The Commercial Swoop - Beneficial or Challenging for Leagues?
This week’s article is a particularly exciting contribution from our very own CEO, David Lassing!
Read on as David weights in on the debate around the trend emerging in some markets for commercial partners to swoop in and buy up a club or league and its footprint. David poses the question is this the way forward for sports leagues across Europe? And asks is there a trade-off?
Read on to catch his thoughts on the impact named partners and sponsored campaigns has on the global sporting market.
And then don’t forget to join the debate yourself in the comments section below!
Photo used with the permission of Magnus C Lydahl
If you check the media or take a glance through related social media threads, you’ll quickly notice there’s a subject that takes dominance from time to time in the sporting world. We’re seeing the rise of large, commercial heavyweights laying down big investments in the sporting community. Sometimes they’ll buy up an entire club, in other cases they’ll become the league’s title sponsor. Sometimes treading on sacred ground, from a fan perspective.
In any of these cases, the commercial actor and their brand creates an imprint on the sport, the league or the club in question. And, as you can imagine, the opinions on this commercial footprint are many and varied.
Here in Sweden at least, it’s most common these days to see a brand’s footprint at the arena. Oftentimes, a commercial actor will buy up named sponsorship of the arena itself, or drape their logos across the stands, screens and advertising panels. Something which certainly attracts many fan opinions.
But we’re yet to see a case where a brand swoops in and buys up an entire club, a bit like RedBull have done in Germany, for example. And the reason behind that is actually regulatory. We have a rule in Sweden that prohibits one party from owning 51% or more of a club or its property. Which we’ve seen can also be quite a divisive topic of debate. And you can find strong arguments on both sides.
“some clubs are trailblazing the way... financing their sport, league and its future. Without facing the brink of ruin at the end of every season... without running the risk of sinking the ship every time the athletes hand back their jerseys for the season”
And this debate is playing out against a backdrop where Swedish clubs in the first and second divisions are fighting tooth and claw to generate the revenue they need to put forward a strong team on the pitch. Because a strong team achieving good results is a surefire gateway to broadcasting money, and bigger and better opportunities with commercial sponsors.
But make no mistake. In some cases, the stars align and the finances sort themselves out. But not every time. And as the results start to fade, so do the earning opportunities tied to results, instead of to business models.
But there’s light at the end of the tunnel. The modern world of sport pitches more clubs in a position where they grab their business by its horns and create even bigger margins and opportunities. Built on solid business models.
Some clubs are trailblazing the way in a fantastic way, financing their sport, league and its future. Without facing the brink of ruin at the end of every season. And a healthy economy coupled with well-established commercial partnerships often paves the way to a club that can truly reinvest in the sport itself. Without running the risk of sinking the ship every time the athletes hand back their jerseys for the season.
Photo used with the permission of Marcus Vilson
If you take a look over the Atlantic, you can’t help but take note of the incredible financial muscles that stand behind the American sports industry. They certainly don’t miss an opportunity to generate income and create earning potential.
And in spite of this commercial proximity, loyal fans and club affinity runs high. There’s history, spirit and sport behind this gigantic money spinner, often run by a sharp marketing team. And more of often than not, leagues tred the perfect balance between opportunity and equity when it comes to player salaries. A process that is well regulated thanks to salary caps and talent that can’t simply be bought but instead needs to be picked at the Entry Draft. This all helps ensure that it’s not necessarily the club with the biggest financial muscles who come out on top at the end of each season. As is, argubaly, often the case in European football.
Which makes you wonder. How would the American model look if it was applied in another context? In Sweden, for example.
Would it work or create chaos on the pitch and behind the scenes? And what about the grassroot sport and our player development pathways. Would they be negatively affected by such a transition? What would we lose and what would we gain?
What we can say, from our 15 years of experience in this sector, is that commercial collaborations and tight relationships with sponsors and partners more often than not leads to stronger leagues and clubs. It creates the necessary pre-conditions to grow. It drives fan consumption, which in turn can be invested back into the game. Back into the sport. Which in turn, only leads to better gameplay for fans to enjoy. And a richer experience in the arena come match day.
So commercial power’s got a lot to answer for. And arguably it’s already highly present within sport, across the world. And perhaps it’s only getting stronger and becoming more present? What do you say?