Introduction: It Captures the Hearts and Minds of a Society
It is worth considering how business and sport arrived at the current situation. How did the business of sport get to todayâs heights from the dark days of the eighties? Cave (2015) suggests many factors came together, but without the contribution of a select band of innovative entrepreneursâthree, to be preciseâthe revolution may never have happened in the first place. Rupert Murdoch and his Sky satellite television colleagues had the foresight and courage to plough ever-increasing sums into English football, based on their conviction that the sport is so popular with domestic audiences. More recently, Team Sky has also played a key role in the rejuvenation of British cycling. In motor racing, Bernie Ecclestone had the prescience to understand how globalisation, the enduring appeal of fast cars, and the distributive power of broadcasting could create enormous value for Formula One . In golf and tennis, Mark McCormack, the late founder of sports marketing agency International Management Group (IMG), was the first to recognise that athletes and sports stars had value well beyond their performances. By identifying athletes as sporting brands in their own right, he unlocked unexploited intellectual property, which has gone on to help create some of the most powerful brands in the world (Cave 2015).
The above individuals were all innovative entrepreneurial visionaries. They all took risks and had a visionary view on the potential for their sports, events or talent over the long term. First, Rupert Murdoch gambled on the power of football to drive a particular business proposition and proved spectacularly successful. Second, Bernie Ecclestone transformed what was a cottage industry into a global powerhouse in terms of financial performance and cutting-edge technology. Ecclestoneâs achievements paved the way for all major sports to succeed as businesses and had a radical impact on the evolution as sport as a business. He had a great vision of what motor racing was capable of achieving, and understood the great public interest in it, as well as the enormous broadcasting potential. Many would argue that Ecclestone had a massive impact on so much sport, not just motor sport, because he opened everybodyâs eyes to what could be done (Cave 2015). Finally, in golf and tennis, Mark McCormack, of IMG , was the first to develop the personal branding potential of athletes as popular media stars. McCormack was one of the first to understand the individual potential of sports people to earn much more money than they had done before and to take control of their own intellectual property rights (Mason 2015).
The far-sighted ideas of Murdoch, Ecclestone and McCormack have been realised. In 2016, the global sports market, comprising of infrastructure, events, training and manufacturing and retail of sports goods, was estimated to be worth $US600â700 billion (KPMG Business of Sports 2016). This accounted for approximately 1% of the global GDP. Besides exercising a significant impact on the global economy due to its close association with other sectors, including education, real estate and tourism, the sector also contributed to improvements in general health and the well-being of a country. In the United States , Burrow (2013) notes that the sports industry generates approximately $US14.3 billion in earnings a year. The industry also contributes 456,000 jobs with an average salary of $US39,000 per job. Moreover, Nightengale (2013) reported that the Chicago Cubs generate $US600 million annually for the state of Illinois and a large part of the economic impact involves jobs. In the UK from 2010 to 2015 the business of sport became a ÂŁ20bn-a-year industry supporting some 450,000 jobs. According to Oxford Economics, the London Olympics had contributed ÂŁ16.5bn to Britainâs 2017 gross domestic product, and cycling now brings in ÂŁ3 billion annually to the UK economy.
The market for sporting events is worth US$80 billion in 2014 (Kearney 2014), with impressive growth projected for the foreseeable future. By the time the 2014 FIFA World Cup ended, 3 million people had gone through the turnstiles at 12 Brazilian stadiums, paying in some cases thousands of dollars per seat to see the worldâs greatest footballers. On televisions around the world, more than 3 billion people watched at least a minute of the Cup, thanks to media rights worth as much as US$1.7 billion in total. The TV networks were rewarded handsomely with record ratings: from the 30 million Chinese who watched the GermanyâArgentina final despite a 3 a.m. local start time, to the 90% of Dutch households that watched the Netherlands semi-final game against Argentina. Moreover, the US match against Portugal was one of the most watched soccer games in US history, with approximately 24.7 million viewers. This clearly demonstrates the commercial returns possible from a global sporting event (Maese 2014).
In the US , sport media rights are projected to go from US$14.6 billion in 2014 to $US20.6 billion by 2019, accounting for a compound annual rate increase of 7.2%. Over 35% of current local television rights deals with the National Basketball Association (NBA) , National Hockey League (NHL) and Major League Baseball (MLB) are set to expire by 2019, which will contribute to the overall growth in the sector, based on the assumption of progressively more lucrative new deals. Meanwhile, it is anticipated that the amounts paid to televise English Premier League (EPL) football will continue to rise across a range of new digital providers (Heitner 2015).
Another change over the past 30 years has been a recognition by business that sports can play a key role in winning hearts and minds, and transform how companies are perceived (Mason 2015). Mason believes that sports sponsorships and partnerships are conferring benefits such as deeper engagement with customers and motivation of staff, beyond the traditional avenues of brand awareness and hospitality. Sports also have the power to lift people up in times of turmoil. The âMiracle on Iceâ came at a time when tensions were high in the Cold War, and South Africaâs 1995 Rugby World Cup victory helped a nation heal from decades of Apartheid. Nelson Mandela said: âSport has the power to change the worldâ.
As an example, the Laureus Academy embraces the principle of using sport to help bring positive change to disempowered communities. Sporting celebrities offer their time to support the work of the Laureus Foundation. Former sporting stars who have aligned themselves with the Laureus include Boris Becker, Jack Nicklaus, Hugo Porta, Kapil Dev, Sebastian Coe, Monica Seles, Tony Hawk and Dan Marino (Schteiber 2017). The Laureus story is a mix of corporate sponsorship, celebrity sport, and the will to succeed in some of the most devastated and impoverished parts of the planet. Significant global brands are sponsors and this ensures the work continues, while in return, the brands travel the world and associate with top sports personalities and events.
Sports provide a platform for people to come together and support their country. International events like the Olympics and the World Cup serve as a point around which to rally and show national pride and unity. More recently, the London Organising Committee of the Olympic Games yielded employee and customer engagement benefits brought by corporate associations with people-centred Games. The bodies set up to manage the eventâs legacy also put in place a structure capable of delivering long-lasting benefits. Sport can inspire passion and people; it involves merchandise and money, supports ideology and identity, fosters community, enhances profile and professionalism, and generates sponsorship and symbolism. The actions that sports have taken to professionalise themselves in business strategy and administration has greatly reduced any reputational risk previously associated with sports endorsements. Sports businesses are today more transparent and professional, and more and more focused on the customerâthe fan (Mason 2015)âand as such, are trusted by business partners. With the right leadership, culture and innovative practices, sport can create the foundation for social, cultural, and commercial progress. These represent the themes presented in this book.
The Global Sport Ecosystem
The âbusiness ecosystemâ as a concept was introduced by James F. Moore (1993) in an article published in the Harvard Business Review called âPredators and Prey: A New Ecology of Competitionâ. It raised attention to a change in the way organisations relate to each other within the same environment. This change was triggered by the challenges of technological innovation, mainly related to the development of the World Wide Web in 1990. A new highly dynamic and interconnected world arose after the popularisation of the Internet in the early 1990s, which created a whole new world of commerce (Kelly 2015). Since then, the concept has been largely used to describe the network of organisations that evolve by competing and collaborating within the same environment.
Organisations realised that in the globalised and highly interconnected world that rose with the Internet, it was no longer possible to view their businesses as isolated members of a single industry. Businesses were seen as players of complex ecosystems that cross a variety of industries. The rise of the âecosystemâ as a concept has increased the interest and concern around the interdependence of organisations and activities within a given context (Adner 2016). The relationships between organisations gained new significance, as no business is capable of...