A year ago, the Sports industry was bracing itself for the impact of the coronavirus pandemic. An analysis conducted on behalf of ESPN in May, 2020 projected losses for North American Major Sports leagues to be “at least $12 billion in revenue and hundreds of thousands of jobs” (1)
“As an economist, you stand back, you look at the carnage that’s taking place — dumbfounded, awestruck, mind-numbing,”- Patrick Rishe, Director of sports business program at Washington University in St. Louis (1)
Professional teams and leagues in North America and around the world were faced with a completely novel challenge that they needed to overcome. Teams and leagues boldy explored innovative fan engagement and revenue generating strategies to endure the Corona-induced recession. From allowing fans to pay to have their faces displayed in stadiums to selling unique digital assets, the imperative was to leave no stone unturned
During the chaos, there were proven digital revenue channels that continued to grow and actually hit new records in sales. MLB and NFL’s Auction Marketplaces for memorabilia and experiences reached record levels of engagement. These Marketplace platforms are and were vital sources of for-profit and charitable revenue for entities across the leagues and teams.
A year later with recovery underway, leading analyst firms are reinforcing the notion that digital fan engagement will be essential for teams and leagues that want to hit the floor running in 2021.
The 2020 PwC Sports Survey empathized “enhanced digital media fan experience” as the #1 revenue opportunity for the sports industry. (2)
Deloitte’s 2021 outlook for the US sports industry identified novel partnerships with technology companies that can improve fan experience as a key area for reshaping and expanding revenue generating models. (3)
“Organizations should consider breaking away from traditional category management, especially in the area of technology, and develop complex stories and platforms in which multiple vendors can participate.” – Deloitte 2021 Outlook for US Sports Industry (3)
Maple Leaf Sports and Entertainment embraced this digital strategy with their recent launch of the Real Sports Auction Marketplace. Their new Marketplace has served fans with collectibles, memorabilia and more from multiple MLSE properties like the Toronto Raptors, Toronto Maple Leafs and the Leafs Foundation.
For some, launching your own online sales platform may sound like an unnecessary undertaking. After all, these kinds of assets could be sold via traditional sales channels like licensees and third party platforms such as eBay.
However, adopting a platform model comes with profound advantages that are lost when using traditional and third party channels.
Firstly, Marketplaces are ecosystems – their value is derived from the vendors and customers that use the platform. ‘Trusted Sellers’ Marketplaces like MLSE’s recent launch and MLB Auctions only allow a close knit group of select vendors to sell through the platform. This can include entities like teams, team foundations, exclusive licensees, Hall of Fame, Alumni and Player association and Player Foundations. Careful curation and the existing dedicated fan base of leagues and teams unlocks a larger shared revenue opportunity for the owner of a Marketplace and their partners. Fans also benefit because they now have access to a more trustworthy and engaging Marketplace. One-of-a-kind assets, directly from the source leads to premium prices and a premium shopping experience for everyone involved.
Secondly, Marketplace owners are able to tap into the incredible potential of receiving a portion of every single transaction that occurs on their platform. They also maintain ownership over all the data generated on their platform. Owning a Marketplace can mean more sales and better insights – key steps to the path of revenue recovery that the Sports industry is currently navigating.
So who builds ‘Trusted Seller’ marketplaces?
The latest Gartner Market Guide on Marketplace Operations Applications (Feb 2021), lists Commerce Dynamics (CDi) as the behind the scenes technology partner for the biggest names in the Sports. CDi’s Enterprise Marketplace platform, OpenCanvas powers MLSE, as well as The LA Rams, MLB, NHL/Fanatics, NBA, NFL, WWE and F1.
“We are pleased to be called out by Gartner as the main provider of ‘trusted seller’ Marketplaces and even more pleased by our Partners’ success. MLB, NBA, NFL, NHL/Fanatics, AFL marketplaces are a testament to the leagues focus on enhancing fan engagement as we move into recovery.” Said Michael Grieve, Co-founder and CEO, Commerce Dynamics
This crisis has demonstrated the potential gains that enterprises can capture with quick-paced and strategic digital adaptation. Implementing “maybe-for-the-future” projects, today could mean creating the immediate injection of cash that a brand needs to thrive in 2021.
Gartner’s report also states that “ For many Gartner clients, adopting a marketplace model was initially on their roadmap for 2021 or beyond, but they pulled those plans forward in 2020 when their existing business models were disrupted due to COVID-19.”
How the Sports industry will recover in the remainder of 2021 is yet to be seen. There are however, clear indications that Marketplace innovators will position sports leagues, teams and brands as leaders in the new normal and beyond.