Where’s the money?

It appears that sports is starting to batter down the doors keeping it from getting out into the sun. We’ll all soon be staggering into the light, squinting our eyes at the brightness we’re no longer accustomed to, figuratively speaking. It will be a new day. And we will find ways to make live sports events viable again.

International sports entities are doing things that less prosperous countries have been doing for decades. But they are doing it for public health and safety, not economic restrictions. For example, playing in a single venue, as the NBA has announced it will be doing in Florida, after Major League Baseball was offered a home in Arizona. Sports leagues in smaller countries have done that to save on travel and accommodations. Ease of securing just one playing arena is a side benefit that is now the main focus.

The question is now sustainability. Local amateur sports are in for a long hibernation, as mass gatherings will not be allowed any time soon, and businesses are all functioning at only half to one-third capacity. That leaves it up to professional sports organizations to find means to keep their businesses going and seek revenue elsewhere.

Upon first glance, it may appear that the online and broadcast sports market has fragmented. Airtime on mainstream broadcast media has either been relegated to reruns and discussion programs, or reallocated to other genres. Online, there is renewed interest in old issues, old highlights, old rivalries, old athletes. The importance of the quality of broadcast lighting and camera work has taken a back seat to availability of content. And since everyone is doing things on their own, the path of least resistance is to be more concerned with the subject than the technical aspects.

Consider, too, that many advertisers are holding on to their pre-approved budgets for the year, as they wait for further developments. There are no sports events, period, so budgets are being held until the situation gets closer to normal. There is still no data or trend of these monies migrating to online sports, which – for now – have much smaller audiences and cater to very specific markets. What this means is that the larger, established, multinational leagues have a much better chance of surviving or thriving. It is simpler for them to cut costs and still reach a larger segment of the market.

The NBA and its advertisers are hoping to be first and have a virtual monopoly on the sports audience. Yet, it remains to be seen how the absence of a crowd and the attendant atmosphere will impact a television audience. Some may find it lifeless without all the cheers, boos, groans and shouts of fans in the seats. Will the broadcast audience accept it or be uncomfortable with the lower volume? Will it feel like practice or summer league games? Once advertisers track the new audience numbers, they can determine the new worth of their placements. For now, it’s a test phase.

Ticket sales, though important, are not as big a chunk of revenue as one would expect. And most of the income from paying patrons goes to host teams and venue costs like maintenance and staff, which is out of the equation. Where will the money come from, then?

Television revenues and ad shares seem like the lifeblood of the giant sports leagues now more than before. It’s more cost-effective, particularly in the current scenario where there is almost no competition. Even entertainment programs are not shooting new material, save for newscasts, current affairs shows, and a number of limited shows in Canada, the US and a few other places. Advertisers may have lost their below-the-line activities, but they now have a much larger captive market to court.

Merchandising and ancillary products may be a big-ticket item for leagues that get creative and take advantage of the situation. Special edition collectibles like jerseys, caps, t-shirts and the like can be ordered online. Forward-thinking collectors will jump at the chance to have them. Autographed items can also be big if auctioned online exclusively to specific countries or markets. Protective masks and goggles with league or team logos can also bring in much-needed funds. How often will those products hit the market again?

We are discovering a larger market out there. We just need to have something to hook them with. A little more work can bring in a bigger payoff.