Alberto Ramon is a sports industry executive with over 25 years of experience focused on how innovation, technology, content and data, combined with new consumer consumption habits & channels, can disrupt the sports field. He is the latest addition to the N3XT Sports family, where he leads strategic business development activities within the company.
Read on to gain some insights from Alberto into the modernization of sports organizations, how rights holders need to implement a data-driven decision-making process within their organizations, and the importance of addressing the fragmentation of revenue streams in sports.
1. Alberto, you have seen the buy- and sell-side of sports media over the course of your career. What trends are you seeing in sports media, and what is the best way for sports organizations to leverage these trends in the future?
There is a concerning situation for tier 2 properties. Their main media revenue streams came from pay TV and linear classic TV. Now, a fragmentation of audiences across channels, platforms and media distributors makes it difficult for them to capture critical mass viewers. Consequently, they cannot make the difference in terms of media owners’ subscriptions or advertising revenues.
In this context, the transition to digital is hugely challenging for sports properties in general. From a technical, business and content point of view, amongst others, not everyone has invested enough resources and efforts to solve the puzzle. Added to this, the understanding and experience of digital transformation is low within the sports industry.
These tier 2 properties cannot replicate what premium sports content achieves from a production and distribution perspective. This is causing the top of the pyramid to narrow significantly, a phenomenon accelerated by the pandemic.
The trajectory of the ‘old’ media economy has been charted already. It seems that media rights owners need to fully understand this reality and navigate the digital avenue promptly, through content aggregators, their owned direct-to-consumer platforms, and social media. As they find their space to grow in the new media landscape, they will gain visibility again.
Aggregation of media and commercial rights and long-term partnerships are levers that can make the value proposition more sustainable and attractive to financial partners.
The majority of the most valuable properties at the top are already experimenting and gradually capturing the digital opportunity while at the same time maintaining linear TV as the largest source of income and greatest popularity engine.
Aggregation of media and commercial rights and long-term partnerships are levers that can make the value proposition more sustainable and attractive to financial partners. The majority of the most valuable properties at the top are already experimenting and gradually capturing the digital opportunity while at the same time maintaining linear TV as the largest source of income and greatest popularity engine.
2. In the past years, we have seen the entrance of investment groups into the sports industry, mainly focused on professional sports teams in football. What will be the impact of this new stakeholder group on football governance with leagues, federations and clubs?
I’m not convinced that all the sophisticated money that is coming to football is looking for classic financial returns ‘only’. Definitely, this trend will accelerate the professionalization of the industry (still young) and will bring tools, expertise and knowledge from other fields that will be highly productive when applied in football.
Owners coming from the global business world are not always happy with frameworks that are not allowing them to optimize the results and growth of the sports organization they control. This will generate friction with the established governing bodies, leading to a gradual shift towards the American model of professional leagues.
One of the main challenges from this friction is that the ‘federations’ model was created around the pyramid structure of sports. In the United States, much of the pyramid structure stays within college sports. If a link in the chain of the pyramid of the sport is broken by top teams/athletes leaving the structure, it brings uncertainty to the whole system because Europe is not supported by a similar professional college system.
It seems that the best solution would be if the stakeholders involved in this process could find that fair (and ‘fair’ is a difficult and ambiguous term) balance between growth, business returns and, on the other hand, safeguarding the sport itself.
3. With the cash shortage across the sports industry due to COVID-19, how will the role of leagues and federations (across professional and Olympic sports) evolve in the next years?
This is a very difficult period for the sports industry, strongly affected by the crisis. It is exposed to a weakening in media and sponsorship revenues, and a shortage of supply of events and venue business. This shortage means there is a high demand for capital and financing.
At the same time, we are witnessing the proliferation of SPACs, an investment vehicle that has been used in many industries before but rarely in sports, the increasing interest in sports opportunities by institutional investors, etc., which translates into greater offer of financing and capital for the sports industry.
This means that the best performers and those who can show sound potential for growth will find financial support. At the same time, these governing bodies will probably need to show greater flexibility in terms of governance, ownership and duration of the deals if they want to fit into the playbook of these investors.
4. How can sports organizations, especially those with global fan bases and members, attract new technology partners to their ecosystem?
Global properties seem to be aware of the need to embrace technology and avoid the risk of getting left behind, because it opens opportunities for monetization, and allows them to connect with fans directly and give more engagement to their partners.
I believe that technology partners that are very successful in other industries, regardless of their size, are interested in the sports industry.
At the same time, the sports industry recognizes the need for doing something while the eyes are fixed on solving the issue of bringing sports events back to action. The identification of technology solutions and partners, and their implementation and maximization of results is not a singular task. This requires significant allocations of resources (teams, budgets, objectives, calendars, strategies…) from the sports organizations to effectively embed these solutions within the workflow, commercial portfolio and overall value proposition of the organization.
Historically, some of those tech partners have been willing to pay cash or value-in-kind for providing their products and/or services and being associated with the sport. This shows how powerful sport can be. Sports properties need to place themselves in the shoes of these profiles of partners and create the space that will allow the partner to grow, create a business case, and ultimately reach the objectives agreed upon with the rights owner.