SportAccord 2024 saw a line-up of world class speakers tackling the hottest industry opportunities and challenges – and as moderator David Eades pointed out, in sport we’re often faced with a fine line between the two: “the critical thing is to recognise both when they come along!”
This, in a nutshell, is what Roger Mitchell – corporate financier, founding CEO of Scottish Professional Football League and author of the newly released book ‘Sports Perfect Storm: An Industry Now Totally Adrift’ – brought to the fore in his Summit session with Eades.
Exploring some of the serious structural challenges International Federations and sports rights holders are facing, including the fragility of the financial structures supporting the sports ecosystem, Eades and Mitchell took SportAccord Summit delegates on a journey through sport with some helpful tips.
Weathering the storm
“There are multiple weather fronts hitting sport,” explained Mitchell. “I like to categorise them across money, demographics and geopolitics.”
Mitchell focused on the influx of capital investment in sport, with new stakeholders attracted to the prestige and returns the industry offers, and sports rights owners keen to use this “availability of cheap cash” – as Mitchell put it – to expand and develop.
“But now that has ended, and in a vastly changed media landscape that offers significantly smaller margins”, said Mitchell, as he pointed that this is also happening in a world where sponsors demand detailed, direct and tangible fan response data against the cost-of-living crisis backdrop.
“Things are much more expensive, ticket prices are going up – north, north, north. There’s going to be a breaking point.”
Sport’s ‘attention economy’ battle
The challenges of targeting the younger generation audiences with sport content was also highlighted by Mitchell – with the risk of “losing the battle in the attention economy” being very real for the sport’s industry:
“We as an industry over-estimate our importance – ‘it’s sport, everybody must love sport’ – well, not really. We’re selling a product – in football’s case 90 minutes – to a younger demographic that doesn’t care about 90 minutes. They will not have that attention for 90 minutes. Sport over-estimates its must-have factor for young audiences.”
Sport’s ‘known and unknown’
Mitchell, a former EMI executive, also warned the sports industry of complacency and under-estimating risk, drawing parallels with the music industry and using the launch of Napster in 1999 as a prime example:
“I saw the start of Napster. And the answer was what I see now: ’small thing, won’t affect us. We’ll be fine.’ In two to three years, their business was gone.”
Napster, the free peer-to-peer file-sharing network – which at its height had tens of millions of users who could search for and share MP3s stored on their personal computers over the internet – almost brought the music industry to its knees and caused a blizzard of law suits.
Mitchell drove home the message: “People generally under-estimate risk – known unknowns, and especially unknowns – I have a whole chapter on that!”
Best direction for sport
Eades underlined the importance of looking at the positives and routes out: “What would be the best direction for sport to start taking now, to turn your ship around, to keep it afloat?”
Mitchell highlighted the opportunity to risk share with sponsor and broadcast partners: “Take less money up front, enjoy the success together if it comes – together, i.e. revenue share – and take that to your athletes. We do not talk enough about athletes.”
The potential of the younger generation in this new era for sport was also underscored by Mitchell: “The younger generations have understood that we’ve messed up – this goes beyond sport. The younger generations have understood that we have to do things differently.”
Roger Mitchell’s ‘Sports Perfect Storm: An Industry Now Totally Adrift’ is a book about three very interconnected industries – sport, media and finance – now all facing “hurricane headwinds.” The book explains the general principles of finance to the sector of sport and entertainment, the intelligent use of finance techniques to reduce risk profiles and make for better operational management, decision-making and sustainability.
Stay tuned for more exclusive insights from SportAccord 2024, coming your way over the next few weeks. Our series reveals parts of some of the most exciting discussions from Birmingham, centred around the horizontal theme “The Power of Sport”.
