We assume the influence of sports teams on society. After all, take a quick look at trending news and you’ll see that, for better or worse, sport players, teams, leagues and the like are consistently ranking high on both the national and international interest list. That said, it is understood that widespread broadcasting of sports teams helps to beef up all of this sport industry interest. Yet, in the age of social media and online engagement, changes in the digital interaction and consumption of the sporting industry also changes our ability to measure, define and reflect the influence of a brand and an audience.
Today, it isn’t solely those who receive a broadcast who are fans of a team. Look at United Manchester alone, with their 359 million fans, many of whom live in Africa, for proof.
So, as we consider the growing scale of sport audiences and fans, the importance of developing a 1:1 relationship – at that same scale – is paramount. Opportunities abound for individual teams, leagues and organizations as far as improving the profile of their fans, its segments, trends and wants. The ultimate goal: create a personalized experience for the fan that produces premium revenue for the brand and provides off-the-chart value for sponsors.
Providing Increased Sponsorship Value
When an advertiser buys a sponsorship with a team or league, what are they getting, how is it valued, and are we at a market apex for sponsorships? See, we are at the crest of a wave when it comes to the present methods of selling and valuing sponsorships, and an increase in fan data is likely to transform the valuation.
We are at the crest of a wave when it comes to the present methods of valuing sponsorships, and an increase in fan data is likely to transform the valuation.
Let’s just consider the $559 million sponsorship deal between Manchester United and GM. The goal of the sponsorship was to reach United’s Asian audience. After all, GM doesn’t even sell in the EU. Yet, while we know that Manchester United has a global fan base consisting over more than 659 million fans, why was it that GM saw value in the United fan base in Asia?
In other words, what exactly was GM buying at such a high premium? Could they really be sure that the United fan based in Asia was even interested in GM to begin with? Was this partnership really a good investment? Did it make sense, and if so, where was the data to prove it?
To take a look at another brand also buying sponsorship space with Manchester United, Adidas’ 10 year long partnership cost the sporting goods brand $1.3B. Yet, this brand cohesion makes sense. After all, players will wear Adidas on the field, influencing both in stadium fans and those watching the game via TV. For GM, though, players won’t drive cars on camera – at least, not when and where the United fans are tuning in (i.e. during the games).
Social Media Fans vs. Broadcast Fans
Here’s another layer to add before we really dig down into why the GM deal made any sense, if it did at all: Manchester United’s kick-off game only pulled in 3.5M fans – or .62% of the global fan audience. For both Adidas and GM, these brands could have received just as much audience penetration sponsoring an ad before a popular video on YouTube than they did during that one game.
But, lack of audience penetration during broadcast games doesn’t devalue the social media following of Manchester United, nor does it devalue the global fan base, many of which skipped or couldn’t access the broadcasted game.
In the end, GM and Adidas are paying for brand association. After all, the social media fans of United are already engaged, already obsessed, already loyal. For GM and Adidas, partnering with United is about more than the broadcast. It’s about attracting similar loyalty.
Football vs. American Football
Back here in the States, where national fan bases watch football more readily via broadcast thanks to wide-spread access, is the sponsorship valuation the same as it is for a partnership like GM and Manchester United?
To truly compare it, let’s look at the top 5 grossing teams in each sport:
The NFL’s top five teams on value in terms of gross revenue and multiple:
- Dallas Cowboys ($3.2B valuation / $100%mm 2013 gross revenue / 5.71x multiple)
- New England Patriots ($2.6B / $428mm / 6.07x)
- Washington Redskins ($2.4B / $395mm / 6.08x)
- New York Giants ($2.1B / $353mm / 5.95x)
- Houston Texans ($1.8B / $339mm / 5.46x)
The five Money Teams on value in terms of gross revenue and multiple:
- Real Madrid ($3.4B / $675mm / 5.1x)
- Barcelona ($3.2B / $627mm / 5.1x)
- Manchester United ($2.8B / $551mm / 5.1x)
- Bayern Munich ($1.85B / $561mm / 3.3x)
- Arsenal ($1.3B / $370mm / 3.6x)
So, the valuations are similar, though the social media fan bases differ. For instance, Manchester United has 59M fans on Facebook alone compared to top American football team the Dallas Cowboys which has 7.5M fans on Facebook. How do brands in the U.S. makeup for this lack of global reach? They sponsor the whole league.
In 2010, Bud Light took over Coors as the new official beer of the NFL. The six year long sponsorship cost the beer company $1.2B, ensuring the company a global reach and an insane amount of fan engagement and loyalty. After all, fans interact with the beer brand every time they purchase a beverage at a game or pay attention to a commercial during a break.
Buying Engaged Fans at a Global Scale
The influence of the sporting industry on society is paramount. We know this, and recent incidents only further prove the validity. That said, teams like Manchester United or leagues like the NFL can influence fan behavior like never before – and it is no longer merely the broadcast viewers that sponsor brands are trying to reach.
Instead, a globalized economy, a world wide network (i.e. the Internet), and social platforms that connect people with teams halfway around the world has created a sponsorship value that is currently in flux. Some sponsors pay for the view, much like Adidas, but others pay for the loyalty and the reach outside of broadcast. In other words, social media is the sport industry’s newest, and potentially highest grossing, revenue stream.
Teams like Manchester United or leagues like the NFL can influence fan behavior like never before.
The only thing these organizations need to do to fully utilize it, then, is to create a leverage system by which they can prove to brands the high value of their digitally engaged and active fan base. You do that with fan data, collected ethically and used to better the fan experience.
In the end, it’s a win-win for both the fan and the team. Better brands, added opportunities to interact, and more profitable leagues. Looks like big data is the real catalyst for change for the sporting industry – we’re just waiting on the teams themselves to catch up.
For more information on how you can start ethically collecting your fan data, contact us for a demo.