Understanding the European model of sport and implementing the right sales strategy
Sports is a super exciting industry: who wouldn't want to work with the biggest clubs/leagues, top athletes and brands of this world? Nowadays, the sports industry is very attractive: many people want to work in sports, and a lot of products, solutions and services are created and offered to clubs, leagues, and federations which are flooded with requests and various solicitations. This results in a very competitive and hard-to-penetrate industry. And like every other one, it has its own specificities and should be well understood if one wants to succeed in establishing its solution in this market.
Thus, once you know your product functions accordingly and fulfills a specific target need, you will have to focus on your way of selling it so that you can onboard your first clients. To that point, having solid market knowledge and implementing the right sales strategy are two crucial points. From understanding the European sports ecosystem to implementing the right sales strategy, we will go through some of our key insights to best position and sell your product.
Understanding the European Model of Sports Ecosystem
Understanding the landscape you are operating in will enable you to better structure your approach to sports organisations and maximise the discussions you will have with key stakeholders.
First and from a structural point of view, it’s often said (an exact definition of this doesn’t really exist) that the European sports industry is structured as a pyramid, where grassroots organizations/clubs rely on regional organizations that rely on national ones until reaching the European/continental and international governing bodies. This interdependence between each level is at the heart of sports in Europe, and has been created to equally distribute revenues, encourage mass participation and competitiveness between organizations.
Key Principles
Performance and merit: this is evidenced by our promotion & relegation system. Here we find again a pyramidal model in which national entities create and manage autonomously their own different competitions and associated tiers.
Social responsibility: in europe, sports organisations have social obligations based on solidarity that implies a redistribution of commercial incomes to the development of sports and the funding of social programmes to benefit to grassroots and local sports entities.
Autonomous governance: in Europe, sports organisations are more or less autonomous in the creation and management of their own events and competitions.
These principles aim at driving more equality and give more chances to every organization. The European model is often compared to the North-American model which is pretty different:
In North America, sport is dissociated from amateur and recreational sports. Professional leagues operate as private companies owned by the clubs themselves (memberhsip system) and in a closed way (no promotion/relegation). In this model, the creation of monopoly power makes the economic risks very limited. Moreover and through a very cooperative approach between all stakeholders, the leagues and the franchises better promote their mutual economic interests. This commercially driven approach contrasts with the European model, much more sporting results driven.
Understanding how European sports organisations are structured as well as the key principles and mechanisms of our model is key to indentify which has the power and relevant target to drive more businesses.
Revenue model and influence: focus on football
It will come as no surprise to anyone but the sport that generates the more business in Europe is soccer. In 2019/2020, the total revenue of the European professional soccer market was estimated at 25.2 billion euros. Over the past decades, the business model of football has evolved from a matchday revenue-driven model to a broadcast revenue-driven model. This main shift has of course enabled European football to scale and be consumed by global audiences, but at the same time, it has made leagues and clubs more and more dependent on Media rights deals.
If we take a closer look at the main revenue drivers in the 2020-2021 season, around 36% was generated by Media rights (let’s not forget the pandemic which consequently affected matchday revenue, especially ticketing). This provides you with a clear picture of the leading trends, the growing importance of broadcasters and their relations with right holders (let’s not forget the pandemic which consequently affected matchday revenue, especially ticketing). Paying attention to the media deals is a very good indicator of the timing to reach out to leagues, clubs and even federations. One other important source of revenue to consider is the sponsorship/commercial sector. Accounting for about 30% of revenues, new partnerships and commercial deals can lead to further business opportunities. Generally speaking, if your solution can bring value in the context of a partnership or on the use/diffusion of media, certain events and deals can be a business trigger.
Having this understanding of the market is the very first step and it should help you to set up your business strategy to better convert opportunities into money. The European model has its own specificities, institutions such as leagues aren’t as powerful as in North America when it comes to rights and that’s why it’s essential to know where the power is and who can take a decision to activate your solution. In so doing, you ensure targeting the right organizations and the right people.
Implementing the right Sales Strategy
From our long experience working in the European sport industry, we have been able to draw out certain conclusions that should be considered when starting selling a product.
Build business reputation
Sports organizations are over-solicited so it's very complicated to stand out from others. To achieve the highest level of success, you must pay particular attention to your reputation. Indeed, a good company reputation opens the door to opportunity and provides unhindered access to sports organizations.
Personalities: we never earn trust by pretending to be other than we are. Pretty simple to say but not so easy to apply. People want to meet personalities, and sometimes it fits, sometimes it doesn't. But staying true to your organization's unique nature is essential. Your uniqueness, individuality, foibles, peculiarities, and honesty can be your greatest offerings. These qualities will allow you to attract your most valuable clients and customers. Because if you adapt your personality to each client, the whole ecosystem will not understand who you are. Don't overlook that we operate in a tight market, where almost all actors know each other.
Advocates: finding advocates can be one way to assert your personality in the market. Creating excitement around your product will enable you to find people to help you. These advocates will make your product shine and visible within their network and, by doing so, will spread your values to the market. Having someone that best shows a brand is a huge plus to achieving a strong business reputation.
Business reputation should be one of the most beneficial intangible assets of your organization. And this should result in competitive advantages, higher sales and increased profits.
Emphasize the value of your solution
Big organizations are always scared that they're not going to have a return on investment and will use a portion of their budget for something that's not valuable for their needs. As your solution probably solves real pain–points, you will build far more value for those organizations by truly highlighting it.
KPI’s: KPIs are key to support decision making. And because they are the most tangible way to showcase your value, you will need to test against them. This is even more important for sports organizations as they can project themselves and realize the business opportunity that brings your solution. If you can rely on KPIs that are relevant, it will be easier for those organizations to appreciate the value of your offered solutions and you will be able to turn your discussion into bigger deals.
Value versus Cost: it's always important to explain the value versus the cost. Every product has a cost and needs resources. But as it should have a real impact on the organizations’ strategy, it's critical to focus on the winds that they're going to get from using it, versus the initial money that they're going to have to throw at it another.
Set up the right processes
It doesn't matter how good and relevant your solution is, if you don't have the right practices and processes, you are wasting all your efforts. If it is infinitely more challenging to get in touch with organizations than to maintain an existing relationship, what should be the best way to start creating a right discussion environment?
Rely on sports calendar: As explained above, understanding the ecosystem will enable you to optimise your reach out strategy. Chime in sesons dates, TV rights cycles, partnership renewals to be on top of what’s happening in the industry. A simple news you read can be the trigger!
Keep the pace: As a startup, you certainly operate very fast in your day-to-day activities, but you have to be very patient with high-level strategy. Thus, you have to be in a position to do volumes, make sure that people know you but also support the pace. Because if you talk to an organization that gets back to you a few months after, they surely have educated themselves on the topic and can be more challenging. Making sure to have the right cadence to follow up with those organizations is mandatory.
Differentiate your approach: if you are targeting tier one sports organizations ( whether it's clubs, leagues or broadcasters), you know that these are huge organizations with multiple stakeholders. First, make sure that you are in touch with different business units, then make sure that your approach is adapted to your interlocutor and find the right balance between sales and product as visions and expectations will certainly differ from one to another. Because at the end, you will have to convince all of them (BD, product, marketing teams, tech teams, etc.)
Anticipating next steps: startups and sports organizations don't operate at the same speed so it's necessary to be in control of the next steps. Having them clearly defined at the end of your meetings is the best way of being legitimate and getting back to them if they're not getting back to you.
Getting a new product adopted in the market takes cross-functional accountability and contribution, even more within the sports industry. To make the commercialization process successful, you have to create and orchestrate a plan that is aligned with our industry specificities. If you are still unsure about your business strategy to succeed in the European sports market, we can help you grow your presence and traction across the territory. At LaSource we are always excited to help startups that can shape our industry.