier, pricing is one of the least understood aspects of marketing. We therefore need to investigate the concept of price more fully. When an individual (or company) decides to purchase a particular product or service, they agree to pay a monetary price. This is captured by the final price that the company or organisation charges. However, it is also accurate to state that as well as the monetary costs, consumers also incur a range of non-monetary costs. Wilson et al. (2012) identify four such costs or sacrifices in the context of services. They are summarised as follows. 1. Time costs; which refer to the time it takes to acquire the ticket for the event/game, the length of time it takes to get to the venue. This notion of “waiting time” is a sacrifice. 2. Search costs; this identifies the effort expended in identifying and selecting the services that a person requires. 3. Convenience costs; fitting the consumer’s schedules around the event or game. In recent years this may indeed involve a sacrifice, as TV companies constantly change the time of the game to fit in with their schedules and requirements. This might mean fans having to travel long distances to see a game on a Monday night. This also means costs or sacrifices in terms of taking time off from work and incurring hefty charges by way of train or bus tickets to get to the game. 4. Psychological costs; such as the fear people might have about understanding jargon in the case of buying life assurance or pensions from financial service providers. In the context of sport, it may be exhibited in a reluctance on the part of some fans to purchase tickets from a range of confusing and non-transparent ticket options on a website.

Thus, customers and fans have to make an evaluation of the value proposition that is put before them. If the benefits outweigh the monetary and non-monetary costs then it is likely that they will purchase the service at that price. This, in turn, takes us on to a very critical dimension of ticketing strategy: understanding the concept of value. 7.4.1 

Value Defined

In order to understand the customer’s perception of the price charged for the service, we need to understand the concept of value. The actual price is an explicit indication of what the seller feels the service is worth. The assumption is that the company concerned has made a detailed analysis of a number of influences in arriving at that price. These include costs, competitor prices and research with customers. The latter influence is critical in determining a price that they are willing to pay and which represents an accurate assessment of the value proposition that is being offered to the target market(s). How we define value in the context of the customer’s evaluation of a service and its price? Cram (2006) defines value as a combination of the product/service benefits and emotional associations as an identified price level. This is captured in . Fig. 7.1. He suggests that there is a tipping point, where the perceived benefits outscore the perceived costs (reflected in the actual price). The customer is then favourably disposed to spend money on that item. Companies are obliged to make a strong attempt to understand how customers define value. This will point them to a pricing strategy which will be relevant to customers and one which will resonate with their needs and requirements. Many people would argue that this is the essence of overall marketing strategy: how to create and develop added value that will attract segments to the product/service? If customers see no difference in the value proposition between competing products or services then they will buy the item that is the  

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Value

=

Perceived Emotional Benefits

+

Perceived Emotional Associations

-

Perceived Price

..      Fig. 7.1  Defining value. (Source: Cram 2006, p. 15)

7

lowest in price. MacDivitt (2013) pinpoints this approach to pricing as commoditisation. While it can be argued that it makes it easier for salespeople to focus on price as the key focus for selling, it largely ignores the need to inject some form of differentiation in order to add value to the product. The problem with such a focus on price is that it orientates the customer to lower prices: they expect concessions and reductions. As well as demonstrating a lack of creativity with respect to adding value, it will ultimately drive down profit margins and make it difficult for companies to survive in the longer term. In the context of ticketing/pricing decisions it can be strongly argued that the onus is on marketers to study the different segments which exist in that market and identify attributes and dimensions which can add value to the service and differentiate it from the competition. This, we should note, is not about adding extra features or elements to the service. Unless they are of specific relevance to the segment’s needs and requirements, they will not add value. In fact, it will add costs to the delivery of the service and add confusion in the minds of customers; who see these unnecessary features as being irritants. On the other hand, value added elements that increase the perceived benefits should lead to situations where certain groups of customers will be prepared to pay a premium for that service. This “virtuous circle” should lead to extra profitability for the organisation.

7.4.2  Value Drivers and the Value

Triad

Organisations need to have a firm understanding of the key factors or drivers that create and add value to the service/product proposition. If this does not occur it will ultimately

Revenue Gain

CUSTOMER VALUE Emotional Contribution

Cost Reduction

..      Fig. 7.2  The customer value triad. (Source: adapted from MacDivitt and Wilkinson 2012)

cost them money and a deterioration in market share and performance. MacDivitt and Wilkinson (2012) developed an approach which they labelled as the Value Triad to help organisations to identify and measure value drivers and their impact on pricing strategy. This is highlighted in . Fig. 7.2. By applying this approach, it can be argued that organisations can more closely research and understand the purchasing influences and motivations with respect to their target markets. Equipped with such information, companies are in a stronger position to create and adjust the value proposition. As indicated in . Fig. 7.2 the authors pinpoint three dimensions to the triad. Revenue gains (RG): refers to yield improvements and increases in productivity in areas such as reduced time to market, shorter delivery time to customers and enhanced output. These gains can emerge from pinpointing the issues that really matter to segments: clearly they will vary across such segments. Cost reduction (CR): identifies areas where costs to customers can be reduced. Aspects include easier-to-use services, helpful websites and so on. Emotional contribution (EC): pinpoints areas such as peace of mind, comfort, aesthetics and risk. Overall it creates a “feel  

 

159 7.5 · Approaches to Pricing Within the Services Sector

good” mentality and can help to increase trust and confidence in relation to the product/service. Clearly our focus is on the services sector in general but more specifically in the area of sport. Revenue gains and cost reduction may be more relevant in the case of manufacturing physical and tangible products. They are also easier to measure in terms of setting benchmarks and key performance indicators. It can be argued that the third dimension:emotional contribution, is intangible and more relevant to the services sector. This combination of conducting research with different segments on their attitudes, perceptions and assessment of competitive offerings will undoubtedly lead to a closer understanding of the core drivers and influences that shape their concept of value. It can be argued also that it leads to a more realistic and accurate pricing structure for the organisation and one which empathises more fully with the needs of the specific segment or segments. 7.5  Approaches to Pricing Within

the Services Sector

7.5.1 

Cost-Based Approaches

Traditionally, companies and organisations relied on what might be termed a “cost-based” approach to pricing their services. This is a basic although popular strategy. It is popular because it forces the company to isolate the various cost elements associated with the service. This identifies breakeven points (where the service does not lose money). Many organisations then add on a margin. This is usually determined by the industry average and any particular value-added dimensions that may provide the company with the opportunity to charge a little more (a premium). Clearly it has the virtue of relative simplicity. However, marketers would quickly point out that it does not necessarily represent the reality of what happens in the market-place. The key constituent: the customer, is not aware of the specific costs encountered by the company. They will place a value on

what they deem to be acceptable to their requirements. This may bear little relationship to the cost-oriented approach adopted by the company. As mentioned earlier it is not just about the monetary costs incurred by the customer, it also involved non-monetary costs. This means that in many cases the price charged by the company may not reflect the reality of what customers are willing to pay. For services in particular this is critical. While manufacturers of physical products can more easily identify and apportion costs, it becomes more complex when we are addressing intangible services. By definition, they are difficult to quantify and assess in terms of cost determination. We will explore this in a later section. A typical feature of this approach is that service providers fail to identify the true value placed on the service and make the mistake of under-pricing. 7.5.2 

Competition-Based Pricing

This, as the name suggests, is a pricing strategy which focuses on what the main competitors are doing in this area. Again, it has some merits in terms of rationale and simplicity. After all, if you maintain a pricing strategy which is broadly in line with your competitors then you cannot go too far wrong. It does not mean that we charge exactly the same price: rather we use the competitor’s prices as a guide. It implies that the organisation does not deviate too far away from those price points. The biggest difficulty in the context of services is comparing and equating the service value propositions of the competitors. Some, perhaps the more dominant ones, offer a broader and deeper range of services. As a consequence, they are in a stronger position to cross-subsidise certain services. The intangible nature of services also means that it is difficult to accurately assess the merits or otherwise of competitive pricing. Some organisations are price leaders or price setters and others are price followers. Each organisation has its own capabilities and weaknesses. This is reflected in the nature of the service

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product offering. Blindly following the price levels adopted by competitors will more than likely result in sub-optimal pricing, with a corresponding effect on market position, sales and profitability. 7.5.3  Demand-Based Pricing

7

This approach is increasingly viewed as being the most effective way of formulating and implementing pricing strategy. For the first time in the discussion we are beginning to recognise the importance of the key stakeholder (the customer) featuring in the pricing decision-­making process. It explicitly identifies the importance of researching the various targeted segments in order to gain an understanding of their perceptions, attitudes and opinions about the service. In carrying out this assessment companies gain a clearer understanding of the role that price plays in the purchasing decision-making process. A key challenge is to identify the components of value that customers consider in their purchase decision. This will clearly vary across different groups of customers. It will also vary by the situation that faces the customer. For instance, in the context of sport, a fan may be willing to pay a high premium for a ticket to a critical match for the club (for example a cup final). In the case of a mid-week game against mediocre opposition in the middle of winter, other factors come into play with respect to whether or not the fan purchases the ticket. 7.6  Ticketing in the Context

of the Sports Sector

In the previous sections we have assessed the concept of price and the various approaches adopted by organisations within the overall services sector. We also looked at the concept of value and the role that it plays in formulating and implanting demand-based strategies. We now move to the specific area of sport, which is the focus of the overall text-book. We use the term “ticketing” from now on because this is the phrase that is most commonly used within the industry.

7.6.1  Characteristics of the Sports

Sector and Implications for Ticketing Strategy

In previous chapters we focused on the characteristics that feature strongly in the sports sector. We do not intend to repeat that discussion here. Instead, we consider those characteristics which have a direct bearing on ticketing decisions. In any discussion on ticketing and sport we should recognise at the outset that decisions revolve around understanding the relationship between supply and demand. While this occurs in every industry sector, it can be argued that a failure to grasp the fluctuations between supply and demand will lead to inefficient ticketing strategy formulation and adoption. The perishable nature of sports products means that sports marketers should focus extensively on understanding the equation between supply and demand. Empty seats in sports stadia and arenas are an explicit recognition of problems in balancing supply with demand. We will see great variation across different sports, competitions and participating teams. In some instances, supply will greatly exceed demand. The challenge here is to capture the balance between revenue maximisation and attendance maximisation. In the latter case sports marketers may have to be very creative about how they attract more fans to the stadium. Is it better to have 20,000 people paying an average of £40 to watch a game? Or does it make more sense to have 38,000 fans in attendance but paying only an average of £25? We examine this dilemma in more detail later. However, it raises questions about the overall ticketing objectives that a sports club or team might set out in their plan. We should also acknowledge that, like the airlines business, the sale of tickets is only one dimension of revenue generation. Airlines such as Ryanair develop healthy revenue streams from what is called “ancillary activities”. These include charging for luggage, car-­ hire and public transport (typically entering into agreements with such operators and get-

161 7.7 · The Evolution to Ticketing Strategies Based on Demand and Value

ting a share of the revenue), income from arrangements with designated hotels and so on. In the case of sport, match-day ancillary revenue can be generated from food and beverage, parking, restaurants and bars, merchandising, renting out the stadium for concerts, conferences and so on. Thus, we can see that decisions on ticket pricing will have an impact on sales that are generated from such ancillary services and products. 7.6.2  Sports Economics

The research on pricing in the sports sector is comparatively limited. However, we should acknowledge that sports economists have generated some interesting observations and findings in this area. Some of this research points to interesting approaches to ticketing by sports marketers. Drayer and Rascher (2013) for instance, note that some sports organisations do not price their tickets with the objective of profit maximisation. This can lead to under-pricing. However, there are strong arguments for applying this approach. Larger attendances can lead to incremental sales across the ancillary products. Marketers and CEOs are driven in many cases by performance on the pitch or court. Winning teams attract higher attendances as some fans fall into the “Basking in Reflected Glory” syndrome. If we extend this observation a little further we can see some relevance in the cliché that “winning teams create happy fans”. Happy fans are much more likely to be positively disposed to spending more of their money on the team, again across a number of ancillary items. Thus, it can be strongly argued that short-­ term profit objectives are sacrificed in order to build greater revenue streams over a longer period of time. Happy fans are also more likely to return to future games. Apart from generating more revenue, sports marketers can take advantage of this phenomenon to build more loyal fans and increase the fan-­ base. We discussed the concept of relationship marketing in an earlier chapter.

7.6.3  Fan Loyalty and Behaviour

High to very high levels of loyalty to a team is a feature of some segments of the fan-base. At the extreme end of the spectrum we can identify what might be termed “fanatical fans”, individuals who attend games come what may. At the opposite end we can identify casual fans who attend games occasionally and who pay as and when they decide to go. Sports marketers often refer to this group as “walk-up”s: people who turn up on the day, with no prior commitment to purchase a ticket. In the quest to understand how fans determine value, sports marketers recognise the importance of team identification as a factor in influencing fan behaviour. Fans with levels of identification can be directly related to various facets of perceived value. This covers facets such as functional, emotional and social (Kwon and Kwak 2014). ??What advice would you give to the Marketing Director of a football team who wants to target fans with high levels of identification with the club with more relevant pricing strategies?

7.7  The Evolution to Ticketing

Strategies Based on Demand and Value

If we consider how pricing strategies have changed over the past three to four decades we can see that sports marketers and organisations have become more pragmatic in their approach. In essence they have moved more rapidly towards a form of demand-based pricing which increasingly recognises the ­importance of setting prices using real-time data analytics. We shall consider this more fully later in the chapter. 7.7.1  Location-Based Ticketing

Traditionally, it has been the practice within the sports sector to price seats according to location. The closer the seat is to the action,

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the more expensive the ticket. Seats at the centre of the stadium or arena (in the context of most sports) provide better views and bring the spectator closer to the action. By contrast seats that are at the very back of the upper tier of the sports arena provide a more distant and limited perspective of events on the pitch or court. Naturally these seats tend to be priced at a significantly lower level. Location-based pricing was the standard for most sports teams and organisations. It is still used in the present era of sport. However, we have moved on considerably from relying on this factor as the only influence on ticketing strategy. 7.7.2  Variable Ticket Pricing

As is the case with service sectors in general, sports marketers recognised that other factors come into play when fans and spectators are weighing up the pros and cons associated with purchasing tickets for a particular game. These can be summarised as follows: 55 Type of game (top-level, mid-level, bottom-end, derby opponent) 55 Timing of game (weekend, mid-week, time of year) 55 TV coverage (can impact on attendance) 55 Nature of the game (league, cup, play-off, semi-final and so on) 55 Weather and its impact on the scheduling of games. When clubs factor in such options they adopt a pricing strategy which can be described as Variable Ticket Pricing (VTP). This approach is based on the practice of setting varied prices for the schedule of games at the start of the season. It acknowledges the fact that it is necessary to offer a range of prices to take account of the factors listed in the preceding paragraph. It also recognises that different segments of fans exist, each group having different preferences, perceptions and requirements. Variable Ticket Pricing also provides opportunities to increase revenue and profitability for the sports organisation. By designing a range of prices, the sports organisation

can drive incremental improvements in profits in certain segments. Games with strong and successful opponents can justify a higher price as fans are willing to pay more to gain access to such an event. In the context of clubs operating in the major sports, we see this evidenced in the adoption of different ticketing strategies for Category A, Category B or Category C games. Category A referring to the top teams, Category B covering mid-table teams and Category C reflecting lesser quality teams. VTP injects variety and a move away from a rigid and fixed approach to pricing sports events and games. It recognises that price is ultimately driven by the potential demand, and not by the internal requirements and politics of the sports team or organisation. To some extent it takes account of the sports marketers and administrator’s intuition and experience of the likely demand. Increasingly, however, it has moved from a judgemental approach to one which is based on “big data”. As far back as 1999 the Colorado Rockies, Major League Baseball Team (MLB) operating in the American market was identified as one of the first sports clubs to adopt variable ticket pricing (VTP) (Drayer et al. 2012). However, we need to enter a note of warning. VTP makes a strong attempt to provide some creativity and recognition of the need for different prices. However, the major weakness with such an approach is that the prices are still fixed in advance: typically, well before the beginning of the new season. This means that it takes little or no account of day-to-day fluctuations and changes in the relationship between supply and demand. For instance, prolonged cold weather over the course of the winter may deter significant numbers of fans to stay away  from games. A pre-determined pricing strategy, albeit a variable one, does not take account of such influences. 7.7.3  Bundling Strategies

The concept of pricing strategies based on bundling various elements of the service offer, also provides a form of variable ticketing pricing.

163 7.7 · The Evolution to Ticketing Strategies Based on Demand and Value

Typically, in the services sector, many organisations create different value propositions based in reducing or adding elements of the service offer to different segments of the market. Again, this is based on the recognition that customers have different requirements and different interpretations of what constitutes value. When using this approach, no uniform price is applied by the service provider. Likewise, there is no standard value proposition. Instead the provider will create different “packages” to appeal to different segments. The rationale for this is based on the view that offering a range of service products provided greater value for the overall market and as a consequence can lead to more revenue and profit.

7.7.4  Exercise ??The owner of a sports gym is concerned about a decline in membership. This has been a recurring feature of the business for the past 2 years. Without some action she reckons that the business will close. She has asked you to put forward some innovative ideas about how she can increase membership and revenue. The current pricing strategy is as follows: £60 per month for access to the gym and equipment. This includes one meeting per month with a fitness expert. Students (the gym is located close to two universities) gain monthly access for £30 and retired and unemployed people are charged a monthly fee of £25. The average monthly payment is £35. Total membership is £350. Detail how you would create a pricing strategy that drives up revenue and membership.

Bundling services in the sports sector is a recognition that fans have different interpretations of value. We should note, however, that the sports packages on offer must resonate and be relevant to specific segments. There is a danger that this exercise follows what might best be described as a “product-led” approach. Many service providers in the financial service

sector have created a bewildering range of services and bundles that have little relevance for the customer. This could be described as a “product-led”, product-driven approach. While such service providers might see this as an indicator of creativity and innovation, the reality is that they offer little or no benefit to their respective target markets. The opportunity to use pricing bundling strategies has increased substantially in recent years for sports bodies. This is due to the convergence of technology and “big data”. However, we can observe that the shift to smart season cards (instead of traditional paper-­based alternatives) allows sports marketers to link up various aspects of the “gameday” experience. This is manifested in features such as merchandise, food and beverage and so on. In addition to offering different categories of seats, special deals or promotions can be layered around a price package. For instance, one category of price might include a seat in a particular part of the ground along with access to a bar or restaurant facilities. Another ticket might include a free beer or soft drink. Such initiatives in the area of pricing are becoming more prevalent as across all of the major sports, fans are seeking increasingly more hedonic experiences. The game or match, for some categories of fans may not be the cornerstone of the experience. While it may be important, the overall facilities, food and beverages and the opportunity to socialise at a sporting event, take on greater significance. As a consequence, people are willing to pay a price for such an experience that incorporate some or all of such offerings. We can see that the concept of a value proposition is not necessarily uniform. It can mean different things to different people. The sport of horse racing provides a good illustration. In the UK, attendances at race meetings have declined over the past couple of decades. It has also lost its appeal to the younger person. Many race tracks have responded by investing in the facilities and also incorporating music and conferences into the overall product portfolio. This is exemplified by offering racegoers tickets that include admission to a music event after the races have finished. While traditional

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horse racing fans, particularly older people, might have little interest in such a proposition, the inclusion of a music event has become very popular with people who have little interest in the actual races. They attend to enjoy the atmosphere, meet up with friends, celebrate special events and generally enjoy the experience. Many do not leave the bars and restaurants to watch the horses in the parade ring. We should note that such strategies are not new in the field of services sectors such as hotels, leisure and entertainment. Such bundling practices have been a consistent feature of pricing strategies as noted by (Foutz 2017).

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Sports organisations are only recently recognising the benefits that can accrue from introducing price bundling propositions in a more varied and innovative way. There is a danger that sports marketers use price bundling as an opportunity to “layer” the value propositions with a range of disconnected features, committing the cardinal sin in marketing of adopting a “features-led” approach. If this ticketing strategy is to work effectively, the various elements of the bundle have to be relevant to the target market. For instance, if there is little or no interest in some of the features, then it is unlikely to work.

Golf in Crisis as Memberships Drop

The sport of golf is experiencing a decline in memberships of golf clubs and a significant decrease in the number of young people taking up the sport. While the sport thrives in newer markets such as China, India and south-east Asia, the bastion of golf: Scotland, is struggling to retain and attract members. The Scottish Golf Union (SGU) is working closely with its 576 affiliated clubs to address this problem. One in three players have not renewed their golf memberships in the UK between 2004 and 2016. Why is this happening? One reason advanced is that it has become associated with “oldies”: mainly retired males who tend to dominate the clubhouses and are fiercely resistant to change. Another possible explanation lies with the nature of the game itself. A round of golf is based on players taking on eighteen holes. A typical foursome (four players playing together) can take anywhere from three and a half to four and a half hours. Many people find it tiring and difficult to schedule in a crowded diary.

??In terms of pricing strategy what would you recommend to golf administrators in general and golf club management, in particular about trying to attract different tar-

Younger people, particularly teenagers, are put off by the length of time it takes and the expensive nature of the sport  – in the latter case, mainly experienced when purchasing golf clubs, accessories and taking out membership or paying green fees. Some statistics back up the view that golf is in decline.

»» In 2006, the high water mark for the sport

worldwide, more than four million Britons played golf; last year, that number was just 2,785,000. Membership of clubs in England has fallen from 850,000 to 652,000 in the same period, according to England Golf, the governing body for the sport in the country, with similar patterns reflected in Wales, Scotland and Northern Ireland and worldwide. (7  https://www.theguardian.com/sport/2017/apr/07/drive-to-getpeople-playing-­golf-again)

(Source: developed by author from various sources on the Internet)

get groups to take up golf and join clubs? Focus on teenagers, kids, families and females in your discussion.

165 7.8 · Other Discriminatory Pricing Tools and Techniques

7.8  Other Discriminatory Pricing

Tools and Techniques

Variable ticket pricing manifests itself across different approaches to setting and formulating prices in sports marketing. This is often referred to as discriminatory pricing and happens where organisations charge different prices for a broadly identical product or services, based on a number of different criteria. A good example of this would be the case of a football club that offers a special price to attract females to a particular category of game. Similar initiatives might include a “family” ticket or a special price for “military personnel”. In such cases the product is identical (the game or match) but the price can vary. We consider a range of discriminatory pricing strategies in the following paragraphs. 7.8.1  Product Line Pricing

Sports clubs and organisations in common with manufacturing companies and other service providers, offer a broad range of products. In the case of football, the core product might be the regular season league games. However, other products might include the women’s football league games, reserve team games, various underage games and so on. From a sports marketing perspective, opportunities exist to price certain products for certain segments in order to build interest and encourage fans to migrate or trade-up to the more profitable products on offer from that organisation or club. Many sports at the elite level, are increasingly attracting more females to the events and games. This could be stimulated by offering attractive prices in the first instance to the women’s football games. This involves the female segment within the overall club community and can heighten interest in the core produce in the line: the regular league games. A form of cross-subsidisation can also occur with such line-based pricing strategies. A good example of this can be found in the sport of Australian Football League (AFL). In 2017 the sports administrators for this sport established a Women’s AFL compe-

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tition which has been supported by the affiliated clubs. The women’s league offers female players the opportunity to play the sport at a semi-professional level and one of the biggest challenges is to build up a viable audience for the sport and attract reasonable attendances. In terms of pricing, some clubs have charged nominal prices to attract fans. Others have not introduced a formal price for each game: relying on a bucket collection instead. While other teams have incorporated the female games into the overall match-day package by staging them before the main event. The rationale behind these approaches is clear. Firstly, it has to build up audiences and secondly it involves a form of cross-­ subsidisation in order to take a long-term view of the viability of the product. Without such subsidisation, it is highly likely WAFL is likely to “wither on the vine” and fail. Evidence of its potential can be evidenced from the fact that over 460,000 females are participating in this sport, representing around thirty per cent of all participants. At the elite end, games are being streamed to fans via the Internet and TV channels are beginning to show interest in covering some games. 7.8.2  Premium Pricing

This approach is becoming more prevalent across many aspects of services marketing and also within the sports domain. This is characterised by offering the fan elements of the value proposition which are free and other elements which require a subscription or an extra payment. In an era of digitalised offerings, this might mean that an app, which can be downloaded, is free, along with some basic content or material but different price tariffs are applied if the fan wants to use a wider and deeper range of options. Within the context of fan engagement, this might apply to situations where a club offers a range of features on its club website. The elements that have to be paid for represent an opportunity to derive revenue for the club, as well as opportunities to offer special promotions and offers to fans who are willing to pay

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for the option of being able to take advantage of such deals. It also creates opportunities for the sports marketers to attract advertisers to the website or social media platform that it runs. The challenge with premium pricing strategies is to make the right judgements about what people are willing to pay for and to understand their behaviours in terms of using such apps and products. We can see this in the case of the newspaper industry, and in particular, how fans behave with respect to accessing sports material and content. Clearly, in the face of the Internet, traditional sales of newspapers have entered into terminal decline. More and more people no longer purchase a newspaper. Instead they rely on the online versions or the Internet in general for their consumption of issues such as news, politics and sport. In response, newspapers have responded by creating value propositions based on the premium pricing strategy. For instance, in the area of sport, the printed version contains some basic coverage of sports. However, to access extra material, for example video clips, interviews with athletes and so on, the customer takes out a monthly subscription. In some cases, different levels or tiers may exist. The customer has the choice, if you want more than the basic offerings, then you have to pay for it. As well as generating additional income, companies are beginning to realise that many people are willing to pay a little more for extra material than simply relying on the basic value proposition. This phenomenon was first picked up in the music business, when operators such as Apple and Spotify realised this was happening. By introducing variations in what is being offered (free and pay-to-use elements) it can generate revenue and still appeal to a wider range of segments. 7.8.3  Life-Cycle Pricing

This approach recognises the concept of the life-cycle; that over time, the value of the product is likely to diminish. It realises that at various points in the cycle the product will need to

alter in terms of the price label that is placed on it. The initial strategy may be to price the product at a high level  – reflecting the practice of prestige pricing or a skimming strategy and then lowering the price as initial demand tapers off. It is not necessarily a form of discriminatory pricing although as we discuss in the next paragraph, opportunities are available. A good example here is the case of the merchandising of football jerseys. Typically, at the beginning of each season, football teams release details about their new home and away tops or jerseys. They are wrapped around high prices. This reflects the desire on the part of many fans to acquire them quickly in order to wear them at the early-season games. Psychologically, this is a clever recognition of how fans behave. Some would argue that it is also manipulative. For instance, young ­children leverage pressure on parents to buy them the latest strip because they do not want to invite ridicule in the school-yard. However, as the season moves on and with unsold shirts still on the shelves, it makes sense to lower the price. In terms of discriminatory pricing, sports marketers can incorporate coupons or special offers together with other elements in the overall price offer to shift the inventory and generate some incremental revenue. An example of this might be where the club is trying to attract extra sales of tickets for a mid-week game against poor opposition. By offering a ticket at a reduced price, together with a coupon for a discounted price on a jersey, it is possible that this will make the price of the ticket more attractive to fans. 7.8.4  Equitable Pricing Strategies

This approach acknowledges that sports clubs should be fair to their fans when it comes to setting their ticketing charges. Clearly, not all fans are equal when it comes to their ability to pay for the privilege of attending sports events. This does not mean of course that prices should be priced as low as possible. However, it can be argued that pricing decisions should try to gain a sense of balance across the different pricing options for fans.

167 7.9 · Dynamic Pricing

This has become an emotive subject in the case of many elite sports. It has become relatively expensive to watch baseball, cricket, and football and so on at the top level. While revenue from media rights and sponsorship has soared, salary levels of players have exponentially risen, relative to what the “working man or woman” earns. Supporters associations have become very vocal and outspoken about the prices being charged. They feel that the traditional fan is increasingly being priced out of the market and that attendance at major sports events and even regular season league games is becoming the preserve of the well-off fan. The argument continues, by taking the view that if certain segments of the market can no longer attend then there is a real danger that attendance will decline and that participation rates will also decrease accordingly. Therefore, the onus is on sports administrators and marketers to make some explicit recognition of fairness and equity when formulating and implementing ticketing strategies. Equity-based pricing has particular significance in the area of community-based sport. In this sector pricing strategies for the use of publicly-owned or controlled facilities such as playing fields, tennis courts and so on are in many cases influenced by the need to come up with policies that do not exclude certain sections of the community. This might include people from poor or deprived backgrounds who otherwise could not afford the fees to make use of such facilities. In the community sector such facilities might be subsidised by grants from the government or the local authorities. Thus, pricing objectives and strategies may be driven by wider social objectives such as encouraging sports participation or reducing obesity in society. 7.9  Dynamic Pricing

Over the past decade to 15 years sports marketers have taken the concept of Variable Ticket Pricing (VTP) to a new level. This takes us into the era of Dynamic Ticket Pricing (DTP). In this section we explore the concept

of dynamic pricing and place it in the context of the sports sector. The first sports club officially recognised in the literature as being the pioneer of dynamic pricing was the San Francisco Giants. They introduced a change in pricing policy in 2009 which was based on the principles of dynamic pricing. Before we look at their approach we need to define what we mean by the term “dynamic pricing” and its constituent parts. Dynamic pricing still practices the basic principles of variable ticket pricing. However, while the latter approach offers different prices to customers, they are largely set in advance: before the beginning of a new season. By contrast, dynamic pricing varies prices much more frequently, often on a daily basis and in real time. This means that the price of a ticket could alter a number of times during the day in response to fluctuations in supply and demand. If demand is weak, sports marketers can change the price of the ticket to stimulate demand. Clearly prices are set in advance (as is the case with variable ticket pricing - VTP). However, they are then altered and changed on a frequent basis, unlike VTP. It is a response to on-going developments on a real-time basis. Let’s explore this concept in more detail. In the case of VTP, tickets are priced, based on historical patterns of demand from fans and factor in issues such as timing of the game (mid-week vs weekend), category of opponent (strong, average or weak) derby games (the opposition being local) and public holidays. This is based on anticipating likely demand. Its strengths rest with the fact that it follows a rationale that should, in theory, lead to more optimal revenue streams emanating from this source. However, it can be strongly argued that because the prices are set so long in advance, this approach does not reflect the real “day-­ to-­day” events that can impact on the up-take of tickets and attendance at a specific game. For instance, when the tickets were set before the start of the season it cannot anticipate how well or poorly the team is playing during the middle or towards the end of the season. A team that finished near the bottom of the league the previous season and is experiencing

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great success at the mid-way point of the current season, will attract more fans. This could not have been factored into the pricing decision at the beginning of the season. By adopting dynamic pricing strategies, the club can change the prices for up-coming games by factoring in issues such as performance on the pitch, weather conditions, and local issues such as bus or train strikes and so on. The use of technology and “big data” allows sports marketers to have a clearer picture of demand patterns and fluctuations and to make decisions in real-time and in a speedy fashion. For instance, they can vary prices on a daily basis in the days leading up to the match or game. Although, previously, such factors were outside the control of clubs, they now become controllable to the extent that altered prices represent a more realistic appraisal of demand and supply fluctuations. Again, we have to acknowledge that this is not a new phenomenon. It has been practiced for considerably longer in other service sectors such as retailing, hotel and hospitality and airlines sub-sectors. Drayer et  al. (2012) note that during the 2010 season, the San Francisco Giants (American Baseball team) made full use of dynamic pricing, revenue from ticketing increased by seven per cent. In a wider context and in order to gain a clearer picture of how DTP works, we can look no further than Amazon. This company alters the prices of its items with bewildering frequency - in some cases on a daily or even hourly basis. This is perhaps an extreme example of dynamic pricing in action. However, it illustrates the point that responses to demand and supply fluctuations can be acted upon in real time. Dynamic pricing is often referred to as yield or revenue management. The practice of yield management emanated in the airline and hotel sectors. This philosophy is based on the principle that companies will implement a pricing structure that pushes prices higher as the time of the consumption of the product/service approaches. In the context of sport, for games or events that exhibit very high levels of demand, ticketing strategy will certainly move the price in

an upwards direction. This has the effect of creating conditions for optimal revenue generation. Of course, in sport the reverse approach can also occur. In the case of games that have relatively low levels of demand, sports marketers may create a range of discounted prices closer to game-day. Thus, once again prices, using a dynamic pricing approach will reflect the fluctuations between demand and supply. In the airline business, marketers recognise that if customers book well in advance, they can command a lower price. However, many people do not conform to this behavioural trait. Instead, they leave the booking to the last few days before flying. Airlines can ­sustain a much higher price in this instance as they know that the potential passenger has little choice left but to pay the price quoted on the website by the airline. To some extent this phenomenon can be explained by the behaviour of people who use credit cards. If everyone paid their monthly bill from the credit card company to the exact amount, then the latter’s ability to generate profits would diminish. Reality shows that most people only make part-payment and as a consequence high levels of interest payments on their outstanding bills. 7.9.1  Prerequisites for Dynamic

Pricing to Work

Kimes (1989) identified six prerequisites where dynamic pricing strategies in the context of overall revenue management can create a successful environment. They can be summarised as follows. 1. The ability to segment markets: this creates conditions where prices can be varied across different groups. 2. Perishable inventory: inventory cannot be stored - marketers have to maximise revenue from fixed capacities e.g. stadium size. 3. Product sold in advance: demand can fluctuate over time and altering pricing can reduce the risks. 4. Low marginal sales costs: where there are low costs associated with servicing addi-

169 7.10 · Big Data and Technology: The Glue That Helps Dynamic Pricing Strategies Work

tional customers, it makes sense to vary prices to pull in new customers. 5. High marginal production costs: where it is difficult, if not impossible, for a marketer to create additional inventory e.g. extra seats in the stadium or additional rooms in a hotel. You have to work with what you’ve got. Varying prices can help to maximise revenue. 6. Unpredictable demand: in situations where there are high levels of demand fluctuation, it justifies the adoption of different prices. Drayer et  al. (2012) argue that if the above general conditions and criteria are applied generally to the sports sector, then it can be seen that dynamic pricing is fit for the purpose. (See also Kemper and Breuer 2016)

7.10  Big Data and Technology:

The Glue That Helps Dynamic Pricing Strategies Work

We can glean from the subsequent discussion on dynamic pricing that the ability of marketers to make effective use of such strategies is largely based on data. More specifically, the acquisition and ability to analyse large chunks of data provides the material upon which pricing decisions can be made. Big data has implications for all areas within the sports sector; from “wearables” used by coaches and athletes to monitor performance through to the fan. In the context of ticketing strategies, we can see that comprehensive data on fan’s purchasing behaviour can provide sports marketers with invaluable information about their reactions to price changes, their spending patterns at games and sports events and as a consequence how to design relevant demand-based strategies. Without such data, sports organisations tend to rely on a combination of intuition and cost-based ticketing strategies. This does not mean that the task of setting prices is becoming any easier. Big data creates its own difficulties and challenges. Too much data can blind any organisation to effective dissemina-

tion of it, to relevant personnel in an organisation. The old cliché of “paralysis by analysis” pertains to some extent. Technology in the form of apps and location-­ based marketing tools, allied to social media platforms, allows sports marketers to capture data. More importantly technology allows them to integrate such information and use it in a strategic way. For instance, a smart season card linked with a mobile app can present the sports ­organisation with the ability to track and monitor the individual fan’s engagement, spending and changing perceptions and attitudes across the full plethora of behaviour. It is not just about setting prices. On a more strategic level it is all about capturing and retaining fans and in the process, managing them in a profitable and customer-focused manner. In the context of ticketing, big data provides the glue by which sports marketers can develop the variables that impact on successful pricing. Research by Shapiro and Drayer (2014) analysed a number of games during the San Francisco Giant’s 2010 season. They considered ten different variables and found that the key influencing factors were: seat location, team performance, the home team’s winning percentage for the past ten games, individual performance (of players), number of all-stars on the opponent’s roster and a number of time-related variables (start-time of the game, number of days before the game and the particular stage of the season). 7.10.1  Data Analytics

Designing relevant price structures for sports games and events is dependent on understanding all facets of fan behaviour. This is a “given” and cannot be avoided by sports marketers. As mentioned earlier if this is ignored, then pricing enters the realms of guesswork and intuition and a focus on internal, supply-­based influences. The likelihood of coming up with a meaningful and value-focused strategy is very low. Deloitte (2014) in a report on dynamic pricing practices pinpoints key pricing decision areas where data analytics can provide some answers. In theory, this should lead to

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more relevant and customer-driven strategies. They are identified as follows. 1. Dynamic pricing doesn’t mean charging more for everything: it means charging the right amount for everything. In order to arrive at the right amount, sports marketers need to have an understanding of profitability, market tolerances, competition and customer behaviour. Analytics can help in this regard. 2. Fans aren’t looking for transactions: they want an experience. Understanding customer behaviour and expectations is critical when putting together a value proposition for different segments. 3. Not all customers are the same. Perhaps it is an obvious statement but as with other sectors of business, sports marketers need to treat customers differently in terms of pricing. Think of potential differences in requirements for corporate customers and families at sports games and events. We need relevant data to help us answer such questions. 4. Promotional effectiveness matters. This takes into the realm of communicating with fans and targeting them with relevant offers and promotions. For instance, monitoring comments on fan forums and social media platforms can generate a raft of useful information. 5. Analytics can help to generate appropriate ticketing programmes. What will the market bear in terms of price structure? We will not know unless we can capture and analyse the data (Deloitte 2014, p. 3). Data analytics play a crucial role when using dynamic pricing in the context of sport. . Figure  7.3 highlights the important role that it plays in the process. Essentially, a number of algorithms are utilised to analyse a number of relevant variables (discussed earlier in this chapter) which have a critical influence in determining appropriate price structures. This analysis generates a price recommendation for the decision-makers in the sports organisation and form the basis for the subsequent implementation of the ticketing strategy. This process is captured in . Fig. 7.3.  

 

Strategy

Organisation

Dynamic Pricing Flexible Pricing Strategy to Optimise Ticket Revenue

Technology

Analytics

Consumer Behaviour

..      Fig. 7.3  A holistic model for dynamic pricing. (Source: Deloitte (2014) An Analytics Based Pricing Strategy for Sports Franchises)

7.11  Dynamic Pricing: An Appraisal

In the preceding paragraphs we have outlined how dynamic pricing works in practice and have concluded that the characteristics of the sports sector create a conducive environment for its use. Let us consider the advantages and disadvantages associated with the use of this technique. 7.11.1  Advantages

1. Real-time implementation: Dynamic pricing allows the sports organisation to make changes to its pricing structures in realtime, in an attempt to stimulate sales or reduce the level of fluctuation between supply and demand. Alternative approaches involve setting prices well in advance. This means that such strategies are difficult to adjust in response to changing daily or weekly conditions. 2. Increasing revenue: Dynamic pricing when used effectively, can increase the revenue stream from this source. As mentioned earlier studies consistently show that sports clubs can generate up to a thirty per cent increase in high-demand situations and five to ten per cent in low-demand conditions (Deloitte 2014, p. 4).

171 7.11 · Dynamic Pricing: An Appraisal

3. Reducing the influence of secondary market operators: Dynamic pricing can counteract the threat from secondary market operators such as StubHub (we consider this issue later in the chapter). A better understanding of demand patterns and fluctuations can create situations where the club can charge less than such companies. This reduces the criticism that clubs engage in price gouging (exploitation of fans). 4. Provides a clearer insight into the concept of value: Data analytics provides a clear opportunity for sports marketers to more fully understand customer perceptions, attitudes and behaviour in the context of price. In theory, this should allow for value-­focused propositions that are relevant to different segments of the market. 5. Technology and third-party providers: As recognised earlier in this chapter, improvements in technology (for example apps, mobile and location-based technology) have taken dynamic pricing to a new level. Many sports organisations who do not have the requisite skills to operate the process outsource the activity to specialist providers. Companies such as Omnia Pricing Software and Qcue work closely with clients in the sports field and manage the data analytics process. 6. Increasingly knowledgeable fans: Arguably, fans are much more comfortable with the concept of dynamic pricing from their experiences with online transactions on various website - most notably, Amazon. 7. Reducing the risk of under-­pricing: One of the dangers of not understanding the concept of value is under-pricing. Sports marketers will gravitate to this default position because of a fear that demand will fall. The reality is that in many cases, deliberate under-pricing makes sense if the overall objective is to drive revenue increases from ancillary areas of the business. However, the secondary ticket market tends to work on the basis that in high-demand situations, fans are willing to pay significantly more than is often estimated, in order to get access to the event.

7.11.2  Disadvantages

1. Confusion: The use of dynamic pricing can create an array of prices across a regular season for sports clubs. The Major League Baseball in the USA is a case in point. The nature of the sport involves each team playing 162 games over a six-month schedule. Games can take place on nearly a daily basis. Constantly changing prices can lead to confused fans who are continually forced to react to the changes that may be taking place on a daily basis. 2. Damage to the brand: Widespread and unrelenting use of dynamic pricing can potentially damage the brand and the brand equity associated with it. As fans become used to the expectation of lower prices appearing on the website, their interpretation of value is likely to change. ­Constantly varying prices, particularly if they involve decreases, can tarnish the brand. 3. Historical data: While the level of sophistication surrounding the technology and algorithms has increased in recent years, much of the analysis is based on historical data. This may not necessarily generate the expected level of accuracy required by sports organisations. There is no guarantee that the patterns of fluctuation in supply and demand will continue in the same manner into the future, although in fairness, much of it will present an accurate picture. 4. Difficulty of quantifying some of the factors: Arguably more factors come into play in the sports sector than is the case with the airlines and hotel businesses. Factors such as the expectations of fans, can be difficult to measure or quantify. 5. The existence of the secondary ticketing market: Dynamic pricing does not necessarily address the problem of secondary ticket operators making significant profits. This is an indication that inefficiencies still exist in the ticketing system for many clubs. In many cases fans have no alternative but to resort to such sources for tickets.

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6. Lack of skilled personnel and budget: By contrast to traditional users of dynamic pricing in the hotel and airlines sector, many sports clubs do not have the budget or internal capabilities to implement dynamic pricing. Using third-party operators such as Qcue can get around this problem but to some extent various aspects of control are ceded to such operators. This can potentially lead to tensions. 7. Negative postings on social media platforms: Research by Vale (2017) suggests that fans are increasingly making use of e-Word-of-Mouth (eWOM) to share their experiences. This potentially raises the spectre of negative comments that may damage the club’s brand and reputation. In summary, dynamic pricing affords sports marketers the opportunity to gain a much clearer perception and understanding of the fan’s perception of value and willingness to pay. It can significantly reduce the extent of inefficiencies often associated with traditional ticketing strategies. Bouchet et  al. (2016) observe that most sports clubs do not necessarily engage in daily or hourly amendments to price. Weekly or less frequent updates are the norm rather than the exception. This would indicate that a “common-sense” approach is the most favoured approach. Perhaps this is a recognition that more frequent changes can lead to some of the disadvantages highlighted in the preceding chapter.

7.12  The Secondary Ticket Market

Within the general entertainment markets, including sports, the secondary ticket market has become a significant influence in terms of how fans can source and access tickets. These sectors exhibit high levels of demand, with typical supply and demand fluctuations. Purchasing a ticket from the club or event organisers may be problematic for many fans. Quite simply, in cases where demand exceeds supply and where the perishable nature of services “kick in”, fans have no alternative but to seek tickets from other sources, most of which

are unofficial and do not have any accreditation from the official sports bodies or clubs. We should note that in recent years many sports clubs and organisations have in fact established relationships with designated secondary ticket operators - we discuss this later. Swofford (1999) identified three reasons as to why the secondary market exists. 1. These ticket brokers may be less risk averse than the event organisers and clubs. The latter, as we noted earlier, may prefer to under-price in certain circumstances to optimise revenue from ancillary activities. 2. Secondary ticket sellers tend to have a lower cost-function due to lower information, transaction and lower taxes. Put simply they have more accurate information about the overall market. 3. Secondary market operators have shortterm profit as their priority. Some clubs are perhaps less reluctant to exploit fans due to the need to cultivate loyalty and avoid negative publicity in the media.

7.12.1  Implications for the Various

Stakeholders

Secondary ticket operators effectively fulfil the role of an intermediary between the sports organisation and the fans. Like many such middlemen in the business sector, the primary organisation would prefer if they did not exist. They take potential revenue away, irritate fans and because of the focus on making profit, are often accused of exploiting the fan and trading on their misery and disappointment if they cannot get a ticket for an event or game. Counter-arguments suggest that the existence of such operators highlights the inefficiency and incompetence of official primary sports organisations and that they provide a necessary function in terms of clearing inventories of tickets. To this extent, sports marketers view them with mixed feelings: a nuisance when demand is high but useful when demand is low and they can sell off remaining tickets for the club or organisation. We examine these views in greater detail in this section.

173 7.12 · The Secondary Ticket Market

7.12.2 

 roblems with Secondary P Ticketing

Fans, arguably the most critical stakeholder in the area of ticketing, tend to suffer from the proliferation of unauthorised operators in the secondary ticket market. Firstly, it appears to have become easier for operators to capture a large volume of tickets for sports events and games. They can do this by making use of specialised software - often referred to as “bots”. By applying this software, they can automatically purchase very large numbers of tickets the instant that they go on sale. Evidence of this can be seen shortly afterwards when these tickets go on sale on sites such as eBay. Less sophisticated but still effective techniques include the use of multiple identities and multiple credit cards to purchase tickets. There is also a lack of transparency in the legal regulations. In some countries such as France and Norway it is against the law to re-­ sell music tickets. It is not as clear in the UK.  However, recent proposed legislation attempted to address some of the problems. A review of secondary ticketing (Watterson 2017) recommended, among other conclusions, that secondary platforms should ensure that ticket sellers on their platform be clearly identified and that their details are provided to consumers. It also specified that primary ticket sellers (i.e. clubs and sports administrators of sports events and competitions or events) should guard against the possibility of mass purchase by individuals or organisations. The UK government accepted all of the recommendations which took account of the major negative criticisms made in that report and by other organisations. For instance, the Consumer Group Which, launched a campaign in 2013 called “Play Fair on Ticket Prices”. It noted that it was wrong to allow operators to enforce compulsory fees amounting to as much as eighteen per cent on top of the price charged for the ticket. Such practices indicate strongly that many operators appear to be allowed to operate with relative impunity from the law and within

a lax environment in terms of accountability and monitoring. The government response in the UK could be deemed to be equivocal. It proposes to tighten up on the use of bots by operators but is somewhat vague on how that might actually happen. It appears to follow a policy of looking to the industry to come up with initiatives to respond to the recommendations of Watterson. 7.12.3 

Exercise

??Select three countries of your choice and examine the way in which secondary ticket markets are addressed and regulated. How does this compare with the approach in the United Kingdom?

7.12.4 

 anaging the Relationships M Between Primary and Secondary Ticket Sellers

The preceding section highlights the areas of tension and conflict that can occur between the two key stakeholders in the ticketing process. The former referring to the initial sellers - teams, event organisers and sports entity holders, the latter identified as made up of various middlemen such as brokers and even fans who acquire tickets and sell them for substantial profit on online websites. Courty provides a useful comparison between the traditional and modern secondary resale markets. This is captured in . Table 7.1. We can see that a number of changes and trends have emerged, particularly with the advent of online marketplaces. These essentially consist of general auction sites such as eBay or specialist online marketplaces such as StubHub and Viagogo. Brokers tend to use multiple sites to re-sell their tickets. Fans also make use of what are called ticket aggregators: operators who provide price comparisons on ticket availability to identify the most economical source for their tickets.  

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..      Table 7.1  Changes in ticketing practices Modern ticketing model

Traditional ticketing model Primary

7

Secondary

Sellers

Teams

Brokers, Scalpers and Fans

Buyers

Brokers and fans

Fans

Intermediation

Ticket Box Office, Team Club Season Tickets

Traditional methods, e.g. classified ads

Tickets

Printed tickets with face value physically exchanged (handling and mailing costs)

Electronic paperless tickets can be transferred at no cost until the event starts

Regulation and ticket restrictions

Tickets are non-refundable and transferrable Regulations restricting the resale of paper tickets are difficult to enforce

Resale restrictions are enforceable on sponsored sites

Price determination

Fixed in advance and often cost-based. Prices vary little with seat location and game’s specifics

Teams incorporate information from secondary market sales to optimise primary market prices for current and future events and for season tickets

Brokers price according to market conditions

Teams sponsor secondary online marketplaces primary and secondary markets are getting integrated Online resale marketplaces and aggregators reduce search costs. Teams sponsor resale marketplaces

Source: Adapted from Courty

Online markets facilitate fan-to-fan sales or buy from brokers (broker-to-fan). They compete on a wide range of perceived benefits such as price setting options for the seller, ticket selection, guarantees over fraud and counterfeit concerns and so on. Fees (typically around 35 per cent) are shared between the buyer and seller but do not include shipping costs for paper tickets. Typical online marketplaces include StubHub, Viagogo, Seatgeeks and Ticketiq. The situation has become even more blurred as sports event organisers and teams have begun to manage prices in the primary market. Some have appointed companies such as Ticketmaster as the official secondary ticket market operator. Courty also points to the increasing use of electronic tickets. This approach makes it more difficult for operators to commit fraud

as everything is digitally logged and controlled by the entity holder (club or organisation). They also generate useful information about the customer that has purchased the ticket - in terms of purchase patterns, how much they are willing to pay and so on. Season-ticket holders also re-sell their tickets. Clubs are concerned about this as it provides an opportunity for selling at excessive prices and damaging the image of the club. In English Premier League and Championship, clubs such as Huddersfield Town have set up their own exchange hub. In this instance, season ticket holders can re-sell their tickets at the official price, the club gets additional income from the sale of the ticket and the season-­ticket holder gets credits or rewards in terms of preferential access to away tickets or discounts on the renewal of the season card or ticket.

7

175 7.12 · The Secondary Ticket Market

If You Cannot Beat Them, Join Them: The Case of the NFL

For many years the NFL and the teams that make up the different conferences complained bitterly about the relentless intrusion of predators and scalpers who were determined to make as much money from the re-sale of tickets for regular season and play-off games. In 2017 it decided to do something about it. Based on the full support and involvement of all of the teams it set up a resale marketplace site in order to be in a position to control, to some extent, the prices being charged to fans. The official ownership, involvement and control of the club was seen as a clear form of reassurance and “peace of mind” for fans trying to gain access to a ticket. Baseball was the first sport in the USA to move in this direction in 1999 when San

7.12.5  Exercise ??Assess the merits of the approach adopted by the NFL.

7.12.6  Primary and Secondary

Ticket Markets - Future Trends

Further improvements in the areas of technology, data capture and data analytics should lead to more accurate management of the fluctuations between supply and demand. More detailed analysis of transactions is likely to shed greater insight into fan and competitor behaviour. As teams and competition administrators increasingly take control of secondary ticketing (either through in-house or collaborative partnerships with middlemen) the risks associated with fraud and counterfeiting should reduce: it is probably too naïve to assume that they will be eliminated. However, clubs and

Francisco Giants partnered with 7 Tickets.­ com. At first glance such partnerships and league-owned marketplaces appear to reduce the potential instances of fraud. On a practical level they also reduced the search costs for fans. It also improves the quality of data held on individual fans, enabling the club or league administrators to more accurately predict demand patterns. Some concerns have been expressed about the dangers of such practices reducing brand loyalty among fans. Why would fans purchase season tickets if they can quickly go to a sponsored marketplace and acquire cheaper tickets? (Source: adapted from Courty 2019)  

sports organisations should be in a stronger position to take ownership of the secondary ticketing market, either by working in partnership with authorised operators or bringing it in-house, via better technology and data management. The onus will be on governments to introduce stronger legislation to tighten up on the prevalence of individual touts or scalpers who are creating problems for legitimate fans. In June 2018, FIFA filed a criminal complaint against Viagogo, one of the main ticketing companies, about its deceptive and non-­transparent behaviour. Although FIFA operated the only official website for the sale of tickets, Viagogo was selling a wide range of tickets in the UK at prices that were far higher than the official price. This instance indicates that familiar problems still exist. It is more than likely that the fan will suffer even more in this case because FIFA have the technology in place to trace the tickets. Any fan acquiring a ticket from a non-official source would have it cancelled upon presentation at the match-day venue.

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7.13  Conclusions

7

sports marketers. While revenues continue to stream into sports clubs due to increasing We have examined the issues and factors influ- media rights and sponsorship, attendance at encing sports ticketing principles, policy and sports events and games is still critical to the implementation in this chapter. We have overall finances. Sports marketers still have to face the chalacknowledged that this aspect of sports marlenge of attracting fans to events and retainketing strategy has been somewhat neglected, ing their business. This is not easy, and is likely by contrast, to other elements of the marketto be more challenging in years to come. The ing mix. impact of the Coronavirus crisis is likely to However, the confluence of technology linger with all of us for a number of years. It and data management has led to a major shift may make it difficult to retain fans in suffiin approach to pricing in the sports sector. cient numbers than in the past. Sports clubs and organisations, armed with Fans consume sports in an increasingly better quality data, can now more accurately complex number of ways. Streaming sports estimate likely demand patterns for games events illegally, accessing games “on the go” and sports events. In essence we operate in an and increased improvements in technology and era where smarter pricing is the order of the picture quality mean that many fans no longer day. This presumes that sports marketers make effective use of the technology and data bother to physically attend games. In effect they analytics to engage in such ticketing practices. become virtual fans - watching the games and interacting with their favourite sports and This does not always happen. Some sports clubs can be accused of not clubs, but no longer necessarily interested in implementing smarter pricing strategies. attending games in a “live” or physical sense. When developing ticketing strategies, Instead, they still adopt a more traditional sports marketers will have to focus on the live approach which is largely based on cost and experience for the fan. Fan expectations have competitor-based pricing. While such straterisen in this regard. They no longer expect to gies are not necessarily wrong, they ignore the sit in poor quality seats with out-of-date facilreality of the market and specifically the cusities. Experiential marketing becomes much tomer. more strategic to sports clubs in terms of Smart pricing strategies should be value-­ building loyal fans. based and reflect the perceptions, attitudes and behaviour of the fan. This is particularly the case in situations where supply exceeds Learning Outcomes demand and where the sports club or organ55 Traditionally, sports bodies and clubs isation is in active competition for the fan. have been very conservative in terms of We have examined the move towards techhow they approached ticketing strategy niques such as dynamic pricing and the role design and formulation played by secondary ticketing operators. In 55 Effective ticketing strategy should the latter case the emergence of such comparevolve around addressing the concept nies has often been cited as an example of the of value, as defined by the fan and not inherent inefficiencies that are built into the based only on internal considerations existing pricing policies and operating procesuch as cost dures employed by sports bodies. 55 Effective pricing does not necessarily Going forward, we are likely to witness revolve around charging higher prices. more sophisticated approaches to pricing by

177 7.13 · Conclusions

55

55

55

55

55

The actual ticket price is just one dimension of the overall experience. It may make sense to reduce prices, in order to attract more fans and generate more revenue from ancillary revenue streams such as food, merchandise and so on Due to technology and “big data”, sports marketers are now theoretically in a stronger position to understand demand patterns and fluctuations more fully The adoption of techniques such as dynamic pricing has created situations where clubs can generate more revenue and fan attendance at certain categories of games that are difficult to sell in advance Ticketing revenue is but one element of overall revenue streams. The overall objective for sports marketers is to monetise the product and derive maximum revenue from all sources. Ticketing strategy has to reflect this “bigger picture” Sports clubs have been accused of exploiting the fanatical loyalty of fans. This is often exhibited in the high prices that are charged for events and key games. In an era of social responsibility and ethical marketing, this is something that sports marketers cannot ignore. They have to consider the issue of equity-based pricing more fully within the overall context of ticketing policies and procedures The secondary ticketing market still creates many problems within the sports sector. For high-profile events it remains the only source for a fan. Secondary ticketing operators range from sophisticated operators such as TicketMaster and Viagogo, to scalpers who operate outside the stadia, peddling tickets at exorbitant prices

55 More needs to be done by sports bodies and legislators to regularise practices in this area, although it will never be eliminated

??End of Chapter Discussion Questions

1. Assess the view that basing your pricing strategy on what your competitors charge is a safe way of managing the process. 2. Examine the key drivers of value from the perspective of the fan. How can this shape and influence the ticketing strategy for a football team that is constantly struggling to stay in the Premier League? 3. Evaluate the view that dynamic pricing is the same as variable pricing. Use examples to support your point of view. 4. Some commentators argue that sports clubs “rip off ” fans by constantly increasing prices and that this will lead to many fans not being able to afford to go to sports games and events. What is your view on this perception? Use examples to support your line of argument. 5. Examine the concept of equity-based pricing. How relevant is this concept in the context of ticketing strategy formulation and implementation? 6. Critically assess the view that the existence of secondary ticketing operators is an indication that there are great inefficiencies in the way in which sports marketers set their pricing strategies. 7. Examine the extent to which you would agree with the assertion that one of the best sports ticketing strategies is to charge as much as you can get away with. Use examples to support your position on this statement.

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Chapter 7 · Ticketing Strategies in the Sports Sector

The Leaving of Liverpool: Fans Walk Out

7

Introduction In 2010 Liverpool football club  -  the English Premier League team, was acquired by the Fenway Sports Group. This is an American sports investment company. It has a portfolio of sports properties which includes the Boston Red Sox - the Major League Baseball team as its marquee brand. Business experts view the Fenway Sports Group as one of most sophisticated and strategic players in the sports space globally. Despite initial suspicion on the part of Liverpool fans about the possible motivations of the Fenway Group for buying the club, the owners were seen to be supportive of the manager: providing him with cash to purchase players. By contrast to other leading EPL teams however, many commentators argued that the owners adopted a more “business-like” approach to releasing funds. The new owners faced a real initial challenge: its Anfield stadium only had a capacity of around 46,000. This was considerably below its main competitors such as Manchester United - the latter having a capacity of 75,000. They committed to increasing capacity in order to make it more competitive and generate extra revenue streams as an issue of immediate priority. The new main stand opened in 2016. This raised the ground capacity by 9,000 to an overall figure of 54,000. Revised Pricing Strategy for 2016/17 Season In early 2016 the club reviewed its ticketing strategy for the upcoming 2016/17 season. It proposed to increase some of the seats in the newly designed main stand from £59 to £77. This sparked outrage amongst a number of fans' supporter associations. This was seen as a step too far and once again a clear signal that football clubs were no longer interested in the average working class supporter. Instead they were viewed as being avaricious and unrelenting in their quest for more and more revenues.

Was this an indication also of a tipping point in terms of how fans view the concept of value for money? Many fans felt that this was typical of what tends to happen when foreign owners take over a club and focus on the key issue (for them), profit at all costs. Influential supporters groups such as The Spirit of Shankly (a highly popular and successful previous manager) demanded meetings with the CEO at the time; Ian Ayre. They threatened to organise a mass walk-­ out of the stadium at the next scheduled home game against Sunderland: appropriately enough on the stroke of the seventy-­seventh minute. The Response to the Criticisms Ayre met with the various groups and argued that fans should focus on the bigger picture. Liverpool had to be competitive in the market if they were to challenge clubs such as Manchester United, Chelsea and Manchester City. The onus was on the senior management to generate as much revenue as possible in order to make this objective happen. However, he acknowledged that there had to be a balance in the context of setting prices that were affordable for the fan-base. He felt that the club had taken this on board when reviewing pricing levels for the coming season. In particular, he argued that the proposed increase to £77 only affected 200 seats in the main stand. In real terms this only impacted on less than a half of one per cent of total capacity. Likewise, proposed increases in season tickets only affected a limited number (the lowest costing £685). In the context of season ticket categories, he argued that in fact sixty-five per cent had remained the same or had decreased in price. In the context of overall ticket prices the proposed change would mean that fortyfive per cent would experience a decrease for the coming season.

179 7.13 · Conclusions

He also made the point that the club operated a scheme whereby 500 tickets for league games were made available to “local fans” at the knock-down price of £9. He evidenced this as an example of how the club emphasises its commitment to the fans and to the community in the city of Liverpool. The Pricing Controversy in Context The timing of this controversy was unfortunate. Around that time the new Sky media rights deal had been announced with much fanfare and trumpeting. This contract would deliver around $5.2 billion to the EPL over the next three seasons. This figure did not include further revenue from the sale of international media rights. This took the total to over £8 billion. This marked a significant increase on the previous deal-driven mainly by the increased competition from BT, who acquired some of the available live games packages. The EPL was literally awash with money. Combined by the perceived outrageous salaries that were earned by players, this led to more condemnation of the proposed increases by the fans and supporters groups of Liverpool football club. Another negative event also fanned the flames of criticism. A couple of weeks prior to the announcement about the new prices, EPL clubs blocked a proposal to freeze away tickets at £30. This was seen as yet more evidence of the greed of the clubs. With money pouring in from media rights and increased sponsorship, various supporters groups and politicians felt that this presented an opportunity to make a meaningful gesture to fans: given the levels of economic austerity being experienced in the UK since 2009. This experience was not confined to English Premier League clubs. In Germany, fans of Borussia Dortmund also expressed their displeasure with the Commercial department by throwing tennis balls onto the pitches in one of the Bundesliga games.

Various surveys, most notably one carried out annually by the BBC Television Corporation called “The Price of Football” showed evidence that the average season ticket price of a football ticket to the EPL had increased by twice as much as the cost of living rates in the UK.  Even the cheapest season ticket had increased by 8.7 per cent since 2012 (£508.55p). Change of Heart In the face of the mounting criticisms from fans and within the social media in general, the Liverpool Board of Directors decided to keep the prices at £59. The change in approach was captured in a quote from comments made by Billy Hogan: the Managing Director and Commercial Director, to a fans forum in December 2017 when he articulated the need to formulate a long-term pricing strategy. He presented the club’s position on ticket revenues to the 10 forum members present. He said:

»» “Ticket pricing impacts overall club rev-

enue and our goal on the commercial side is to drive as much revenue as possible in order to provide the resources for Jürgen Klopp and Michael Edwards to reinvest in the football side. This is all geared towards winning, which is what everyone wants”.

»» “The reality at Liverpool is that demand for tickets exceeds supply. That creates its own question of how we should price tickets but we have never gone down that route. We have tried to strike a balance, looking at what people can afford to pay at the lower end and what people can afford to pay at the higher end”.

»» “But we also want to compete and, in the case of this forum, I think that

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means looking at ways that we can collaboratively drive revenue while also addressing some of the issues that we are all aware of”. (7 https://www.liverpoolfc. com/news/announcements/284865liverpool-to-formulate-long-term-ticketpricing-­strategy)  

7

At the same forum, Phil Dutton, Liverpool’s head of ticketing and hospitality, suggested that one way forward would be for the club to become more creative in the way that it structures pricing. “Nothing should be off the table today in terms of ideas and we will see what we can agree on,” he said. “If people can pay to get into the game, they should. But by the same token, if people are struggling, we should look at what we can do. If that means giving consideration to stretching the pricing structure we should do that.” Tony Barrett, Liverpool’s head of club and supporter liaison noted that:

Appendix ??Discussion Questions 1. Examine the extent to which you would agree with the view that the role played by disgruntled fans and social media has effectively restricted the club from maximising revenue from its ticketing strategy.

»» “This was another positive forum in which several issues were discussed in a challenging but constructive atmosphere,” said “While there may not have been a consensus on all matters, there was a clear commitment from all involved to continue working together in the best interests of the club and its supporters”.

»» That

bodes well for the future and, although there were no immediate solutions to the challenges faced, the frankness and thoughtfulness of the discussion ensure the ticket pricing structure fans forum got off to a good start. It is now crucial that this particular forum reconvenes in January prior to the club setting its budget for the 2018–19 season.

(Sources: Compiled by the author from various sources on the Internet).

2. Assess the rationale behind the proposed changes to pricing strategy as articulated by the board. How well or how badly did they handle the change? What could they have done differently? 3. How true is it to say that this is a simple case of foreign owners not understanding the nature of football and its fans in the UK context?

181 Appendix

The Price Is Right: The Case of Boston Celtics and the NBA

Introduction

..      Table 7.2  Valuation of NBA brands (2016)

Boston Celtics was founded in 1946 and play in the Eastern Conference Atlantic Division of the National Basketball Association. The overall divisions comprise thirty teams. Boston Celtics was one of the eight founding members of the NBA and over the past 70 years or so it has been the most successful team in the NBA, winning seventeen championships. Like most sports teams it has had peaks and troughs: struggling in the 1990s and recovering to win the championships in 2008.

Team

Valuation

New York Knicks

$3.600 billion

Los Angeles Lakers

$3.300 billion

Golden State Warriors

$3.100 billion

Chicago Bulls

$2.600 billion

Boston Celtics

$2.500 billion

Source: Compiled from various sources on the Internet

The Stadium The team play in the TD (Toronto and Dominion Bank) Gardens stadium in the centre of Boston. This is the largest entertainment arena in the state of New England and was opened in 1995. It has an overall capacity of 19,580 and for basketball it has an official capacity of 18,580. The arena stages over 200 events annually. The Boston Celtics also share the stadium with fellow Bostonian National Hockey League team; the Boston Bruins. It has three private restaurants in the stadium: Banners Harbor View, Legends and Premium Bistro. The Celtics makes use of ninety executive suites, 1100 Club Seats. It makes use of 360 degree-led technology and operates specific areas such as the Loft, AT&T Sportsdeck and the Heineken Green Room.

indication of the overall financial worth of Boston Celtics. In terms of revenue, . Table  7.3 provides an indication of what the club generated over recent seasons.

 ey Performance Indicators in the NBA K Championships

Ticket Price Indicators

Historically, the most successful club in the NBA, it has made the play-offs consistently in the past 4 years without actually winning the overall prize. In terms of comparing the valuation of the franchises in the NBA, . Table 7.2 gives us an  

 

..      Table 7.3 Revenue 2016/17

$257 million

2015/16

$200 million

2014/15

$181 million

2013/14

$173 million

2012/13

$169 million

Source: compiled from various sources

The NBA reveal some interesting trends when we consider comparative average prices for a ticket to watch the fan’s favourite teams play. . Table 7.4 indicates the average price charged by seven of the top teams in the NBA. The cheapest average ticket to watch NBA basketball during the 2016/17 season could be  

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Chapter 7 · Ticketing Strategies in the Sports Sector

..      Table 7.4  Average price of tickets

7

Team

2016/17

2015/16

2014/15

Atlanta Hawks

$87

$50

$47

Boston Celtics

$103

$72

$95

Brooklyn Nets

$87

$83

$85

Charlotte Hornets

$85

$64

$51

Chicago Bulls

$97

$105

$101

Cleveland Cavaliers

$150

$195

$47

Golden State Warriors

$240

$140

$83

Source: compiled from various sources

purchased at the home of the New Orleans Pelicans. This turned out to be $48. The aforementioned figures do not fully convey the cost of watching NBA teams. For instance, there is a long waiting list for season tickets at the Boston Celtics. A “good seat” would cost around $10,000 in 2017/18. By contrast a seat at the top of the arena (referred to by fans as the “nosebleed seats”), would set you back to the tune of $2,000. Loge seats (small areas in the arena that can hold a small number of people) can cost around $7,000. Fans who cannot attend all of the games can recoup some money by putting the seat up for sale for individual games. They typically make use of Ticketmaster, the official partner of the NBA when it comes to selling tickets. In terms of attendance at Boston Celtic games, the average in the season 2017/18 was 18,600, with an overall attendance of 744,960. This effectively meant that each game had full attendances. This compares with an overall NBA average game attendance of 17,830.

The NBA and Ticketmaster Partnership In 2012 the NBA entered into a partnership with Ticketmaster, one of the main third-­party operators in the secondary ticket market. The NBA identified an opportunity where it could compete with other key operators such as StubHub. This was not necessarily innovative: the National Hockey League had a similar arrangement in place with Ticketmaster since 2008. The latter company stated that it had twenty per cent of the secondary ticket market for hockey tickets. The NBA saw this partnership as a mechanism whereby it could provide a “one-stop-­ shop” for basketball fans in terms of securing tickets for games, as well as selling on tickets that they could not use. The partnership between the NBA and Ticketmaster created 7 NBATickets.­com. This represented the only official resale marketplace of the NBA. We should note that NBA does not necessarily control the team rights in terms of setting prices. While the thirty teams all participate on the 7 NBATickets.­com website, twentyfour have individual ticketing deals with Ticketmaster. In the early years of the deal, Philadelphia 76ers sold all of their tickets through StubHub. As stated earlier, the individual teams set their own ticketing strategy. An advocacy group called Fans Freedom Project raised some concerns which centred on the issue as to whether fans would be allowed to set their own price when using 7 NBATickets.­com or if the individual teams would enforce price floors below which tickets could not be sold. The NBA argued that there should be no price floors, but left it to the discretion of the individual teams. In early 2018, Ticketmaster announced that it was renewing the partnership for the NBA and the WNBA.  It was going to focus more fully on enhancing the digital ticketing experience for fans, allowing them to focus on the actual game.  

 

 

183 Appendix

 n Insight into the Approach to Ticketing by A Boston Celtics A 2015 Harvard Business Review interview with Richard Gotham, the President of Boston Celtics generated the following responses to a couple of questions on the general issue of ticketing. HBR: You’ve been with the Boston Celtics for 12 years now. How has the business of running a professional basketball team evolved in that time? Gotham: “In the years that I’ve been involved, things have become exponentially more sophisticated. These aren’t mom and pop operations anymore. Asset valuations in our league have really grown over the years. For example, Steve Ballmer just bought the L.A.  Clippers for $2 billion. We now have entire conferences dedicated to the analytics of our business and our basketball operations. We’ve hit a point of acceleration in video and wearable technologies that provide us with information that we’ve never had in the past about how to optimize player performance. We have a global audience that has an unending thirst for mobile content, and a sophisticated CRM database that allows us to be a state-­of-­ the-art marketing operation. We talk about things like yield management, demand curves, and perishable inventory - factors that dictate our pricing strategies. We’re working with unprecedented levels of data. At the same time, so much of what we do is all about the intangible, emotional attributes that really drive fan passion and engagement - that’s what fuels our business, and always has.” HBR: You’ve been with the Celtics in good years and bad. How do you keep the business itself running steadily, when team performance can change so much year-to-year? Gotham: “You need to have a business that’s flexible enough to respond quickly. That way, when the going is good, you can maximize your upside yield on assets like ticket sales and

merchandise, and when the team isn’t performing quite as well, you have a hedge in place to protect your downside risk. The big revenue drivers in our business are TV media rights - both national and local - and ticket sales. The bulk of the variability in our annual revenue is in ticket sales, which is most sensitive to team performance. So, it’s a matter of trying to keep our finger on the pulse of demand in order to maximize our return. We monitor pricing and demand in real time using algorithms to help inform our decisions. In some cases, demand says that you can raise the price. In others, it says lower the price to drive a higher volume. We have an analytics team that’s built some models using regression analysis to help us with dynamic pricing. It allows us to determine the right price, for the right game, for the right customer - and even factor in a sudden last-­minute snowstorm on top of that to see how it affects demand. We were really the first team in the NBA to say that it’s OK to price your tickets differently for different games.” HBR: I talked to a few families who said that they’d love to attend a Celtics game, but between the tickets, parking, food and drinks, it’s prohibitively expensive. What would you say to those families? Gotham: “Tickets to sporting events can be expensive. Our pricing, as I mentioned earlier, is demand-driven and what the market will bear, and generally the market will bear a lot. But having said that, we recognize that being accessible and affordable is important for growing our fan-base, so we have a lot of entry points. You can buy a Celtics family pack, which gives you four tickets, concessions and a souvenir for $70–$90, which is pretty affordable for a professional sports game. We keep about 25% of our inventory in the form of individual tickets that are $30 or cheaper. The idea is that we cordon off a certain amount of our seats so that we’re not pricing people out. That

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Chapter 7 · Ticketing Strategies in the Sports Sector

math fluctuates from year to year based on changing demand dynamics. For as long as I’ve been here, we’ve always maintained 300 seats for every game at a $10 price point, but we found that the scalpers were scooping up those seats and selling them at higher price points, so we had to combat that a bit. It’s about educating the market that those alternatives are available. In a year when the team isn’t considered to be a championship contender, we’re doing more marketing of those ticket offers and promotions using database-driven marketing.” (7 https://hbr.­org/2015/03/how-an-­nba-teamthinks-about-data-talent-and-­pricing)  

7

Concluding Comments The sport of basketball is right up there with the other bastions of sport in the USA: American football and baseball. As we can see from the statistics it represents a lucrative investment for most of the franchise owners of clubs that play in the national divisions of the NBA championships. Boston Celtics, as befitting of one of the doyens of the sport, almost routinely sell-­out their games. Together with the other teams and the administrators of the NBA, they implement a ticketing strategy that arguably is demand-led. By this I mean that the tactics used are reflective of the nature of the demand for tickets from the perspective of the fans. This is encapsulated in the following quote from Steve Schanwald, a Vice-President of the Chicago Bulls. “Ticket pricing is becoming more fluid and

?? Discussion Questions 1. Examine the extent to which you would agree with the assertion that fans are losing out in the context of the strategy employed by the NBA teams and the overall administrative body of the NBA. 2. Does it make sense to have such varying degrees of fluctuation in the pricing of tickets for NBA games?

often changes daily, based on supply and demand, along with other factors,” said Steve Schanwald, the Bulls’ executive vice president of business operations, who responded to questions via email. It’s becoming similar to other industries such as airfares and hotel rooms. Consumers typically aren’t aware of the exact pricing until they make a specific inquiry. We’ve found that fans are becoming much more familiar and comfortable with this trend. And they often benefit because there’s much greater ticket availability and many more pricing options”. (7 https://www.­s portsbusinessdaily.­c om/ Journal/Issues/2013/04/15/In-Depth/NBA-­ Ticketing.­aspx) Selling tickets for games in the sport of basketball is complicated by the fact that any given team might have as many as forty different price points available for seats in different sections of the stadium. This does not provide much room for manoeuvre - particularly when dynamic pricing strategies are being used. The days of setting pre-determined prices are a thing of the past. NBA teams are becoming more adroit at selling tickets for games and appear to be making use of smarter tactics in order to maximise revenue. (Sources: Compiled by the author from various sources on the Internet). (7 https://hbr.­o rg/2015/03/how-an-nba-­ team-thinks-about-data-talent-and-­pricing). (7 https://www.­sportsbusinessdaily.­com/ Journal/Issues/2013/04/15/In-Depth/NBA-­ Ticketing.­aspx).  

 

 

3. Assess the rationale for the NBA making the decision to renew its partnership with Ticketmaster. 4. In relation to other major sports, how would you rate the strategy employed by the NBA?

185 References

References Bouchet, Adrien, Michael Troilo, and Brian R. Walkup. 2016. Dynamic pricing usage in sports for revenue management. Managerial Finance 42 (9): 913–921. Courty, Pascal. 2019. Secondary ticket markets for sports events. In Handbook of sports economics. SAGE Publications. London: United Kingdom. Cram, Tony. 2006. Smarter pricing: How to capture more value in your market. London: FT Prentice Hall. Deloitte. 2014. An Analytics-based Pricing Strategy for Sports Franchises: Maximise revenue and enhance fan experience through analytics. Deloitte Development LLC. Drayer, Joris, and Daniel Rascher. 2013. Guest editor’s introduction: Sports pricing research: Past, present and future. Sports Marketing Quarterly 22: 123–128. Drayer, Joris, Stephen L. Shapiro, and Seoki Lee. 2012. Dynamic ticket pricing in sport: An agenda for research and practice. Sports Marketing Quarterly 21: 184–194. Foutz, Natasha Zhang. 2017. Entertainment marketing. Foundations and Trends in Marketing 10 (4): 57–66. Kemper, Christoph, and Christoph Breuer. 2016. How efficient is dynamic pricing for sports events? Designing a dynamic model for Bayern Munich. International Journal of Sports Finance 11: 4–25. Kimes, S.E. 1989. Yield management: A tool for capacity- constrained service firms. Journal of Operations Management 8 (4): 348–363. Kwon, Y., and D.H.  Kwak. 2014. Revisiting the team identification-value purchase relationship in the team-licensed merchandise consumption context: A multi-dimensional consumer value approach. Sports Marketing Quarterly 23 (2): 100–114.

Macdivitt, Harry. 2013. Pricing points. Cambridge Marketing Handbook. Kogan Page, Ltd., London: United Kingdom. Macdivitt, H., and M.  Wilkinson. 2012. Value-based pricing: Drive sales and boost your bottom line by creating, communicating and capturing customer value. New York: McGraw-Hill. Shapiro, S.L., and J.  Drayer. 2014. An examination of dynamic ticket pricing and secondary market price determination in Major League Baseball. Sport Management Review 17: 145–159. Swofford, J. 1999. Arbitrage, speculation and public policy towards ticket scalping. Public Finance Review 27: 531–540. Vale, L. 2017. Social media and sports: Driving fan engagement with football clubs on Facebook. Journal of Strategic Marketing 26 (1): 37–55. Watterson, Michael. 2017. Independent review of consumer protection measures concerning secondary ticketing facilities. IND/16/7. Wilson, Alan, Valarie A.  Zeithamal, Mary Jo Bitner, and Dwane D.  Gremler. 2012. Services marketing: integrating customer focus across the firm. McGraw-­ Hill. Second European Edition. London: United Kingdom.

Further Reading www.liverpoolfc.com/news/announcements/284865-­ liverpool-­t o-formulate-long-term-ticket-pricing-­ strategy. www.hbr.org/2015/03/how-an-nba-team-thinks-­abpoutdata-talent-and-pricing. www.sportsbusinessdaily.com/Journal/Issues?2013/ 04/15/In-Depth/NBA-Ticketing.aspx.

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The Sports Product and Brand-Building Decisions Contents 8.1

Introduction – 188

8.2

The Sports Product – 189

8.2.1

Key Dimensions of the Sports Product – 190

8.3

Innovation and Product Development – 191

8.3.1

Collaboration – 192

8.4

Perspectives on Innovation in the Sports Sector – 193

8.4.1

Exercise – 195

8.5

Branding in the Context of the Sports Sector – 195

8.5.1 8.5.2 8.5.3 8.5.4

 rand Equity – 195 B Brand Equity and Keller’s Framework – 195 Brand Equity in the Context of the Sports Sector – 197 Building Brand Loyalty - Sports Team Brand-Equity Index – 199

8.6

The Most Valuable Global Sports Brands – 200

8.6.1

Exercise – 201

8.7

Sports Brands and Brand Extensions – 201

8.8

Co-branding – 203

8.8.1

Pros and Cons of Co-branding – 204

8.9

Conclusions – 205 Appendix – 206 References – 211

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-­3-­030-53740-1_8) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_8

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nnLearning Objectives

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On completion of this chapter you should be in a position to address the following objectives: 55 Understand what is meant by the sports product 55 Identify the components and factors that shape the development and refinement of the sports product 55 Examine the evolution of new sports products and adjustments to existing sports 55 Assess the role that innovation plays in developing the sports product 55 Examine the interface between technology and sports product creation and development 55 Understand the concept of the brand in the context of sport 55 Evaluate the concept of brand equity and how it works in the sports sector 55 Assess the relationship between brand equity and fan loyalty 55 Examine sports brand extension strategies 55 Understand the role that co-branding and licensing play in sports product and brand development 55 Examine the relationship between the sports organisation and other stakeholders in managing the sports brand.

8.1

Introduction

In this chapter we consider one of the critical aspects of marketing strategy: product innovation and development in the context of the sports sector. The sports sector in common with all areas of business operates in an environment which is constantly changing. It is dangerous to accept that the sports sector is more predictable than other more volatile sectors. There is a tendency to assume that individual sports, particularly well-established ones (in terms of longevity and heritage) can continue on their merry way, without having to pay much consideration to the external environment within which it operates. In 7 Chap. 6 we hopefully debunk this perception. The reality is that ALL sports are directly and indirectly affected by the various  

dimensions that make up the sports business environment: political, economic, social, technological, economic and legal. Sports fans in tandem with traditional customers in other sectors, change over time in the context of how they consume and engage with their favourite sports (see 7 Chap. 4 for a full examination of this topic). Sports marketers have to anticipate and proactively introduce strategies and tactics to address such change. As we have repeatedly noted in this text, the shift from treating sport as an amateur and idealistic series of ventures (particularly at the elite level) has long since disappeared in most countries. The arrival of senior executives, directors and CEOs has brought a commercialism to sport. This is reflected in the focus on monetising sport: “working” or “sweating” the assets and in particular seeking ever-increasing avenues for identifying and exploiting revenue streams. Whether you approve or disapprove of such a development is immaterial in the greater scheme of things. It is an ongoing reality in the sports sector. In the early sections of this chapter we identify what constitutes a sports product. How do we shape and develop a sports product? How does this differ from more traditional products? We assess the components that make up a sports brand. While this term is a standard phrase in the context of traditional brands, it is only in the last decade or so that it has become part of the lexicon within sport, as more and more marketers from other industry sectors enter the realm of sport. We evaluate the role of innovation in the context of sports product development. This can range from radical innovation, as evidenced by the emergence of “new” sports such as eSports and Mixed Martial Arts (MMA) through to developments and refinements in traditional, well-established sports such as rugby, cricket and football. We address brand-building strategies in the middle part of the chapter. We initially examine sports brand equity and how this can be developed by using a range of initiatives such as co-branding, licensing and brand extensions.  

189 8.2 · The Sports Product

In the later stages of the chapter we assess the relationships between sports organisations/clubs and their key stakeholders such as sponsors, governing bodies, technology companies and sports equipment and accessory companies, in shaping product development. 8.2

The Sports Product

Our first task in this chapter is to understand what we mean by the term “sports product”. The sports sector sits firmly within the overall “services-dominant” product area. This implies that services characteristics dominate and influence the product decisions. For instance, a key characteristic of services is the concept of perishability. You cannot store a service. In the sporting context if a sport club’s stadium has a capacity of 40,000 and a game is coming up next week, then the sports marketers have to engage in strategies that attempt to maximise attendance. If only 23,500 fans turn up for the game then that is it! You cannot rewind the clock to try and generate a higher attendance. Some products are not service-dominant in terms of their composition. For instance, companies that supply cement to the construction sector would be described as marketing a very “physical and tangible” product. However, even in such a “product-dominant” situation there are also service dimensions. Cement manufacturers have to meet delivery schedules and respond quickly to unanticipated orders or problems experience by builders. The consequence arising from unreliability can be grave for builders: delays occur, slowing down targeted completion dates and the strong probability that penalty costs will be imposed on them. In the context of sport, it can be challenging to pinpoint what exactly constitutes the “product”. We can identify four levels that are associated with any product (including sports). The challenge for sports marketers is to be able to differentiate their product offer from their competitors. 1. Core product: as the title suggests, this gets to the heart of the matter. What is the essential thing that they are willing to pay

for? The core, basic benefits that are sought. In the context of sport that is likely to revolve around the sports event, game or competition. For instance, fans will have a perception of what they expect when attending a game: basic benefits include having a seat with a reasonable view of the action, acceptable parking and transportation facilities, adequate food and beverage outlets and relative ease of entrance and exit. Such features shape the fan’s perceptions and expectations. In the sports context, due to the passion and commitment exhibited by dedicated, “die-hard” segments, it is possible that a sports organisation can get away with providing a very basic, even sub-standard core proposition. For instance, fans may put up with poor performances and uncomfortable seating because of their fanatical loyalty to the club. However, in the longer term this is a dangerous strategy. Eventually a “tipping point” will come where even the most loyal fans will desert the club, even if it is only temporary. We can say that this reflects the fact that variation can occur within the realms of the product. Over time this can range from periods of success and euphoria to the depths of despair, as the club struggles in its respective league or competition. 2. Expected offer: This element of the product recognises that there are additional benefits that fans would expect. This is liable to alter, due to changing perceptions and expectations. For instance, in the case of major sports such as football, NFL, basketball and rugby, fans will expect better quality food at specific games or events. Likewise, they expect to be able to purchase tickets for the game in a straightforward manner online. Such elements of the offer are additional to the core offer but are also provided by the competitors. This means that there is little or no opportunity to develop a clear point of differentiation or advantage. 3. Augmented offer: This more advanced level takes us into an area where a sports organisation can introduce benefits that are not typically provided by competitors (other

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clubs in the league). Like most new benefits it is unlikely that a sustained competitive advantage can accrue. This is because other clubs will react and introduce similar, if not better benefits, if fans respond positively to the new features. A good example of this was the introduction of Wi-Fi to the stadia and arenas. Pioneering clubs were proactive in this area. Other clubs quickly followed suit and, learning from the initial teething problems experienced by the pioneers, in many cases provided speedier and more reliable Wi-Fi in their respective stadia 4. Potential offer: this level of product development is arguably the most difficult one. This is because marketers have to apply some lateral thinking in terms of how they define their product and how it may operate in the longer-term. In the context of sport, some clubs are more forward thinking in terms of defining their product. For example, this might mean defining the product as operating in the leisure and entertainment industry rather than the more limited sports industry. Following on from this view, when developing a new stadium (particularly in a green field site) the club may also incorporate a shopping mall, entertainment facilities (cinema, indoor bowls, and casino), hotel and apartments. These features are not part of the core offer. They are not expected by fans or directly augment the product. They may however address potential expectations of fans of the future and attract other segments or groups to visit the “leisure/entertainment emporium” that has been created by the club. This wider view of what constitutes the “product” encourages marketers to adopt a more strategic view. It is not just about the core dimensions. It also considers factors that drive the product forward, to take account of changing conditions in the business environment and changing patterns of consumption and behaviour on the part of the customer (fan). The sports product is also complicated by the issue of uncertainty. This is a variable that

the sports organisation and marketers have little or no control over. They can certainly invest in better quality players, coaches and managers to boost the chances of success. However, large cash outlays do not guarantee that this will happen. Players do not live up to expectations or receive career-ending injuries that can render such investment redundant. 8.2.1

 ey Dimensions of the Sports K Product

Foroughi et al. (2016) provide a useful synthesis of the extant research on the core elements of the sports product. They can be identified as team characteristics and player performance. When we refer to team characteristics, we are focusing on issues such as the success of the team in the sports arena. This is reflected in the current position of the team in the league or competition, the percentages of wins to losses/draws, the history and heritage of the team in relation to success and current performance and the quality of player recruitment and signings. Player performance refers directly to the perceived ability of the players in the current team. How do they measure up to the task of winning: in terms of fitness levels and ability? Do they champion the style of play that reflects the history of the club and that which is demanded by the fans? This is captured in . Fig. 8.1. This can create potentially conflicting perceptions and expectations. For instance, in the case of football, iconic teams such as Manchester United, Barcelona, Real Madrid, are often successful on the pitch - in terms of winning trophies. However, fans may still have negative perceptions because the team as a whole and the quality of play from individual players does not reflect the history and tradition of the club. Specifically, this may be seen in defensive and negative tactics employed by the chief coach in the quest to succeed. Trophies may be won by using such an approach, but it may turn off fans and generate negative comments and sentiment on the social media platforms.  

191 8.3 · Innovation and Product Development

Emotion Core Product Quality Team Characteristics Player Performance

Anxiety Dejection Anger

Behavioural Intentions

Happiness Excitement

..      Fig. 8.1  Team characteristics and player performance. (Source: adapted from Foroughi et al. 2016)

The authors identify the importance of emotion in terms of influencing the behavioural intentions of the fans. Arguably sport is a product which epitomises the full range of emotions in fans. They identify five manifestations of emotions that have been pinpointed in the literature: anxiety, dejection, anger, happiness and excitement. Such emotions are closely linked to the experiential nature of the fan’s consumption of the sport. Clearly, success on the pitch (as defined by the fans in terms of their expectations) and the club (as defined by the approach to signing players) can generate positive or negative emotions in the minds of the fans. This will influence their engagement with the team. This is reflected in attendance at matches, the purchase of merchandise and visits to the website and discussion forums. Poor performances engender potential negative perceptions, particularly if this happens on a regular basis and in the worst-case scenario, finishing at the bottom of the league or experiencing relegation to a lower league. The level of identification that fans exhibit towards their favourite team will influence their perceptions and experiences. Funk and James (2001) put forward a framework which identifies the levels of engagement with sports teams. This involves four stages: awareness, attraction, attachment and allegiance. As a fan progresses through to allegiance, the level of identity increases. Highly identified fans fall into the latter stages of the continuum.

In terms of perceptions, attitudes and behaviour towards the team, the highly identified fan is more likely to accept relatively poor performance and levels of failure than those fans who do not display the same level of commitment. In summary, we need to understand the different levels or strands that associate with the sports product. Like all products there are different layers; ranging from the core element through to what the product might look like in the future. Sports marketers are faced with the challenge of continuing to make the product relevant for the fans. Although they cannot control performance and success on the pitch, they can engage with a range of strategies and initiatives to engender positive emotions across their fan-base. They need to retain the continued loyalty of their highly identified fans and create a product that attracts new segments in order to further grow that fan-base. 8.3

Innovation and Product Development

Many experts argue that a failure to innovate is a recipe for death! Unless organisations display a continuous focus on innovation it is likely that the product will become stale or moribund. Existing and new competitors will take up the challenge and bring new ideas, technologies and business models to the fore. The sports sector is no different. Individual sports that remain static in terms of the prod-

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uct, its rules and regulations and the way in taken place across all aspects of sport, rangwhich it is presented and delivered to its fans, ing from new materials, technologies, regulacannot rely on history, tradition and the sta- tions and information processes. tus quo, to further advance its cause. This Ratten (2016) notes that sport is viewed by approach is akin to an ostrich sticking its head many commentators as a multi-disciplinary in the sand. It ignores the realities of the mar- field involving a number of different functions ketplace. Change is constant. Even the most and stakeholders. Each of these parties have a successful brands will desiccate and become compelling need to deliver sports products irrelevant. that are relevant and embrace innovations. In the sports sector we see the emergence of sports that were not around (at least in international and global terms) 15–20 years 8.3.1 Collaboration ago. Mixed Martial Arts and eSports are relevant cases in point. Traditional sports have Collaboration is critical in terms of setting to grapple with the challenges of retaining and driving an innovation agenda. interest among its core fan-base and attract- Stakeholders such as the media (electronic ing the millennials and Z-generation to their and broadcasting), sponsors and sports property owners have a common desire to improve ­respective value propositions. A perusal of the general literature on inno- the quality of the product and embrace relevation indicates that it involves the use of new vant technologies and processes. Collaboration is also important in terms knowledge to change existing products and of driving forward innovations in new staprocesses, services or technologies. Some innovations can be described as rad- dium development. Typically, this involves a ical. These typically represent “game-­number of interested parties such as the changers” in so far as they redefine the product sports federation, the national or regional in new ways that were not previously available. tourist board, city planning authorities and Examples might include the “Walkman”, the government agencies. Without such collaboration, it is unlikely that radical and innovaiPhone and iTunes. However, most innovations do not have tive stadia would appear on the horizon any the same dramatic effect. In some cases, they time soon. We see evidence of this in terms of the use are refinements or adjustments to existing products. In this respect they can be described of ultra-definition cameras, location-based marketing, big data and digital marketing, to as incremental innovations. Typically, innovations can be driven by deliver the sports product experience to the reducing costs and making the product more viewers and the fan-base. Collaboration also occurs in the case of accessible for customers. It can be achieved by finding applications for existing technologies the networks and relationships with sports or by utilising new business models for intro- equipment and clothing manufacturers. Improvements in clothing for example can ducing and delivering the innovation. The sports sector, driven by the business/ increase the performance and efficiency of commercial imperative is no different. Sports individual performers. This is evidenced in administrators, property owners and market- sports such as swimming, cycling and ­athletics. Legislators responsible for the rules and ers have to constantly question the validity and relevance of their product and develop regulations of a particular sport play a signifiinnovations to keep it at the forefront in the cant role in deciding whether or not such developments contribute positively to the minds of their target markets. Potts and Ratten (2016) highlight the development of the sport. For instance, at the importance of innovation in the sports sector. Olympic Games in Sydney (2002) one of the This is reflected in the developments that have key sports manufacturers introduced a new

193 8.4 · Branding in the Context of the Sports Sector

swimsuit that considerably enhanced the performance of Australian swimmers. Subsequently such swimwear was banned as it gave them an unfair advantage.

8.4

Perspectives on Innovation in the Sports Sector

Birkinshaw et al. (2008) identify four different perspectives on the general topic of innovation: institutional, fashion, cultural and rational. Ratten (2016) attempts to place these perspectives within the context of the sports sector. In the context of an institutional perspective, the responsibility of the sports bodies and regulators plays a significant role here. They essentially become the gatekeepers as to whether new processes and developments are introduced into the particular sport. For instance, the International Tennis Federation is grappling with the challenges caused by final set matches continuing on, without the introduction of a tie-break to bring the game to an end. In 2010 the longest ever match at Wimbledon took place. After 11 hours and 5 minutes, John Isner beat Nicolas Mahut. It was spread over 3 days, partly due to weather conditions. Commentators complained that it put undue physical stress on players and TV companies were annoyed because it disrupted their schedules. Some fans were also discommoded when missing train connections. The problem reoccurred at Wimbledon in 2018. John Isner (again) was involved in the semi-final against Kevin Anderson. I guess the lesson for players is, do not end up playing Isner! This time he lost after starting the match at 1 pm and finally leaving the court at 8 pm. Many people argued that this was unfair to the actual winner because both players were physically exhausted and Anderson was in no fit condition to play the final, having only 1 day to recover. Inevitably he lost in straight sets. The Wimbledon organisers have ruled that the final set of any match in the future should

finish with a tie-break if the players are level at 12–12 games each. Although this might sound relatively minor in the greater scheme of things, this adjustment to the tie-break rule is intended to provide a more comfortable environment for all of the stakeholders. The fashion perspective relates to new materials and dress codes. The sport of cricket traditionally was played in white shirts and flannel trousers. The test format still adheres to this procedure. However, shorter versions of the sport have long introduced coloured garments in order to literally brighten up the spectacle and reflect the times that we live in. Better designed golf equipment, which make use of lighter and more powerful material has radically changed the way that golf is played at the top level. Players are driving the ball so far now that some championship courses (and the legislators) have to extend the distance of some of the holes to make the game more challenging. The culture perspective addresses the different ways in which society, sports property owners, clubs and fans react to the concept of the new innovation and ideas. Technological innovations such as Hawkeye (in tennis, rugby and football) have considerably reduced the errors that have been traditionally made by referees and umpires. Some sports have embraced such technology quickly. Others have done so reluctantly, for example, the Indian Cricket Board. FIFA and UEFA (football) authorities were slow to take on the concept of the Videoassisted referee (VAR). Some fans have been supportive of it. Some TV companies have criticised it for the delays that are caused. With sport being so profitable at the elite level however, it is hard to argue against something that will minimise (not eliminate) errors. The rational perspective refers to the practicality and feasibility of introducing the proposed innovation. For instance, golf authorities are grappling with the need to make some innovations to the traditional way in which golf is played. Membership levels are dropping off as people find the challenge of playing 11 holes too time consuming. This is

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particularly so for teenagers. The authorities are beginning to introduce shorter versions of the game in order to attract new players. Because sport appeals to the emotions to such a strong degree, there is a danger that by tampering too much with the essence of the individual sport, marketers and administrators have to tread a careful line between upsetting traditional fans and attracting new segments. The more traditional the sport, the greater the likelihood that this may happen. History, tradition and heritage may have to be compromised in an attempt to take the sport forward. This can result in alienation of certain categories of fans. While they may be upset and drift away, the reality may suggest that a failure to attract younger or family seg-

ments could lead to the demise of the sport over time. By contrast, relatively “new” sports have emerged and do not have to deal with such issues as history, tradition and heritage. Mixed Martial Arts (MMA) has emerged and ­established itself as a very popular international sport by combining the best of sports such as boxing, karate, wrestling, judo and kickboxing. Arguably it has conceived a compelling product that has attracted a widespread audience and fans across many geographic regions of the world. By using aggressive marketing, based on narratives around competitors such as Conor McGregor and controversy, it continues to capture increasing numbers of fans and media attention.

8 Whoopy Do

Wearable technology has been the “hot” area for many people who are involved in sport from grass-roots to elite level for the past decade or so. Since 2004 when the Australian Rules Football (AFL) teams embraced activity tracking of their players, it has become the “musthave” for many active sports people. The Fitbit has arguably been the most successful and ubiquitous product. Founded in 2007, it now has over 12 million users worldwide. However, it would be wrong to perceive the Fitbit and its attributes as being the “state-of-the art” product any more. At elite level, sports teams have, in tandem with the science and medical profession moved on considerably in terms of sophistication and areas of application. Whoop is at the forefront of usage. It is a wristband product and performs a number of functions that can help players, coaches and nutritionists programme personalised fitness and health strategies for their individual players. It monitors heart rates, sleep patterns and levels of fatigue. It tells coaches how close players are to their peak fitness levels and also aids in designing customised recovery programmes. It certainly does not win on appearance: it consists of a simple nylon band! Once it is set up

via the app, it captures a wide range of data analytics on the athlete. So much so that it is the official recovery wearable of the NFL players association. The administrators of the Major League Baseball (MLB) sport also allow it to be used during games. Other products such as the Catapult Sports Optimeye S5 measure areas such as acceleration, direction and the impact of collisions. Sport has advanced from the days when someone would run onto the pitch with a sponge to revive players! Other technologies such as virtual reality and augmented reality offer opportunities for sports stakeholders to improve the customer experience. More work needs to be done however to make them more practical and “userfriendly” for fans and viewers. Large and cumbersome headsets being a particular offputting feature. Sports marketers are looking at the pros and cons of allowing fans and the media an opportunity to access such data. For the former, it would mean that fans could gain even closer access to their players. For the latter it would provide more big data on teams and tactics.

195 8.5 · Branding in the Context of the Sports Sector

8.4.1

Exercise

??Assess the dangers that might result from widening access to such data on players?

8.5

Branding in the Context of the Sports Sector

Commensurate with the emphasis on commercialism and monetising the sports assets, it is not surprising that the concept of branding and brand equity has entered the sports sector lexicon. Respectable sports clubs, organisations and sports property owners see the building of the brand as being central to their future ambitions and targets. In this section we examine the process of evolving a product to a brand. We first have to ask ourselves what we mean by the term “brand?” At a basic level a brand is simply a means of identification. It is a basic point of differentiation that allows people to recognise the product from competitive brands. This can be captured in the name, symbol, website or logo. However, identification alone means nothing. Just because a person might recognise your product, does not mean that they will purchase it or make a commitment to continue buying it in the future. It may not even register as part of the consideration set. Without proper development of the product in terms of relevant attributes and benefits that are pertinent to the target market, it is unlikely to move higher in terms of a customer’s perception and assessment of its qualities. Making the product stronger and establishing credible associations and credentials is the challenge facing all marketers. Building a strong brand revolves around a value proposition that distinguishes it from competitors. This is crucial in terms of encouraging customers to purchase the product again and again and fall into that category that we refer to as “loyal customers”. Brand loyal customers are critical to any organisation in terms of developing its overall business

assets and becoming even more profitable. Any decline in numbers from this quarter inevitably leads to a loss of revenue and market share. It also puts pressure on the organisation to identify new potential customers – in many cases a very costly exercise in terms of marketing budget requirements. 8.5.1

Brand Equity

Brand equity refers to the level of goodwill that the brand has developed over the course of time. This is  typically encapsulated in strong customer perceptions and attitudes towards the brand, positive word-of-mouth about it and high levels of brand loyalty. For branders there are clear benefits. The customer exhibits strong degrees of confidence and trust in the brand. In many cases they are willing to pay a premium for these benefits. They can provide the brander with a cushion in the event of a recession as customers are unlikely to switch to cheaper brands. Customers also align themselves closely to such brands: they see the brand in many ways as representing their lifestyles, aspirations and behaviours.

8.5.2

 rand Equity and Keller’s B Framework

Richelieu and Lessard (2014) argue that the brand is the most important asset of any sports club, team or sports property. The stronger the sports brand, the greater the likelihood that it can generate higher revenues and profit over time. The sports brand values and associations also provide direction for the club, an identity for the fan-base and a point of interest for the media and existing and potential sponsors. Keller (2013) developed a framework that provides us with an understanding of how consumers respond and engage with brands. This is captured in . Fig. 8.2.  

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Relationships What about you and me?

Resonance

Judgements/Feelings

Response What about you?

Performance/Imagery

Meaning What are you?

8 Identity Who are you?

Salience

..      Fig. 8.2  Building the brand. (Source: Adapted from Keller 2013)

The model poses four critical questions that customers are likely to raise, either consciously or sub-consciously about the brand. He identifies six so-called “building blocks” that the brander has to put in place in order to achieve resonance (the top of the pyramid). This should lead to a successful brand. At the bottom we need to create salience that is the basic challenge of creating awareness. ­Without this, the brand will make an insignificant impression in the minds of potential customers. You are also challenged to identify why the brand is relevant to such customers. You need to highlight the attributes that make your brand stand out from competitors. As we move up the pyramid, we are tasked with communicating what your brand stands for - its values and associations: performance relating to how well the brand performs (primary characteristics and features, service effectiveness, efficiency, empathy and price). We also consider how the brand meets the customer’s experiences either directly or from word-of-mouth imagery. The third step in the ladder refers to how the customer thinks and feels about your

brand. They make judgements on issues such as credibility, quality, and the degree of superiority over competitive brands and so on. They may be accurate or inaccurate. The extent and level of feelings that customers exhibit about your brand is another important element. Feelings can be positive or negative (or a mixture on a number of areas). Typically, such emotions are expressed on elements such as: warmth, fun, excitement, security, self-approval and self-respect. Again, branders have to reflect on these issues, assess how well or badly they are addressing the key concerns, judgements and feelings, and respond accordingly. The top of the pyramid is where the brander ideally wants the brand to reside. Not surprisingly this is not an easy task to achieve but it is ultimately worth the investment as customers in this category form a very deep relationship with the brand. Keller (2013) pinpoints four manifestations of this relationship: 55 Loyalty: in terms of visible commitment, measured by repeated purchases of the brand

197 8.5 · Branding in the Context of the Sports Sector

55 Attachment: extremely positive attitudes about the brand, the ultimate being a “love” of the brand 55 Sense of community: a sense of belonging to a club or community with like-minded people 55 Active engagement: where customers actively engage with the brand, not just when purchasing it. This is manifested in them visiting websites, blogs and discussion forums, sharing their experiences online and so on. 8.5.3

 rand Equity in the Context B of the Sports Sector

Marketers face a continuous challenge to maintain and reinforce brand equity with its target market(s). If standards slip in key areas that are relevant to customers and are not addressed, then loyalty will ebb away. Likewise,

if other brands make more appeal and address the needs and expectations of customers more fully it is also likely that the equity will weaken. Naik and Gupta (2013) have developed a variation of the original Keller model to reflect equity in the context of the sports sector. They call this the “fan-based brand equity pyramid”. . Figures 8.3 and 8.4 capture their thoughts in this “re-worked” model. The authors consider earlier work by Gladden and Funk (2002), Bauer and Sauer (2005),  Ross (2006), Stockburger-Sauer and Exler (2008) and Villarejo-Ramos and Martín-­ Velicia (2007) in this revamped framework. They argue that previous studies only “focused either on the development or measurement of teams’ brand-equity focusing only on brand awareness, brand associations or brand knowledge. These frameworks had also restricted themselves by not taking a holistic view of responsibility of teams’ man 

Loyalty Attachment Commitment Engagement Social Responsibility

Consequences Fan Loyalty Merchandise Sale Jersey Rights

Quality Credibility . Superiority Consideration

Team Reliability Team Effectiveness Team style Ticket Price

Warmth Fun Excitement Security Social Approval Self-Respect

Fan Demographic Factors Fan Psychographic Factors . Mode of Sports Consumption History/Performance of Team

Hierarchy of Intent and Needs Satisfaction

..      Fig. 8.3  Fan-based brand equity pyramid. (Source: Naik and Gupta 2013)

Media Exposure Ticket Sales

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4.

Relationship–what about the team and fans?

3. Fans-Team

Responses–what about the team?

Resonance 2. Fans Judgement

Team Performance

Fans Feelings

Meaning–what is the team?

1.

Team Imagery

Identity–who is the team?

8 Team Salience

..      Fig. 8.4  Building the sports brand. (Source: Naik and Gupta 2013)

agement towards fans and society in order to attract and retain loyal fans” (p33). . Figure 8.4 identifies the four key questions which have to be addressed as we move up the pyramid: team identify, team meaning, fan responses and the fan-team relationship. Let us look at each one in more detail.  

Team Identity  Much of the earlier research

focused on the identity of the team as opposed to fan identity. Team identity creates and develops brand awareness. This in turn builds brand salience as the fan becomes more familiar with the team and its attributes. Brand salience contains two dimensions: depth and breath. The former refers to the level and ease of recall in the mind of the fan, about the team. The latter encompasses some broader issues such as the fans top-of-mind and consumption-­related behaviour. Team Meaning  In terms of building the

attraction of the brand to the fan, two dimen-

sions are highlighted. They are in line with the original model as developed by Keller (2001). They are team performance and team imagery. The former refers to the functional and performance-­ related fan associations. The latter refer to the abstract and imagination-related issues. Both dimensions relate to the likelihood of fans increasing their loyalty to the team. This is reflected in a stronger propensity to make more purchases, for example, merchandise. They also reflect the fans perceptions and attitudes to the quality of the team performance on the pitch and the level of entertainment which they provide. This also relates to the general reliability of the team with respect to the percentage of games won ratio. Team imagery by definition is more abstract. Naik and Gupta (2013) suggest that “intangible and abstract meanings can be broadly classified into categories dependent upon fan demographic factors (fans gender, race, ethnicity, income, marital

199 8.5 · Branding in the Context of the Sports Sector

status), fans psychographic factors (attitude towards sports/life, social issues, possessions, careers or political interest), mode of consumption of sports (stadiums, television, online, mood of the fans, time or day of the interaction with the team), fans personalities and their values, and finally the past history or performance of the team under consideration” (p35). Fan Responses  Here sports marketers need to gain an insight into the feelings and judgements that fans hold and make about the team. This builds upon the building blocks of performance and imagery at the previous level on the pyramid. Judgements reflect the more rational perceptions  -  based on level of success (win ratio), quality of play and so on. They represent perceptions based on what the fans heads are telling them. By contrast feelings represent the softer dimension (perceptions based on the “heart”). Such feelings revolve around issues such as warmth, fun, excitement and so on. This aspect is important for sports marketers in terms of identifying how fans evaluate the team and its associated products and services such as merchandise, stadium facilities and so on. This in turn reflects how loyal they are, or capable of becoming. Fans-team relationships  This takes us to the

top of the pyramid and reflects the strength of the resonance or bond between the team and the fan. They identify a number of categories such as behavioural loyalty, sense of community, attitudinal attachment, and level of active engagement and so on. The consequences arising from building a strong brand equity are reflected in a number of positive outcomes. From the perspective of sports marketers, areas such as level of fan loyalty, extent of merchandise sales, value of shirt advertising rights, increased media exposure and ticket sales should generate increased revenue streams as a consequence of building the brand. Although not mentioned in the re-­ worked framework by Naik and Gupta it can also be argued that heightened revenue can be generated from better sponsorship deals, enhanced stadium naming rights and more lucrative international opportunities to generate increased revenue.

8.5.4

 uilding Brand Loyalty - Sports B Team Brand-Equity Index

Building loyal fans is critical to the development of a successful sports team. This is helped to some extent by the presence of passion and commitment which feature heavily in many cases in the minds of fans. The challenge is to build on this passion and generate as many loyal fans as possible. In the previous section we discussed the importance of building brand equity. Here we develop our assessment of the importance of creating scales to help sports marketers gain a better understanding of fans perceptions, attitudes and opinions about sports brand. Practical questions include the following. What are the key measures that we can use to provide us with such an understanding? Much of the previous work in the area of brand equity was based around traditional, product (as opposed to service-dominant) brands. Such frameworks and scales failed to adequately address the intangible dimensions. In particular, traditional approaches did not address the experiential dimensions that are critical in the context of sport. Similar to the research conducted by Naik and Gupta. Yousaf et al. (2017) have built on previous research to develop a measurement tool which they call the Sports Team Brand Equity index (STBE). They identify four dimensions: beginning with brand awareness and moving towards team loyalty. This is captured in . Fig. 8.5.  

Team Loyalty

Brand Associations

Team Performance

Brand Awareness ..      Fig. 8.5  Sports Team Brand Equity Index (STBE). (Source: Adapted from Yousaf et al. 2017)

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Building on earlier work by Diamantopoulos and Winklhofer (2001) they identify brand awareness is the starting point and reflects the degree of awareness of a particular team on the part of the fan or viewer. Team performance addresses two dimensions: team performance and team rivalry. In the case of the former, it is an amalgamation of past performances, the quality of the playing squad and so on. Team rivalry explicitly recognises the importance of competition and the resulting intensity, between rivals. Most fans relate their team to a rival – usually their main perceived competitor (could be city-­based or based on traditional rivalry). Rivalry can also occur at the individual level (athlete versus athlete). For instance, great rivalries can be found in most sports. Examples include Federer versus Nadal and Djokovic (tennis) and Froome versus Thomas (cycling). Rivalries can occur also at team level. Examples include England versus Australia in cricket, Argentine and Brazil in football and so on. Brand associations refer to those features and attributes that fans associate with a brand. They also evoke a combination of positive or negative feelings about those associations. These associations can be both team-related or non-team related. The relationships that the fan has with the team are also supplemented by the level of engagement with other like-minded fans. Thus, we can see the importance that such engagement plays in shaping the level of identity held by the individual fan. High levels of identification positively influence the degree of team loyalty. Yousaf et al. (2017) put forward an eight-­ item index to identify the range of variables that impact on the degree of strength of sports brand equity. They are identified in 7 Box 8.1. Using a five-point scale, sports marketers could use this framework to examine the issue  

of brand perceptions and attitudes in the context of identifying the strength of the brand. We should however be careful about blindly accepting such frameworks (helpful though they might be). In this case the authors pinpoint some deficiencies. Firstly, it looks at only one sport: the Indian Premier League (IPL) within one state in that country. It predominantly focused on a male-based respondent and only analysed the youth segment of that market. It is difficult therefore to draw generalisations to other sports and cultures. However, it provides a working framework that can be to the benefit of sports marketers in understanding the relationships between their respective fan-bases and the sports brand.

Box 8.1  STBE Index Items 55 The symbol of Team X is unique and I can recognise it among competing brands 55 Team X is very successful in Event Y 55 Team X does very well against their rivals 55 Team X has a history of winning 55 Team X has the best coach for the team 55 I am able to see friends because of Team X’s matches 55 I consider myself a loyal fan of Team X 55 Being a fan of Team X is a large part of who I am. Source: adapted from Yousaf et al. (2017).

8.6

 he Most Valuable Global T Sports Brands

At the time of writing, the most recent figures available which identify the top ten most valuable brands are to be found at the following link: 7 https://www.­i nvestopedia.­c om/insights/ most-valuable-sports-teams/ They are as follows (. Table 8.1).  

 

201 8.7 · Sports Brands and Brand Extensions

..      Table 8.1  Most valuable sports brands 1. Dallas Cowboys (NFL) 2. New York Yankees (MLB) 3. FC Barcelona (Football) 4. Manchester Utd (Football) 5. Real Madrid (Football) 6. New England Patriots (NFL) 7. New York Knicks (NBA) 8. New York Giants (NFL) 9. San Francisco 49ers (NFL) 10. Los Angeles Lakers (NBA)

$4.2 billion $3.7 billion $3.64 billion $3.6 billion $3.58 billion $3.4 billion $3.3 billion $3.1 billion $3 billion $3 billion

Source: 7 https://www.­investopedia.­com/insights/ most-valuable-sports-teams/  

It is worth noting that despite the success of football in Europe and globally, only three such brands reside in the top ten. Four of the top ten brands come from NFL - despite the limited nature of the appeal of this sport globally. The number one brand: Dallas Cowboys, has not won an NFL championship since the 1990s. Its value is largely attributed to its stadium which opened in 2009. It sold the naming rights for the stadium for $400 million in 2013. The prominence of 70 per cent of the top ten brands from the USA reflects the value of the three main sports there: NFL, baseball and basketball. Media rights and sponsorship deals are also reflected in the value of these brands. 8.6.1

Exercise

??Update the list in 7 Box 8.1 from sources that you can find on the Internet. Reflect on any changes that have taken place on the list (new entrants and/or absentees). Assess the potential explanations as to why any changes have occurred.  

8.7

 ports Brands and Brand S Extensions

As sports clubs, organisations and event property owners further pursue commercial opportunities in order to monetise revenue, the concept of a brand extension strategy begins

to figure more prominently in their line of thinking. The concept of band extensions flows initially from the success of building the brand in a particular product category. The brand has achieved high levels of success and recall in terms of revenue that it becomes feasible to make use of that brand name to associate with other product categories or sectors. Traditionally this involved sports clubs opening retail stores in order to create dedicated space to sell club merchandise and paraphernalia. Theory would suggest that by extending the brand name to other areas, the club can benefit from the high levels of recall and positive brand associations. This ­(hopefully) is reflected in increased revenue from the new product category. Walsh and Ross (2010) draw a distinction between brand extension strategies and licensing. In the case of the former it means the direct use of a pre-existing brand. Licensing on the other hand involves a separate company making use of the brand image, logo and so on, for a payment fee and on-going royalties. Brand extensions DO NOT involve such outside companies. Much of the potential success of extending the brand into new product categories will depend on the level of strategic fit that exists between the established brand and its application to a new product category. For instance, let us go back to our previous example where the sports club opens up some physical retail outlets in the home city and in strategic cities globally, where there is evidence of substantial support for the team. One could argue that there is a reasonably close fit between the football team brand and its name on retail merchandise stores. This should lead to synergies between the two brands. However, if a sports team places its brand name on a restaurant chain, it could be that there is a distant relationship between the two brands. This can lead to confused perceptions and attitudes of fans. In some cases, it might anger fans who see such as venture as a waste of time, costing money and leading to a failed business venture: where such investment could be better spent on new players.

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Sports brands with a strong brand equity are in a potentially stronger position to build on this. They can leverage the positivity associated with the brand to such extensions. By contrast, brands with weaker equity may struggle to gain traction in the mind of the target markets and run a higher risk of failure. Sports marketers also have to grapple with the potential risk of diluting the value of the original brand if it is applied to extensions that are inconsistent with the original brand values and associations. This is often referred to as the Bookkeeping model. This can create the effect of fans modifying their beliefs and attitudes to the brand. Walsh and Ross (2010) also refer to the Typicality model. This covers situations where there is a potentially close strategic fit between the original brand (the football club) and the brand extension (retail merchandise stores) but where inconsistent associations can still emerge. In this hypothetical case, if the club is predominantly supported by fans from a working-class background and it begins to sell expensive, upmarket merchandise and accessories (e.g. upmarket male and female beauty products), then negative changes in perception and behaviour might occur. In this situation it might be argued that the club, in its quest to generate more revenue and margin is at risk of alienating its traditional fan-base. Further research conducted by Walsh and Ross (2010) indicates that the threat of brand dilution is reduced with brand extension strategies. Much will depend on the level of identification that the fan-base holds with the team brand. Fans with higher levels of identification are less likely to change their perceptions and behaviour. By contrast, fans with lower

levels of identification are potentially likely to modify their behaviour. This suggests that marketers can pursue brand extension strategies without having to worry unnecessarily about diluting the original brand equity. Such strategies would need to be supported by positive marketing campaigns, particularly in areas of digital marketing and viral marketing. Fans with high levels of identification, arguably, are more likely to transfer such positive feelings to a brand extension venture. If the club moves away too radically from its core brand values and associations then it runs the risk of antagonising some fans with lower levels of identification. Arguably, they should focus on product categories and areas that are associated with their product. Apostolopoulou (2002) identified five areas where sports team brands might consider brand extensions. 1. Sports-related (e.g. retail stores selling sports merchandise). 2. Entertainment-related (e.g. restaurants, craft beers). 3. Media-related (e.g. newspaper, TV channel). 4. Information-related (website, data mining). 5. Low perceived fit extensions (opening cinemas, airlines)! Clearly as we move into category five (above) there is a high degree of risk associated with such ventures. As well as alienating fans, there is also a probability of high losses in terms of investment. In an era of constant focus on monetisation opportunities it is increasingly likely that we shall see more brand extensions going forward.

FC Barcelona: Onwards and Upwards

Barcelona football club is one of the best-­ known and successful brands in world football. Founded in 1899 in Catalonia in Spain. It has become a powerful social brand in the context of its importance to the overall Catalonia region and its quest for independence. It is the fourth most successful brand in the world and is estimated to be worth over $3.6 billion.

Its global popularity is reflected in its social media following, estimated to be among the biggest in the world from the perspective of sports brand. It claims to have over 100 million followers globally on its Facebook pages and millions more follow them on Twitter. It has over forty-seven partners: the main ones being Nike and Rakuten.

203 8.8 · Co-branding

It has established numerous product lines and extensions. These include its Megastore and Museum. The latter, in particular, focuses on issues such as Multimedia Zone and Museum Space Messi.

??1. H  ow viable is the opening of the FC Barcelona travel agency business? 2. How could this be extended into other areas related to travel and the club?

8.8

Co-branding

Co-branding has become another vehicle for generating an increased revenue stream for both parties in the arrangement. This revolves around the concept of collaboration between two independent brands that come together to be used on a single product or service. This is different from the brand extension concept discussed in preceding paragraphs. In the latter case it involves leveraging of an existing parent brand which was used on a new product line or category. In essence it is a form of strategic alliance between two brands. (See Tsiotsou et al. (2014)). In the context of sports, a team brand can potentially work well with unrelated brands (in terms of sports) but which may have similar characteristics in their respective brand personalities. For instance, a successful team (in terms of winning trophies and competitions) could consider co-branding with a

In 2015 it opened its own travel agency. This allows fans to book tickets to travel with the players to away games.

brand which also exhibits such characteristics, for example, a sports equipment brand that is perceived by its customers as being the “best-­ in-­class” and which is endorsed by successful athletes. In both cases the common link is built around winning, success and top performances. This example is based on two brands that are clearly sports-related. In situations where sports and non-sports related brands come together it may be more problematic if strong strategic fit can ensue. Much of the existing research has focused on non-sports related situations. Lee et  al. (2016) provide a substantive review of the extant research in the sports category. They cite the work of Wu and Chalip (2013) who examined two cases of sports and non-sports brands becoming involved in a co-branding exercise. These included Nike and Adidas (sports) and Ralph Lauren and Tommy Hilfiger (non-sports). The male respondents did perceive a positive image transfer from non-­ sports brands to sports brands. However, in the case of female respondents, no significant influences came into their assessments.

J’aime Paris

One of the most interesting and long-­lasting co-branding strategies involves Paris St Germain (PSG) and Nike. The former is a French football team which was founded in 1970. The latter is one of the most successful and iconic brands in the world. The fortunes of PSG changed irrevocably in 2011 when a wealthy Qatari consortium purchased it. Its President, Nasser Al-Khalaifi immediately declared that he wanted the club to become a leading global sports brand.

On the field this ambition was reflected in over $1 billion being invested in improving the squad. In terms of achieving the ambition of making it a truly global sports brand, the club adopted a strategic perspective in terms of seeking out global co-­branding opportunities. Its long-term involvement with Nike is reflected in some of these ventures. In September 2018 it entered into a co-­ branding agreement with the  Jordan brand (owned overall by Nike). The team wore a spe-

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cially designed kit for its European Champions League games during the 2018–2019 season. It wore the Jumpman logo on the kits. It involved a three-year deal with the Jordan brand  –  where no other football team could feature the brand. On opening day of the partnership it sold out the entire stock of 5000 items from its online site. Over the next few days it also sold 20,000 items through stores in Paris, Tokyo and Doha. In essence PSG wanted to expand its operations into the fashion sector to solidify its position as a global sports brand. From the perspective of marketers working with the Jordan brand they wanted to expand its business away from its original basketball roots (Michael Jordan in the 1990s onwards). Working on the various linkages between lifestyle, fashion and football also meant that the city of Paris could be used. Paris is perceived by many people as one of the most cultural, historic, fashion-conscious and vibrant cities in the world. This involvement is reflected in other co-branding initiatives. In 2015 PSG combined with Levis to launch the Levi PSG Trucker jacket. The team name appeared on the back of the jacket and its logo featured on the left shoulder. Two years earlier PSG partnered with Hublot, the Swiss watchmaker, to launch a PSG-branded King Power Watch. The players subsequently modelled the watch at a Hong Kong fashion show as part of their pre-season tour to that region. In 2014 Hugo Boss, the German fashion brand became the club’s official tailor. The players wore the suits at all home games as well as European Champions League matches.

??1. A  ssess the co-branding strategies employed by PSG. How successful do you think they have been? 2. To what extent would you  agree with the view that the club is entering into areas that they know nothing about. Is there a danger that by entering into such co-branding relationships it could deflect away from their core business?

In 2015 another partnership with the Japanese street wear label SOPHNET led to a range of leather jackets, hoodies and sweatpants being launched. 2017 witnessed two further significant co-­ branding strategies. PSG appeared during the Paris Fashion week with a set of jerseys that were worked into a number of designs by the French label, Koche. Shortly after, as part of the Rolling Stone’s World Tour (UK band) it launched a fashion collection featuring the colours of PSG (red and blue) combined with the band’s famous “tongue and lips” logo. This partnership was set up by Bravado, the branding part of Universal Music. PSG take the view that such initiatives address a number of objectives. Firstly, it takes the brand away from the football and sports sector to a wider and broader strategic space. The coming together of football, fashion, lifestyle and so on helps the club to position itself as a global brand. It opens up new audiences and in particular a younger target market. The club has also made extensive use of celebrities or “influencers” to reinforce its branding strategy globally. People such as Beyoncé, Kendall Jenner, Naomi Campbell and Rhianna have featured prominently. PSG is a good example of a team brand that has sought to expand its awareness and potential to a wider audience than simply the football fraternity. Although lacking the heritage and history that is associated with older football team brands such as Manchester Utd, Real Madrid and Bayern Munich, it has tried to circumvent this by linking closely to the heritage of Paris and its cultural history. (Source: Developed by the author)

8.8.1

Pros and Cons of Co-branding

Co-branding strategies share many of the upsides and downsides that are associated with brand extension initiatives. Arguably the risks are somewhat higher as they bring two unrelated brands together as opposed to extension strategies where the parent brand attaches its name to the new product.

205 8.9 · Conclusions

Among the potential advantages include the fact that risk is shared between the two brand owners. It also allows the sports team/ organisation to project its brand values and ­associations to a wider audience. This is also reflected in the move away from simply being positioned in the sports sector. Increasingly, fans coalesce around leisure, lifestyle and celebrities as their expectations rise and sporting experiences change. Provided due care is paid to looking for synergies and a strategic fit between the brands, then possible risks of failure can be reduced. As noted previously, too many ventures can irritate fans who see this as a “money-grabbing” attempt by the club - particularly if ticket prices continue to escalate. However, more research on this topic is required, before any definitive judgement can be made.

8.9

Conclusions

In this chapter we examined the role of product development and branding within the context of the sports sector. The key driver for the focus on brand development has come from the inexorable shift towards commercialisation. Sports clubs and organisations have to seek more creative ways of monetising their business operations. The concepts of brand building and brand equity have seamlessly transferred from the traditional industry sectors to professional sport at the elite end. We examined the challenges involved in building up sports brand equity. One issue is the intangible nature of the brand – common to many similar service-dominant products. The level of identification of fans with the team is identified as a critical influence in terms of building brand awareness and moving to active loyalty and strong engagement. We acknowledged the importance of product development and innovation in the context of the sports sector. Sports which fail to address the challenges of keeping their product fresh and relevant run the risk of losing their audiences and fans to new and emerging

sports. The reality is that fans change over time in terms of their perceptions, attitudes and consumption of sport. Established sports such as boxing are in danger of being superseded by Mixed Martial Arts (MMA). Cricket, another sport rich in history and longevity is faced with the challenge of relevancy for the younger generation. Faced with this challenge, cricket authorities have responded by creating new versions of the game - in particular the “20:20” product. This is played over a three-hour period and has been aimed at the family segment. The English cricket authorities have devised another product called the “One Hundred”. Both versions address the need to shorten the duration of the game  -  international test cricket is played over 5 days! We recognised the contribution of key stakeholders in shaping product development and innovation in the sports business. The media, for instance, can shape pragmatic considerations such as the duration of a game and the technology employed to reduce the possibility of referee or umpire error. The use of pyrotechnics such as fireworks and music also increase the levels of excitement among fans attending live events. Sports product and equipment manufacturers, working in tandem with sports administrators and authorities, can also improve the quality of performance of athletes and heighten the quality of the overall product. Traditional marketing strategies, such as brand extensions and co-branding, have also featured prominently - again a manifestation of the focus on commercialism. Learning Outcomes 55 The sports product needs constant refinement, adaptation and innovation in order to remain relevant to the changing needs and expectations of fans 55 The sports product typically falls into the “service-dominant” category 55 The core sports product is heavily influenced by the team characteristics and player performance

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55 Incremental innovation tends to be more prevalent than radical innovation in the context of sport 55 Innovation in sport is characterised by collaboration between the stakeholders in the industry 55 Innovation typically reflects a number of perspectives such as institutional, fashion, culture and rational 55 Keller’s original brand building framework can be adapted to the sports sector, reflecting issues such as team identity, team meaning, fan responses and fans-team relationships 55 Successful sports brand extension strategies typically involve a close strategic fit and synergies 55 Co-branding strategies work well where the values of the unrelated brands have a close strategic fit. If this does not happen there is a risk that the outcome may lead to a dilution in the respective brand images.

??End of Chapter Discussion Questions 1. Assess the view that if sports organisations fail to innovate they will die. Use TWO examples to support your point of view. 2. Examine the challenges facing sports clubs when attempting to introduce innovations to their overall sports product. 3. Evaluate the view that radical innovation is unusual in sport and that incremental innovation is more common and appropriate. Use TWO examples to illustrate your views and opinions.

4. Identify some of the key factors which influence the fan’s perceptions and attitudes to a sports brand. 5. To what extent would you support the view that sports brand extensions divert the club away from more important decision areas such as investing in the stadium facilities and in the team. Use TWO examples by way of illustrating good or bad practice. 6. Assess the pros and cons of using co-­ branding as a viable marketing strategy for sports clubs and organisations. 7. Some commentators argue that successful innovation in the sports business is all about collaboration with other key stakeholders. How valid is this perception? Support your response with TWO examples. 8. An Asian billionaire has purchased a German football team which plays in the Bundesliga (the premier league in Germany). It has enjoyed moderate success: reaching the European Champions’ League group stages twice in the last 15 years. It has consistently finished in the top half (but outside of the top four) eight times in the past 10 years. The new owner has a stated aim of establishing this club as a global brand - with particular focus on the Asian market. As a sports marketing expert, what advice would you provide to him?

Appendix

I Want to Ride My Bicycle

Introduction For decades cycling in the UK at the elite level of sport did not exactly generate much success at the Olympic Games; arguably the barometer of measuring success (by winning medals). Since the British Cycling organisation was set

up in 1959 it achieved only one medal at successive games up to the early 2000s. This was to change dramatically at the Beijing Games in 2008 where UK cyclists won eight of the ten medals available on the track cycling events. This was matched once again at the next

207 Appendix

Olympic Games in 2012 which was held in London. The 2004 Games in Athens was actually the beginning: cyclists won two medals and this marked the change in profile for the sport of cycling. This was their best performance since 1908. Why have we witnessed such a turnaround in the sport? This was not a “one-off ” achievement. In the 2016 Games at Rio de Janeiro the UK cycling team once again dominated proceedings by winning 12 medals: eight of them in the “gold” classification. Likewise, with respect to road cycling, UK cyclists achieved tremendous success in the Tour de France; the premier road race in the calendar. In 2012 Bradley Wiggins became the first UK cyclist to win this event, with another cyclist. Mark Cavendish also finishing prominently. Their team - Team Sky then proceeded to dominate subsequent editions of the Tour de France. Chris Froome has won the event on four occasions: 2013, 2015, 2016 and 2017. Another team member of Sky, Geraint Thomas, from Wales, continued the British domination of this event by winning it in 2018.  he Arrival of David Brailsford T In 2002 British Cycling appointed David Brailsford as the overall Performance Director. He had always been involved in cycling and started his career as an export sales manager for a bike company in Yorkshire. He also competed as a cyclist. He started with British Cycling as an advisor when the UK Lottery was introduced in 1997. This formed the basis for the funding of sport in general in the UK.  Cycling received substantial funding from this source. It established its headquarters in the city of Manchester. As well as locating its offices there, it gradually developed facilities such as a velodrome and training facilities. During this time Brailsford also qualified with an MBA which stimulated his thoughts in the direction of strategy.

 he Philosophy Adopted by David Brailsford T Brailsford applied a deeply analytical and strategic approach to his new position at British Cycling. Always an avid reader of management techniques and principles, he was particularly influenced by the Japanese approach to quality management and innovation. Theories such as “kaizen” was prominent in his thinking. Kaizen, also known as continuous improvement, is a longterm approach to work that systematically seeks to achieve small, incremental changes in processes in order to improve efficiency and quality. This approach was used extensively in Japanese manufacturing. Companies such as Toyota were to the fore in promoting this approach to quality management back five decades ago. Brailsford analysed the sport of cycling and set about working on the “theory of marginal gains”. In essence, this was based on the Japanese principles of “kaizen”. From his analysis of the sport, Brailsford strongly believed that if you can break down each element that goes into making a bike and performing on it in competition, you can identify areas for marginal improvement within each step in the process. If you can subsequently develop improvements in such areas, this can give up a 1 per cent increase in performance. This can make you more competitive and allow you to achieve success. In a sport such as cycling where the thinnest margin can lead to success Brailsford argued that this could lead to substantial gains overall. He applied this philosophy with rigour. This was demonstrated in a number of different ways. Such instances included the following: 55 He experimented with a wind tunnel. Initial analysis indicated that the typical bike used in professional cycling was not sufficiently aerodynamic 55 He identified that a simple thing like dust on the floor of training areas undermined bike maintenance. He had the floors painted to identify such impurities. This led to improvements in the performance of the actual bikes

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55 He insisted that cyclists used anti-bacterial gel to cut down on infections 55 He worked closely with engineers and scientists from a number of companies to derive improvements in the design of the bike. This was predicated on the belief that better design and more innovative use of materials in their construction can generate significant improvement in terms of speed and overall performance relative to the competition.

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A good example of this focus on partnerships with other companies is demonstrated in an agreement that British Cycling entered into with Cervelo, a bike supplier, in 2014. This occurred long after Brailsford had left British Cycling and moved to Team Sky. This partnership took the form of a five-­year agreement where R&D personnel from both organisations worked jointly to develop, design and manufacture the fastest bike in the world. Proof of the success of this venture was demonstrated in the 12 medals won at the Rio Games in 2016. The following quote from an interview with Brailsford encapsulates his approach. “By experimenting in a wind tunnel, we searched for small improvements to aerodynamics. By analysing the mechanics area in the team truck, we discovered that dust was accumulating on the floor, undermining bike maintenance. So we painted the floor white, in order to spot any impurities. We hired a surgeon to teach our athletes about proper hand-washing so as to avoid illnesses during competition (we also decided not to shake any hands during the Olympics). We were precise about food preparation. We brought our own mattresses and pillows so our athletes could sleep in the same posture every night. We searched for small improvements everywhere and found countless opportunities. Taken together, we felt they gave us a competitive advantage.” (7 https://hbr.­org/ 2015/10/how-1-performance-improvementsled-to-olympic-gold). British Cycling established a unit which it labelled the “Secret Squirrel Club”. This group focused on analysis and development to drive continuous improvement and essentially for 

malised the approach of the organisation to innovation. They worked closely with engineers and scientists, in particular with the Cervelo R&D team. This was demonstrated in the development and launch of the £10,000 Cervelo T5GB bike which was introduced at the Rio Games. The approach was not to reveal the new bike until “competition time”. This ensured that competitors could not get time to study the design and make changes to their bikes. Brailsford argued that such a philosophy would be ineffective if there was insufficient “buy-in” from staff, coaches and cyclists. Thus much of any success would be dependent on creating the right culture and environment to allow such a philosophy to thrive and prosper. This is reflected in the focus on identification and recruitment of potential cyclists that could eventually be in a position to “medal” at the Olympic Games. A talent team was established to develop an under 15 apprentice programme. From an assessment of talent across the different geographic regions of the UK, 70 cyclists were signed up as apprentices. This involved them taking part in intensive “boot camps” and training programmes. This number was reduced (after assessment of their performance and potential) to 16 riders who were invited to join the Academy Programme. This group was then reduced to eight members who were identified as having the capability, drive and mental as well as physical strength to win medals at future Olympics. On average one medal winner would come from this programme (which started out with 70 participants). British Cycling also recognised the importance of the contribution of “Big Data” to the process of continuing with their strategy of producing medal winners. It established a “Readiness Index” in 2014. Twenty of the coaches employed by British Cycling focused on the development of the pathway riders (young riders in the system). The index built up a detailed profile of each individual rider. Data was collected on such aspects as physiological changes to their bodies  -  a key performance indicator being increased in upper and lower body strength.

209 Appendix

Issues such as speed and finishing time improvements were also tracked and logged. A “playbook” was developed for each rider. Every 3 months each rider underwent a thorough assessment to see if they were “measuring up”. The Index also carries out a detailed analysis of competitors and the performance of their cyclists in competitions. Patterns are identified which might help British Cycling to identify areas where marginal gains could be derived. Allegations have been made that the culture imbued in the British Cycling organisation encouraged a regime of bullying and discrimination. Female cyclists in particular appeared to be victims of these practices and high-profile cases were exposed in the media. The creation of the team was announced on 26 February 2009, with the major sponsorship provided by BskyB (now known as Sky Television). The company were searching for a sport in which they could have a positive and wide-ranging impact through sponsorship. British Cycling first began their relationship with BSkyB in 2008 with a £1 million sponsorship in the Sky Track Cycling team following the Summer Olympics in which British cyclists excelled. This launch would hopefully enable them to establish credibility and visibility in sport which captured millions of “eyeballs” on TV across Europe and beyond. Brailsford joined them at the beginning as General Manager, with responsibility for setting and implementing the strategic direction of the team. He set the objective of providing the first cyclist from the UK to win the Tour de France by 2014. The sport of cycling  -  particularly with respect to road racing had been riddled with allegations of cheating and doping. Many cyclists were caught and served terms of suspension or were banned from the sport. The most high profile case arguably involved the USA rider Lance Armstrong. He dominated the sport for years but was eventually exposed as a drugs cheat. Brailsford, in response to these problems with the sport argued that his team would only recruit riders who were totally clean and had

never been involved with drugs. He established a “zero tolerance” policy in this area - anyone caught would be dismissed from the team. This was implemented and one of the Sky Team coaches, Bobby Julich was sacked in 2012 when he admitted that he had used EPO when he competed as a rider in the 1990s. Team Sky maintained close connections with British Cycling and located its offices beside their HQ in Manchester. This made sense given the investment that British Cycling has made in the infrastructure and facilities. This was demonstrated by a velodrome and track made of Siberian Pine Wood (which was identified as the best material for training on). Brailsford continued with his application of the “marginal gains” theory. The team won the 2012 Tour de France when Bradley Wiggins came through to finish first on the podium. As mentioned earlier this success was flanked in subsequent years by Chris Froome. Team Sky, backed by substantial investment and the strategies of Brailsford quickly established itself as the dominant team on the road-racing circuit since its inception in 2009. Like many successful teams in sport they are not well liked by competitors, the cycling media or indeed many of the fans. Brailsford’s attention to detail is reflected in the use of a “super bus” which has been designed to allow riders to recuperate at the end of each stage. Again we see evidence of the theory of marginal gains in operation. More worryingly, the team has been accused of “skirting around the edges” of potential cheating. This was evidenced in the case of Bradley Wiggins. He received a therapeutic use exemption (in effect a medical clearance) to take the banned corticosteroid triamcinolone drug to treat him for pollen allergies. While this technically did not infringe any rules many athletes use it in order to improve performance. They get away with it due to the medical clearance.  urther Scandals Involving Wiggins F and Team Sky UK Anti-Doping (Ukad) launched an investigation in 2016 into the contents of a Jiffy bag

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delivered to Wiggins at the 2011 Critérium du like salbutamol in a sample does not result in a Dauphiné. In a written statement to a parlia- mandatory provisional suspension and the body mentary hearing, the medical doctor for Team has asked Froome for more detail. Sky insisted the package contained only the Many cyclists and media journalists felt decongestant Fluimucil but Ukad has still not that if this was any other cyclist, a suspension been able to verify that claim because of the would have been automatic and the cyclist lack of medical records. would have been stripped of the Vuelta win. The doctor subsequently resigned. He Froome stated that he was happy to coopclaimed he was not well enough to be inter- erate with the authorities and reiterated his viewed by Ukad. An enquiry could not get any total horror of using drugs in sport. In May information on the background because a 2018, just before the Giro D’Italia, Froome was Team Sky official claimed that the data was lost cleared of any wrongdoing by the International because of a stolen computer. Cycling Federation. He subsequently went on In November 2017 Ukad admitted defeat to win this tour with some sensational stage and declared Team Sky and Brailsford free of performances. This meant that he was the any doping charges. However, they expressed champion of the three major tours: Tour de serious concerns about what happened and France (2017), the Vuelta (Spanish tour in were especially critical of the lack of proper 2017) and then the Giro D’Italia. This achievedocumentation and recording of data. Without ment, together with his previous wins in the saying so they indicated that this was the only Tour de France, arguably left him as one of the decision they could arrive at. most successful cyclists of all time. However, Team Sky was damaged in the general media. The general public and indeed many Summary cycling fans are cynical about claims that the British Cycling and Team Sky have been the sport of cycling is clean. The case with Wiggins key organisations in driving the sport of proonly served to exacerbate these perceptions. fessional cycling from being a peripheral sport Wiggins quickly retired from road racing a to a dominant one in terms of medal success couple of years after winning the Tour de for UK sport in the Olympics and the major France. Many people suspected that this was in road-racing events in Europe. response to any possible charges being levelled Sir David Brailsford (knighted by the against him in the future. Queen in 2013) has been at the heart of such In September 2017 Chris Froome was achievements. It can be strongly argued that he caught up in a similar type of allegation. applied scientific and strategy-­based principles Four-time Tour de France winner Froome to seek improvements in performance from his had double the allowed level of legal asthma riders in both organisations. In doing so he has drug salbutamol in his urine during September’s made use of technology and data to drive such Vuelta a Espana win. success. However, under governing body UCI’s anti-­ Sources: (Compiled by the author from doping rules, the presence of specified substances various sources on the Internet).

??Discussion Questions 1. Assess the approach adopted by Brailsford. To what extent would you agree with the view that such an approach damages sport and encourages bad behaviour at best, unacceptable practices at worst? 2. What are your opinions on the theory of marginal gains?

3. Do you believe that the strategies employed by Brailsford can be sustained into the future? 4. To what extent would you would agree with the view that the use of technology places too much emphasis on medal-winning?

211 References

References Apostolopoulou, A. 2002. Brand extensions by U.S. professional sport teams: Motivations and keys to success. Sport Marketing Quarterly 11: 205–214. Bauer, Hans H., and Nicola E. Sauer. 2005. Customer-­ based brand equity on the economic success of sports teams. European Journal of Marketing 39 (5/6): 496–513. Birkinshaw, J., G.  Hamel, and M.J.  Mol. 2008. Management innovation. Academy of Management Review 33: 825–845. Diamantopoulos, A., and H.M.  Winklhofer. 2001. Index construction with formative indicators: An alternative to scale development. Journal of Marketing Research 38: 269–277. Foroughi, Behzad, Davoud Nikbin, Sunghyup Sean Hyun, and Mohamed Iranmanesh. 2016. Impact of core product quality on sport fans’ emotions and behavioral intentions. International Journal of Marketing and Sponsorship 17 (2): 110–129. Funk, D.C., and J. James. 2001. The psychological continuum model: A conceptual framework for understanding an individual’s psychological connection to sport. Sport Management Review 4 (2): 119–150. Gladden, J.M., and D.C.  Funk. 2002. Developing an understanding of brand associations in team sport: Empirical evidence from consumers of professional sport. Journal of Sport Management 16 (2): 54–81. Lee, Donghun, Michael Cottingham, Demetrius Pearson, Soon-Ho Kim, and Jungkun Park. 2016. Collaboration strategy in sports industry: Team co-­ branding. The Service Industries Journal 36 (11–12): 595–613. Keller, K.L. 2001. Building customer-led brand equity. Marketing Management. 10 (2): 14–19. Keller, Kevin Lane. 2013. Strategic Brand Management: Building, measuring and managing brand equity. Pearson Education. London: United Kingdom. Naik, Anush Yousaf, and Anil Gupta. 2013. Branding of sports teams: Re-conceptualising the fan-based brand equity model. International Journal of

Marketing and Business Communication 2 (3): 31–40. Potts, Jason, and Vanessa Ratten. 2016. Sports innovation: Introduction to the special edition. Innovation: Management, Policy and Practice 18 (3): 233–237. Ratten, Vanessa. 2016. Sports innovation management: Towards a research agenda. Innovation: Management, Policy and Practice 18 (3): 238–250. Richelieu, Andre, and Stephanie Lessard. 2014. Long gone the glory days. Is branding of any help? The case of formerly successful European football clubs. Sport, Business and Management: An International Journal 4 (4): 284–297. Ross, S.D. 2006. A conceptual framework for understanding spectator-based brand equity. Journal of Sport Management 20 (1): 22–38. Stockburger-Sauer, N.E., and S.  Exler. 2008. Brand image and fan loyalty in professional team sport: A refined model and empirical assessment. Journal of Sport Management 22 (2): 205–226. Tsiotsou, Rodoula, Alexandris Kostas, and T.  Bettina Cornwell. 2014. Using evaluative conditioning to explain corporate co-branding in the context of sports sponsorship. International Journal of Advertising 33 (2): 295–327. Villarejo-Ramos, Á.F., and F.A. Martín-Velicia. 2007. A proposed model for measuring the brand equity in sports organizations. EsicMarket 123: 63–83. Walsh, Patrick, and Stephen D. Ross. 2010. Examining brand extensions and their potential to dilute team brand associations. Sport Marketing Quarterly 19: 196–206. Wu, D.G., and L. Chalip. 2013. Expected price and user image for branded and co-branded sports apparel. Sport Marketing Quarterly 22: 138–151. Yousaf, Anish, Anil Gupta, and Abhishek Mishra. 2017. Sport team brand-equity index: A new measurement. Journal of Indian Business Research 9 (2): 169–188.

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Globalisation of the Sports Product Contents 9.1

Introduction – 215

9.2

Why Internationalise in the First Place? – 216

9.2.1

Exercise – 218

9.3

 otivations and Barriers to International M Expansion – 218

9.3.1 9.3.2 9.3.3

 ush and Pull Factors – 218 P Internal and External “Triggers” – 219 Barriers to Internationalisation – 219

9.4

Within the Context of the Sports Sector – 220

9.4.1

 otential Inhibitors to the Sports P Internationalisation Process – 220 Exercise – 221

9.4.2

9.5

 riteria for Evaluating the Attractiveness C of International Markets – 221

9.6

Strategies for Internationalisation – 225

9.6.1

Objectives and Rationale – 225

9.7

I nternational Entry Strategies in  the Sports Sector – 227

9.7.1

“ Inside–Out” and “Outside–In” Approaches to Internationalisation – 227 Co-partnerships – 228 Samplers, Teasers and the “Real Thing” – 228

9.7.2 9.7.3

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_9) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_9

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9.7.4 9.7.5 9.7.6 9.7.7 9.7.8 9.7.9 9.7.10

S taging Regular Season, Competitive Games in International Countries – 229 Establishing Franchises in International Markets – 229 Licensing – 230 International Distribution through Media Rights Sales – 231 International Development through Season Passes – 231 Developing New International Competitions – 232 Outward and Inward Investment Strategies – 232

9.8

Internationalisation Strategies: The Way Forward – 234

9.9

Conclusions – 235 Appendix – 236 References – 243

215 9.1 · Introduction

nnLearning Objectives On completion of this chapter you should be in a position to address the following objectives: 55 Understand the trends and developments which have led to the focus on internationalising sports properties, competitions, teams and fans 55 To examine the motivations for investing in globalisation 55 To identify the criteria for selecting potential international markets for expansion and growth 55 To assess the different approaches adopted by sports organisations for internationalising their respective products 55 To assess how approaches to internationalisation of sports products differs and compares with traditional theories of globalisation 55 To assess the potential inhibitors to international sports product development 55 To understand the role of the media in facilitating or inhibiting global expansion of the sports product 55 To evaluate how technology and digital marketing allow sports organisations to connect with the international fan 55 To understand the role of diaspora in expanding a sport globally 55 To assess the main geographic areas for international growth and development 55 To appreciate the role that psychic distance plays in international development of sports products 55 To examine the importance of understanding cultural differences in international expansion.

9.1

Introduction

The theme of sports commercialisation features prominently in all of the chapters in this text. At the elite end of sport, the unrelenting focus for sports property owners is to generate increasing levels of revenue from as many sources as possible.

International/global expansion is one such potential route. In this chapter we examine the challenges and opportunities that face sports property owners in their quest for expansion and increased revenue streams. The cliché that the world has become a “global village” is often used (indeed misused) in business texts. This is based on the supposition that companies and organisations ignore international markets at their peril: for fear that they may miss out on a welter of opportunities. In this chapter we examine the relevance of this view within the context of the sports sector. The counter-argument to this perception, in general business, is that companies can severely underestimate the challenges involved in expanding their operations internationally and that the potential risks of failure can ultimately lead to a downturn in the fortunes of a previously successful domestic business. We test out the validity of both points of view in this chapter. As mentioned in earlier chapters, the sporting landscape has changed in a dramatic way over the past couple of decades. Whereas most of the major sporting events and competitions took place in geographic locations such as North America and Western Europe, this has now altered significantly. Prior to the 1990s markets such as south-east Asia, Latin America and the Gulf region were barren and desolate areas within the context of staging such events. This has changed in a conspicuous way over recent years. Now major property owners such as the International Olympic Committee (IOC), Federation Internationale de Football Association (FIFA), Union of European Football Associations (UEFA) and Formula One have expanded their operations increasingly towards these emerging regions: some of which have arguably overtaken many of the so-called “developed” economies. The concept of the “virtual fan” has also enlivened the appetite of sports clubs to build their fan-base and potentially benefit from opportunities such as increased sales of merchandise across different regions. Even in the most impoverished and desolate parts of the world you are likely to see people wearing the

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jerseys of clubs such as Real Madrid, Barcelona, and Manchester United and so on. The geographic and cultural boundaries are ever more blurred and sports property owners are increasingly availing of such opportunities. More sophisticated and personalised usage of technology and social media has further inflamed the marketing activity in such areas. In the early part of this chapter we explore the motivations for globalising sports properties and the criteria which can be used to identify priority international markets. We assess the challenges involved in designing appropriate strategies. We consider the roles that key stakeholders such as the media, sponsors and sports property owners play in the internationalisation process. We assess the different methods used to expand internationally. We consider the critical success factors that can help sports organisations to overcome the obstacles to successful global growth. In the later stages of the chapter we look at key markets such as China and the opportunities and challenges facing sports property owners as they attempt to enter such regions.

9.2

Why Internationalise in the First Place?

Many people assume that a business only survives by seeking out as many opportunities as possible in order to survive and prosper. Certainly, this has some “face value” validity. A failure to identify and exploit such opportunities leads to the accusation that the organisation is short-sighted, risk averse and in danger of handing such possibilities to its direct and indirect competitors. The counter-argument suggests that in some cases international expansion may not fit in with the specific objectives of the business owner/founder. For instance, many entrepreneurs are only satisfied if they grow the business to a certain level and then reap the

benefits by selling it on to another investor. They do not want the hassle of dealing with a more complex and complicated set of business processes that surely accrue when the company moves into the international arena. Similarly, lifestyle objective may also rule out the willingness of the owner to expand the business further. In the context of sport, other issues may come into play. For instance, some sports are very much grounded in a local, regional or national environment and have little existing or potential appeal in other markets. Sports such as shinty (Scottish), hurling and Gaelic football (Irish) are successful in their local domain. The latter sports attract large attendances and TV viewing figures at the top end of the sport in Ireland. Over 82,000 attend the All-Ireland finals and critical championship games as a matter of routine. Australian Rules football is a good example of a very successful, commercially run sport. Outside of Australia, however, it captures little awareness or participation. The respective sports administrators of Aussie Rules and Gaelic football have established a bi-annual “mixed rules” series of games to promote their respective sports in the countries of Australia and Ireland. This has led to mixed results. While attendances at the games have been reasonable, they have never progressed beyond the objective of generating interest in the events. Undoubtedly there is overlap. Arguably (historians vary) it was Irish emigrants to Australia that created Aussie Rules in the first place. Clearly there are cultural and historic links between the two games. The overall lesson from this example is that some sports find it very difficult, if not impossible, to expand beyond their national environment. It has a national, regional and local focus at its core. The two sports mentioned in the above paragraph are examples of areas that would find it difficult to move up the ladder in terms of exploiting international opportunities. At best it could be argued that they are limited in terms of expansion beyond their respective domestic markets.

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217 9.2 · Why Internationalise in the First Place?

Sport Football

Event World Cup Olympic Games

Athletics Swimming Formula one

World Athletics Championships

Global

International

Baseball NFL Ice Hockey

National

Aussie Rules Gaelic Football Judo

Regional/Local

..      Fig. 9.1  The sports pyramid. (Source: Adapted from Shani and Sandler 1996)

. Figure 9.1 is an attempt to portray the different tiers of sports in terms of levels of awareness, reach, media coverage, participation and acceptance. Please feel free to debate the accuracy of this analysis. In some cases, individual sports can move up (or down) the ladder depending on circumstances, such as increased international media coverage This suggests that at the top of the pyramid sports, such as football, have a universal appeal across virtually all geographic regions. This is supplemented by very high levels of media and existing fan coverage and interest. As an event, both the World Cup and Olympic Games attract the highest levels of viewing figures across the globe. Sports, such as athletics and swimming, maintain a strong global level of participation but arguably cannot be classified as achieving a global impact because of declining levels of media coverage. Sports such as rugby, cricket, baseball, basketball and ice hockey have a strong international presence, but only in certain regions. For instance, cricket is played in regions from Afghanistan through to Sri Lanka and Australia. They have a strong linkage to  

British colonial times - mainly they are areas that belong to the British Commonwealth and historically were occupied by Great Britain. Sports such as Aussie Rules, judo, and Gaelic football and so on are grounded in  local or regional geographic areas. They have limited appeal and low awareness outside of their boundaries. This categorisation is only meant to be illustrative and I am sure it will engender some debate; particularly when it comes to very commercially successful sports such as baseball and American football (NFL). The latter sports are at the forefront of commercialisation in terms of media rights, attendances and viewing figures in North America. Both sports have made significant attempts to expand internationally (we will examine them in greater detail later in this chapter). However, in terms of global expansion they are unlikely to gain significant traction in many geographic regions. For many sports the answer to the question as to why bother to internationalise is largely rhetorical. In order to remain viable and generate further income streams, they have to embrace internationalisation. If they wish to even maintain the status quo (in terms

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of benchmarks such as attendances, viewing figures and participation), they are obliged to recognise that the world has become more global, interactive and in the context of the sports sector, facing more competition from other sports and phenomena such as gaming (largely the product of the Internet and technology). In the latter case “eSports” is the fastest growing sport world-wide. To ignore the prospect of seeking growth through international expansion would be foolhardy from the perspective of sports property owners, sports marketers and administrators. The arrival of proven (in the context of industry experience), professionally qualified and business-focused individuals to the realm of sport has also exacerbated the focus on internationalisation. Niche sports such as surfing, equestrian, fencing and so on are proving to be increasingly creative in promoting their sports. By developing their own streaming platforms, they can build an audience profile. This can lead to a “virtuous circle” when sports broadcasters sign contracts to cover the sport, thus broadening the audience reach. In turn, this attracts a wider international audience and ultimately sponsors who are willing to invest in the sport to align their brand values with an attractive demographic.

9.2.1

Exercise

??Using material that is available on the Internet, choose a niche sport of your choice and carry out an assessment of its approach to widening its audience reach and viewing figures.

9.3

Motivations and Barriers to International Expansion

Watanabe et  al. (2018) note that the sports product is a complex one which consists of a number of different levels and tiers. This is reflected in the core dimensions such as the game/event and the rules and regulations, allied to the game activities, fan motivations,

the services and the environment surrounding the event/game (stadium, parking, facilities, food and beverages and so on) and locational dimensions such as geographic and physical location within the city/country. Growth, both domestically and internationally, can occur across a number of these features. This is in contrast to traditional manufactured goods which do not necessarily have the same layers of complexity surrounding the product. We should take this into account when assessing the motivations for international expansion. The traditional extant literature on internationalisation motives portrays the decision as largely based on a proactive or reactive rationale for seeking growth outside of the domestic market. Terms such as “push” and “pull” are often utilised to further explain the logic for international expansion. 9.3.1

Push and Pull Factors

“Push” factors tend to revolve around the following issues: 55 A mature market which has little or no scope for further growth and development 55 Weak economic conditions: recessionary climate where people’s disposable income has been in decline, leading to a fall in demand for the product or service 55 Competitive pressures: leading to a reduction in demand 55 A small domestic market which has reached saturation 55 A market which is dominated by one or two large companies/brands. Such conditions largely work against the company in terms of future growth in the domestic market. By dint of such pressures, companies are forced to look elsewhere for salvation. International markets may provide the answer to such a problem. “Pull” factors involve the following: 55 Stable political structure in the potential country/region 55 A “pro-business” and “pro-sport” political culture, where foreign investment and entry is welcomed

219 9.3 · Motivations and Barriers to International Expansion

55 Positive economic conditions, e.g. growth you can join them on the international in income levels, a wealthy “middle-­ front income” class 55 Working closely with trade associations, 55 Population growth: particularly in attracexport agencies and Chambers of tive social, economic and age demographics Commerce who can help to identify poten55 Familiar cultural reference points tial customers in such markets. 55 A favourable tax regime. Kozma and Andras (2014) suggest that the Such drivers are often viewed as being proac- main drivers ultimately revolve around four tive, reactive or a combination of both. fundamental influences: Reactive motivations refer to situations where 55 Government and economic policy drivers: the company is approached by a foreign comindicating a positivity about attracting pany or agency and invited to operate in that international companies to that country particular region. Proactive reasons are 55 Market drivers: providing evidence that largely instigated by the company (senior there is a demand for similar products and/ executives/owners) itself and usually involves or services a planned, strategic approach. 55 Cost drivers: that can generate economies of scale or build upon existing competitive advantages 9.3.2 Internal and External 55 Competition drivers: based on competitive initiatives and strategies operating in simi“Triggers” lar regions. The “triggers” for internationalisation can emanate from internal or external sources. 9.3.3 Barriers Internal triggers include: 55 “Switched-on” management: who proacto Internationalisation tively seek out potential opportunities and have an open mind on potential collabora- The extant literature on internationalisation tions and networks in an international identifies some barriers to growing the business away from the domestic market. Some environment 55 Special event: for instance, the arrival of a organisations simply do not have the expernew Managing Director who is prepared tise, technology or scale of operations to to and has the necessary skillset to insti- enable them to embark on an internationalisagate major change in the management tion journey. To pursue such a strategy would structure and operations of the organisa- lead to high levels of risk and exposure in markets which they have little or no knowltion 55 Inward/outward internationalisation edge or no connections. Lack of understanding of the “way of activities: either importing or exporting doing business” locally (in a specific country) 55 Economies of scale. can lead to situations where despite the company having a product/service with competiExternal triggers feature the following: 55 Market demand (both existing and poten- tive advantages, it will still be doomed to tial): the existence of established demand failure. Entry to markets where there are high levfor the product or the likelihood of such els of political instability can also act as a sigdemand 55 Contact from, or with, potential network nificant obstacle. There are dangers attached to rolling out partners who are keen to do business with or replicating the business model which the company or organisation 55 The existence of competitors in such mar- worked well in the domestic market to interkets: if you can’t beat them domestically national environments. It is not practical to

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apply a “Think global – Act global” approach anymore. Cultural, social, economic, political and technological influences heavily militate against such a practice. “Think global  – Act Local” is a strategy that is advocated by many business commentators. This takes account of local preferences and practices and can lead to a more realistic and workable strategy. This is often referred to as “glocalisation”. Glocalisation is based on the need to undertake appropriate research into the international market under consideration, to determine the extent to which the market conditions prevail in that region. In addition to detailed research, the basic principle of glocalisation revolves around the principle of “learning by doing”. In essence there is a need to accept that mistakes are sometimes inevitable, in terms of implementing strategy. Therefore, the ultimate success of the internationalisation strategy will be dependent on having an adaptive and flexible approach; where changes can be made quickly in order to overcome initial errors.

9.4

Within the Context of the Sports Sector

The sports sector is similar in many respects when compared to the general literature and research on the motivations for internationalisation. However, there are some aspects that arguably are specific to sport. We examine some of the similarities and differences in this section. The maturation of domestic markets allied to the strategic imperative of developing additional income streams, is arguably the main motivator for sports organisations, property owners and clubs at the elite end of the sports spectrum. The full embrace of commercialisation has speeded up this process across many markets in the past 15–20 years or so. The role that media plays in the internationalisation process is critical to the success of any such process. This is perhaps a unique feature of the sport product internationalisation strategy. As we noted in 7 Chap. 5, media rights and the willingness of pay-per-view and  

traditional channels to pay for them, has driven up the revenue levels considerably. Coverage of live events by such broadcasters helps to showcase the team, competition or event. Aggressive follow-up marketing by the sports property owners and individual clubs further speeds up the process of consumption on the part of fans. The ease of access to live sport due to technology, has made it much more feasible and attractive for fans (wherever in the world they may be) to follow their favourite sport, team or player. Not alone does this increase the fan-­ base, it also opens up opportunities for clubs to sell merchandise and related items in such markets. Arguably, without media coverage, it becomes difficult for sports organisations to penetrate international markets. However, as noted earlier, it is still possible to build such audiences by making creative use of dedicated YouTube, Twitter and other social media channels to access potential fans. Goss (2009) pinpoints three key motivators that facilitate the internationalisation process. 55 Development of the live audience size 55 Development of the media-based audience size 55 Expansion of related merchandise, sporting goods and licensed items. Following the above approach should lead to a “virtuous circle”. Building the live audience and the global fan-base increases the international attractiveness of the team/competition/ event. This attracts the media, which in turn raises the potential for more sponsors who are willing to pay more for the privilege of being involved in the sport. 9.4.1

Potential Inhibitors to the Sports Internationalisation Process

A number of potentially negative factors can restrict the process of globalising a sport/club/ property. Some of these are arguably contentious areas and are the subject of ongoing debate in the industry and the extant research.

221 9.5 · Criteria for Evaluating the Attractiveness of International Markets

One inhibitor to international expansion is the obsession with tradition and heritage that exists in certain areas of the sports sector. Sports administrators and owners of properties and clubs, in some cases, are reluctant to embrace internationalisation because they fear that they will offend the existing domestic fan-base. At best, they will partially engage with aspects of internationalisation but may be unwilling to fully “buy” into the concept. For instance, in the football sector in many European countries, some clubs are not prepared in some cases to contemplate a change of name or a change of ownership which might lead to a loss of control over how the club is marketed and branded. Some clubs that have changed from a local family-owned status to one that has been purchased by foreign owners have encountered resistance from domestic fans. For instance, an English club, Hull City, was purchased by an Egyptian owner, who wanted to change the name to Hull Tigers. This was motivated by the symbol that the tiger plays in Asian society. By changing the name, the new owner argued that this would make the image and brand of the club more attractive and relevant in such markets. Eventually, mainly due to fan pressure, the idea did not come to fruition. 9.4.2

requisite levels of investment and “footprint” in the market. Unless the club already holds a strong brand equity in that market, the reality is that it will take time to develop the brand. A dependence on the sale of media rights can lead to complacency on the part of sports marketers and administrators. As we discussed in 7 Chap. 5, we can see a situation where traditional cosy relationships with broadcasters such as Sky, ESPN and Star will potentially no longer exist in the next few years. Already sports property owners are introducing alternative channels to distribute their products and the rise of OTT operators is already challenging the hegemony of PPV operators. Nepotism and cronyism, allied to a lack of transparency in ownership and poor due diligence, can lead to poor decision-making at best and fraudulent behaviour at worst. As well as potentially alienating the domestic fan-base, it can lead to badly thought out strategies in terms of international expansion. The ego of the new owner and lack of understanding of the values of the club/sport property owner can supersede logical decision-making. It can also lead to substantial losses in the context of trying to develop the brand in international markets.  

Exercise 9.5

??Assess the extent to which you would agree with the view that the Hull City case is an example of a situation where the club has missed out on potentially lucrative opportunities in the Asian markets.

Short-termism is another inhibitor to international expansion in the sports sector. In the ever-present quest for additional revenue, sports property owners can underestimate the challenges involved in building the brand internationally. As a consequence, this can lead to a lack of strategic focus on the targeted markets, and an unrealistic estimate of future revenue streams. Like most successful global expansion strategies, it requires a longer-­term view of the market allied to the

Criteria for Evaluating the Attractiveness of International Markets

In the context of the sports sector, a number of criteria come into play when assessing potential opportunities in a global context. Firstly, and it might appear to be obvious, there has to be a compelling reason for sports property owners to take the focus away from their domestic market and seek expansion in international markets. For instance, if the sports organisation is facing competition from other sports in the domestic market and there are still further growth opportunities there, a shift in focus may deflect attention from immediate challenges that currently exist.

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The following question needs to be addressed. Is there a sufficiently large and relevant demographic that could generate a revenue stream? Obvious candidates would include China and India. Both have very large populations. More significantly, perhaps, is the size of middleincome, well-educated individuals. These groupings are more likely to seek out positive leisure experiences such as sports events, competitions and clubs to attend or follow. They may wish to consume a new sport or competition by watching it on TV or through live Internet streaming. They may also purchase related merchandise, attend pre-season games or tournaments where they can see their favourite team and players in action, or make occasional trips to see their team play in the country where that team is based. 2. Diaspora

An example would be the case of rugby in the Republic of Ireland. Over the past decade this sport has experienced a significant growth in popularity, resulting in an increase in participation rates, growth in areas of the country where there had not been a traditional presence in the context of rugby teams and successful participation in European leagues. Traditional sports, such as Gaelic football and hurling, are challenged with the task of maintaining their presence as the premier sports in Ireland. Although there is no evidence that they want to expand the respective sports into new markets (they have a small presence in the USA, Australia, the UK and the Gulf) any long-term planning would inevitably take the administrators away from domestic competitive pressures, and maintaining their position in the overall leisure market. Assuming that opportunities to increase revenue, streams and participation rates have reached saturation point in the domestic market, sports marketers and administrators need to consider a number of criteria that can help them to gauge the attractiveness of potential markets. . Table  9.1 highlights such criteria. We briefly examine them in the following paragraphs. 1. Evidence of a demographic profile that meets with the requirements of the sport product.

In many cases the existence of a large demographic profile will not necessarily lead to any significant fan-base. However, the number of “ex-pats” living and working in that country can provide a stimulus to potential growth. Many of these people (the diaspora) tend to retain the culture and traditions of their country. This is often translated into organising leagues and competitions among themselves, in many cases gaining the support of the organising body. Social networks between the diaspora and local citizens can lead to greater interest and involvement among the latter.

 

..      Table 9.1  Criteria for assessing the attractiveness of international markets Criteria Demographic profile Diaspora Psychic distance Media interest, coverage, infrastructure Ability to develop networks, partnerships Legislation Political Source: Author

1

2

3

4

5

Weighting factor

Total weighting score

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Cricket in Germany

Cricket is a sport that has traditionally been played in regions that were once part of the British Empire. Soldiers and ex-pats introduced the game to locals back in the nineteenth century and the game has grown exponentially in the following countries: India, Pakistan, Australia, Sri Lanka, South Africa, New Zealand, Zimbabwe, West Indies and Afghanistan. While still a “small” sport in relative terms, Ireland recently gained test status (premier division) along with Afghanistan. The challenge facing the International Cricket Board is to develop the game in other regions of the world. An unlikely candidate is Germany. We normally associate this country with major sports such as football, hockey and so on. In fact, cricket has been played there since the nineteenth century. However, since the start of this decade, it has experienced a sharp increase in the numbers playing cricket. Ninety-five per cent of this growth has come from Afghan immigrants who started arriving in this country since 2014. It is estimated that around 47,000 immigrants have come from this country since then. There are now over 300,000 Afghans living in Germany. Evidence of their impact on the sport of cricket can be found in the following statistics.

3. Psychic distance Conventional theories on the process of internationalisation often pinpoint the concept of psychic distance as being a critical factor in assessing the attractiveness of a particular country. This refers to the perceived differences between the home country and the foreign country. Such differences refer to language, cultural economic, political and economic factors. In situations where the range of differences are likely to be high, it can be argued that the risk involved in expanding operations to such a country is likely to be high. By contrast, countries with perceived low psychic

The number of cricket clubs has grown from sixty (2012) to 370 in 2017. Over 6000 people play cricket. Cricket used to be played in big cities such as Cologne and Frankfurt. It was mainly played by Indian students studying in universities and English ex-pats working in Germany. Due to the dispersal of the Afghan immigrants to many small towns and village, participation has spread across the country. In 2017 Germany won the European Division One competition and currently play in Division five of the World Cricket League. Over one hundred grounds are currently in use for cricket. Most are “general purpose” grounds where matting is used for the wicket. It receives some support by way of equipment from English clubs and the English and Welsh Cricket Board. Germany will not be breaking into the “premier league” any time soon. However, the signs augur well for continued growth and development of the sport beyond the traditional colonial countries of the old British Empire. (Source: Developed by the author from various sources on the Internet)

distance are seen to be less likely to be as risky. In this latter case, countries that have low psychic distance would have a number of similarities in terms of historical, political, social and geographic ties. On the basis of this concept many commentators argue that this plays a significant role in helping an organisation to select specific countries for international growth. What relevance does it have for the sports sector? Arguably, certain components are less important in relative terms than might be the case with other business sectors. For instance, in the context of cultural differences, a strong argument can be made to suggest that sport

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tends to transcend or cut across cultural boundaries. In essence, sport enjoys a common lexicon in different parts of the world. Football is played in virtually all parts of the world, irrespective of religion or race. Other sports such as tennis, golf, Formula One and swimming, while perhaps not enjoying the same degree of universal approval and interest, nonetheless develop a strong global following. If this view is accepted it makes it easier for sports marketers and sports property owners to contemplate entry to new markets. However, a counter-view might suggest that political and legal differences might be as high and non-transparent as to raise the risks involved in market evaluation and eventual entry. The “law of unintended consequences” also comes into play in such situations. For instance, the Formula One strategy of expanding its Grand Prix races globally has led to major criticism from certain quarters. This was highlighted by its involvement with Bahrain when civil rights groups and certain governments argued that it should have no contact with such regimes, a number of years ago. The role that social media plays in sport, allied to technology (digital channels and live streaming in particular) also provide a strong justification for suggesting that the degree of psychic distance is less important in today’s world than it would have been previously. 4. Media interest, coverage and infrastructure As discussed in 7 Chap. 5, cultivating and developing media interest and coverage is critical to any possibility of gaining traction or a footprint in a particular international market. Without that, it becomes very difficult for sports marketers and administrators to create awareness or develop interest among potential fans. Realistically, media broadcasters will not initially become enthusiastic about a particular sport if it has no record of accomplishment or pedigree in that particular country. However, it is not impossible. The proliferation of sports channels and live streaming on the Internet means that there is a potential demand for niche or less well-known sports to fill gaps in the schedules. This can develop  

viewers who watch initially, and subsequently are attracted to that sport. Such audiences are by definition going to be narrow. Selecting a country where there are poor levels of speedy Internet access and other infrastructure aspects clearly pose problems for sports marketers in terms of developing access and audience awareness. 5. Ability to develop networks and collaborative arrangements Key stakeholders such as the media, sponsors, governments, regional policy-makers, entrepreneurs and potential investors are critical players in the internationalisation of sport. This resonates with the traditional literature on the globalisation of business (Johanson and Mattsson 1988). This theory reflects the view that successful international expansion is based on the need to reduce the risk involved in entering markets where there is a lack of understanding and expertise surrounding the way of doing business and the social and cultural norms that prevail there. To some extent, companies can mitigate this challenge by carrying out internal research on the market. However, the use of networks and contacts in that market can act as a heuristic in terms of gaining access and developing opportunities. Welch and Welch (1996) emphasise that knowledge of the market is critical. By learning from engagement and collaboration with external factors, a company can gain a more strategic view of the issues involved in market entry. 6. Legislation This criterion takes us into the field of legislation, particularly with respect to employment issues. It potentially affects the recruitment of players and the placement of coaches, marketers and administrators in the specific country. It also has implications for a range of other issues such as arbitration and appeals, antidoping, human rights and welfare, women in sport, gender identity, and in the case of the European Union, the Lisbon Treaty. There are many more areas that we do not have time to mention here in this chapter. However, sports marketers need to be aware of relevant

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areas of legislation that have a direct and indirect impact on the ability of sports organisations to operate legally in various countries. 7. Political The nature of the government, in terms of policy and stance with respect to sport, plays an important role in establishing how easy or difficult it might be to gain entry into a particular country or region. At one extreme, there are potential dangers where a government wants to use sport as a mechanism for promoting its ideologies or changing its perception globally. This could lead to situations where a sports organisation/club might find itself in conflict with the policies of its domestic government. For instance, Formula One has opened up the possibility of locating a Grand Prix in Saudi Arabia. This has drawn criticism from various quarters as to the efficacy of this strategy. In early 2020, the leader of the Saudi Government, Mohammed bin Salman bin Abdulaziz al-Saud (MBS) was involved in a bid to purchase Newcastle United. The Saudi leader, under the guise of the Saudi Public Investment Fund, held an eighty per cent stake in the bid. The Qatari government wrote to the authorities complaining that the Saudi Arabian PayTV Network, BeoutQ, illegally broadcasted EPL games in that country. BeIn Sport, owned by the Qatari government, had acquired the rights to show such games across the MENA region. At the time of writing, the bid still had to be accepted by the EPL. The latter organisation expressed serious concerns about the efficacy of allowing the Saudi bid to go through. At the other end of the spectrum, a government may place little or no importance on promoting sport within its society and fail to provide any incentive or positivity to a potential sports organisation that wishes to expand in that region.

9.6

Strategies for Internationalisation

We examine the alterative mechanisms for expanding the sports product globally. Before we move to that stage however, we should

consider the rationale for such strategy formulation and implementation. Any effectively run sports organisation (as we discussed in 7 Chap. 6) requires the underpinning of a planned and strategic approach to the shaping of its future development. This naturally extends to decisions about international expansion. The starting point revolves around the rationale for pursuing such a strategy. What are its specific objectives?  

9.6.1

Objectives and Rationale

We can identify a number of objectives (by no means exhaustive) that can underpin the move towards greater internationalisation and expansion for a particular sports property. 55 To create higher levels of awareness and interest. As noted earlier, certain sports properties set out to develop a wider degree in the sport in different geographic regions. This is a prerequisite if potential fans eventually convert to subscriptions to watch regular season league games. 55 To increase the global fan-base. Many sports properties recognise that developing the number of global fans leads to an increase in revenue. This occurs from increased sales of merchandise and widening the number of fans participating in the social media platforms. 55 To become more actively engaged with the global fan-base. Social media platforms such as Facebook, Instagram and Twitter (to name but a few) present the sports property with a clear opportunity to engage more interactively with fans. Well-­ crafted websites and well-maintained social media platforms increase the ability of the organisation to remain relevant to the fan. Additionally, sports marketers can develop trust and confidence in its brand and reinforce the “global community” concept that many fans desire. 55 To build brand equity. Sports properties that are already well known outside of their domestic base have to grapple with the challenge of building on this position of potential strength. Otherwise, they slip

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into the realms of complacency and leave the door open to competitors. As discussed in earlier chapters, the emergence of eSports presents an existential threat to many sports, both domestically and in a global context (Singer and Chi 2019). Commercial pressures from owners and various stakeholders reinforces this threat: revenue will decrease if marketers do not invest in initiatives to work on further brand-building strategies. 55 To change global perceptions, opinions and attitudes. Sports properties can play a significant role in a wider sense, by influencing the ways people in other countries perceive their country’s political and social policies and structures. For instance, the Chinese worked closely with their sports bodies to influence global perception when it staged the 2008 Beijing Olympics. 55 Vladimir Putin, the Russian President, invested billions of dollars in the staging of the Winter Olympic Games in Sochi (2014). Critics accused him of wasting public money to satisfy his own ego but also to use the event to highlight his political agenda. 55 To spread the sport to emerging economies. Sports property owners such as FIFA and UEFA have taken decisions to host hallmark events such as the European Championships and the World Cup in regions of the world that have never staged such tournaments. They argue that this objective addresses the criticism that they are elitist and focused on well-developed economies. Poland and the Ukraine hosted the UEFA European Football Championships in 2012. This represented a departure from staging the tournament in traditional “football” countries. 55 Similarly, the same organisation chose Baku, the capital of Azerbaijan, to host the 2019 Europa League Cup Final, despite criticisms that it did not have the infrastructure to be in a position to do so. 55 To seek out and purchase talent from selected countries or regions. As sport becomes more global, individual clubs, in sports such as football and basketball invest heavily in terms of recruitment and

coaching in relatively under-developed regions such as Africa. Alternatively, they scout for talent in potentially lucrative countries such as China and India. They can generate clear benefits from this objective, if they are successful. A star player from India, who signs for Barcelona or the New York Knicks can spark off an immediate boost in popularity for that sport in that country. Fans follow the player online, take out subscriptions to watch the league games and become more enthusiastic and participate in the sport. 55 Successful football teams often go a step further and establish partnerships with feeder teams in other countries. This provides coaching expertise for players with teams. It also creates a route for talented players to play with the “big” team in the elite leagues in Europe. 55 To identify potential investors located outside of the domestic market. As we noted in our chapters on sports governance and media rights, the amount of money required to develop successful teams and clubs, places pressures on clubs. While media rights bring in a lot of cash, salaries and transfer fees (particularly in football) drives a lot of cash out. Foreign investors, in the form of entrepreneurs, conglomerates and governments, provide a potential rich stream of cash that can change the competitive position of a club. 55 To identify potential partners and collaborators. In order to expand into international markets, it is critical that a sports organisation accepts that it is almost an impossible task unless it can “tap into” and establish collaborations and partnerships with key organisations in the chosen market. 55 To develop certain elements of the overall sports “product”. In an era, which increasingly focuses on issues such as diversity and gender, some sports seek out opportunities to promote the female version of their sport. This can have the effect of extending their reach and exposure in regions where women do not play it to any significant extent.

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55 To spread the risk and reduce dependency on the domestic market. With increasing competition from direct and indirect competitors in the local market, sports organisations cannot afford to ignore any trends indicating opportunities “further afield”. Clearly much depends on the following issues: –– Whether the sports property is local, regional, national or international –– The scale of its operations –– Its resource base –– Ability to recruit relevant personnel. 55 As we noted earlier in the chapter, some sports properties do not meet these criteria. This takes international expansion off the agenda, at least in the short to medium term. 9.7

International Entry Strategies in the Sports Sector

In this section, we assess the alternative approaches to market entry and penetration. It is not our intention in this text to examine the theories and concepts of internationalisation in a generic sense. I recommend that readers should refer to standard texts such as (Hollensen 2017) for more detailed reading. Before we address specific entry modes, it is important that we revisit the concept of the sports product. There are many layers and dimensions to the sports product. They include the following: 55 The league, competition or discrete sports event 55 Individual teams, players and participants 55 The history, heritage and evolving patterns surrounding the club, competition and event 55 On-pitch level of entertainment, strategies, player signings, fan experience and coaching 55 Facilities and infrastructure: stadium design, IT infrastructure, access and egress, hotels, retail shopping centres, conference centres, ability to cater for other sports 55 Size and spread of the fan-base (domestically and globally)

55 Evidence of brand development and on what basis 55 Level of interest expressed by the international media 55 Level of existing and/or potential interest by fans outside of the domestic market 55 Who owns the sports property? Family-­ owned? Fan-controlled? Public or private company? Conglomerate? Foreign or domestic investors? The dimensions listed above, combine to shape the nature of the product offering. They interact to influence the potential for exploring opportunities outside of the respective domestic setting.

9.7.1

“Inside–Out” and “Outside–In” Approaches to Internationalisation

Conventional wisdom suggests that companies seek global expansion through some of the triggers that we discussed in 7 Sect. 9.3.2. This could be labelled as an “outward-­ seeking” approach. Individuals within the company recognise potential international markets and instigate a range of initiatives to pursue this goal. They actively seek out potential distributors or collaborators to make this happen (inside-out). The initial move emanates from within the company and moves outwards in terms of its approach. Similarly, it may be the case that a company moves from a domestic setting because companies in other countries approach them to explore potential business opportunities (outside-in). This occurs in some instances through third-party organisations such as business associations or Chambers of Commerce. The move in this case comes from outside the organisation and stimulates some discussion within the senior directors/managers. We can see evidence of both approaches existing in the sports sector. They are not mutually exclusive. Many sports organisations routinely utilise both, depending on the situation and specific circumstances.  

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As noted earlier in this chapter, sports organisations also have to make distinctions between fans who can attend the event/game/ competition physically and those who, due to geographic and logistical issues become “virtual” fans. They can still watch “live” sports events but rely on media or technology to enable them to do so. This creates opportunities for sports marketers and administrators to penetrate markets without having to create a “physical” presence there. In the following paragraphs, we assess a number of potential entry methods. 9.7.2

9

Co-partnerships

The cliché that “no man is an island” applies here. By partnering with key stakeholders, a sports organisation recognises that little progress can be made in terms of internationalisation unless they follow this approach. For instance, the media broadcasters act as a critical “bridgehead” in terms of introducing a particular sport or competition to a new audience in a particular market. The success of a particular sport arguably rests with its ability to capture and develop an audience. Failure to do so leads to a quick dissipation of interest and the withdrawal of media coverage. The English Premier League quickly recognised the importance of partnerships with media broadcasters. “Tie-up” with the likes of Sky television exposed the league and its teams to many European markets. Partnerships with broadcasters in other geographic regions reinforced the strength of the “brand” and it is arguably the most successful sports brand globally today. Our case studies on snooker and Formula One, highlight the role played by the media in building interest in a sport. We can also see the important role played by individuals with vision and entrepreneurial skills in the process (for instance  Barry Hearn and Bernie Ecclestone). Partnerships and collaborations extend beyond the media, who have a direct interest in the sports sector. As we noted in 7 Chap. 3,  

governments and public bodies such as tourist boards also express enthusiasm to work closely with sports organisations to attract major events to a particular country, region or city. Sports tourism has grown exponentially. Staging major competitions and events draws in significant revenue and creates employment. For instance, the Danish government established Sport Event Denmark in 2008. It set a specific objective to increase revenue from sports tourism. Since then it has hosted a number of major events such as the Badminton World Championships (2014), World Archery Championships (2015), the European Short Course Swimming Championships (2017) and the World Men’s Handball Championships (2019). In 2021, it will host the Tour de France, by staging the “Grand Depart” (the curtain raiser to the event). Over this period, it has increased revenue from sports tourism by a factor of seven. Co-partnerships and collaborative ventures are an intrinsic part of any sports internationalisation strategy. They allow the respective governments and sports bodies to showcase their facilities and infrastructure and can literally place it on the map. 9.7.3

Samplers, Teasers and the “Real Thing”

We have recognised the importance of the “virtual” fans: people who cannot attend live games but want to consume the sport in whatever way they can. Clubs in major sports such as football, basketball and baseball have used pre-season friendlies, participation in competitions and guest appearances by key players to “connect and engage” with their fan-base in overseas countries. Such initiatives allow fans to watch their favourite teams and players, collect “selfies” and autographs and generally feel physically close. Clubs also benefit from increased sales of merchandise and sundries by engaging in such events. However, in recent years, this has not proved to satisfy the increasing demands and

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expectations of fans. In response, some sports bodies are going a step further. 9.7.4

 taging Regular Season, S Competitive Games in International Countries

The NFL (American football) and NBA (National Basketball Association) have taken the next leap forward. In the former case, the CEO and his team within the NFL, recognised the need to play more meaningful games in selected international cities. Fans want to see competitive games that have some meaning for the participating teams. Pre-season friendlies are often treated as glorified practice games by teams. Players do not play at “full pace”. Coaches try out new tactics and give games to younger squad players. Fans have become accustomed to this but seek a higher form of engagement and entertainment. The NFL staged its first regular season game in Mexico back in 2005. This generated an attendance of over 100,000. In 2007, they staged their first such game in London. Since then they have increased the number of games played there. The results produced an average of over 80,000 in the intervening 13 years. We should note that the comparable average attendance at games staged in the US market is around 66,000. In 2019, the NFL staged four such games in London and one in Mexico. This approach resonates with some of the established theories of internationalisation. It recognises the principle of “psychic distance”. This encourages organisations to focus on markets that are closer to them in terms of culture, location and social distance. Arguably, this reduces the risk involved. The NFL has also followed a measured and incremental approach. It has gradually increased the number of regular season games in London from one to four, over a period of 12 years. It has avoided the temptation to

spread and increase the number to other geographic locations in Europe, Central or South America. 9.7.5

Establishing Franchises in International Markets

This strategy builds on the earlier approaches of using pre-season tournament and regular season games. Sports administrators sanction the establishment of a team franchise in a particular city outside of the domestic market. It is widely anticipated that the NFL will follow this approach by awarding a franchise to a London-based team who will play in the NFL. This could happen as soon as 2022. Jacksonville Jaguars, a current NFL franchise, have expressed interest in taking up this potential franchise. Its owner expresses dissatisfaction with current attendances at their local stadium and sees much greater potential in such a relocation. They have played a number of times in the regular season games staged at Wembley Stadium in the past few years. This recognises that every team has an existing and/or potential value. This represents an asset that is potentially up for sale to the highest bidder. If potential investors are prepared to buy the rights to the franchise, then they acquire ownership of that team and gain a number of rights and privileges such as territorial rights, ensuring that they do not encounter a competitor in that region. The value associated with franchises can be gleaned from the following statistic. The value of NBA teams in the USA increased by 75 per cent from 2015 to 2016 (7 http://www.­ forbes.­com/nba-valuations/). Within the US market, franchises have featured prominently over the years. They can switch from state to state. American fans appear to be less resistant to the notion of “losing” their local team. By contrast, in the United Kingdom and other parts of Europe, such a move would infuriate fans and lead to major resistance.  

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Franchises provide a mechanism for global expansion of a particular league or competition. As long as there are potential investors, then notionally such a strategy can work. However, there are downsides. Proper due diligence needs to be exercised to establish the credentials of the potential investors. Sports administrators need to be convinced that a viable, long-term market exists for the establishment of such a franchise. A few regular season games may not necessarily indicate that there is a demand for a team, which could generate the necessary support throughout the full and regular season. The franchise-based approach arguably increases the level of risk. It also creates the possibility of some loss of control from the perspective of the sports property owners. However, the physical presence of a team in a particular geographic region indicates a more tangible commitment to internationalisation.

9.7.6

Licensing

This strategy involves two parties. The sport organisation (the licensor) enters into an agreement with a company (the licensee) to use its name, logo or trademark on the company’s products in a designated geographic territory. A club or sports property will create a number of such licensing agreements across a wide range of product categories. These can range from jerseys, helmets, equipment, leisurewear and other accessories for men, women and children. They can also extend to a diverse range of other items such as video games, restaurants, sunglasses and so on. The licensee agrees to pay a royalty fee for each item sold. It benefits from access to a proven and recognised brand. The licensor profits from a revenue stream that can boost its overall income.

Bundesliga and IMP

In 2019, Bundesliga International, a subsidiary of the Deutsche Football League, entered into an agreement with IMP to be its global representative across a number of different markets in Europe, Asia, the Middle East and America. It will handle a wide range of products and will work closely with Bundesliga International. The latter has offices in Beijing, New York and Singapore. IMP is tasked with the challenge of establishing a diverse range of distribution chan-

Licensing presents sports property owners with a relatively quick mechanism for accessing selected international markets. It also mitigates the risk, as the onus is on the licensee to generate the sales targets that are usually specified by the licensor. It ensures that the licensor can focus on its core business; developing and building the brand, while passing on the manufacturing task to the licensee. On a negative note, the licensor potentially exposes itself to counterfeit items and intellectual property theft. It requires proper mon-

nels to connect with potential fans and customers. As well as generating revenue, Bundesliga International feels that it will increase the global popularity of the brand. It is perceived as one of the strongest leagues in Europe and already has a big reputation for producing high quality and entertaining football. (Source: Developed by the author)

itoring of licensees in terms of due diligence in the first instance. The licensor should implement an effective approach to quality management - in the context of the manufacturing of the items by the licensee. Licensing contracts typically run for around 5 years. Increasingly, in an era of litigation, both parties are potentially exposed to possible risk. The licensee does not receive any guarantee that it will retain the license at the end of the expiry period. The licensor may not gain the cooperation of licensees in terms of being allowed to audit their activities.

231 9.7 · International Entry Strategies in the Sports Sector

In summary, licensing provides a low-risk and low-cost approach to international development for sports property owners. It allows them to expand sales of their sports merchandising and ancillary products quickly. Much will depend on the overall brand perception and equity that has been established in the chosen market. In most licensing contracts, the licensor generally acts as the dominant partner in the arrangement. 9.7.7

International Distribution through Media Rights Sales

As we noted in 7 Chap. 5, distribution of sport properties through the sale of media rights generates a large revenue stream for property owners. However, it also ensures that the sport gains penetration or a “footprint” in the chosen international markets. Key stakeholders such as media broadcasters (either terrestrial or pay-per-view) act as the “bridgehead” between the sport property owner and the potential viewers/fans. This allows the sport/club/competition to gain a much wider exposure to fans across a number of different geographic territories. This (hopefully) leads to a “virtuous circle”. It stimulates awareness in new markets, builds interest, attracts sponsors and adds value to future media rights deals. However, other options exist. Increasingly, sports property owners are considering over the top (OTT) alternatives (also discussed in detail in 7 Chap. 5). This poses a threat to the PPV broadcasters, as it provides greater flexibility for viewers, who traditionally have had to take out monthly subscriptions for access, irrespective of what specific games they wish to view. Sport property owners can also set up their own unique channels to which global fans can subscribe. For instance, ahead of the 2019/2020 season, the English Premier League created its own YouTube channel. They show a range of items  -  covering archived games, and specific content from the twenty Premier League teams. We should not view this as an  

 

innovation: other football leagues in Europe have introduced similar channels in recent years. Such material allows fans to engage more fully with the EPL and view material that is specific to their teams. The EPL is not allowed to show any live games and there are delays as to when they can post action from recent matches. It also ensures a degree of protection to those broadcasters that have purchased the media rights to show live games in the particular geographic territory. For now, the EPL approach arguably protects the interests of the various stakeholders and can best be described as a hybrid model: utilising a number of methods to engage and connect with a domestic and international fan-base. Clubs also develop their own specific channels and place them on social media platforms. This provides specific material and content that is relevant to their domestic and global fan-base. As we noted earlier, many fans desire close engagement with their favourite teams, players and so on. This strategy achieves this goal. Threats from illegal streaming of live games arguably heightens the need for more personalised engagement with fan-bases. Well-designed channels provide an essential link to fans irrespective of where they are located. 9.7.8

International Development through Season Passes

Sports property owners of leagues and competitions increasingly see opportunities for global expansion by making use of virtual season tickets or passes for fans who cannot attend live games. Our case study on the NBA highlights the strategic use of such a mechanism. Other sport properties such as the NFL (American Football) and the GAA (Irish football and hurling) utilise similar passes. This approach addresses the objectives of making the elite competitions and leagues

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The sport of football (soccer) highlights the degree of foreign ownership and how it varies across the “Big Five” European leagues. The English Premier League (EPL) is arguably the strongest global sports brand. Because of its popularity, many potential investors seek entry and access to this product. At the start of the 2017/18 season, around sixty per cent of the twenty clubs making up the EPL involved foreign ownership. This pattern has not diminished in recent seasons. Similar trends appear in the French league, most notably the purchase in recent years of Paris Saint-Germain by a Qatari conglomerate 9.7.9 Developing New (effectively, the government). We can see a slower degree of foreign investment in the International Competitions Italian league, but it has increased in recent Sport property owners utilise new competi- years. The Spanish and German leagues exhibit tions in international markets to fulfil a num- certain differences. In Spain, traditionally ber of objectives. These include satisfying fans many clubs exhibit a strong degree of fan ownin an international market by bringing teams ership. In Germany this is even more embedfrom elite leagues to different geographic ded with the “50+1” rule. In this case, clubs, regions; tying in with media broadcasters to with one or two exceptions, require that fans promote the sport property; building the fan-­ own more than half of the individual club. Investors seek ownership of sport properbase and creating opportunities for selling ties for a number of reasons. Many see such merchandise and ancillary products; rejuvepurchases as a means of making money. For nating the sport property. instance, the Glazer brothers (a wealthy US In order to remain credible, sufficient business family) acquired ownership of sponsorship and investment is required. Manchester United by purchasing the necesOtherwise, fans in such countries may not sary shares. They pursued this strategy by takdevelop an interest in it. ing out a number of loans, which were For more analysis of this option, you leveraged, on the club. They have made sigshould analyse the case called “Rugby: the nificant profits in the intervening years. Critics Scrum Backwards, which can be found in the argue that this has placed a high degree of 7 Appendix at the end of this chapter. debt on the Manchester United brand. Other investors see club ownership as a mechanism for promoting a particular coun9.7.10 Outward and Inward try’s vision and place in the overall global environment. Sport appeals to many people Investment Strategies globally in terms of the positive values and As elite sports have become more commer- images that it portrays. Governments view the cialised, it becomes critical that more and sports sector as a useful tool for promulgating more investment is needed to expand the rev- their policies and philosophies. If used in an enue streams and develop the infrastructure at effective manner, it can alter perceptions, attiall levels (local level, club, league and interna- tudes and opinion, not just amongst society in tional). general, but also with opinion formers. available to a much wider geographic audience. It also caters for the diaspora (people who live abroad and still want to access the regular season, competitive games). As we look to the future, we are likely to witness wider use of this strategy. Arguably, it can eliminate the need for broadcasters and lead to an even greater revenue for sport property owners. It also reduces the degree of risk and costs associated with physically staging competitive games directly in international markets.

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233 9.7 · International Entry Strategies in the Sports Sector

Qatar: The Land of Sport

The tiny Gulf state of Qatar hit the headlines in a big way in 2010 when it won the right to stage the 2022 football World Cup. It has no history, heritage or link to this sport. The success of its bid sparked off allegations that it won by employing questionable tactics (such as bribery). Many people found it hard to believe that a country of under two million people located on a small space in the desert could achieve such success. Inhospitable weather conditions (temperatures getting as high as 50° in summer) surely would mitigate against staging the second most prominent sports event in the world? Not so. As one of the largest oil and gas producers in the world, the Qatari government has the funds available to invest in sport. It views sport as being a significant sector in a world of the future, where there will be no more oil or gas left. While the World Cup bid and subsequent win has captured global attention, it detracts somewhat from the overall strategy of making Qatar a significant player in global sport. Since it staged the Asian Games in 2006, it has invested significantly across a range of sports. These include the following: Indoor World Athletics Championships (2010), Moto GP Grand Prix, European Tour Golf events, WTA (Women’s Tennis Association) Finale, Diamond League Athletics and World Athletics Championships (2019).

??1. Assess the approach used by Qatar to develop its sports portfolio worldwide. 2. Can it sustain its success?

Countries such as Qatar have employed an outward-facing approach to international sports development. They have also utilised an inward-driven approach by recruiting foreign coaches and athletes into the country with a specific brief of improving standards across a variety of key sports such as football and athletics. The country expects to see this investment pay off in the form of medals at hallmark events such as the Olympic Games and the World Athletics Championships. Its

It has established high-profile sports sponsorships such as collaborating with FC Barcelona. It also established the ASPIRE Zone Foundation in 2003 to develop a sports infrastructure that can stage global events and encourage locals to participate in sport. In 2011, Qatari Sports Investments purchased the Paris Saint-Germain (PSG) football team. This organisation represents the Qatari government and makes it one of only two football teams that are owned by a country/state (the other being Manchester City – owned by Abu Dhabi). Since then it has grown to be in the top five teams globally with a value of just under £1 billion. It retains two of the most expensive players in the world and consistently reaches the final stages of the European Champions League. Chanavat (2017) argues that by acquiring major sports properties such as Paris Saint-­ Germain and Paris Handball, it generates a powerful influence at the seat of major sports decision-makers. This is complemented by the staging of hallmark sports events and the creation of a major sportswear brand called Burrda Sport. Qatar’s TV company, Al Jazeera, has been instrumental in winning the media rights for covering sport in the Gulf Region. BEIN Sport also located in Qatar, cementing the strong media position of that country globally.

Gulf neighbour, Bahrain, has offered passports to a number of athletes to represent it at such events. In recent years, they won medals for that country. By seeking out potential foreign investors or attracting approaches from them, clubs can develop the necessary funds to allow them to improve their competitive position both in their domestic and international competitions. The success of sport properties such as the EPL and other leagues in Europe indicate that they are attractive brands to associate with, from the perspective of international investors and conglomerates.

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However, this approach has led to accusations that club owners have sacrificed the values and ethos of their respective clubs and leagues. This is based on the belief that many international investors have no empathy with local fans and conditions. Rather, they view ownership of such clubs in purely commercial and dispassionate terms. This can lead to a lack of engagement with fans and a failure to take account of their views and opinions. Counter arguments suggest that the inward flow of finance bolsters the quality of the club and the league and presents a more entertaining “sports product” for fans.

9.8

9

Internationalisation Strategies: The Way Forward

Sports such as football, NFL, NBA and MLB have pioneered the concept of globalisation and expansion in the last couple of decades. We have noted the strengths of brands such as the EPL.  Looking to the future, can we observe likely future trends? Mandis et al. (2018) carried out an extensive assessment of the Italian football league, Serie A.  They identify likely future trends that, in their view, may emerge in the future. They might also apply to other sports. 55 An increasing shift from traditional broadcasters to social media/technology companies. Twitter, Facebook and Amazon have already made inroads by acquiring media rights for sports events. Netflix are “sitting in the wings”. It is likely that such powerful and wealthy companies as Facebook, Apple, Amazon, Netflix and Google (FAANG), with their hefty financial resources, will continue to acquire media rights 55 Increasing encroachment by governments and states. State-owned organisations and conglomerates now own clubs such as Paris Saint-Germain and Manchester City. They do so for a number of reasons, mainly to do with the promulgation of their political and economic policies. We are likely to see further investment in major clubs in the football sector and in other sports such as basketball

55 Multinational companies. A combination of state-owned and private investment companies are likely to extend their involvement in sport by acquiring a portfolio of sports properties globally. City Football Group (CFG) own or co-own six clubs across four continents. As well as owning Manchester City, they co-own New  York City FC in tandem with the New York Yankees (Baseball team). They hold a minority stake in the Spanish club, Girona. Such developments can lead to the use of synergies across the portfolio to leave the organisation in a very strong position 55 Individual clubs investing in other sports. Increasingly clubs are setting up teams in other sports such as basketball. Football teams for example Barcelona and CSKA Moscow to name but a couple, own for instance, many teams that play in the European Basketball League 55 Fans focusing less on domestic leagues and more on international competitions. In line with the focus on global sport, it is likely that we will see further growth in international leagues and competition. For instance, much discussion in recent years concentrates on possible initiatives such as a European Super League in football. This is likely to come to fruition at some point. This may lead to a lack of interest in domestic leagues among fans 55 Further growth in the development of academies and “feeder-clubs”. The continent of Africa in particular, represents further opportunities for growth. We will see further expansion in these areas by clubs. It is likely that major teams in the elite leagues will acquire a holding in leading domestic teams and use this partnership to identify, develop and eventually transfer outstanding talent to their main teams in Europe or in the USA. Globalisation of strong global brands brings a number of negative features that are commonly associated with the growth of transnational “super brands” such as Amazon, Google, McDonalds, Coca Cola and so on. Goldblatt (2019) points to issues such as cor-

235 9.9 · Conclusions

ruption, human rights infringements and financial misappropriations becoming commonplace in the sports sector. It is unlikely that we will see any diminution of such behaviour any time soon.

9.9

Conclusions

In this chapter, we have examined the issue of the internationalisation of sport properties. A strong “wind of change” blows across many of the elite sports. This is driven by developments in technology and advances in social media platforms. This creates a conducive environment for sports property owners to identify, connect with and build fan-bases outside of their domestic markets. The maturation of domestic markets, combined with the strategic imperative of increasing revenue streams forces sports property owners to seek out opportunities globally. We recognised that many of the strategies pursued by sports organisations and clubs resonate with traditional theories and frameworks of internationalisation. These include collaborative ventures, incremental, staged international expansion and the concept of psychic distance. The role played by intermediaries such as media rights holders cannot be underestimated. They can act as a “bridgehead” between the sports property owners and the fans. We identified the potential threat to traditional broadcasters from illegal streaming services through to sports property holders cutting the chord and setting up their own OTT platforms. Many global fans desire a more flexible way to consume their sporting experiences. This may lead to a decline in the traditional monthly contracts currently employed by broadcasters. Learning Outcomes 55 We can identify a pyramid, which indicates which sports are more likely to pursue internationalisation strategies

55 Technology has made it easier for sport property owners to expand their operations in an international setting. Using “season tickets/passes” provides a good example of this practice 55 Sport property owners utilise a diverse range of strategies to expand their product globally 55 Commercialisation and monetising the brand for sports at the top of the pyramid such as football, basketball, NFL and MLB, is a crucial driver in the internationalisation process 55 Sports marketers and administrators have to achieve a balance between increasing revenue streams and retaining the support of its local fan-­ base. A failure to do so can lead to disenchantment in the domestic market and a feeling that the club/organisation alienates local fans 55 The growth of state, institutional and private investors continues at pace and is likely to lead to further global expansion of sports properties.

nnEnd of Chapter Discussion Questions 1. Assess the view that internationalisation strategies employed by sport property owners are radically different from traditional frameworks and approaches. 2. Critically examine the use of licensing as a mechanism for entering international markets. 3. Evaluate the extent to which you would agree with the view that selling media rights is a key element in achieving successful internationalisation of a sport property. 4. As sports leagues such as the EPL and the NBA penetrate international markets, domestic leagues are likely to decrease in popularity. How valid is this perception? 5. Examine the motivations for internationalising a sport. How would you

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defend the view that internationalisation is not relevant for every sport? 6. Examine the advantages and disadvantages of using sports franchises to expand into international markets. Use examples to support your point of view.

7. Develop a framework that could be used to help sports marketers to assess the most appropriate international markets to enter.

Appendix

Rugby: Pushing the Scrum Backwards

9

Rugby is a sport that has its origins in the Public Schools of the United Kingdom. Often referred to as a “game for gurriors, played by gentlemen”, it embellished its middle-to upperclass ethos right through the twentieth century. Like other sports, it became popular in a number of commonwealth countries such as South Africa, New Zealand and Australia. The first World Cup took place in 1987 and the New Zealand team captured the honours. Rugby underwent a major shift in direction in 1996 when it became a professional sport at the elite level. Prior to that event, some of the top players received payments and were often referred to as “shamateurs”. Throughout the past 25 years or so, the various countries embraced professionalism, some with great success, such as England, Ireland, France and New Zealand, and others, such as Scotland, with less impact. The sport proved to be popular in smaller countries such as Fiji, Tonga and Western Samoa. Rugby also became popular within certain parts of Italy, most notably in areas such as Treviso. This led to Italy joining the (formally) “Five Nations” in the year 2000. In the revamped “Six Nations”, they have struggled over the past 20 years. Occasionally they have had encouraging wins over the stronger nations such as Ireland, France and Scotland. However, the sport of rugby has not really developed in the more populous regions and cities. Many commentators query the right of Italy to remain in this elite competition. Some argue that relegation should be introduced and cite nations such as Georgia, who arguably have a stronger claim to a place in the tournament. Unfortunately, the professional era has led to most of the more powerful countries availing of the opportunity to “poach players” from

these regions. They made offers of financial inducements and exploited rather loose “qualification” rules to do so. In terms of global growth, the sport of rugby has made little headway. The staging of the World Cup stimulates some degree of interest globally and has led to a limited uptake in European countries such as Germany. The game is popular in the likes of Georgia. This country has the strongest justification for possible inclusion in an expanded “Six Nations” competition going forward. Competitions such as the “Six Nations” championship (England, Wales, Ireland, Scotland, France and Italy) in the Northern Hemisphere and SANZAAR (formally called the Tri Nations) consisting of South Africa, New Zealand, Australia and Argentina, in the Southern hemisphere) prove to be the most popular and commercially successful of the international tournaments run by the national rugby organisations. More recently, the “November Internationals” (friendlies between international teams from both hemispheres) were added to the event roster. In early 2019, the game’s governing body, World Rugby, proposed some changes to the current international league system. Under this proposal, the international teams would play a maximum of twelve international matches each year. The existing Southern and Northern hemisphere competitions would double up to form the new overall competition (points to be awarded for wins and draws). The teams would play each other home or away in alternate years. Under this plan, World Rugby proposed the addition of Fiji and Japan to make up the twelve participants. This competition includes the prospect of relegation and promotion. World Rugby

237 Appendix

viewed this innovation as an incentive for rugby-playing countries below the top tier to improve their competitiveness. World Rugby argued that the following points would also benefit the overall promotion, participation and interest in rugby globally: 55 Make the current November friendly international more compelling for fans 55 Provide a stronger narrative for rugby fans 55 Avoid a clash with the World Cup (this competition would not be staged during the World Cup year) 55 Provide a route of progression for the so-­ called “smaller” nations 55 Attract greater revenue streams from the sale of media rights 55 Invest revenue returns into a more professional structure for coaching and establishing academies in the peripheral rugby-playing nations 55 Attract greater levels of sponsorship.

of their sports properties. This, combined with the need to promote the game globally and increase interest and participation levels, was a powerful justification for launching the competition. Among other announcements made by World Rugby, the proposed new format would be “underpinned by a record commercial partnership” with marketing company Infront, which they say will guarantee almost £5 billion ($6.6 billion/€5.9 billion) for investment in the sport over 12 years. Of that figure, World Rugby say £1.5 billion ($2 billion/€1.8 billion) would be guaranteed as incremental revenue for the game. “The proposed business model covers both media and marketing rights but does not include any sale of equity in the competition and therefore full control of the competition and its revenue redistribution model would be retained by the unions, the current major competitions and World Rugby,” their statement reads (7 https://www.­insidethegames.­biz/articles/1076772/world-rugby-announce-changeto-nations-championship-plans-following-criticism). The proposal, under the rules and regulations of the governing body, required the unanimous support of the top nations (England, France, Ireland, Italy, Wales, Scotland, New Zealand, Australia, Argentine and South Africa). The launch of this competition would take place in 2022. The proposal generated a mixed reaction. Some of the leading players expressed concerns about the addition of another layer of competition, and the impact that it would have on player welfare. Administrators in some of the countries remained unconvinced about the potential financial benefits that might accrue to them. Two of the six nations rejected the proposal. Other stakeholders such as the administrators of the English and French premier club leagues argued that this would have an impact on the availability of the top players to play in these competitions. In mid-June 2019, World Rugby announced that it was dropping plans to take the proposal  

Overall, World Rugby justified the new proposed competition by arguing that it would provide maximum financial gain for minimum restructuring of existing competitions. They also expressed the view that it would be particularly relevant for the Southern Hemisphere countries, which had struggled to attract significant revenue from media rights and sponsorship deals. The addition of semi-finals and a final could be potentially sold to media rights bidders as a separate element of the overall package. They could also apply the same principles for attracting sponsors. Match-day revenue streams vary considerably across the different elite countries. The RFU in England generated around £30 million from ticket sales, which equates to around twenty per cent of the combined ticket sales from the other nations. By contrast, South Africa produced a revenue stream of £3.6 million (6 per cent of its total revenue) from its home tests. World Rugby argued that inequalities in income generation across the different elite nations was an indicator that the sport was missing potential revenue and the monetisation

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any further in the face of criticism and a lack of support from key stakeholders. Members of the World Rugby governing board argued that without proper “buy-in” it was not worth taking the initiative any further. The prospect of private investors purchasing a stake in the existing competitions increased as a result. For instance, CVC Capital Purchasing had already made a bid of £500 million to acquire a 30 per cent holding in the “Six Nations” competition. World Rugby remain committed to exploring further ideas in order to develop the sport globally. They argued that further rejections of such proposals would impede progress in terms of promoting the sports in peripheral nations. It would be difficult to invest in coaching and the establishment of academies. Existing problems within the sport remain. New Zealand, arguably the strongest rugby nation, in terms of success on the pitch

?? Discussion Questions 1. Assess the proposed new competition that World Rugby put forward. 2. Consider the reasons why it failed to gain approval.

and brand equity, continually loses its top players to European club teams. Along with some of the other countries, they do not select players for their national team unless they play with teams in the domestic competitions. Players from regions such as the Pacific Islands are lured to the bigger nations in the Southern Hemisphere due to financial inducements and the prospect of playing in a stronger set-up. The members of the World Cup governing body had many issues to ponder upon, as they looked to the future of the sport of rugby in a global context. (Sources: Compiled by the author from various sources on the Internet). 7 https://www.­i nsidethegames.­b iz/articles/1076772/world-rugby-announce-­changeto-nations-championship-plans-­followingcriticism  

3. Examine alternative strategies that World Rugby could implement to promote the sport of rugby globally.

Snookered

Background The sport of snooker evolved from the game of billiards. The latter has a long and distinguished history: it was played in the French court of Louis X1 as far back as the fifteenth century. The term “snooker” originated with a British army colonel serving in India in 1875. It became popular as a “table” game around that time. The game became very popular in the United Kingdom from the 1920s onwards. Two brothers, Joe and Fred Davis dominated the championships right up to the 1960s. While the sport was popular in clubs and bars in the UK, it failed to make any impression in terms of media coverage from television, which began to take off in the late 1950s. The BBC (UK terrestrial broadcaster) launched a programme called “Pot Black” in early 1970s. This provided a wider audience for

the sport and built a strong profile. It was a short thirty-minute feature and demonstrated that there was an appetite and more importantly, a potential healthy set of viewers for this sport. The emergence of players such as John Spencer, Steve Davis, Alex Higgins and Denis Taylor further enhanced its image and popularity over the next decade. A UK audience of 18.5 million tuned in to watch the 1985 final at 1 am in the morning - perhaps the highest point in the popularity of snooker. The further emergence of players such as Jimmy White, Stephen Hendry and Ronnie O’Sullivan made the sport ever more popular in the 1990s. Fans recognised them as positive and attractive players of the game. Although the sport was played in many countries, it lost its popularity on the main TV

239 Appendix

channels. This damaged the sport in terms of the prize money on offer to players. It had also been dependent largely on sponsorship from tobacco companies. This disappeared as a lucrative source of income due to ever-restrictive government legislation. The challenges in attracting new sponsors led to an inevitable decline in the number of televised tournaments. Viewing figures declined for a number of years  -  partly due to the lack of “star” quality, entertaining players and the emergence of other sports, which grew in popularity on TV due to the promotion of them by Sky and other PPV broadcasters. Ironically, the sport of snooker grew in markets such as India and China, but the sports property owners failed to recognise the importance of the international dimension. Virtually all of the major tournaments were held in the UK and the Republic of Ireland. Likewise, the vast majority of the top players also came from the UK, with the exception of one or two from Australia and Canada. The year 2005 proved to be a catalyst for the sport of snooker. Although snooker was popular in China, that year represented the first time that a Chinese player: Ding Junhui, beat the seven times world champion Stephen Hendry in a major tournament in China. In many ways it represented a “changing of the guard” and the emergence of an alternative competitor to the UK players. Renaissance Barry Hearn emerged in 2010 and took over the administration and marketing of snooker. He had established his credentials much earlier in various sports such as boxing. He became a prominent sports promoter in the 1970s and successfully managed snooker players, such as Steve Davis, in the 1980s and 1990s. He established the very successful Matchroom Sports Company and gradually spun out from snooker to promote sports such as boxing, darts, tenpin bowling, pool, golf, fishing and table tennis. When he took over as Chairman of the World Professional Billiards and Snooker Association, he was shocked at the state of the sport. The number of tournaments had declined significantly from the 1980s. Sponsorship had

also tailed off and ­prizemoney likewise. The heydays of the mid-­1980s were a long and distant memory What to Do? Hearn had already revitalised the game of darts. Similar to snooker, darts also declined significantly as a popular TV sport from its peak in the early 1980s. People perceived it as a game for pot-bellied middle-aged men, redolent of pubs and stale beer (see our case study called “Flying Arrows”). It might be worthwhile for you to revisit it before moving forward with this case. He quickly realised that he needed to reposition the sport of darts as entertainment and a place of fun. He introduced music, flashing lights, glamour girls who “walked in” the players, similar to the sport of boxing. Attendances rose and TV viewing figures also increased. New sponsors associated their brands with the sport.  hat Could He Do with Snooker? W He identified a number of areas that had to be addressed as a matter of urgency. Firstly, he had to develop more tournaments in the calendar and expand the location of them to a range of countries in Europe and Asia. He had to change the image of the sport of snooker as “UK-centric” to a more cosmopolitan and embracing setting. In particular, he saw the value of China as a major source for international development. From a population of over 1.5 billion, 70 million people play cue-based sports. In Hearn’s view, it was a ready-made market waiting to be developed. Although so many people played the sport, they and the media viewed it more as a social activity. The lack of commercialisation also indicated to Hearn that opportunities abounded there. He recognised that people could watch the sport of snooker in different ways to that which existed two decades previously. The emergence of PPV channels, Internet-based streaming sites, and 24-hour dedicated sports channels, provided him with an opportunity to do what he was good at: promoting and negotiating deals. If viewing figures and new audiences

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could be developed, then sponsors would also want to invest in the sport. Over the next 4 years, he set about the task with gusto. He created a number of deals with broadcasters. These included a 10-year deal with Eurosport. Quest – a free-to-air channel, agreed to cover the English, Northern Irish and Scottish Open ranking events. Now TV, a 24-hour channel also included coverage of ranking events for the Hong Kong Market. Significantly, Hearn signed a 10-year deal with CCTV, the stateowned Chinese channel, to cover four ranking events: the World Championships, UK Championship, the Masters and the Welsh Open in addition to the World Cup event. He signed further deals with OSN  – the largest PPV broadcaster in the Middle East and North Africa (covering twenty-five countries in total). Timesport HD in Thailand agreed to take all of the events from the Tour and air them. Cognisant of the need to embrace the social media networks, Hearn also set up Facebook Live. This allowed the World Professional Billiars and Snooker Assocation WPBSA to gain TV coverage in regions that did not have TV coverage. Such locations included South America, India, Pakistan, Bangladesh and Sri Lanka. He sold the audio-visual digital media rights to Rigour Media in China. This company had already been heavily involved as the World Professional Billiards and Snooker Association’s technology and training partner at its main academy in Beijing. In addition to a focus on commercial deals with various broadcasters, Hearn spearheaded the development of academies in the major Chinese cities. It opened its first academy there in 2013. The WPBSA also worked on putting in place regional structures for coaching and developing local players. They established an annual tour to China, which included some of the top-­ranking players and involved emerging Chinese players as well. Hearn recognised that he had a very receptive target audience. Many children had taken up the sport and schools promoted the sport by

investing in snooker tables for their pupils to play the sport. Hearn also initiated a collaboration with a rival snooker organisation: the International Billiards and Snooker Federation. He recognised that without such interaction it would take far longer to expand the game globally. The two organisations worked jointly on international development through the creation of multi-sport events with potential involvement in events such as the Asian Games and ultimately, the Olympic Games. Onwards and Upwards During the first few years of Hearn’s administration of the sport, the Chinese market in particular showed spectacular signs of growth. Statistics such as the number of tournaments staged in China provides a clear indicator of its popularity in that market. In 2008, it staged five events. By 2017, this “mushroomed” to over thirty tournaments. Hearn estimated that during this time the worldwide TV audience for snooker had grown to over half a billion people. This growth in popularity was demonstrated by the increasing success of Chinese snooker players in the world ranking tournaments. This culminated in the first ever appearance of a Chinese player in the World Championships final in 2016: Ding Junhui. Over 210 million Chinese fans watched the final. Unfortunately for them, their “hero” lost. By expanding the number of ranking and non-ranking events, Hearn in a “physical sense” ensured the spread of snooker across different parts of the world. This was reflected in the list and number of events for the 2019–2020 season. Locations included Latvia, China, India, Thailand, Germany, Belgium and Gibraltar. In 2018, the Chinese Open became the first tournament to offer a £1 million prize fund. The Asian footprint features prominently in the list of ranking players. In 2017, of the 128 professional players on the tour circuit, 17 came from Chia and 12 from other parts of Asia, such as Thailand, Hong Kong and India. Hearn predicts that by the early 2020s, half of the top thirty-two players will come from China. The Chinese presence increased to 22 in 2018.

241 Appendix

In 2018, players from twenty countries participated in the tour circuit. All sports, in order to expand popularity, need narratives. This refers to positive stories about the sport, mainly by building profiles of players around which (hopefully) fans will focus on and become motivated to watch them and take up the sport. Snooker is no exception. Although a couple of Chinese players such as Ding Juihui have come close to winning the World Championship, one suspects that Hearn and his fellow marketers and directors will jump up and down with delight when a player from that country or elsewhere in Asia ultimately makes the breakthrough. That time cannot be too far off, given his predictions for the future. Mainland Europe is also a fertile growth market for snooker. Players such as Luca Brecel from Belgium and Lukes Kleckers from Germany and Alexander Urserbacher from Switzerland are generating wins across the various ranking events, while not yet in a position to win one as at the time of writing of this case. Over forty federations across Europe administer national championships and work closely with the WPBSA in terms of attracting media coverage. Elephant in the Room So far, we have made little reference to the Indian market. After all, army officers introduced the sport of billiards and snooker during the occupation of that country in earlier centuries. Along with China, India is arguably the most densely populated country in the world. The population exhibits an insatiable appetite for sport, particularly cricket. In this sport, Indian cricket administrators demonstrate their skills and ability to create new sport products such as the Indian Premier League (IPL) 20/20 tournament. Focusing on entertainment, the family, and involving Bollywood stars in terms of ownership of franchises, it has created major profits by acquiring lucrative media rights. Fans turn out in their millions. The tournament attracts the best play-

ers in the world who sign very profitable contracts for the privilege. Could the WPBSA and Hearn achieve anything like this success? Arguably, they start with the knowledge that millions of Indians play the sport. A ready-made target exists. Around two and a half million people play the sport there. From a sports marketing perspective how could they build on this foundation? In 2015, it staged the Indian Open, which was the second ranking event to be held there. Unlike China, India has so far failed to produce a significant player who has broken through to the top rankings. Only two players have come anywhere near that exalted position. Panjaj Advanti is a multiple times world billiards champion. He has flirted with snooker and in 2013, reached the quarterfinals of a ranking event (the Welsh Open). Aditya Mehta reached the 2013 Indian Open final and reached a position of 49th in the World rankings. Since then he has struggled to make any significant impact. By contrast, to the Chinese market, Indians perceive snooker as an elitist sport. This is largely due to its colonial past, where British officers played the game in their army quarters. This has changed somewhat in the last decade or so. Snooker parlours have opened in many of the big cities in India and social club owners placed tables in their facilities. At recent big tournaments in India, the organisers invited Bollywood stars. This avenue to expansion might create the potential for future opportunities. Hearn signed a contract with Leisure Sport Management when the Indian Open event was launched in 2013. This partnership allocated the task of promoting the event, seeking sponsors and attracting media coverage to this company. It resembled the approach adopted in the case of China. This resulted in significant increases in live broadcasting of snooker in 2015 and 2016 (estimated to be a viewing uplift of 48%. Companies such as Sony Six pioneered the concept of PPV coverage).

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Chapter 9 · Globalisation of the Sports Product

 ocial Media Strategy S Hearn and his team decided to use Facebook Live to provide coverage of the 2017 World Championships to geographic areas not currently targeted. This covered forty countries in North and South America and the Indian subcontinent, including Pakistan, Afghanistan and Sri Lanka. His team employed the Facebook audience optimisation tool to assess the success of the campaign. The coverage of the 2017 world championships (over 17 days) generated over 3 million video views and 53 million post impressions. Pakistan generated the highest level of views – 576,005. Hearn estimated that the campaign increased the overall global fan-base by over 30 per cent and by 42 per cent in the United States. Across the regions covered by the Facebook Live campaign, 75% of the video views came from the under thirty-five segment. Hearn expressed satisfaction with the results, citing three goals that he initially set: 55 To grow the World Snooker’s audience 55 To reach and engage with younger fans in new geographic territories 55 To grow the US-based snooker audience. At the end of the World Championships in May 2019 Hearn sat at his desk and set himself two tasks: to review the current status and position of the sport of snooker in the global mar-

?? Discussion Questions 1. Would you agree with the view that the sport of snooker had “a lot done with more to do? 2. Carry out, using material from this case and the Internet, a detailed assessment of snooker’s internationalisation strategy. 3. Has Hearn focused too much on China and India and has he ignored other potentially lucrative markets?

ket and secondly, to develop some initiatives that could take it further in terms of penetration of existing and new markets. Possible participation and involvement in future Olympic Games cropped up quite often over the years at board meetings, in player discussions and in the general media. How could the WPBSA take this forward in future planning and strategy development? Although not an expert in social media and digital marketing, Hearn also felt that the WPBSA was in danger of “missing a trick” by not taking cognisance of an area which was dynamic and volatile and liable to sudden new developments and disruptors. The World Championships has been staged at the Crucible Theatre in Sheffield (UK) since 1978. It creates a unique atmosphere with its intimate audience. It retains a capacity of 980 spectators. In 2017, the WPBSA signed a contract that ensured that the event would continue at this venue until 2027. This cemented the relationship and guaranteed that this venue would continue with its iconic atmosphere. It also closed down speculation that it might be transferred to China, which could provide greater funding and a much larger arena. Before undertaking such analysis and appraisal, his initial thoughts revolved around the following perception. »» A lot done, more to do. (Source: Developed by the author from various sources on the Internet).

4. Assess the view that the concept of snooker becoming an Olympic sport is far-fetched and delusionary. 5. Develop further initiatives that Hearn and his team should take forward. In this exercise, adopt a short, medium and long-range template. 6. Should the WPBSA move the World Championships event to another venue?

243 References

References Chanavat, Nicholas. 2017. French football, foreign investors: Global sports as country branding. Journal of Business Strategy 38 (6): 3–10. Goldblatt, David. 2019. The age of football. London: McMillan. Goss, Benjamin D. 2009. Taking the ballgame out to the world: An analysis of the world baseball classic as a global branding promotional strategy for major league baseball. Journal of Sport Administration and Supervision 1 (1): 75–95. Hollensen, Svend. 2017. Global marketing. 7th ed. Harlow: Pearson Education Limited. http://www.­forbes.­com/nba-valuations/ Johanson, J., and L.-G. Mattsson. 1988. International­ ization in industrial systems – a network approach. In Strategies in global competition, ed. N. Hood and J.-E. Vahlne, 303–321. New York: Croom Helm. Kozma, M., and K. Andras. 2014. Winning in Europe: International strategies for Hungarian sports clubs. Entrepreneurial Business and Economics Review 2 (2): 31–49.

Mandis, Steven G., Thomas Lombardi, and Sarah Parsons Wolter. 2018. What happened to Serie A: The rise, fal and signs of revival. Arena Sport. Birlinn Ltd. Edinburgh. Scotland Shani, D., and D.  Sandler. 1996. Climbing the sports event pyramid. Marketing News, 6. Singer, Dan, and Jaysoon Chi. 2019. The keys to eSports marketing: Don’t get “ganked”. McKinsey & Co, August: available at https://www.­mckinsey.­com/ industries/media-and-entertainment/our-­i nsights/ t h e - k e y s - t o - e S p o r t s - m a r k e t i n g - d o n t - g e t -­ ganked?cid=other-eml-alt-mip-mck&hlkid=1a255b c022a64d2982685554c341d08d&hctky=1911284&h dpid=7937709e-7318-42c9-bfe0-3bafe89676a6 Watanabe, Yasuhiro, Cassendra Gilbert, Mohd Salleh Aman, and James J. Zhang. 2018. Attracting international spectators to a sport event held in Asia: The case of Formula One Petronas Malaysia Grand Prix. International Journal of Sports Marketing and Sponsorship 19 (2): 194–216. Welch, L.S., and D.E.  Welch. 1996. The internationalization process and networks: A strategic management perspective. Journal of International Marketing 4 (3): 11–28.

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245

Managing the Sports Sponsorship Process Contents 10.1

Introduction – 247

10.2

Sponsorship Defined – 248

10.3

Sports Sponsorship in Context – 248

10.4

Why Is Sport So Attractive To Sponsors? – 249

10.5

Sponsorship Objectives – 250

10.5.1 10.5.2 10.5.3 10.5.4 10.5.5

 wareness-Related Objectives – 250 A Image-Related Objectives – 251 Relationship-Related Objectives – 251 Corporate Social Responsibility-Related Objectives – 251 Sales-Related Objectives – 252

10.6

Identifying Potential Partners – 254

10.6.1 10.6.2 10.6.3

 eveloping a Proposal – 254 D Placing a Value on the Sponsorship Deal – 254 Assessing the Value of the Components of the Sponsorship Proposition – 255 Exercise – 255

10.6.4

10.7

 anaging the Relationship Between the Sport M Property Owner and Sponsors – 256

10.8

Sponsorship Activation – 256

10.9

Sponsorship in the Digital Age – 257

Electronic Supplementary Material  The online version of this chapter (https://doi.org/10.1007/978-3-030-53740-1_10) contains supplementary material, which is available to authorized users. © The Author(s) 2020 S. Ennis, Sports Marketing, https://doi.org/10.1007/978-3-030-53740-1_10

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10.10 Tools for Engagement – 258 10.10.1 C  ontent Marketing – 258 10.10.2 Storytelling – 259 10.10.3 Exercise – 259

10.11 A  ssessing the Effectiveness of Sponsorship Deals – 259 10.12 Evaluation Methods – 260 10.13 The Threat from Ambush Marketing – 262 10.13.1 Defining Ambush Marketing – 262

10.14 Responses to the Threat of Ambush Marketing – 263 10.14.1 W  hat Makes Ambush Marketing Work? – 263 10.14.2 Response of Consumers/Fans – 265

10.15 Athlete Endorsement and Brand Ambassadors – 265 10.15.1 E xercise – 267 10.15.2 Brand Ambassadors – 267

10.16 Stadium Naming Rights – 267 10.17 Conclusions – 268 Appendix – 270 References – 281

247 10.1 · Introduction

nnLearning Objectives On completion of this chapter, you should be in a position to address the following objectives: 55 Understand the concept and role of sponsorship within the sports sector 55 Distinguish between philanthropy and sponsorship 55 Examine the different objectives that companies develop for their sponsorship strategy 55 Establish the pros and cons of using sports as an avenue for sponsorship strategy 55 Assess the importance of activating sports sponsorship rights and deals 55 Identify the key success factors for effective sponsorship of sports properties 55 Analyse the process of designing and implementing sponsorship strategy 55 Understand the changing role of sponsorship in the digital age 55 Assess the mechanisms for evaluating the effectiveness of sponsorship campaigns 55 Understand the concept of ambush marketing 55 Evaluate the potential dangers and opportunities associated with ambush marketing campaigns 55 Identify the responses of sports property owners, government agencies and official sponsors to the threat of ambush marketing campaigns 55 Assess the reaction of sports fans and viewers to unofficial sponsors.

10.1  Introduction

In this chapter, we assess one of the key reveue streams for sports property owners: sponsorship. We begin by defining what sponsorship means and how it differs from philanthropy. We examine the typical objectives that both parties (sponsored entity and sponsor) seek when entering into the process of setting up a sponsorship deal.

Sponsoring sports properties has become critical to their financial wellbeing. Owners of clubs and competitions quickly recognised the value of their product, as the sports sector embraced the principles of commercialisation. Likewise, branders identified the enhanced value to their products because of their association with sport, particularly when the chosen entity espoused many of the values and attributes associated with their respective brands. We consider the stages involved in the process of securing and managing sponsorship deals. In particular, we identify the critical success factors necessary for an effective contract. We assess the importance of the concept of activating the sponsorship deal. It is not sufficient to “throw money” at a sports property and then sit back to reap the perceived benefits that may (or may not) accrue. Both parties in the contract should recognise that in order to achieve a successful partnership, they should invest in the process. The sports property owners have to assess mechanisms for ensuring that the sponsor, and the target audience, achieve a positive outcome. This may include sharing data on the event (brand recall assessments, engaging in joint-promotional activities and so on). This allows both parties to gain leverage from the event/competition/ club. Sponsors should recognise that they need to invest in “bringing the sponsorship deal to life”. This is the essence of what we mean by the term “activation”. We address the changing demands placed on sponsors because of the digital era. Factors such as “big data”, technology, mobile and location-based marketing ensure that the nature of engagement with fans has changed irrevocably. We examine how sponsors and sports entities assess the effectiveness of sponsorship contracts. In the later stages of this chapter we evaluate the threats and opportunities arising from the practice of ambush marketing. Ambush marketers have been around for over 40 years. Successful sports properties attract the attention of branders who are not officially associated with the event. They pay no fee to the

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Chapter 10 · Managing the Sports Sponsorship Process

sport entity owners. They potentially benefit from associating their brand (through various initiatives) with the event. This can generate higher levels of brand awareness and confusion in the minds of targeted fans who attend events live or watch from afar. 10.2  Sponsorship Defined

10

We should note at the outset of any appraisal of sponsorship, that it is NOT a modern concept created by clever marketers in recent decades. It has been around in various guises over a number of centuries. Dating back to the ancient Olympic Games in Athens and the emergence of classical musicians such as Mozart and Beethoven, individuals and organisations have benefited from funding and support from other parties. In the latter cases, artists, composers and poets attracted support and “benefit-in-kind” from royalty, wealthy benefactors and entrepreneurs. This allowed them to work on their projects in an environment that provided some degree of financial security. Such practices are often referred to as philanthropic acts. Essentially this means that an individual or organisations provide support (financial and/or non-financial) to an individual or entity, without any expectation of benefits accruing to them in return. This is a critical point to grasp as it indicates the essential difference between philanthropy and sponsorship. In the latter situation, one party (the sponsor) invests in financial and/or non-financial support to a sponsored entity in order to address marketing and business objectives and fully expects a return on this investment. The operative word in this definition is “invests”. Masterman (2007) reinforces this view of investment as being a cornerstone of any sponsorship contract. In an era of commercialisation and monetisation of sports products and entities, virtually all sponsorship deals are predicated on a return on investment (ROI). In most cases, this typically involves financial transfers. However, there are exceptions to this observation. We explore this later in the chapter. Such

exceptions include a transfer of expertise and technology from the sponsor to the sponsored entity. Sponsors may also engage in initiatives with sports entities in order to address corporate social responsibility objectives. 10.3  Sports Sponsorship in Context

In order to consider the global expenditure on sports sponsorship we should consider the total spend globally on sponsorship. This identifies the significance of the sports sector. . Table  10.1 identifies the latest (at the time of writing this text) global expenditure on sponsorship. Expenditure on sponsorship covers a number of different categories such as sports, arts, entertainment, causes, festivals and fairs. The sports sector is the most dominant area for attracting sponsorship. Estimates vary, however, the percentage of total expenditure on average is anywhere between 50 and 70 per cent. The bulk of the rest of sponsorship expenditure covers the arts sector. A survey conducted by Two Circles (2019) estimated that global expenditure on sports sponsorship would reach a figure of around £35 billion globally in 2019. However, we should add a note of warning however. The same survey identified a potential deficit of around £14 billion annually that sport property rights holders fail to exploit. This is caused by poor models for estimating the  

..      Table 10.1  Global expenditure on sponsorship Year

Spend

2018

US$ 65.8 billion

2017

US$ 62.7 billion

2016

US$ 60.1 billion

2015

US$ 57.5 billion

2014

US$ 55.3 billion

2013

US$ 53.1 billion

Source: 7 https://www.statista.­c om/statistics/ 196864/global-sponsorship-spending-­since-2007/  

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249 10.4 · Why Is Sport So Attractive To Sponsors?

value of the property rights, largely due to utilising procedures that do not take into account the influence of digital marketing. Rights holders rely on techniques that are based on linear TV.  As we established in an earlier chapter, this form of sports consumption is in decline, as many fans increasingly utilise other media channels. We will revisit this issue later in the chapter. We should inject a further cautionary note. The impact of the Coronavirus crisis (at the time of writing this chapter) could not be estimated. As various sports properties were cancelled and/ postponed for a number of months in 2020, it is reasonable to assume that investment in sponsorship declined over this period. It is also likely that the value attached to such sports events and competitions may also decline. . Table  10.2 identifies the most prominent industry categories that engage in sports sponsorship. This table highlights the growing importance of the betting industry in the context of sports sponsorship. This is particularly so in major sports such as football in the UK. By contrast, the alcohol sector is likely to decrease in importance in future years, as governments in Europe introduce legislation that is more restrictive. This will curtail the involvement of large companies such as Diageo in the future. It is also likely that governments (particularly in the UK), instigate similar legislation to  

..      Table 10.2  Industry breakdown (UK Market) Industry

Percentage

Financial services

19%

Automotive

14%

Airlines

13%

Gambling

12%

Alcohol

9%

Soft drinks

7%

Other

26%

Source: 7 https://twocircles.­com/gb-en/articles/ sport-misses-out-on-14bn-despite-growth-year-­ for-sponsorship-spend/  

..      Table 10.3  Geographic breakdown of sponsorship expenditure Region

Percentage

North America

36%

Europe

26.7%

Asia Pacific

25.2%

Central and South America

7%

Other

3.8%

Source: Venturoli (2019)

restrict the influence of betting companies such as Paddy Power and William Hill. In geographic terms, North America is still the largest sector for overall sponsorship. . Table  10.3 examines the breakdown of overall sponsorship across the different global regions. The North American market has traditionally been the central focus for the era of commercialisation within the sports sector. The “big four” sports: NFL, NBA, MLB and NHL drive sponsorship deals due to their high levels of popularity and the large salaries of the main players. The figures in . Table 10.3 still reflect this dominance. However, we can recognise that the “winds of change” are blowing across other regions. The growth of sponsorship deals in Europe and the Asia Pacific region reflects this trend.  

 

10.4  Why Is Sport So Attractive

To Sponsors?

The preceding section highlights the dominance of the sports sector in terms of global expenditure. Why should this be the case? 1. Sport transcends geographic, cultural and religious borders. Very few, if any other sectors “cuts through” these divisions in society. Sports such as football, because of its universality, generates supporters and fans across the globe in the case of successful brands such as Barcelona, Real Madrid,

250

Chapter 10 · Managing the Sports Sponsorship Process

and Manchester United and so on. This clearly offers great appeal to branders who pursue global strategies. 2. Receptive environment. Sport engenders passion, positivity, enjoyable experiences and excitement for fans. This appeals to branders who convey similar values and attributes. This has the potential to create synergies as the brand and sports property holders align their brands in the form of a mutually beneficial partnership. 3. Rich vein of values and symbols. Sports mirrors many of the features of tribal marketing. We discussed this concept in 7 Chap. 4. This concept argues that individuals, in many cases, welcome the opportunity to belong to a wider community of like-­ minded groups. Sport, through its combination of rituals, procedures and behaviour creates such an environment. 4. Loyalty. Sport, particularly at the level of fans supporting and engaging with clubs, engenders an intense degree of loyalty and commitment. When “married” to the associations and attributes of the sponsor’s brand, this creates a strong bond. It can lead to higher levels of brand awareness and desire and ultimately a stronger market position because of the deal. 5. Media interest and coverage. The advent of PPV channels and greater coverage of sports, from elite to niche, attracts the interest of sponsors. They can “get their message out there” and potentially benefit as a result. 6. Changing digital landscape. Technology, which creates situations where brands can track customer behaviour and consumption, also extends to sponsorship deals. By activating such a deal, both sponsors and property owners can more accurately track the effectiveness of the initiative. They can also engage and interact with target markets than was possible in the “analogue” era.  

10

10.5  Sponsorship Objectives

In order to develop a coherent and relevant sponsorship strategy, companies should identify the specific objectives that they wish to achieve. This provides direction for the subse-

quent deal/contract. Otherwise, there is a distinct danger that it will lose focus. Masterman (2007) and Stotlar (2005) pinpoint a number of different categories. They can be summarised as follows. 10.5.1  Awareness-Related

Objectives

When many companies enter into sponsorship arrangements with sports property owners, the issue of brand awareness features prominently in the rationale. This may relate to the objective of building or increasing awareness of the brand in a particular country or region. This applies particularly to brands that currently have a low level of awareness in an existing market or propose to enter new markets. Sponsorship presents an opportunity to associate the brand’s values with the chosen sports property. It can then develop appropriate activation strategies in order to maximise its effectiveness. It is important to differentiate between corporate and marketing-focused levels. The former refers to a situation where the company or organisation focuses on raising and building awareness levels of the overall company and not on any particular brands that sits in its product/service portfolio. For instance, the Chinese information and technology solutions provider: Huawei, has attracted a lot of attention during 2019— most of it, negative. Arguably, this company has a very low level of corporate awareness among the UK market. Huawei might conceivably increase awareness levels about the extent of its business portfolio by engaging in some form of sponsorship initiatives. Utility companies (gas, electricity and so on) also find that many consumers have little or no awareness about them in general and about their range of products and value propositions in particular. High level sports properties present opportunities to become more involved in their markets and can raise awareness levels. Marketing-focused objectives relate to a specific brand within the product portfolio of the company.

251 10.5 · Sponsorship Objectives

Many companies combine both aspects when formulating sponsorship strategies. 10.5.2  Image-Related Objectives

Companies may choose a range of objectives that directly relate to the image that they hold in the market place. For some it may be about reinforcing a strong and positive brand image, in terms of perception among its target market and its overall positioning strategy, relative to its competitors. For brands that suffer from a negative image, a sponsorship contract may be critical in terms of altering stakeholder’s perceptions and attitudes. If it works in an effective way, it can enhance the image of the brand with the key stakeholders. However, sponsorship is not like conventional advertising. In the latter case, the company can control the message and book the space on TV, radio or other media options. Sponsorship does not provide such a safety net. It has to enter into an arrangement with a sports property, which in most cases retains a set of values and attributes with its stakeholders. When a sponsor enters into that space, it does not guarantee anything like the same degree of control. It is a symbiotic relationship in essence. This implies a transference of attributes and associations between the two parties. This may not necessarily translate into a successful outcome.

10.5.3  Relationship-Related

Objectives

Companies, organisations and individual brands interact with and depend on cooperation and collaboration with various stakeholders such as customers, suppliers, media, shareholders and their own workforce. Sport sponsorship deals present opportunities for establishing and  cementing such relationships. For instance, companies sponsor sports events and competitions in order to reward staff, suppliers or dealers. Part of the contract usually involves the right to a number of tickets

and hospitality suites at the venue. Within the confines of the corporate hospitality tents, companies can entertain some of their stakeholders by providing food and beverage, combined with exclusive seats to watch the unfolding events on the tennis court, the cricket ground or the arena. They can discuss business, engage with them, and cement ongoing relationships. Such activities as corporate hospitality attract a strong degree of opprobrium from many quarters. Some view it as a squandering of corporate resources, particularly in recessionary times. Others argue that it is a form of bribery and a recipe for unethical behaviour. However, a cursory look at the sheer scale of hospitality tents, villages and so on that are on display at major sports events indicates that there is a high demand for such facilities and resulting entertainment. It has become a significant source of revenue for many sports clubs and organisations. However, during recessionary times, corporate hospitality is one of the first areas to experience cutbacks in investment. Apart from the costs, organisations want to avoid negative publicity from the media. This often runs along the lines of “look at those pampered executives enjoying themselves, while the rest of us suffer pay cuts and a decline in real income”. We should recognise that part of the sponsorship objectives may address issues such as building staff morale within the company. By becoming a major sponsor or partner of a top-tier sports property, the company can make tickets available to staff through competitions or based on an individual’s contribution to the success of that company. 10.5.4  Corporate Social

Responsibility-Related Objectives

Companies and brands increasingly work in an era which takes the focus away from the sole objective of maximising profit (see Piewa and Quester. 2011). They have to embrace a wider range of objectives and principles which delve into areas such as the environment, ethical behaviour and behaving as a “good corporate citizen”.

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Social sponsorships have emerged as one avenue through which companies can address some of these objectives (Ennis et al. 2019). CSR’s importance as a credible marketing tool has risen since 2001 (Crampton and Patten 2007), becoming a popular method of promotion with corporations supporting social causes through sponsorship known as social sponsorships (Simmons and Becker-­ Olsen 2006). We examine this concept in detail, later in the chapter. For instance, many football clubs seek greater engagement with companies and organisations in their local and wider community. Companies may provide “financial” and “non-financial” support for joint projects. An IT company, located in a town or city, which has a major football club, may provide tablets and PCs for under-privileged children in selected schools. The club may provide access to a room within its stadium where the IT company can run classes to introduce children to up-to-date IT systems and tools. Both parties in this case address specific objectives. The football club becomes more involved in its local community and the company also uses the sponsorship to emphasise that it is a good corporate citizen. The under-privileged children also benefit from the training and exposure to up-to-date equipment. 10.5.5  Sales-Related Objectives

We should note that most sponsorship deals are not instigated with the sole objective of increasing sales. However, a sales emphasis

may feature to some degree in the sponsorship package. For instance, sponsors of major events will activate the deal by making use of promotion companies and demonstrators to provide samples to fans attending the event. For instance, Hardys, the Australian wine producer, makes use of high-profile cricket tests such as the Ashes (played between England and Australia) to entice fans to try out its wines during the intervals. The likes of Callaway and TaylorMade also create physical space at major golf tournaments to allow fans to hit golf balls with the latest golf clubs in their portfolio. In the digital world, many sponsors devise a number of creative activities on their social media platforms, to encourage fans to purchase merchandise and engage directly with the brand. We should not underestimate the ability of sponsors to generate new business and cultivate customer leads. It is one reason why companies from the financial services sector view sponsorship as an effective avenue for identifying potential new business clients. Sports equipment and clothing companies such as Nike and Adidas enter into contracts with major sports property owners to be their official suppliers. This affords them access to the large numbers of fans attending such events. Many of them will purchase items because of visiting their allocated tent in the village. Sponsors may also use an event to launch a new product/service and take advantage of the environment, atmosphere and media focus, to maximise the opportunity.

Paddy Power Takes the Shirt Off Your Back

Paddy Power is a well-known betting company operating in many markets. It commenced operations in Ireland and moved into the UK market in recent years. Since its inception in the 1990s, it has now established a presence globally in European, Australian and US markets, mainly through mergers and acquisitions. Recently it entered the football market in the UK. This sport is dominated by betting companies in terms of shirt and club sponsorship. In

the second-tier league: the Championship, seventeen of the twenty-­four clubs were the beneficiaries of such sponsorship deals in 2019. Within the Premier League (the top-tier), over fifty per cent of the teams have contracts with the betting companies. The annual spend on shirt sponsorship across football in the UK is around £350 million. Paddy Power has positioned its brand on attributes such as funny, irreverent, controver-

253 10.5 · Sponsorship Objectives

sial and quirky. In many ways, it is the classic example of a disruptor brand: one that challenges conventional thinking. In this case, it latched onto the issue of shirt sponsorship. Some commentators argue that clubs have “sold themselves to the devil” by engaging with a range of controversial brands such as alcohol and betting companies. Over the years, Paddy Power has engaged in sponsorships and advertising campaigns that are mischievous in terms of content but grab the attention of people, generate publicity, and agitate the social media platforms. A quick search on YouTube highlights a number of such examples. This campaign certainly challenges conventional thinking. In effect “it spun the coin” the other way by announcing an “unsponsoring” approach. Instead of blithely replicating what other betting companies were doing, Paddy Power stated that it would “give the shirts back to the fans”. It entered into a sponsorship deal with Huddersfield Town - a team that was relegated from Premier League to the Championship at the end of the 2018/2019 season. Just before it started its pre-season friendlies campaign, the club revealed its new shirt. The Paddy Power name was emblazoned across the shirt on a large sash (check it out on YouTube). This clearly violated the Football Association’s rules with respect to the appropriate size and width of logos on shirts. Fans reacted with outrage to the announcement. Within minutes, the social media platforms and discussion forums revealed the extent of the anger. The media also jumped into the debate. Sky Television and national newspapers commented on a number of issues about the expanding influence of betting companies in the football sector. The Huddersfield Town team wore the new jerseys at their next pre-season friendly against Rochdale. Two days later, Paddy Power revealed that it has been a hoax. Huddersfield Town “revealed” their authentic new shirts for the season, with the logo of Paddy Power removed.

Paddy Power expressed satisfaction with the amount of publicity generated from the campaign. They followed up with a TV, print and digital campaign emphasising that it was giving shirts back to the fans, The TV ad featured glum-faced fans wearing shirts with stupid branding on the logos, such as “Grumpy Pigeon”, “Little Blue Pill” and “Mr Softy”. The advertisement was overlaid with an old song by Donovan called “I love my shirt”. The strapline at the end of the ad featured the following: “Wouldn’t it be better if your footy shirt looked less like a billboard”? In the next couple of weeks, Paddy Power announced further “unsponsorship” deals with four other clubs: Motherwell, Newport County, Southend United, and Macclesfield Town. What are we to make of this campaign? Paddy Power argued that there was a serious message behind it. Too many clubs have become dependent on shirt sponsorship deals with betting companies. Much of the content of shirt sponsorship shows little or no creativity—simply placing the name of the brand on the shirt. By contrast, Paddy Power interacts with smaller clubs and engages with “proper” fans: those who are genuine in their commitment to less successful clubs. These fans are far removed from those who “support” successful clubs and “bask in the reflected glory”. Shirts with no logos emphasises the purity of the jersey and brings fans back to the “good old days” when marketers and monetisation did not exist. This sponsorship campaign reinforced the Paddy Power brand’s campaign of mischievous marketing. In September 2019, the Football Association fined Huddersfield Town £50,000 for their part in the campaign. This was because it had infringed regulations with respect to the size and width of the logo and the sash running across the shirt. Presumably, this would not worry the Huddersfield Town administrators: Paddy Power would pick up the bill for the fine and factor that into its original deal with the club.

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??1. Assess the sponsorship deal and subsequent campaign devised by Paddy Power. 2. In your view, what benefits (if any) accrued to Huddersfield Town? 3. Could this strategy of “unsponsoring” be more accurately described as a “gimmick” as opposed to a serious sponsorship strategy?

10.6  Identifying Potential Partners

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Before we can devise a plan for a specific sponsorship arrangement, companies should identify potential sports properties (from the sponsor perspective) and sponsors (from a sport property owner perspective). Sport property owners should compile a list of ideal sponsors. By “ideal”, we mean companies/brands that align with the values of the sport property and the audience/viewers that attend or watch the event/team/competition. This becomes a “wish-list” to a large extent. Some of those on the list may not have the resources likely to meet the scale of the sponsorship deal that the property desires. Others may have already invested in a deal with similar sport properties. Much will also depend the perceptions held by potential sponsors about the sport property. How well established is the ­property? Who are the current sponsors/partners? How extensively do the media cover it? What demographic profile engages with the property? Of more strategic concern is the answer to the following question. What specific value can the sport property bring to the potential sponsor? This is at the heart of any subsequent discussion and negotiation between the parties. 10.6.1  Developing a Proposal

Determining the value of the sport property sets the agenda. What can we do for your brand? How does our proposition align with your brand values and attributes? How can it help you to achieve your specific objectives? How can we work closely with you to ensure

that you derive an optimal return on your investment with us? This challenges the sport property owner to provide answers to these questions in order to make the proposal relevant for the potential sponsor. This requires the property owner to acquire a full and detailed knowledge of its customers, i.e. those fans that engage with the property in terms of how they consume that sport. The continuing growth of digital marketing and social media provides a setting for capturing such data. However, this will not provide the full answer. Sport property owners need to carry out extensive homework on the targeted potential sponsors. This requires detailed analysis of all aspects of the company/brand. Assess company reports. Examine the overall business and marketing strategy of the company (by making use of published material that is available in the public domain). Determine the corporate culture of the organisation. How closely does its culture align with your operation?

10.6.2  Placing a Value

on the Sponsorship Deal

How do sport property owners determine the value of the deal in terms of what they should charge for their package? There is no simple answer. The overall “price” of the property emanates from a combination of intuition, referencing and hard data analysis and presentation to the potential sponsor. The nature and scale of the deal plays a significant part. At the top end of the scale, we have global properties such as the Olympics, World Cup and so on. As we move down to the base of the pyramid, we are looking at local events within a small geographic area, attracting small audiences. Experience of previous deals provides a reference point. Property owners can substantiate this by comparing their proposition with similar events/competitions/teams that have carried out deals. For new sport properties, this represents a more difficult challenge. There is very little

255 10.6 · Identifying Potential Partners

out there to make a detailed comparison. This leads to an “iterative” process. It is essential to apply a process of learning from mistakes and adapting accordingly. We should note that this is not guesswork, rather, it is a learning process. Properties make use of detailed analysis on audience profiles, media coverage, and level of fan engagement on social media platforms and so on. This leaves them more strongly placed to arrive at a “price” that is a more accurate assessment of its net worth to potential sponsors. 10.6.3  Assessing the Value

of the Components of the Sponsorship Proposition

Sports property owners have to assess the way in which the different components of the proposition can add value for the sponsor. Let us consider what we mean by these components: 55 The event/competition/team (heritage and history, reputation, quality of the players or teams) 55 Reach: Global? International? National? Regional? Demographic profile alignment? 55 Nature and type of media coverage: TV coverage (PPV?, OTT platforms?, own channels?, streaming?, National or Regional coverage?, extent and sophistication of social and digital media platforms?) 55 Opportunities for engaging with fans: at the event/arena, peripheral areas within the city that is hosting the event 55 Identification of joint initiatives, where both parties can enhance the quality of the sponsorship (competitions, developing narratives, building player profiles) 55 Provision of data to sponsors (data sharing) so that they can maximise their activation strategies such as interactive engagement with fans and/or viewers. 55 Provision of ancillary facilities: corporate hospitality tents, village space 55 Provision of retail facilities: stands or areas where sponsors can promote and sell merchandise

55 Provision of tickets to the sponsor for their distribution and allocation to employees/suppliers/dealers/management 55 Providing access to players and/or brand ambassadors during match day 55 Provision of access to  the players for a scheduled number of corporate days 55 Inclusion of perimeter advertising as part of the deal 55 Creation of a tiered sponsorship structure (platinum, gold, silver and bronze). In relation to the final component (tiered sponsorship), many sport property owners create different levels of sponsors/partners within their package. This is best illustrated by the adoption of platinum, gold, silver and bronze partners. The platinum partners pay more and benefit from a wider range of components of the package. Those paying proportionately less, receive fewer benefits. Some commentators argue that this approach is a sensible way of maximising revenue from the sponsorship package: it generates more revenue from more companies. It also recognises that potential sponsors hold different objectives and motives and may not wish to buy into a “one size fits all” package. By creating a tiered package, the sport property owner widens the opportunities for companies to become involved and benefit from their association with the property. Others argue that this practice is the epitome of the “greed” mentality. By following this tiered approach, property owners run the risk of diluting the overall value proposition, create confusion in the mind of fans and ultimate subtract value for sponsors. It also provides opportunities for ambush marketers to “cash in” on this confusion.

10.6.4 

Exercise

?? Select a sport property of your choice. It can be a competition, tournament, club, team or hallmark event such as the Olympics. From published sources on the Internet, carry out an assessment of the approach to attracting sponsors by the sport property owner.

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Analysing each component provides the sport property owner with a much clearer understanding of its underlying value. It is also important to note that sport property owners should customise the proposal so that it resonates with the overall objectives and values of the potential sponsor. Too many sports organisations develop a standard template for the proposal, which they circulate to potential sponsors. The challenge is to personalise the document so that it stands out from similar proposals that branders receive. As we mentioned earlier, property owners should invest the requisite time to study the chosen potential sponsors in order to achieve this degree of individualisation in the content. 10.7  Managing the Relationship

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Between the Sport Property Owner and Sponsors

We noted in earlier sections of this chapter that the days of handing over money to a sports property owner and expecting “good things to happen” are long gone. Sponsors apply a more professional and strategic approach, with in-built targets and metrics. Sport property owners need to work closely with sponsors across all aspects of the deal. Otherwise, they run the risk of losing the contract. Relationship management lies at the heart of successful sponsorships. Like most partnerships, there must be a high level of congruence between the sponsored entity and the sponsor. Incompatibility within areas, such as objectives and strategies, will quickly lead to a sundering of relationships. We should recognise that the signing of the contract between both parties does not represent the culmination of the process. Rather it is the beginning! Over the course of a typical sponsorship, both parties should adopt a flexible approach to the relationship. Changes in the event/environment may suggest that the initially agreed objectives may require alteration to reflect new opportunities.

Lachowetz et al. (2003) strongly argue that the benefits of a strong relationship ensure greater degrees of loyalty between both parties, at the time of sponsorship renewal. Strong relationships also confirm the adage that it is less costly to manage existing sponsors than it is to recruit new ones. Strong relationships lead to a more open and positive culture between both parties. This encourages new ideas and initiatives that can build on previous success in the deal. It also keeps the relationship “fresh”. This is critical in an environment where issues such as activation and developing narratives play a significant role. The challenge for the sponsored entities revolves around seeking areas where it can add value for the sponsor and work collaboratively to achieve mutual objectives. The challenge for sponsors is to maximise the investment by seeking opportunities to enhance the experience for fans and generate scope for interaction. 10.8  Sponsorship Activation

The term “activation” has gained increasing significance within the context of sport sponsorship in recent years. We should recognise that the fundamental challenge for a sponsor is to leverage the investment to the maximum extent. Both parties have to engage in activities that energise the deal, engage in a relevant way with the target market, and enhance their experiences at the event, or their consumption of it, in the virtual world. In essence, both parties have to “bring the event to life”. The days of agreeing a deal and handing over the money to the sponsored entity are over, if we follow this approach. That is merely the first step in the process. As a general guideline, experts in the field of sponsorship recognise that for every pound spent on the deal, a further two pounds also needs to be committed in order to maximise the return on investment. Sponsors can achieve this in a number of different ways. Typical activation initiatives include the following:

257 10.9 · Sponsorship in the Digital Age

55 Activation at the venue/sports arena. Typical activities include organising competitions at a stand or organising “fun events”. This creates an environment whereby fans can engage with the product or try it out. Branders can use the event to launch a new product (e.g. beverage or food) or promote the brand by providing samples to the fans attending the event in the arena 55 Employee activation. Involving employees in activities such as community-based sponsorships 55 Advertising/marketing activation. Where sponsors can make use of celebrities or brand ambassadors to appear at an event to engage with fans, sign autographs, pose for selfies and so on 55 Retail activation. This occurs where the sponsor backs up its sponsorship of an event/team, by running a special promotional offer in retail outlets. This reinforces the sponsorship and further captures the attention of the target market. This may involve co-promotions with supermarkets to generate maximum publicity 55 Hospitality activation. As part of the sponsorship package, sponsors provide hospitality for a range of stakeholders, which may include loyal customers, suppliers, dealers or its own salesforce. This can generate a number of outcomes such as generating business leads, increasing business with top customers and so on 55 Content-based innovation. Consumers must have a reason for engaging with the brand. Using content can be a useful mechanism for capturing their attention, engaging with the content and raising their awareness levels and purchasing the product 55 Business activation. This focuses on reinforcing the corporate culture and values of the sponsor at the event or engagement with the sponsored entity. The sponsorship can be integrated into activities such as away-days 55 Digital and data activation. This captures the benefits generated by the digital age. Sponsors can use material to provide real-­

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time updates, behind the scenes videos and forums for social interaction are all examples. This brings fans closer to the event (especially if they cannot attend it) 55 Social responsibility objectives. These are increasingly becoming more important, in the context of sports sponsorship activation. One way to do this is to develop a community-based activation strand involving charitable causes, schools, clubs or some other social strand. It is not always possible to calculate the direct financial return from this kind of activity but that, perhaps, is one reason why consumers feel positive about brands that engage in this way 55 Celebrity activation. In this case, companies can utilise appropriate sports celebrities to engage with fans at events. (Source: adapted from 7 http://www.­ sponsorship-­awards.­c o.­u k/how-activate-­ sponsorship-%E2%80%93-12-basic-ways) Successful activation strategies relate to the concepts of fun, engagement and creativity. It is also essential that both the sponsored entity and sponsor fully understand the brand: its values, associations and attributes. When linked to a full understanding of the target market, their perceptions, attitudes and opinions, both parties are in a stronger position to devise effective activation strategies.  

10.9  Sponsorship in the Digital Age

Digital marketing has changed the fundamental nature of the relationship between the three key stakeholders in the sponsorship process. As we have noted earlier in this chapter, the traditional model, whereby sponsors transfer money or pay fixed fees to the sport property owner, is largely redundant. Digital marketing and the associated tools that surround it have revolutionised the way in which fans consume sport (see our analysis in 7 Chap. 4). These changes have implications for sponsorship deals.  

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Fans are no longer dependent on one medium for watching and engaging with their favourite sport. Although TV is still the most popular medium in many countries, fans increasingly utilise a range of different media. In countries such as India and China, fans make more extensive use of tablets and mobile phones. Fans are also less inclined to watch a full, live game, preferring instead to capture the key moments or closing stages. They also increasingly prefer small “bite-sized” pieces of a game, e.g. the main action, such as the scores. Sponsors have to grapple with the fact that fans increasingly make use of multiple platforms and use them interchangeably, for example second or third screening. Sponsors need to develop a flexible, adaptive and creative approach throughout the sponsorship process, together with the sponsored entity. Sponsors can make the mistake of “failing to prepare” - leading to a situation of “preparing to fail”. Perimeter advertising and associated signage will have little impact on viewers or fans attending the sports event. They have to be substantiated with relevant content and engagement strategies in order to capture the minds of the fans and seek out their underlying thoughts, views and opinions. The stadia infrastructure increasingly meets the requirements for Internet enablement, although the speed of the service continues to vary across different countries and regions. Certainly the “state-of-the-art” stadium is in a stronger position to enhance the digital experience for fans in areas such as provision of information and data and facilitating betting on the result of a game or “in-­play”. Sponsors, however, run the risk of losing control over the material posted on social platforms. In the traditional models, they controlled the messages and content (while not necessarily guaranteeing any success from such strategies). Fans can distort messages, misinterpret content or simply generate a negative atmosphere on such platforms. Bacon (2015) notes that sponsors have to develop the skill of knowing when to engage with their target market and when to step back.

10.10  Tools for Engagement

In this section, we briefly examine two critical tools that have become very important in terms of addressing some of the issue raised in the previous section. They are by no means the only ones that are available. 10.10.1  Content Marketing

Traditional marketing communications such as TV advertising for instance, pushes information at a target market in the hope that the message will reach them. That can be a dangerous supposition. There is no guarantee that it will reach them. Even if it does, there is a strong probability that it will not register in their stream of consciousness. In the modern digital world, customers decide what media and platforms they will utilise. In the case of sports sponsorship, sponsors have to come up with creative mechanisms for pulling fans to their website or social media platform. Sponsors have to “cut through” the fog of messages and communications that consumers have to cope with. One clear area where “cut through” can occur, is through the content of the message or communication. The sponsor can generate content, as can the sports property owner or the user (in the form of the customer or the fan). They can generate material in a number of different ways by typically using a combination of the following tools: 55 Blogging 55 Social media posts 55 Video 55 Podcasts 55 Webinars 55 Live streaming 55 Infographics 55 Email marketing 55 Social media platforms (Facebook, Twitter, YouTube, Instagram and so on). In summary, we have witnessed a major change in the relationships between the key stakeholders: sponsors, sponsored entities and fans. Lefton (2017) argues that every

259 10.11 · Assessing the Effectiveness of Sponsorship Deals

sponsor has now become a content producer and every sports property owner wants to be a media company. Content and more important, the authenticity behind such material will play a central role moving forward. 10.10.2  Storytelling

If content marketing is all about capturing the attention, imagination and emotions of customers, then the sports sector fits in very well within the concept of storytelling. Sport g­ enerates passion, excitement, enthusiasm, as well the despair. It is perfectly suited to a tool that can help to enhance the experience of the fans who attend sports events or consume them virtually. Laurell and Soderman (2018) carried out a full review of the extant literature and research on this topic. They identify a number of roles that storytelling and the use of narratives play in cutting through to people. 55 They create a positive effect in the minds of fans 55 People like a story, after all we were raised on stories from infanthood 55 Narratives provide a structure for people to relate to and organise their thoughts in a structured manner 55 Narratives allow people to connect the self to the brand 55 Storytelling cultivates interest and curiosity. Significantly, they argue that storytelling is the explicit practice of marketing.

»» Convergence results in stories that are com-

municative and which can be diffused across digital media. What this means is that these stories, from the perspective of the marketing efforts of professional sports organizations, are not necessarily defined by the organizations themselves. Instead, we have illustrated how the influence of story creation, because of social media to a large extent, can occur independently from professional organizations’ control (p. 345).

The inference from their view is that sports marketers, working in organisations, are not just creators of narratives, they also have to

respond to and shape their narratives around contribution of and interactions between fans on social media platforms. In the context of sports sponsorship, such initiatives can help the sponsor to more effectively manage the experience of the fan and interact in a more focused and targeted manner. 10.10.3  Exercise ??Select a sports event, competition, or team of your choice. Examine how that body has used storytelling and narratives to market itself more effectively.

10.11  Assessing the Effectiveness

of Sponsorship Deals

How do you evaluate the impact of a specific sponsorship deal? This is the biggest challenge facing sports marketers. You have spent a large sum of money on a campaign but have you received a meaningful return on investment? Sponsors can utilise a range of tools and techniques to address the above questions. Some appear to be very superficial and basic, while others employ some degree of rigour. Masterman (2007) identifies a couple of basic questions that need to be addressed when it comes to sponsorship evaluation: 1. How clear was the objective? 2. Who took notice of it? No universally accepted mechanism exists for assessing the effectiveness of a sponsorship deal. This is similar in many ways to the challenges involved in evaluating the effectiveness of any advertising or marketing communication campaign. Whichever combination of methods is utilised by companies, they should observe some basic principles in the first instance. These provide greater clarity for the subsequent evaluation and they can be summarised as follows: 55 Clear objectives. These should be stated in unambiguous terms at the outset, otherwise it would lead to confusion. What spe-

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cific areas does the sponsorship deal set out to address? Sales increases? An increase in brand awareness? Changes in perception? 55 Target market specification. Companies should identify the specific target market(s) under investigation 55 The length of the sponsorship deal. Typically, this may run from 3 to 5 years. Sponsors should identify any changes in objectives during this period 55 The need for multi-interventions. Sponsors should adopt a tracking system to assess changes in the responses of fans to the specific metrics utilised. Such metrics may include some of the following: –– Attitude to brand –– Awareness of brand –– Awareness of the sponsorship –– Product sales –– Media exposure generated –– Positive/negative social media activity –– Degree of sentiment expressed on social media –– Response to sponsorship-related promotions –– Lead generation –– TV/Logo exposure. 10.12  Evaluation Methods

1. Impact on sales. Although sponsorship deals focus more specifically on brandrelated issues, in some cases sales may feature as part of the objective for entering into such an agreement. Typically, sponsors may use the deal to introduce a new product or engage in promotions of selected items. Measures include aggregating the number of items handed out to fans at “live” events. In the context of B2B brands, sponsors can also identify the number of sales leads that may have been generated at the event. 2. Media coverage. This can range from simple methods such as tracking the number of mentions in the press and the frequency with which the brand name/logo appears during live coverage of the event/game.

The sponsor can carry out media equivalency audits of such frequencies. This helps them to estimate the value of the sponsorship in monetary terms. It is based on the equivalent cost that the company would have had to pay for such coverage. To some extent, technology allows companies to make more detailed and accurate assessment of such coverage. 3. Brand awareness/recall. Sponsors set objectives such as increasing the level of brand awareness/knowledge during the course of the sponsorship deal. This consists of carrying out surveys to determine the percentage changes over time  – a longitudinal study that reflects the variations in perceptions. This is perhaps the most common methodology used in such circumstances. Some sponsorship deals focus on comparative assessments of how fans perceive their brand. 4. Social media assessment. As we have noted earlier, sponsors engage more fully with social media by running a number of activations. Technology and data analytics present opportunities for them to track the level of sentiment (opinions and posts made by fans about the brand) which can be positive or negative. Sponsors can also track the number and frequency of engagement with fans and their responses to specific promotions, competitions or “fun” activities. 5. Return on sponsorship investments (ROSI). This approach addresses some of the practical problem facing sponsors as they use multiple media to get across their message. By multiple media, we refer to platforms such as TV, Print, Social Media, Hospitality and so on. This inevitably generates numerous data-sets as the sponsor (and sports property owner) tracks responses, perceptions and opinions. Stegelmann (2017) outlines a model developed by Nielson to take account of these complexities and provide a simpler mechanism for analysing the data to identify one overall estimate of the value to the sponsor (ROSI) that comes from the deal. . Figure 10.1 outlines the process.  

Web TV

Awareness Clear image Appeal Interest Fan potential Fit to BRAND

TARGET GROUP PERFORMA NCE

Print

Share of BRAND's target group amongst the fans of the platform Affinity towards BRAND's products amongst the fans of the platform Fan segmentation

Online