It might seem like an odd statement but the reality is that most sport franchises are not in the business that they think they are – and that might just be the single biggest issue for them in growing their business.
So if football clubs are not in the football business what business are they in?
The first thought I had was that they were a content business – i.e. They put on a show for others to consume/watch. This may well be relevant in some markets but based on the UK operating model I have to discount this. The EPL and EFL are in the content business. They have aggregated the content and then sell it on for domestic, international, short form and long form content consumption. They are both very good at this with the EPL being one of the very best at marketing and selling content globally.
Where I move to next is that: Football clubs are in the social business.
This is actually a return to a model that was the original basis of most clubs – and some are still referred to in this way – as community clubs. Often owned by a local magnate or benefactor but built off the working man club basis, the schools and latterly university structures. As clubs have grown and the sector has increased to being a billion-dollar enterprise so they have shed the community tag, especially at the top level. This has been a mistake.
Also read: Business of Football: Pre-season tours are a waste
Don’t get me wrong investing in the football product is important, critical even, but that's because the product you are offering at the core of your community is football. Without it there is nothing. But the football and everything that goes with it: winning, losing, relegation, signing players etc are simply what get people to engage with your company not the end result.
The vast majority of tickets sold to any event, sport being no different, will be sold to consumers/fans living within 50 miles - it's about access to the actual event. So from a ticketing perspective, building a social audience in that zone is key. Most clubs will always need to focus on that as they aren't on TV in front of millions of people each week.
With that in mind, the smaller clubs should be harassing for EFL and FA to permit 4G clubs for use throughout the game. Not only is it ridiculous that League 2 Games can’t be played on this turf whilst UEFA Champions League games can but it also is shocking that this significantly limits the clubs ability to engage with the local community.
The importance of 4G turf
Introducing 4G turf would immediately allow the clubs to invite locals to play on the pitch when not being used for League Matches, allowing events, local concerts and all manner of other ways to engage directly with the fans and non-fans alike to build affinity and drive increased customer engagement and in the end sales. A no-brainer. The current way of thinking limits the way clubs can use their largest asset to engage with their local audience both in terms of number of days and form of interaction.
In the meantime, it also means that all these clubs should be looking at companies like: Umbel, FanCompass, TwoCircles, Winners CRM, WellSaid and others to look at how they build that social base, understand it, grow it and then monetise it.
The bigger clubs are equally social and should be doing the same things (If top level Rugby and American Football etc can be played on 4G so can Chelsea and Manchester United). The difference is that their social platform is so much larger because of the potential size of their audience.
The problem here is the technology and tools to develop a global community are often an afterthought and the social element of their business has been totally outsourced to others – the clubs might tout their large Facebook audiences but the only one profiting from that is Facebook! The same for any number of other social media companies.
Buying players like Pogba and Hazard drives massive potential audiences and engagement but by failing to realise what business the clubs are actually in they are ensuring that they cannot profit from the audience like they would if they were more acutely focused on being in the right business – the social business.
Wrestling back control of the social community, building it religiously, ensuring consumer/fan data and engagement directly with the consumer is key to long-term growth and profitability. It might also be the key to unlocking the top 100 marketing budgets, could build valuations commensurate with their audiences and drive them out of being nice SME’s with big brand awareness and actually propel exponential growth.
Some ‘comparisons’ for you to chew on:
Twitter: $13bn valuation, 313m users
SnapChat: $20bn valuation, 150m users
Facebook: $354bn valuation, 1.7bn users
Chelsea: $1bn valuation (maybe) but apparently 400m ‘fans’
Manchester United: $2.6bn valuation and 600m plus ‘fans’
There are many ways to build a global audience and social network. Starting with data and using the power of football offers a unique opportunity to build both an online community but also to build very real engaged user base around the world – it's not rocket science and can be done with relatively little capital investment…but until the clubs realise what their actual business model is they won't be able to make the changes and will continue to operate as they always have.
Keeping a competitive team should never be underestimated, and if clubs can step back from the current operating model then there is enormous untapped potential for them to release.
If you want more detail on how to make this shift feel free to contact me directly.
