It’s been a curious year for sport so far. In a consolidating and often stagnating market, the temptation is to try to be all things to all people, all the time.
I find the most useful question to ask C-suite leaders in sport talking me through their strategy is, ‘What are you not going to do?’ You only know you have a clear strategy when you can say no to opportunities.
Trouble is, focus can often go too far. For example, an agency leader told me at a conference last month, ‘’90% of our revenue comes from (service x), so we’re going to train all our focus onto this.’’
I understood her view. In today’s external investment fuelled, debt-loaded, agency market the first priority is to make the year’s interest payments. Putting all your eggs into one basket (be it broadcast sales, activating partnerships, enabling betting, selling tickets, building content…. whatever keeps your boat afloat) can feel like an obvious move. But it also worries me.
Sticking to the most profitable knitting is based on an underlying assumption that your market is static. That you’ll make money next year in the same way you make it this year. In sport today, it’s a brave leader who assumes that today’s cash cow is also the shining light of tomorrow.
Just think through the storm clouds for a moment.Broadcast rights have topped out for all but lucky few. Media spend is more than 70% digital (closer to 80% in developed markets including UK and US). Content consumption has plateaued in absolute volume terms, although generational change is driving significant shifts in both messaging and platforms that move hearts and minds. International instability is ongoing, while we remain in the foothills of AI’s disruption of our industry. I can’t think of a single business model that won’t look materially different in 5 years’ time.Given this, every business needs to change before they have to. Innovation is not a luxury, but a strategic hedge against market movements.
However, that is not an excuse to create a playground that lives outside the rules of business reality. Innovation is expensive, time consuming and potentially distracting from the core. Which means it needs as many guardrails as the core business, maybe even more.
I was interested by the way Premier League CEO Richard Masters talked to their launch of a streaming channel (instead of a linear broadcast deal) in Singapore. He said they were ‘looking to build a business’ and learn whether the ‘model might be replicable around the world’, saying the move gives the league ‘more optionality’ and ‘look at different ways of developing our content for different audiences’
It’s easy to write off the innovation of one of the world’s biggest rights holders as a rounding error in the Premier League P&L. However, the key point here is Richard’s intention to ‘build a business’ from the get-go. Innovation without a business plan is just lazy business. A sound business model needs to be built in from the start.
There are plenty of good examples of this in sport. Take content production, just for one.
I sit on the Advisory Board for Whisper – a business that has quietly been building its own strategic hedge against a consolidating market. Widely known and respected as an elite sports production company (working with the likes of UEFA, Formula 1, and Roland-Garros) and building on a return to fully private ownership, Whisper is building on a return to fully private ownership to develop a multi-genre engine spanning broadcast, digital and social production. For example, it has moved into premium documentaries (Sven, Built in Birmingham: Brady & the Blues) and long-running entertainment shows (Jeopardy! and Wheel of Fortune). They’ve also recognised the need to balance a little audience science alongside their art, launching an Intelligence proposition which builds in a constant audience feedback loop to their client work.
These changes reflect wider market shifts in content production. This is no longer a regular B2B market. The Women’s Super League’s latest broadcast deal with BBC and Sky also enabled athletes to take more ownership of their own content rights to drive eyeballs on the league and vest the players in its growth. Racecourse Media Group’s raceday.tv social media channel has been a runaway success, appealing to an entirely different race-going audience and commercial partners alike.
In none of these cases did the innovators bet the house or disrupt their key business model, but were prepared to learn, fail fast and iterate in a state of permanent BETA. Innovation has been grounded in business discipline and very conscious hedges on shifts in the market.
So what does this mean for my business? I have a couple of teenage kids – and the best advice I have been given at this stage as they test and learn is to give them ‘freedom in a framework’. Explore the world to your heart’s content but respect the parents’ rules of the game! I think the same is true with innovation in the sports business. It’s a strategic necessity – but know the parameters. For example, I’ve suggested this as a model recently…
- 1 innovation per business team at any one time
- Each needs a plan signed off up front with a leadership team sponsor (this might be Board for a smaller business)
- £50k max cash outlay including people time
- People time charged at cost plus 30%
- Reviews against plan at 1,3 and 6 months.
It’s internal venture capital, if you like. Innovate away, but within a framework.
So where would I be innovating in the industry today?
- If my business was 90% focused on B2B revenues like the Premier League, I, too, would testing and learning in B2C.
- If I had a sports agency, I would be trialling small projects in music or the arts.
- If I had a sports tech empire on the West Coast of the USA I would be spending time in Holland, Australia and at Loughborough University (innovation hotbeds all three) to make sure I genuinely had my finger on the pulse.
Each of these initiatives would be managed tightly. Probably more tightly than the core business.
There are plenty of investors and Board Directors like me preaching absolute focus. We’re right with the focus bit….but not the absolute nature of it. Absolute focus does little to support the long-term resilience of the business. Looking crudely at this in terms of growing the value of the business – short term focus on today’s revenue and profit can puff up the profit number e in a single year ……but does nothing for your multiple. It’s a balance, just like parenthood!
