Unprecedented times – what’s next for the commercial world of sport?

Posted on
March 13, 2020
Covid-19 has suddenly become a very real threat to the world as we know it. The global economy has plummeted, schools around the world have shut their doors, travel bans are being imposed, and the curtains are closing on the global sporting stage as some of the world’s most high-profile events are being postponed or cancelled.

What are the repercussions of event cancellations for sponsors?

In these uncertain times, both brands and rights holders are facing major challenges. From a brand perspective, significant time and resource goes into planning events: developing creative assets for major integrated campaigns, hospitality and event preparation, planning around major sales spikes. With events being cancelled, brands will see a dilution of their rights, with the potential of them being deemed worthless altogether.
This is an unprecedented situation and (from a practical business sense) the greatest cause for concern for brands will be around how they can limit their losses around investments that have already been made.

Is there a solution to this?

Recouping investment from rights fees already laid down with rights holders will come down to the detail of legal contracts but the last thing brands and rights holders want to be doing is wasting time (and more cash) on legal wranglings. The key will be reaching a commercially pragmatic solution for both parties. There may be options to roll over or extend deals to events in years to come, or for rights holders to provide incremental rights in the future, but again, there are significant monetary challenges that will linger for a long time.

How can these affected partnerships deliver value in the short term?

It is very difficult. Brands will need to move away from activating around physical events and work harder to draw associations with rights holders’ IP and other assets, remotely.
As the situation escalates, brands and rights holders will have to focus on a common-sensical approach for the greater good of society. Excellent crisis management and communications is critical: being clear, open, honest and transparent in these ever-changing times is essential. Rights holders have a lot on the line with significant financial ramifications based upon rankings points and titles, promotion and relegation. There is a lot more to play out…
From our perspective we will continue to monitor the situation on behalf of our clients and address their objectives as best we can in light of the fluid and dynamic situation we find ourselves in. It is a time for being nimble, reactive and innovative in finding the right solutions – reconsidering the use of assets and how they are utilised through various channels.

What role can digital and social media play for rights holders and their partners?

The digital transformation that is going on with the larger rights holders is pivotal in demonstrating value to brands away from live sporting events. Developed rights holders are putting their owned-first party data at the centre of their relationship with their sponsors, allowing them to speak in a valuable way to their audience. These rights holders understand what brands want, and build a strategy based on data insight, developing meaningful online relationships with their target audiences – allowing brands to deliver the right message to the right fan, in the right place at the right time. This sophistication is critical for brands and rights holders and is fast becoming an expectation of the 21st century fan.

Who’s doing it right?

A good example is the RFU’s relationship with IBM. They have been able to harness technology to engage their fans in a meaningful way, and have identified ten personas that each consume England rugby in different ways – that could be based upon age, gender, interests, involvement within the sport etc, and as a result, are able to target their communications to these audiences appropriately. Those rights holders that are able to work with brands to deliver meaningful comms are the ones that will cut through the competition in this extraordinary time.

The current lay of the land…

Rights holders and brands that accrue significant revenue through live sporting events, will be hampered and in fact it is some of the smaller rights holders and teams in the lower leagues of sport which are reliant upon gate receipts as a revenue stream, that will be hardest hit.
Rights holders need to work hard to understand how they can communicate the values and strength of their sport when there isn’t a fan atmosphere in place (or even a match). It has been strange watching football matches over the last few nights with no ebb and flow of fan involvement and actually being able to hear the tackles, the communication on the pitch and orders from the manager on the touchline.
Those rights holders that have a digital infrastructure, valuable assets away from live matches and large fan bases will still be able to drive value for their partners but it will require a shift of focus though, creative thinking, and an awareness of the wider sporting and socio-economic landscape.
Interestingly, there are some rights holders out there that don’t have any live spectators and are actually challenged with overcoming the absence of live spectators already. New innovative event properties like SailGP, the new Larry Ellison backed inshore hi-tech sailing series, and Extreme E, the electric SUV off-road racing series starting in 2021, have to work hard to engage audiences that are unable to be in close proximity to the live event.
These rights holders have to clearly communicate the values of the event through storytelling around the competition, technology, human endeavour, or their own purpose led initiatives - in order to engage their audience, build their fandom and create commercial value for their brand partners.

Are there any positives that can be taken out of the disruption that Covid-19 is creating across the commercial sporting landscape?

There will be lessons to learn from the larger rights holders with a more diverse array of rights and the digital infrastructure to be able to pivot their activity, but also from the newer game changer events out there.
Some of the new event formats, like the ones I mentioned, that are less reliant on live event spectators as a revenue stream, are leading the way in terms of their innovative approach to storytelling, engaging audiences from afar, and delivering consistent value to their commercial partners. Whilst competitive sporting platforms, they are ultimately evolving into their own media businesses generating extraordinary content to reach an audience remotely and engage with a fan base on a meaningful one to one basis.
The current coronavirus crisis will be a test for rights holders, challenging them to strengthen their relationship with their audiences without their live sporting spectacle to rely upon. It’s certainly an interesting time.

What advice would you give in these ever-changing times?

1. Communicate effectively and in a timely way. Take your fans on this journey with you.
2. Be creative. Don’t see this situation as closing all doors. Think outside the box.
3. Innovate: re-consider use of assets and the storytelling behind them.
4. Switch focus: move away from events and on to social and digital.
5. Maintain an open dialogue with your rights holder or brand.

For more insights like this delivered straight to your inbox, sign up to our newsletter here

Posted on
March 13, 2020
Industry Insight

Stay updated

For the latest sports marketing, sponsorship and communication news from Mallory Towers, sign up here

In accordance with GDPR regulations you should know that all information is uploaded to a secure and private online database saved for future email communications. Those details are never shared with other parties. Please read our Privacy Policy for more information.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.