How can your sports organization diversify its revenue streams through digital and innovation activities?
A question on many decision makers’ and administrators’ minds since the onset of the global pandemic in 2020.
This was the backdrop of an engaging discussion that our CEO, Mounir Zok, moderated at the first edition of the Basketball Innovation Summit. The panel brought together Unė Marija Jurkštaitė, Chief Business Officer at BC Zalgiris Kaunas and Sebastian Ferschl, Head of Corporate Partnerships at FC Bayern Munich Basketball.
Leaning on their collective expertise as some of the top minds in digital and innovation in basketball, we light the path ahead for those seeking to answer the question.
Increasingly, we are seeing forward-thinking organizations take steps forward in their digital and innovation initiatives. There are many reasons for this, including adapting the business model to the digital age to exploring new revenue streams to becoming more efficient and agile as an organization. In the case of BC Zalgiris Kaunas, they started their innovation journey back in 2019 with the aim to introduce new technologies in their current business model– they introduced a central intelligence platform and the arena’s mobile app in order to be a customer-centric organization where marketing, sales, and service teams have the insights they need to personalize engagement. The other two goals of their innovation strategy are to contribute to the creation of new innovations for the sports industry and to develop an overall entrepreneurial and innovation culture within the organization.
DIGITAL TRANSFORMATION PATHS IN SPORTS
Even before the global pandemic, hundreds and thousands of fans were attending sporting events but there were millions of them that followed the game from home and only a few sports organizations were taking that into consideration. Before COVID-19 clubs, leagues and federations were prioritizing the on site experience and not prioritizing the millions of fans that stayed at home. The lockdown has proved that this business model does not work anymore and that sports organizations cannot rely on a few revenue streams anymore.
¨Our main revenue stream was ticketing so because of the pandemic we lost all of our normal revenue streams, so we had to explore new revenue streams¨
A new revenue stream that was created through digital was the ‘Zalgiris Insider’, a digital content platform where fans can gather together, share experiences together, and get closer to the action that was born during the global pandemic in order to engage with its fans. Fans can access the platform and consume whatever content they want 24/7 and the club can either monetize the fan through a subscription-based model or through advertising from sponsors.
Last year, FC Bayern Munich Basketball launched the Virtual Audi Dome to offer fans an authentic game atmosphere no matter where they were connecting from. This initiative offers all the attractions that can be found physically in the Audi Dome, but with extra features that can only be done digitally. This initiative not only offered greater value to Bayern’s fans but also to all its partners as they were able to come up with new digital activations.
¨This initiative has been very positive for the fans for our partners but also for the entire organization as by doing digital activations we did not lose any commercial value¨
INNOVATION PATHS IN SPORTS
An innovation strategy must always be aligned with the corporate one as it has to contribute to achieving the business goals of the organization. For FC Bayern Munich Basketball, ¨innovation is one of our core values and in January 2020 we set up an innovation plan and a digital strategy with the aim of attracting new audiences, and getting more data about our fans in order to offer them better and personalized experiences¨ stated Sebastian Ferschl.
When it comes to defining an innovation program at a sports organization, it is important to identify the business, sporting or other KPIs that will be tracked throughout the implementation. In our experience designing an innovation strategy for a top football club in Europe, we looked at this through the lens of sporting, commercial, partnership and organizational KPIs. For example, the commercial & partnership KPIs tracked the club’s partnership pipeline to increase the number of non-competing sports organizations, startup tech companies, tech partners, and universities that can be addressed by the club’s innovation & non-innovation assets. There is no one-size-fits-all for innovation, but a common theme for successful innovation is to tie it to real business needs.
There are different digital and innovation initiatives that can be launched such as the Hackathon that Zalgiris launched in 2019, accelerator programs or startup competitions such as the FanXP Innovation Challenge. The goal of launching such initiatives can vary from one organization to another and based on the organization’s needs, it can go from finding quick, agile and scalable solutions to improve fan engagement and fan experience, to look for innovative solutions to monetize better their fans, expose better value for the partners, and to introduce technologies to improve athletes’ performance.
Initiatives such as the Virtual Audi Dome and Zalgiris Insider that were launched during the pandemic are here to stay. Through innovation, you can create new assets that are not available in the real physical world. Thanks to these new assets, there are new revenue channels that are being developed now. Which ones will win over others? Will they ever be as big as the physical world? Time will tell.
Without an innovation and digital process, right holders cannot discover new revenue channels or new engagement channels, read more about how digital transformation has become a necessary enabler of success.
Our team at N3XT Sports can help your organization go through an innovation and digital transformation process in order to gain a competitive advantage and diversify your revenue streams. Fill out the form below and we will reach out to you as soon as possible.