Opportunities For The Swift-Footed

By Jonathan Bernstein

The sports industry, with its mix of markets and sectors, and its multitude of players, is often hard to pin down. Yet what is not in question is the speed at which it continues to evolve. For sports brands, the message is stark and clear: adapt and change, or risk losing relevance. Sport plays a central role in most cultures around the world, giving brands in this category enormous influence that few others can match. The power of sports brands lies in their ability to build deep and lasting connections with consumers.

The interplay between consumer and brand is fundamentally different in this sector. In most categories, brands deliver an experience that may, in time, create loyalty. Yet with the exception of a few star players, true brand loyalty is elusive and a real challenge to maintain. For sport brands (particularly club teams), loyalty comes easily, irrationally, and is “sticky” (often handed down from parent to child). Just ask any Chicago Cubs fan — it’s been 103 years since their last championship season.

With billions of new global consumers/fans coming online in the next 10–15 years, it’s clear that sports are no longer a local affair, something top European football clubs have known for years. Anyone strolling down Nanjing Road in Shanghai is guaranteed to see a young Chinese fan wearing a Chelsea FC jersey. There is massive growth potential for brands.

No one is doing a better job of this than Formula 1. In the past five years alone, it has introduced new races in India, Singapore, Abu Dhabi, and Korea, with future races planned for the US and Russia — significantly increasing its presence in strategically important growth markets. By partnering closely with local governments, Formula 1 has created a portfolio of iconic events that are highly relevant to a much broader set of stakeholders than just race fans. Take the Singapore Night Race. With the city as backdrop and a viewing audience of 100 million, the government is more than happy to promote the race via its tourism board (and foot 60 percent of the racebill). This is a smart brand strategy that creates enormous value for the brand owner, its partners, spectators, and others.

Like most other sectors, the capacity of sport brands to deepen existing relationships and develop new ones relies on their ability to leverage new technology. Now that the low hanging fruit such as live streaming has been picked (but by no means maximized), the question is, how can brands create additional value in a multi-platform world of cheap digital content that is accessible to most anyone?

FC Barcelona is one brand that is taking a smart, and global, approach to digital. The club’s website is in seven languages, its Twitter feed’s in three. It has a strong presence on YouTube and QQ for its Chinese fans. In addition, Barça is developing the digital assets to monetize the passion and loyalty of its fans by developing a downloadable app for less than USD $1. Today an app, tomorrow a jersey; forever a fan.

Perhaps the most innovative sports brand today is Red Bull. The company has such clarity of identity that it managed to transform an energy drink brand into a mainstream sports brand without compromising or diluting what it stands for. The brand knows who its customers are, delivers the right kind of experience to them, and constantly innovates to maintain relevance. While many brands engage in sponsorship to sell more product, no others have yet created and taken ownership of the sport itself.

One of the biggest sports stories of the year was the global Linsanity phenomenon. While most experts agree that the Houston Rockets contract signed by Taiwanese-American Jeremy Lin was excessive, there is a debate around whether he creates enough value in other ways to justify the contract. Undeniably, the marketing value of a US-Asian star is potentially huge. But to help individuals and franchises make better business decisions, sports companies need a better understanding of how a brand creates value.