Creating a high performing commercial department
Even at the highest level, sporting teams are still on the journey into becoming truly professional, global businesses. For those looking to establish themselves as a world-leading brand, having a commercial team fit for the pressures of modern sport business is a must, says SRi’s commercial rights specialist Chris Jordan.
The ‘business of sport’ phrase is, in itself, something of an oxymoron. As a concept, sport embodies themes such as passion, unpredictability and tribalism. Think business, and words such as strategy, stability and growth spring to mind.
It’s this struggle between the two which the commercial departments of professional clubs have been wrestling with since sporting entities, within football in particular, really exploded as profit-generating corporations and brands over the last 20 years. Sport is more commercial and professional than ever and clubs need to have the right structure in place, while ensuring they continue to nurture their own club identity and connection to their fans.
Even in the last five or six years, some of the biggest clubs have undergone huge culture change from having a ‘local club mentality’ to becoming global sports and entertainment brands. The commercial departments of major Premier League teams have vastly expanded to better handle the challenges and opportunities provided by areas such as CRM, data analytics, digital and media. We’ve seen commercial departments increase by almost threefold, with dedicated media departments created which are designed to tackle all areas of technology, content and international development.
Results can be staggering. Looking at one big Premier League club between 2010 and 2016, we saw match day revenue increase by half, broadcasting revenue doubled (an international figure, and derived ahead of the huge UK TV rights payments coming into effect) and commercial revenue, such as merchandising and partnership deals, has more than doubled.
All this with a stable stadium capacity, no huge investment from billionaire owners and no regular European football.
The US influence in the upper echelons of the British game is also driving change. Sport as a commercial property in the US is perhaps the most mature market in the world – but we’re seeing this model of growing commercial departments being implemented across teams of all shapes, sizes and ownerships down the professional leagues.
Greater growth and revenue has been achieved at a commercial level in a number of ways and can be seen as often drawing on the experience that business-minded individuals have brought in from outside sport.
Partnerships are now much more strategic, relying on ROI and marketing-led strategy rather than ‘passion sells’ made on a whim and a handshake; globalisation has enabled clubs to enter new international markets using live experiential marketing and events such as tours and overseas friendlies; while the right recruitment and professionalisation has also led to clubs being more efficient and strategic with their commercial decisions.
However, with increasing revenues and commercial activity, clubs face the challenge of remaining what they are at heart – a football club. This marrying of the old and new is vital within the make-up of the modern commercial department. There must be existing core teams who understand the club and the sport, but these can then be supplemented with expertise from commercially-minded individuals with wider market knowledge, both within sport and across other areas outside of the industry.
With this in mind, fan engagement becomes a huge focus. From a commercial perspective, the more ‘fans’ a club has, the higher its possibility of revenue becomes. Use of media platforms and CRM is used to connect with fans and offer them engaging content that brings them closer to the club. But, for this to remain successful, the fandom needs to be bought into internally, and not just a cynical drive for commercial success.
While there are still many challenges to encounter, from pitfalls in international expansion and the difficulty of remaining true to the core fans while continuing to seek out new ones, it has become clear that there are exciting opportunities for those clubs and their commercial teams who are structured in a way to tackle the modern, global world of football.
Done well, clubs can nurture new legions of fans whose involvement, engagement and investment in their team drives success both on and off the field. Done well, sport business doesn’t seem like such an oxymoron after all.
Chris Jordan is a senior consultant at SRi, the leading executive search consultancy. He has been with the company for more than six years, establishing himself as an expert in the business areas of sport including sales, sponsorship, event management, media rights and marketing.
To learn more about Chris’ findings and analysis of sporting commercial strategy and to view a recent case study from a Premier League football club, please contact Chris at email@example.com or 020 7092 6965.