Clubs seek way to clip the ticket
Tech promises teams a new revenue source
It's easy to think of sports teams as huge companies: they have vast global exposure, millions of fans and athletes on eye-popping salaries. In reality, though, even the biggest teams are little more than minnows. The world's wealthiest soccer team, Manchester United, has a market value of just US$4.1 billion ($6.2b) — less than, say, Fevertree Drinks, a maker of tonic water and mixers with just 51 employees.
While the biggest teams have millions, if not hundreds of millions, of fans, they have historically been very bad at getting them to part with their money. They will need to up their game.
At the time of its 2012 initial public offering, Manchester United counted 659 million fans worldwide. Analysts estimate the team’s revenue this year will be about £587 million ($1.14b) — just $1.73 per supporter.
Manchester United has been able to consistently increase revenue, not least from the soaring price of broadcasting rights. But that growth risks levelling off as TV companies find it harder to sustain more price increases as audiences drift online.
Witness the sale of English Premier League soccer rights this year, when the price per game declined from the previous round of bids four years earlier.
All this makes it imperative for teams to find new ways of squeezing money out of supporters. Once, it was good enough for a brand to stump up tens of millions of dollars to plaster its logo across a jersey and enjoy the halo effect of the team's emotional bond with its fans. Hopefully, those supporters would then go into a shop a week later and buy the product.
Digital marketing provides the opportunity for teams to put themselves in the middle of the sale of a service or product. It's not simply about using a website or an app to sell fans more jerseys or baseball caps. It's about turning the team into a platform, a way of connecting brands to customers.
In much the same way that pricecomparison websites charge insurers or credit card companies for connecting them to customers, a sports team could, for example, offer its own exclusive video content with another provider’s mobile phone contract and take a cut of the proceeds. If that meant each fan spent just one more dollar a year with the club, it would provide a big boost to sales.
Soccer teams are already moving in this direction, but commercial revenue accounts for less than half their income, compared with 70 percent in baseball.
Arsenal moved early to use digital tools to help brands reach fans. (The team also provides them with detailed data to show how effective the partnerships are, said Mark Thompson, managing director of sponsorship specialist SponServe.)
While the London side’s commercial income has climbed by 50 per cent since 2014 to £91m, it’s still less than half the £199m it makes from broadcasting rights.
Nevertheless, don’t expect sports teams to be content with hawking their latest team strip or souvenir programme. More will turn themselves into marketplaces — and you, the fan, will be their target.
It's about turning the team into a platform, a way of connecting brands to customers.