Sports Industry: It’s All to Play for
The sports industry is growing exponentially. And creating a breadth of opportunities for those ready and willing to ride the wave of disruption it’s experiencing.
At the 9th Conference on Sports Business Management, IESE Professor of Entrepreneurship, Antonio Dávila, highlighted three trends that are disrupting the industry – and generating interesting new opportunities for entrepreneurs who are up to the challenge.
These are: new developments in television broadcasting rights; the ‘professionalization’ of sports; and the digital revolution.
Three years of television rights to the English Premier League recently sold for a record figure of almost 7 billion euros, marking a milestone in European football. And not only because it opens a significant gap with respect to the rest of the major European leagues (in Spain, for example, broadcasters pay approximately 800 million euros). The Premier League also draws the largest audience and has the most equitable distribution of TV revenues among clubs.
At the same time, the multi-million-euro contract signed with the channels BT (UK) and Sky (New Zealand) is evidence of the advantages of collective negotiation over club-by-club negotiation (the Spanish league is the only major European league in which clubs negotiate their own television rights).
With collective bargaining, leagues take in more money and distribute it more evenly. This affects the entire structure: leagues become more competitive and exciting, more modest clubs can survive, and there is more investment in sports facilities and the development of future players.
The Professionalization of Sports
The sports industry is clearly a growth market. Professor Dávila demonstrated that revenue from TV contracts and agreements with sponsors is increasing exponentially in almost all professional leagues, both in the U.S. and in Europe.
Moreover, there is a convergence of business models and structures. In the U.S., for example, expenditure on signing players tends to be around 45-50 percent of revenue, a phenomenon that occurs in different sports, leagues and clubs.
And the same trend can be seen in Europe, although in this case the figure is slightly higher— 60 to 65 percent of revenue (with the exception of the German league, which allocates approximately 50 percent of revenue to signing players).
In general, contract amounts for players are on the rise, but there are enormous differences among sports and between top players and average ones. "There are big disparities in the sports industry," noted Dávila.
Big data and the Digital Revolution
Alex Martínez Roig, content manager for Canal+, highlighted the factors in understanding the Internet’s revolutionary impact on every aspect of television; including technology, content, consumer habits and distribution models.
"Windows of exploitation are changing rapidly," he explained. And the result of all these changes is the ability to personalize offerings. The new consumer is digital, mobile, multi-screen and always connected. And this consumer demands what I want, when I want it, how I want it and where I want it. "The consumer is in charge. Our job is to offer content and make it maximally available."
A New Era for Sport
But this is just one part of the radical change that new technologies are bringing about in the sports industry. The Internet of Things, wearables and big data are creating huge challenges – but also new initiatives in sports management.
As Vanessa Palmer, (EMBA ’10) said: "This is not an era of changes; we’re in an altogether new era."
Palmer is CEO of eSportics, a young company that has launched a platform for managing sports events and a social network for padel tennis enthusiasts.
There are growing opportunities for startups that link sports and technology and the development of applications that affect how sports are both managed and played.
Oscar Pallarols, director of the Smart Living program of Mobile World Capital Barcelona, predicted that these innovations will have a great impact in several areas.
New apps will enhance the experience of fans at sporting events. And fitness and monitoring are a thriving market segment that sports brands like Nike and Garmin are capitalizing on. Meanwhile, Elite sports are benefiting from technology that can improve athletes’ performance and massive real-time data analysis that can predict and improve play.
The future for the sport industry is looking interesting. And it’s all to play for.