Today’s Barclays Consumer Spend report shows that year-on-year retail, hospitality and leisure spending slowed in January[1].
This included a 5.5% decrease in transactions on sports and outdoor retailers, and a 14% decrease in transactions at restaurants.
And though overall consumer card spending grew by 3.1% year-on-year, it was still less than the latest CPIH (Consumer Prices Index) inflation rate of 4.2%.
While most economists expect this inflation rate to fall throughout 2024 – and, importantly, interest rates with it – it shows that the economy remains fragile, and everyday people are buckling their belts.
Simply put, people still have less money to spend, and will have to make calls on where to prioritise for the foreseeable future. Including on sport.
And with the volatile global geopolitical landscape, we have to assume that many of the pressures we’ve discussed in previous pieces will continue to shape how consumers and businesses behave.
Which means even more pressure on our industry – our industry which has been far too slow to change a commercial model that’s been creaking since the dawn of the internet.
We see recent evidence of this everywhere. Media rights are the biggest source of income for professional sport in the UK, and the Premier League had to extend its domestic media rights partnerships last year at a per-game decrease of 23%. In the background, piracy hit endemic levels in 2024, driven primarily by the unsustainable cost of subscriptions.
The same story is being written outside the UK. France’s Ligue 1 scrapped its media rights auction in October as no bid hit the valuation threshold, while that month Napoli president Aurelio De Laurentis said Italian football “will die” after the league signed another three-year cycle at another value decrease.
Sponsorship, meanwhile – the second biggest source of income – saw a 10.3% year-on-year reduction in deal volume in 2023[2], with sectors that have bankrolled sport for decades, including financial services, automotive, and beverages, all reducing their outlay.
The bottom line? Less money for consumers trickles down fast.
I’d be naïve to say there’s a single, simple solution for sports rights-holders.
Yes, technology is important and will play a central role in the solution – but equally there’ll be no technology-driven silver bullet like AI, the metaverse or crypto that will solve the problem.
The solution has to start from the top – an edict for change that identifies and overhauls the strategy and with it, systems, technologies, people, culture and processes.
Critically, we believe that new strategic approach comes via a mindset shift that recognises sports organisations need to transition from a model that supports an event business to one that harnesses the unique properties of sport and allies them with the exponential growth of a digital media business.
Sport is finite. There are only so many event days that can be held, and the more scarce the product, the more valuable it is. So, long-term value and revenue growth needs to come from the large audiences serviced every day of the year (primarily online); they need to drive the business, with events being just one of a wide, diverse menu of options for how the audience can be monetised and have their fandom deepened.
In a week of 10,080 minutes, rather than focusing on the 80 or 90 minutes attention a team will get from someone attending a game, we advocate focusing on the 10,000 minutes of attention they’ll get from them over the course of a year across all touchpoints.
In embracing this mindset shift, we believe all rights-holders operating in the sport and live entertainment sectors can grow profitability in the face of the enduring economic pressures.
So if they’re not already, 2024 has to be the year sports rights-holders give their commercial model the rethink it needs. If they don’t, it could be the year falling revenues and rising debt finally put them out of business. The stakes really are that high.
ENDS
Post by Ben Wells, Chief Executive Officer, PTI Digital. For more information please contact ben.wells@ptidigitalgroup.com
