Globalisation of the Sports Product

Abstract

It was inevitable. The commercial imperative within the sports sector was always likely to drive clubs and organisations away from a dependence on the domestic market. As global media rights sales flourished, successful clubs and competitions sought out opportunities in global markets, where fans were becoming mesmerised by the skills and quality of the product offering.

In this chapter we assess the motivations and barriers that sports marketers face, when seeking out such opportunities.

We also examine the criteria which they can use to assess the future viability of international markets. In many cases, they resemble the challenges faced by traditional manufacturing and services businesses. We consider critical issues such as the role played by the diaspora and the need for networking and partnerships on exploiting global opportunities in the sports sector.

We assess the different market entry modes that sports property owners utilise. We also examine the opportunities for niche sports as they seek to broaden their appeal and the role which media broadcasters play in the process at both the niche and elite ends of the spectrum.

Appendix

Discussion Questions

• 1. Assess the proposed new competition that World Rugby put forward.

• 2. Consider the reasons why it failed to gain approval.

• 3. Examine alternative strategies that World Rugby could implement to promote the sport of rugby globally.

Discussion Questions

• 1. Would you agree with the view that the sport of snooker had “a lot done with more to do?

• 2. Carry out, using material from this case and the Internet, a detailed assessment of snooker’s internationalisation strategy.

• 3. Has Hearn focused too much on China and India and has he ignored other potentially lucrative markets?

• 4. Assess the view that the concept of snooker becoming an Olympic sport is far-fetched and delusionary.

• 5. Develop further initiatives that Hearn and his team should take forward. In this exercise, adopt a short, medium and long-range template.

• 6. Should the WPBSA move the World Championships event to another venue?

9.1 Rugby: Pushing the Scrum Backwards

Rugby is a sport that has its origins in the Public Schools of the United Kingdom. Often referred to as a “game for gurriors, played by gentlemen”, it embellished its middle-to upper-class ethos right through the twentieth century. Like other sports, it became popular in a number of commonwealth countries such as South Africa, New Zealand and Australia.

The first World Cup took place in 1987 and the New Zealand team captured the honours.

Rugby underwent a major shift in direction in 1996 when it became a professional sport at the elite level. Prior to that event, some of the top players received payments and were often referred to as “shamateurs”.

Throughout the past 25 years or so, the various countries embraced professionalism, some with great success, such as England, Ireland, France and New Zealand, and others, such as Scotland, with less impact.

The sport proved to be popular in smaller countries such as Fiji, Tonga and Western Samoa. Rugby also became popular within certain parts of Italy, most notably in areas such as Treviso. This led to Italy joining the (formally) “Five Nations” in the year 2000. In the revamped “Six Nations”, they have struggled over the past 20 years. Occasionally they have had encouraging wins over the stronger nations such as Ireland, France and Scotland. However, the sport of rugby has not really developed in the more populous regions and cities. Many commentators query the right of Italy to remain in this elite competition. Some argue that relegation should be introduced and cite nations such as Georgia, who arguably have a stronger claim to a place in the tournament.

Unfortunately, the professional era has led to most of the more powerful countries availing of the opportunity to “poach players” from these regions. They made offers of financial inducements and exploited rather loose “qualification” rules to do so.

In terms of global growth, the sport of rugby has made little headway. The staging of the World Cup stimulates some degree of interest globally and has led to a limited uptake in European countries such as Germany. The game is popular in the likes of Georgia. This country has the strongest justification for possible inclusion in an expanded “Six Nations” competition going forward.

Competitions such as the “Six Nations” championship (England, Wales, Ireland, Scotland, France and Italy) in the Northern Hemisphere and SANZAAR (formally called the Tri Nations) consisting of South Africa, New Zealand, Australia and Argentina, in the Southern hemisphere) prove to be the most popular and commercially successful of the international tournaments run by the national rugby organisations. More recently, the “November Internationals” (friendlies between international teams from both hemispheres) were added to the event roster.

In early 2019, the game’s governing body, World Rugby, proposed some changes to the current international league system. Under this proposal, the international teams would play a maximum of twelve international matches each year. The existing Southern and Northern hemisphere competitions would double up to form the new overall competition (points to be awarded for wins and draws). The teams would play each other home or away in alternate years. Under this plan, World Rugby proposed the addition of Fiji and Japan to make up the twelve participants.

This competition includes the prospect of relegation and promotion. World Rugby viewed this innovation as an incentive for rugby-playing countries below the top tier to improve their competitiveness.

World Rugby argued that the following points would also benefit the overall promotion, participation and interest in rugby globally:

• Make the current November friendly international more compelling for fans

• Provide a stronger narrative for rugby fans

• Avoid a clash with the World Cup (this competition would not be staged during the World Cup year)

• Provide a route of progression for the so-called “smaller” nations

• Attract greater revenue streams from the sale of media rights

• Invest revenue returns into a more professional structure for coaching and establishing academies in the peripheral rugby-playing nations

• Attract greater levels of sponsorship.

Overall, World Rugby justified the new proposed competition by arguing that it would provide maximum financial gain for minimum restructuring of existing competitions.

They also expressed the view that it would be particularly relevant for the Southern Hemisphere countries, which had struggled to attract significant revenue from media rights and sponsorship deals.

The addition of semi-finals and a final could be potentially sold to media rights bidders as a separate element of the overall package. They could also apply the same principles for attracting sponsors.

Match-day revenue streams vary considerably across the different elite countries. The RFU in England generated around £30 million from ticket sales, which equates to around twenty per cent of the combined ticket sales from the other nations. By contrast, South Africa produced a revenue stream of £3.6 million (6 per cent of its total revenue) from its home tests.

World Rugby argued that inequalities in income generation across the different elite nations was an indicator that the sport was missing potential revenue and the monetisation of their sports properties. This, combined with the need to promote the game globally and increase interest and participation levels, was a powerful justification for launching the competition.

Among other announcements made by World Rugby, the proposed new format would be “underpinned by a record commercial partnership” with marketing company Infront, which they say will guarantee almost £5 billion ($6.6 billion/€5.9 billion) for investment in the sport over 12 years.

Of that figure, World Rugby say £1.5 billion ($2 billion/€1.8 billion) would be guaranteed as incremental revenue for the game.

“The proposed business model covers both media and marketing rights but does not include any sale of equity in the competition and therefore full control of the competition and its revenue redistribution model would be retained by the unions, the current major competitions and World Rugby,” their statement reads (► https://www.insidethegames.biz/articles/1076772/world-rugby-announce-change-to-nations-championship-plans-following-criticism).

The proposal, under the rules and regulations of the governing body, required the unanimous support of the top nations (England, France, Ireland, Italy, Wales, Scotland, New Zealand, Australia, Argentine and South Africa). The launch of this competition would take place in 2022.

The proposal generated a mixed reaction.

Some of the leading players expressed concerns about the addition of another layer of competition, and the impact that it would have on player welfare.

Administrators in some of the countries remained unconvinced about the potential financial benefits that might accrue to them. Two of the six nations rejected the proposal.

Other stakeholders such as the administrators of the English and French premier club leagues argued that this would have an impact on the availability of the top players to play in these competitions.

In mid-June 2019, World Rugby announced that it was dropping plans to take the proposal any further in the face of criticism and a lack of support from key stakeholders.

Members of the World Rugby governing board argued that without proper “buy-in” it was not worth taking the initiative any further.

The prospect of private investors purchasing a stake in the existing competitions increased as a result. For instance, CVC Capital Purchasing had already made a bid of £500 million to acquire a 30 per cent holding in the “Six Nations” competition.

World Rugby remain committed to exploring further ideas in order to develop the sport globally. They argued that further rejections of such proposals would impede progress in terms of promoting the sports in peripheral nations. It would be difficult to invest in coaching and the establishment of academies.

Existing problems within the sport remain. New Zealand, arguably the strongest rugby nation, in terms of success on the pitch and brand equity, continually loses its top players to European club teams. Along with some of the other countries, they do not select players for their national team unless they play with teams in the domestic competitions.

Players from regions such as the Pacific Islands are lured to the bigger nations in the Southern Hemisphere due to financial inducements and the prospect of playing in a stronger set-up.

The members of the World Cup governing body had many issues to ponder upon, as they looked to the future of the sport of rugby in a global context.

(Sources: Compiled by the author from various sources on the Internet).

► https://www.insidethegames.biz/articles/1076772/world-rugby-announce-change-to-nations-championship-plans-following-criticism

9.1 Snookered

9.1 Background

The sport of snooker evolved from the game of billiards. The latter has a long and distinguished history: it was played in the French court of Louis X1 as far back as the fifteenth century. The term “snooker” originated with a British army colonel serving in India in 1875. It became popular as a “table” game around that time.

The game became very popular in the United Kingdom from the 1920s onwards. Two brothers, Joe and Fred Davis dominated the championships right up to the 1960s. While the sport was popular in clubs and bars in the UK, it failed to make any impression in terms of media coverage from television, which began to take off in the late 1950s.

The BBC (UK terrestrial broadcaster) launched a programme called “Pot Black” in early 1970s. This provided a wider audience for the sport and built a strong profile. It was a short thirty-minute feature and demonstrated that there was an appetite and more importantly, a potential healthy set of viewers for this sport. The emergence of players such as John Spencer, Steve Davis, Alex Higgins and Denis Taylor further enhanced its image and popularity over the next decade.

A UK audience of 18.5 million tuned in to watch the 1985 final at 1 am in the morning - perhaps the highest point in the popularity of snooker.

The further emergence of players such as Jimmy White, Stephen Hendry and Ronnie O’Sullivan made the sport ever more popular in the 1990s. Fans recognised them as positive and attractive players of the game.

Although the sport was played in many countries, it lost its popularity on the main TV channels. This damaged the sport in terms of the prize money on offer to players. It had also been dependent largely on sponsorship from tobacco companies. This disappeared as a lucrative source of income due to ever-restrictive government legislation. The challenges in attracting new sponsors led to an inevitable decline in the number of televised tournaments.

Viewing figures declined for a number of years - partly due to the lack of “star” quality, entertaining players and the emergence of other sports, which grew in popularity on TV due to the promotion of them by Sky and other PPV broadcasters.

Ironically, the sport of snooker grew in markets such as India and China, but the sports property owners failed to recognise the importance of the international dimension. Virtually all of the major tournaments were held in the UK and the Republic of Ireland. Likewise, the vast majority of the top players also came from the UK, with the exception of one or two from Australia and Canada.

The year 2005 proved to be a catalyst for the sport of snooker. Although snooker was popular in China, that year represented the first time that a Chinese player: Ding Junhui, beat the seven times world champion Stephen Hendry in a major tournament in China. In many ways it represented a “changing of the guard” and the emergence of an alternative competitor to the UK players.

9.1 Renaissance

Barry Hearn emerged in 2010 and took over the administration and marketing of snooker. He had established his credentials much earlier in various sports such as boxing. He became a prominent sports promoter in the 1970s and successfully managed snooker players, such as Steve Davis, in the 1980s and 1990s. He established the very successful Matchroom Sports Company and gradually spun out from snooker to promote sports such as boxing, darts, tenpin bowling, pool, golf, fishing and table tennis.

When he took over as Chairman of the World Professional Billiards and Snooker Association, he was shocked at the state of the sport. The number of tournaments had declined significantly from the 1980s. Sponsorship had also tailed off and prizemoney likewise. The heydays of the mid-1980s were a long and distant memory

9.1 What to Do?

Hearn had already revitalised the game of darts. Similar to snooker, darts also declined significantly as a popular TV sport from its peak in the early 1980s. People perceived it as a game for pot-bellied middle-aged men, redolent of pubs and stale beer (see our case study called “Flying Arrows”). It might be worthwhile for you to revisit it before moving forward with this case.

He quickly realised that he needed to reposition the sport of darts as entertainment and a place of fun. He introduced music, flashing lights, glamour girls who “walked in” the players, similar to the sport of boxing. Attendances rose and TV viewing figures also increased. New sponsors associated their brands with the sport.

9.1 What Could He Do with Snooker?

He identified a number of areas that had to be addressed as a matter of urgency. Firstly, he had to develop more tournaments in the calendar and expand the location of them to a range of countries in Europe and Asia. He had to change the image of the sport of snooker as “UK-centric” to a more cosmopolitan and embracing setting.

In particular, he saw the value of China as a major source for international development. From a population of over 1.5 billion, 70 million people play cue-based sports. In Hearn’s view, it was a ready-made market waiting to be developed. Although so many people played the sport, they and the media viewed it more as a social activity. The lack of commercialisation also indicated to Hearn that opportunities abounded there.

He recognised that people could watch the sport of snooker in different ways to that which existed two decades previously. The emergence of PPV channels, Internet-based streaming sites, and 24-hour dedicated sports channels, provided him with an opportunity to do what he was good at: promoting and negotiating deals. If viewing figures and new audiences could be developed, then sponsors would also want to invest in the sport.

Over the next 4 years, he set about the task with gusto.

He created a number of deals with broadcasters. These included a 10-year deal with Eurosport. Quest – a free-to-air channel, agreed to cover the English, Northern Irish and Scottish Open ranking events. Now TV, a 24-hour channel also included coverage of ranking events for the Hong Kong Market. Significantly, Hearn signed a 10-year deal with CCTV, the state-owned Chinese channel, to cover four ranking events: the World Championships, UK Championship, the Masters and the Welsh Open in addition to the World Cup event.

He signed further deals with OSN – the largest PPV broadcaster in the Middle East and North Africa (covering twenty-five countries in total). Timesport HD in Thailand agreed to take all of the events from the Tour and air them.

Cognisant of the need to embrace the social media networks, Hearn also set up Facebook Live. This allowed the World Professional Billiars and Snooker Assocation WPBSA to gain TV coverage in regions that did not have TV coverage. Such locations included South America, India, Pakistan, Bangladesh and Sri Lanka.

He sold the audio-visual digital media rights to Rigour Media in China. This company had already been heavily involved as the World Professional Billiards and Snooker Association’s technology and training partner at its main academy in Beijing.

In addition to a focus on commercial deals with various broadcasters, Hearn spearheaded the development of academies in the major Chinese cities. It opened its first academy there in 2013. The WPBSA also worked on putting in place regional structures for coaching and developing local players. They established an annual tour to China, which included some of the top-ranking players and involved emerging Chinese players as well.

Hearn recognised that he had a very receptive target audience. Many children had taken up the sport and schools promoted the sport by investing in snooker tables for their pupils to play the sport.

Hearn also initiated a collaboration with a rival snooker organisation: the International Billiards and Snooker Federation. He recognised that without such interaction it would take far longer to expand the game globally. The two organisations worked jointly on international development through the creation of multi-sport events with potential involvement in events such as the Asian Games and ultimately, the Olympic Games.

9.1 Onwards and Upwards

During the first few years of Hearn’s administration of the sport, the Chinese market in particular showed spectacular signs of growth. Statistics such as the number of tournaments staged in China provides a clear indicator of its popularity in that market. In 2008, it staged five events. By 2017, this “mushroomed” to over thirty tournaments. Hearn estimated that during this time the worldwide TV audience for snooker had grown to over half a billion people.

This growth in popularity was demonstrated by the increasing success of Chinese snooker players in the world ranking tournaments. This culminated in the first ever appearance of a Chinese player in the World Championships final in 2016: Ding Junhui. Over 210 million Chinese fans watched the final. Unfortunately for them, their “hero” lost.

By expanding the number of ranking and non-ranking events, Hearn in a “physical sense” ensured the spread of snooker across different parts of the world. This was reflected in the list and number of events for the 2019–2020 season. Locations included Latvia, China, India, Thailand, Germany, Belgium and Gibraltar.

In 2018, the Chinese Open became the first tournament to offer a £1 million prize fund.

The Asian footprint features prominently in the list of ranking players. In 2017, of the 128 professional players on the tour circuit, 17 came from Chia and 12 from other parts of Asia, such as Thailand, Hong Kong and India. Hearn predicts that by the early 2020s, half of the top thirty-two players will come from China. The Chinese presence increased to 22 in 2018.

In 2018, players from twenty countries participated in the tour circuit.

All sports, in order to expand popularity, need narratives. This refers to positive stories about the sport, mainly by building profiles of players around which (hopefully) fans will focus on and become motivated to watch them and take up the sport. Snooker is no exception.

Although a couple of Chinese players such as Ding Juihui have come close to winning the World Championship, one suspects that Hearn and his fellow marketers and directors will jump up and down with delight when a player from that country or elsewhere in Asia ultimately makes the breakthrough. That time cannot be too far off, given his predictions for the future.

Mainland Europe is also a fertile growth market for snooker. Players such as Luca Brecel from Belgium and Lukes Kleckers from Germany and Alexander Urserbacher from Switzerland are generating wins across the various ranking events, while not yet in a position to win one as at the time of writing of this case.

Over forty federations across Europe administer national championships and work closely with the WPBSA in terms of attracting media coverage.

9.1 Elephant in the Room

So far, we have made little reference to the Indian market. After all, army officers introduced the sport of billiards and snooker during the occupation of that country in earlier centuries.

Along with China, India is arguably the most densely populated country in the world. The population exhibits an insatiable appetite for sport, particularly cricket.

In this sport, Indian cricket administrators demonstrate their skills and ability to create new sport products such as the Indian Premier League (IPL) 20/20 tournament. Focusing on entertainment, the family, and involving Bollywood stars in terms of ownership of franchises, it has created major profits by acquiring lucrative media rights. Fans turn out in their millions. The tournament attracts the best players in the world who sign very profitable contracts for the privilege.

Could the WPBSA and Hearn achieve anything like this success?

Arguably, they start with the knowledge that millions of Indians play the sport. A ready-made target exists. Around two and a half million people play the sport there.

From a sports marketing perspective how could they build on this foundation?

In 2015, it staged the Indian Open, which was the second ranking event to be held there.

Unlike China, India has so far failed to produce a significant player who has broken through to the top rankings. Only two players have come anywhere near that exalted position.

Panjaj Advanti is a multiple times world billiards champion. He has flirted with snooker and in 2013, reached the quarterfinals of a ranking event (the Welsh Open).

Aditya Mehta reached the 2013 Indian Open final and reached a position of 49th in the World rankings. Since then he has struggled to make any significant impact.

By contrast, to the Chinese market, Indians perceive snooker as an elitist sport. This is largely due to its colonial past, where British officers played the game in their army quarters. This has changed somewhat in the last decade or so. Snooker parlours have opened in many of the big cities in India and social club owners placed tables in their facilities.

At recent big tournaments in India, the organisers invited Bollywood stars. This avenue to expansion might create the potential for future opportunities.

Hearn signed a contract with Leisure Sport Management when the Indian Open event was launched in 2013. This partnership allocated the task of promoting the event, seeking sponsors and attracting media coverage to this company. It resembled the approach adopted in the case of China.

This resulted in significant increases in live broadcasting of snooker in 2015 and 2016 (estimated to be a viewing uplift of 48%. Companies such as Sony Six pioneered the concept of PPV coverage).

9.1 Social Media Strategy

Hearn and his team decided to use Facebook Live to provide coverage of the 2017 World Championships to geographic areas not currently targeted. This covered forty countries in North and South America and the Indian sub-continent, including Pakistan, Afghanistan and Sri Lanka.

His team employed the Facebook audience optimisation tool to assess the success of the campaign. The coverage of the 2017 world championships (over 17 days) generated over 3 million video views and 53 million post impressions.

Pakistan generated the highest level of views – 576,005.

Hearn estimated that the campaign increased the overall global fan-base by over 30 per cent and by 42 per cent in the United States.

Across the regions covered by the Facebook Live campaign, 75% of the video views came from the under thirty-five segment.

Hearn expressed satisfaction with the results, citing three goals that he initially set:

• To grow the World Snooker’s audience

• To reach and engage with younger fans in new geographic territories

• To grow the US-based snooker audience.

At the end of the World Championships in May 2019 Hearn sat at his desk and set himself two tasks: to review the current status and position of the sport of snooker in the global market and secondly, to develop some initiatives that could take it further in terms of penetration of existing and new markets. Possible participation and involvement in future Olympic Games cropped up quite often over the years at board meetings, in player discussions and in the general media. How could the WPBSA take this forward in future planning and strategy development? Although not an expert in social media and digital marketing, Hearn also felt that the WPBSA was in danger of “missing a trick” by not taking cognisance of an area which was dynamic and volatile and liable to sudden new developments and disruptors.

The World Championships has been staged at the Crucible Theatre in Sheffield (UK) since 1978. It creates a unique atmosphere with its intimate audience. It retains a capacity of 980 spectators. In 2017, the WPBSA signed a contract that ensured that the event would continue at this venue until 2027. This cemented the relationship and guaranteed that this venue would continue with its iconic atmosphere. It also closed down speculation that it might be transferred to China, which could provide greater funding and a much larger arena.

Before undertaking such analysis and appraisal, his initial thoughts revolved around the following perception.

A lot done, more to do.

(Source: Developed by the author from various sources on the Internet).