At the beginning of December 2014 Deloitte
published the latest “Finanzreport deutscher Profisportligen 2014”, giving an
overview about the financial and economical situation of the four German sport
leagues basketball (BBL), handball (HBL), ice hockey (DEL), and third league
football. In summary the report certifies all four leagues increasing attendances
and growing financial revenues. Main sources of revenue were commercial
revenues, including incomes from sponsorships and merchandising, and match day
revenues from ticketing. On the downside, gains from media right sales were negligible
for clubs of BBL, HBL, and DEL as there were no considerable broadcast
arrangements.
The outlook, given by the authors of the report,
is more or less positive for all three leagues, thus we can expect also
future grows in terms of attendance and revenue figures.
This circumstance raises the question where
growth actually comes from? Using the example of the BBL and its development in
the recent years we can see, that the governing body plays a crucial role when
it comes to enabling and initialising professionalisation and commercial
growth. However, in the end the individual participating clubs are responsible
for acquiring commercial partners and establishing professional structures. By
taking a look at the commercial business strategies of most of the clubs of
BBL, HBL and DEL it can be assumed, that the top priority of the greater part
of these clubs is to invest financial resources in the sports squads, rather
than investing in infrastructure and commercial structures. This approach is
based on the theory that high investments into the team lead to a better
sportive performance and thereby to a higher attractiveness for spectators and
commercial partners. The figure below exemplifies this approach.
Against the background of a sustainable
long-term business strategy, which aims on stable, better increasing, financial
revenues and sustainable numbers of spectators, I am convinced that the aforementioned
strategy is not the most rewarding one. This view is based on the proven fact,
that the greater part of fans and followers in diverse sports is not primarily
interested in victories and excellent sportive performances of their teams, but
rather in excellent customer service, CRM and fan engagement measures, and, of
course, commitment and dedication of the players. However, last named does not
require top-earning players. Consequently, in my opinion the investment
strategy at professional sports clubs should look like shown in the figure
below.
The figure shows, how an investment in the
infrastructure and the administrative office staff enables customer (fan)
service and therefore customer satisfaction, which is one of the key elements
for customer retention. Additional manpower in the commercial department would
also enable the sustainable management and acquirement of sponsorships and
partners. A qualitative approach to potential partners is more likely to
generate new contracts than only sportive success without the appropriate
address. After a timeframe of two to three seasons the additional revenues will
break even the investments and from that point on additional revenues could be
invested into the actual performing team, without neglecting the requirements
of a professional sport club of today.
The full report from Deloitte is available upon request: Deloitte Report
[German only]
