The financial implications of empty stadiums and no match-day revenue are huge for thousands of second-tier clubs and sports from around the world. The top leagues have monopolised the mainstream broadcast, leaving second-tier sports unable to reap the commercial benefits. Now the pandemic has brought to the surface an issue that has been bubbling under for many years – the current sporting commercial model is outdated, and in urgent need of revision. It’s time to change the model.
Unless this happens quickly, clubs will succumb to financial pressures, and years of history and fan loyalty could come to an end. Now might be the time for the leagues and national governing bodies to change their future commercial prospects.
In the UK alone, there are numerous lower league football clubs “teetering on the edge due to loss of ticket sales” with the English Football League (EFL) claiming its 72 clubs stand to lose £200 million without fans for the entirety of the 2020-21 season.1 Away from football, English cricket recently revealed it had lost £100 million as a result of the pandemic. In contrast, the Rugby Football Union (RFU) has quoted a similar financial loss from having to play the remainder of this year’s international matches behind closed doors.2 This can’t continue.
4.9% was the predicted year-on-year growth in the global sports industry, jumping from $129 billion in 2019 to be worth $135.3 billion in 2020. As the pandemic has unfolded and the realisation of its impact made apparent, this figure has quickly been revised down by almost 50% to $73.7 billion.3 The true meaning of this? Every club, league and federation’s revenue will be hit, and those that don’t do something about it now will suffer the most.
2020 has sent shockwaves through the sporting world. – a year like no other. A year that has turned our way of living on its head. A year that has sent shockwaves through the sporting world. From live games to sponsorship agreements, every aspect of what we have come to know and love about sport has been blown apart. Amongst the seismic waves there have been moments of positivity, inspiration and technological innovations. However, the reality is that the current global situation has exposed professional sport federations for what they are – operations run on unsustainable commercial models.
No aspect of sport has avoided the wrath of COVID-19, with all avenues of income being hit hard. With the pause in live sport earlier this year has come the inevitable impact on broadcasting, commercial and event-day revenue. Sales of media rights, sponsorship and advertising partnerships, as well as ticketing and hospitality have all suffered where they would have normally flourished.
With broadcasters struggling to fill airtime, no clear return of fans to stadiums, and teams looking to begin/continue their season, the industry has had to react. In doing so, sporting technological innovations have accelerated, with many ingenious solutions providing moments of inspiration and hope. We are no strangers to the need for re-energising the stadium for the broadcaster; the introduction of our OZ ARena solution comes at a time when clubs and sports federations from around the world are seeking ways of generating revenue and providing fans with authentic experiences.
From pre-recorded crowd noise being played over broadcasts to Zoom video fan walls placed strategically around pitches, the shift in thinking and technological advancement has been more significant than at any period in the history of the sport. Much to the pleasure of fans at home, athletes on the pitch and sporting leagues around the world, these advancements ensured that some form of normality was resumed. But these were only ever going to be short-term solutions; failure to face up to the long-term issues could be catastrophic for many clubs.
Finding new ways to engage fans with deepening pools of content, increasing flexibility of payment options for supporters, and providing additional assets to sponsors to fulfil contract obligations are not sustainable measures in the long run.4 With the realisation that this isn’t just a 2020 problem, leagues have had to develop contingency plans for games without live audiences, but have they really addressed the key elements that are putting increasing financial pressures on clubs?
By changing the way that sport is produced and distributed, new revenues can be generated to sustain the future survival of leagues and teams. At OZ Sports, our eyes have long been open to the problems that exist, and we’re equipped to change it. We’re set to shake-up the sporting commercial model, re-energise stadiums and reinvigorate the relationship between fans and their clubs. Are you ready to join us on that journey? Let’s talk today.