Skip to content
Ideas Marketing strategy

The business of sports, post COVID-19

Anand Chakravarthy

Andy Chakravarthy, Essence Managing Director for India asked GroupM's Business Head for ESP Properties Vinit Karnik about the reopening of spectator sports in India and around the world.

[Andy] It's a difficult future to predict but if you were to gaze into a crystal ball, how do you see the return of spectator sports over the next 12 months?

[Vinit] For the next 12 months, the in-stadia audience will be challenging considering the risk attached. Organisers would have to exercise caution while drafting the resumption plan. From a business point-of-view, federations will be in search of a sweet spot in between two extremities, i.e. the opportunity cost of not conducting the league vs. the incremental costs of conducting the league. It’s safe to assume leagues and events with the lion’s share of revenues tilting towards broadcast fees would be the first few (if not many) to resume sporting action in 2020. 

There is dual silver lining for emerging sporting markets like India though; one is we will have a playbook from our European counterparts to draw learnings from to optimise our efforts, and two, the Indian sporting season is likely to open up during the festive season which is lucrative for both consumers and advertisers. 

Given the significant relationship between spectators and players in any sport, will there be a decline in motivation for the players and hence the impact of the sport?

From a player point-of-view, it’s fair to assume that any impact on the quality of gameplay would be minimal, if at all, in the short term. These are professional athletes who have worked their way up the system and for the majority of their careers would have played in front of a limited audience. While playing to the empty stands is not the ideal option, in times like these, working towards getting back the normalcy should be the focal point for most federations. We’ve already seen this with the likes of Bundesliga and Premier League players; no reason to believe otherwise for the rest of the clan.  

As we see the early return of sporting leagues in a few countries playing in empty stadiums, what are sports administrative bodies doing to enhance the experience for players & fans alike?

The primary concern of sporting bodies around the world with regards to resuming sporting action is the safety of players, technicians and support staff. And this is a massively expensive affair as it involves additional logistics in terms of fully booked out hotels, quarantine protocols, chartered flights, additional health checks, redrafting of player contracts and insurance amongst other expenses. Thus, for sports administrative bodies in 2020, a lion’s share of their effort is towards putting the best foot forward to ensure the players and support staff are safe and healthy. This is true for rights holders whose primary revenue sources are skewed towards broadcast rights. For sporting bodies whose revenue dependency tilts towards gate receipts, more often than not, it’s prudent to push the league till one can get fans back in the stadium safely.

From a viewer point-of-view, broadcasters globally are toying with tech solution providers like VIZRT who are creating virtual fans-in-the-stand for La Liga so that the spectator in front of their television gets a pre-pandemic sporting feel. Add to that ambient in-stadia sound and you’ve got a near-real experience for the TV audience globally. Many tech companies are working on developing technology to stitch fans’ cheers and moans into the live broadcast remotely. While the tech-based solutions are available to provide a near-real pre-pandemic sporting feel to the TV viewer; there’s the sizable group of hardcore fans who would like to take the opportunity of empty stands and zero ambient noise to catch players’ candid chatter which is true gold dust.  

Sports is a multi-billion dollar business across the world. The current disruption is a potential threat, even in the long term. As an expert in this space what are some of the fundamental shifts you believe need to happen between various stakeholders to protect this opportunity?

The pandemic and subsequent lockdown has surfaced a number of ailing and cash-strapped sporting businesses. It’s fair to expect: 

  1. Sports business (league and franchise) closures and takeovers across the globe 

  2. New player, sponsorship and broadcast contracts and renegotiations

  3. Technology intervention that forms new fan habits and strengthens others 

  4. A blocked sporting calendar for years ahead; leading to events and leagues which have been delayed, suspended or rescheduled fighting tooth and nail for favourable fixtures  

While these are the harsh realities of the recovery phase, it also presents an opportunity to reconstruct the industry to rise like a phoenix and thrive for decades to come. 

We were just beginning to see international sports leagues like the NBA and MMA making inroads into developing markets like India. Will we see a pull back and a delay in this happening now?

Historically, international sports leagues like the NBA enter a developing market with a long term vision in mind. Case in point being the NBA in China, which is a three-decade-long story. And with a vision that long, one accounts for economic and social downturns like recessions during the development phase. Hence a complete pullback is highly unlikely; however a momentary pause is possible. Having said that, since it is reset for everyone, this also is an opportune time for all the local and international emerging leagues to revisit their development strategies and apply some of the learnings from pre-pandemic times and regain the lost ground going forward.

Advertisers across the world, view live sports as a key opportunity to build their brands. Vast amounts of money are involved be it sponsorships, advertising, merchandising, etc. What is your advice to the marketing community when it comes to sports investments? 

Resuming sports is a big signal to the world that the crisis has passed and we can come together again. It’s an extremely strong positive sentiment and when coupled with a global fanbase waiting with bated breath to see their favourite sporting icons in action; it’s safe to assume that the viewership numbers are expected to be unparalleled. Take the case of La Liga. Upon return, the international viewership numbers grew more than 48% compared to previous rounds of the 2019/20 season. When it comes to sports globally, most commercial partners take a long term view. While in the short term (2020) some rights fees or sponsorship values may be renegotiated, most partners and rights holders will rally together by helping each other and over time put this pandemic behind them. So the advice to the marketing community is to take a long term view. If need be, course correct plans in the short term (2020), but stay invested as sports will come back stronger in defining the new normal to the world with passionate fans cheering their favourite teams and favourite players, massive activity around the grassroots development that will build the next generation of fans and communities and most importantly attract appointment viewing for live action on TV.