The impact of technology and other WINNING investments on the business of sports

By Kenneth Cortsen on February 12, 2014 in Sport & Events, Sport & Media Relations, Sport Economy, Sport Management, Sport Marketing

As a result of the rapid growth of commercialization and globalization in the business of sports, it has been stressed that sport is about WINNING. Although, this statement may seem cynical for some people it is clear that the business of sports in our contemporary society is about making a positive difference on and off the field. WINNING may take different forms in this sense.

Finding profitability opportunities is a process to strive for, especially in professional sports where there is often a correlation between financial capabilities and the likelihood of WINNING. But focus on profitability ‘in isolated terms’ does not do the work of generating positive change in the business of sports. Merely, it requires a more holistic approach to strategy and operations. In the broader spectrum of sports, which integrates the ramifications of the structure of the sports world, it is shown that the more holistic approach to find and exploit profitability opportunities in the business of sports is key. Recreational or amateur sport settings are different than the business models characterizing commercialized professional sports leagues or popular spectator sports such as football/soccer, American Football (NFL), basketball, ice hockey, tennis, golf or Formula 1. Thus, to bring this holistic approach into play, I tend to emphasize that WINNING is more than winning on the field. Even though, WINNING on the field is always ideal and optimal, it is also evident that focus on WINNING off the field may lead to organizational growth and financial comfort (and not just in ‘isolated’ profitability terms). By saying that, I am not saying that money isn’t important because such a statement would go against sound rationales and one of my strongest convictions regarding the business of sports is that it is easier to shake and revolutionize the current reality positively if you have or are capable of building a rigorous and strong financial platform. In other words, I am saying that all players in the business of sports should strive to find and exploit profitability opportunities but to clarify this statement it is crucial to portray this this process also has to do with the understanding and utilization of the stakeholders and assets of the sports industry.

For sport executives, the business of sports is about staging positive experiences and transformations. Thus, WINNING also becomes a matter of controlling the game on the field to the best of your abilities (with elements like the unpredictability, drama and competitive nature of sports in mind). Moreover, WINNING is about controlling the in-venue experience and transformation to the best of your abilities. Purely, you must make sure that all stakeholders of the in-venue experience, e.g. fans, media, volunteers, and sponsors, have a great experience and that a portion of these are taken to the next level in the way of undergoing a positive transformation. The latter may be exemplified via a person joining his/her first NFL game at Lambeau Field or football game at Anfield Road or Old Trafford and hence getting an experience exceeding expectations. This may most likely cause the person to become a lifetime fan of Green Bay Packers, Liverpool FC or Manchester United and thus to spread positive buzz about his/her team across various platforms whether we are talking about face2face or online viral communication platforms. So, the positive experience means that the person is positively transformed into becoming a ‘true fan’ of the respective team. This means money for the respective sports businesses.

On top of that, sports businesses must seek to control the balance between the in-venue experience and the media experience and thus seek to generate relevant content in both arenas to sustain in the tough competition from other live sports, leisure and culture experiences as well as from the fragmented media sphere full of news, reality shows, documentaries or other means of broadcasted entertainment. There is no excuse on the holistic path to WINNING in the business of sports so make sure to struggle to connect with and engage fans and stakeholders in captivating ways. This includes investments in face2face entertainment activities surrounding in-venue game experiences and events, investments in technology to facilitate broader and better fan engagement opportunities during in-venue games and events, and investments in competences and technology to stage the production of quality online content 365 days per year and thus also to serve the hunger of avid sports fans via other and more traditional media platforms. This will accelerate the ability to exploit the benefits of better engagement levels, which leads to commercial advantages via the mix of structured customer data and applicable physical and online promotional and sales stands. Integrated solutions are meant for the future and this requires investments in tangible (e.g. equipment like wireless computer technology, Jumbotrons etc.) and intangible (e.g. knowledge) assets on the business side just as we know from the sporting side of the organization with its investments in assets like turf fields, rehabilitation equipment, fast players, tactical gifted coaches and game intelligent players. The financial bottom-line of sports businesses are depending on all these investments. From a ROI-perspective this holistic angle makes sense due to the fact that contemporary and future sports business revenue streams will be even more interrelated since the business unit of fan relations (with its strong ties to such revenue streams as ticket revenues and merchandise revenues) branches off into other units such as sponsorships and media relations that can enhance the overall business model’s revenue optimization.

It is a ‘connected world’, see video below:

The social media landscape has changed rapidly over recent years and has played a vital role in shifting priorities of sports businesses and sport marketers. Social media engagement in sport has gone through massive growth rates due to the emotional equity linked with sports fandom. Now, we see more sport businesses and corporate investors investing in future revenue streams directed from these massive engagement levels. Thus, sport business and corporate stakeholder engagement in and tracking of fan generated social media conversations adds dynamics and extended life force to the meaning of this content for fans and for sport businesses and corporations (including ‘commercial meaning’). Moreover, it provides these commercial interests with another effective targeting tool. Attendance development and specific consumption patterns can be closely monitored and hence assist with giving sport businesses and sport marketers the opportunity of personalizing the experience, i.e. ‘saying happy anniversary’, offering special promotions etc. Modestly, sport businesses must acknowledge that if they really want to get to know their clients on an individual basis, the investment in all these assets are part of the game.

Interesting examples of taking advantage of these opportunities:

NFL & SAP, see video below: