Non-traditional revenue streams for Australian and global rights-holders (Part 1)
Non-traditional revenue streams for Australian and global rights-holders (Part 1)
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Broadcast rights, membership, ticket sales, corporate hospitality, sponsorship and merchandise sales - the same revenue streams have been in place for decades for rights-holders
…and many Australian and global sporting organisations are experiencing the situation where these traditional streams no longer offer much ability for growth. Time is scarce, attention spans are limited, and winning the hearts and minds of young people is as tough as ever. New entertainment options are constantly surfacing so if sports don’t evolve, they’ll get left behind.
With many sports oragnisations breaking-even or losing big sums of money YOY, innovation is required…
Sports organisation’s have always been faced with the dilemma of whether or not to branch out into new categories - an often high-risk, high-reward scenario. The pandemic was highly disruptive for many sports teams who were dependent on traditional revenue streams so for many, it is now more important than ever to strengthen their balance sheets.
Australian sports sponsorship could be hitting a wall
One of the major revenue generators for rights-holders is sponsorship, and many Australian sporting organizations have been diluting their “official” partnership categories to open up the door for new sponsors. Rights-holders have also been allowing new logo placement’s across their key properties to generate new revenue. The Melbourne Storm coaches polo and BBL jerseys are saturated with brand logo’s, NBL courts are more cluttered than ever, the AFL has integrated new sponsor logo placements in the centre-circle, goal square and 50m arc, and broadcasts are squeezing in more and more in-game sponsorship integrations during stoppages and free throws. Although traditional sponsorship will remain a key element of a commercial plan, rights-holders will need to create new innovative ways to deliver value to brands.
Sports organisation’s have a big opportunity to stretch their brands and create new fans…
Strong, appealing and credible brands, large and passionate fan bases, sport science, coaching knowledge, access to elite players, elite facilities etc. - sports organizations are in an incredibly unique position to launch new ventures, and some have already realised this potential and started to capitalise.
Here are some examples of sporting organisation’s within Australia and across the globe that have successfully created new revenue streams through a strategy technically known as “horizontal diversification”
1. New subsidiaries
Aligned Leisure - Richmond Football Club
Aligned Leisure was launched in 2015 and is a wholly owned subsidiary of the Richmond Football Club. In partnership with a host of local city councils, it currently operates 29 leisure centres, community stadiums, pools, gyms and other facilities, catering for 2.1m+ visits per year and employing 600+ staff.
Golden Sate Entertainment, Golden State Warriors
In 2022, the Golden State Warriors launched Golden State Entertainment that produces licensed documentary content, produces music and holds non-basketball live events in the Bay Area.
2. Education academies and courses
For what can easily be mistaken as a traditional sponsorship, AFL and cricket have partnered with universities to create something much bigger - sports related courses that offer students formal education and valuable hands-on experience within elite sporting environments.
Educations partnerships:
RMIT University partnered with the Essendon Football Club and Cricket Victoria to create the Essendon Education Academy and Melbourne Cricket Education Academy respectively
La Trobe University partnered with Carlton Football Club to create the Carlton College of Sport
Swinburne University partnered with Richmond Football Club to create the Richmond Institute
TAFE Queensland partnered with Brinsbane Broncos to create the Sport Business Institute
3. Investment funds, incubators and accelerators
Tennis Australia (TA) recently launched an accelerator program “AO start ups” as part of a multi-year partnership with their capital fund, Wildcard Ventures. This program gave tech start-ups the opportunity to introduce technological innovations at the 2023 Australian Open, in exchange for TA having the opportunity to invest in the company.
This isn’t a new phenomenon and there are many international examples of rights-holders who have adopted something similar… See below from Andrew Petcash
Elysian Park Ventures (EPV) is the private investment firm of the LA Dodgers and has a track record of successful sports-related investments - It has a portfolio of 50+ investments in companies such as Oura, DraftKings, Freeletics, Steezy and SeatGeek. EVP recently teamed up with the PGA to create EP Golf Ventures, a joint venture designed to invest in startups across golf and in particularly, coaching and training, health, wellness and performance science, hospitality, facility management, retail, and agriculture.
Prior to Roman Abramovich’s forced sale of Chelsea FC, he also wholly-owned Chelsea Digital Ventures (CDV), a digital-first business that created Blue Fuel - a sports nutrition service developed by Chelsea FC’s nutritionists and coaches. The service delivered specially-designed sport supplement products (protein bars, powders and shakes), performance recipes and meal plans, via a user friendly app. Since the forced-sale of Chelsea, CDV no longer seems to be functioning.
4. Property development
Australian Racing Clubs have been redeveloping their real-estate and ageing infrastructure over recent years to take advantage of Australia’s rising land values and demand for housing. The Moonee Valley Racing Club teamed up with superannuation fund Hostplus to create “The Valley of Tomorrow” - a project in the process of delivering new hospitality outlets, residential housing, offices and community facilities for locals.
Elsewhere across the Australian racing industry:
The Victorian Racing Club has been selling land around the Flemington Racecourse for future development
Brisbane Racing Club is currently delivering a $1.5 billion “Master Plan” - creating new entertainment, commercial and residential offerings
Cbus Property purchased 5 hectares from Randwick City Council for $250m to construct apartments near Randwick Racecourse.
Internationally, the Milwaukee Bucks have been constructing the “Deer District”, a 30-acre property surrounding the Fiserv Forum. The precinct consists of restaurants, bars, shops, luxury apartments, a supermarket and a gym.
This concept isn’t unique in the USA…
Dallas Cowboys - The Star
St Louis Cardinals - Ballpark Village
Atlanta Braves - The Battery
5. New teams and alliances
City Football Group, owner of a portfolio of soccer clubs such as Manchester City, New York City, Mumbai City and Melbourne City are a prime example of how rights-holders can effectively expand internationally by leveraging their core competencies. Through partnerships, global sporting organisations are working together to evolve their sports across borders - The most recent high-profile example is Tottenham Hotspur’s new 15-year strategic partnership with Formula 1 designed to deliver a brand a new F1 experience to London, through it’s electric karting facility.
In Australia, drawing inspiration from this business strategy in 2017, AFL clubs Collingwood and GWS Giants, and the NRL’s Melbourne Storm, were granted ownership licenses, allowing them to venture into the revamped Australian netball competition.
Following a similar path in 2018, the Adelaide Football Club acquired a professional baseball team, the Adelaide Giants, envisioning that it would provide important commercial development opportunities, and greater exposure in Asia, especially in Japan, Korea and increasingly China. Unfortunately, this vision didn’t come to fruition - Adelaide were forced to sell their new franchise in 2021 after being heavily impacted by the global pandemic.
Although GWS Giants, Collingwood and Melbourne Storm haven’t suffered the same fate, the financial sustainability of Netball in Australia has come under the spotlight in recent times. Luckily, a double government-lifeline has been recently handed to Netball Australia:
Visit Victoria - $15m sponsorship, filling the void left behind by Hancock Prospecting
Australian Institute of Sport - $9.4m funding to support preparation for 2026 Commonwealth Games
As the above case studies show, there is always risk involved in investing and new ventures, even for high profile sports teams.
In more recent news, the NRL’s Cronulla Sharks have submitted a joint bid to join Australian soccer’s second-tier national competition, set to start in 2024.
More to come…