Unofficial Partner Podcast
Unofficial Partner Podcast
UP448 The Squeezed Middle - Frenemies: Where Next For The NGB Model?
This is a follow up to our popular series of last year, The Squeezed Middle, which was a collaboration with PTI Digital, the independent strategy and technology consultancy. This episode looks in to a new report, The Sports Leadership Benchmark, based on a survey of sports CEOs, carried out by PTI. You can download the report, for free, at ptidigitalgroup.com
Joining Richard are Ben Wells, CEO of PTI Digital and Aquatics GB CEO and former EFL Marketing Director, Drew Barrand.
This podcast is sponsored by Leaders in Sport - Get 15% off Summit passes
Leaders in Sport connects the most influential people and the most powerful ideas in global sport to catalyse discussion, and drive the industry forward. Through a series of global summits in North America, Europe, Asia and the Middle East, invitation-only memberships and long form content, Leaders in Sport provides professional executives, both on and off the field, with access to a community of peers to share best practice and trends that are shaping the future of sport. Their flagship event, Leaders Week London, returns from 14 to 17 October, with The Summit taking place at Allianz Stadium, Twickenham hosting the most senior executives from over 40 countries, including over 100 brands. We'll be there, and you should join us. Visit leadersinsport.com/UP for more information and use UP15 for a 15% discount on your Summit passes.
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Hello, welcome to another episode of Unofficial Partner, the sports business podcast. I'm Richard Gillis. This is a followup to our popular series of last year. The squeezed middle. Which was a collaboration with PTI digital, the independent strategy and technology consultancy. This episode looks into a new report published by PTI digital. Called the sports leadership benchmark, which is based on a survey of sports CEOs, you can download that report for free. I think at PTI digital group. Dot com. So joining me are two old friends, Ben Wells, chief executive of PTI. And aquatics GB CEO, drew Baron who's formerly EFL marketing director. This episode of Unofficial Partner is sponsored by our friends at leaders in sport. Leaders in sport connects the most influential people in the most powerful ideas in global sport to catalyze discussion and drive the industry forward. Through a series of global summits in north America, Europe, Asia, and the middle east invitation, only memberships and long form content leaders in sport provides professional executives, both on and off the field with access to a community of peers to share best practice. And trends that are shaping the future of sport. Their flagship event leaders week London returns from the 14th to the 17th of October. With the summit taking place at Twickenham hosting. The most senior executives from over 40 countries, including over 100 brands. We'll be there. Of course. And you should join us. Visit leaders in sport.com Ford stroke. Up for more information and use up 15 for a 15% discount. On your summit passes.
richard_2_10-04-2024_120808:I better say hello. First of all, to Ben Wells. Hello.
ben_2_10-04-2024_120810:Hello there.
richard_2_10-04-2024_120808:And to Drew Barrand.
drew_2_10-04-2024_120812:Hello.
richard_2_10-04-2024_120808:Hello. People probably listening won't know our backstory, Drew. They won't, they won't, they won't realize that, you know, how central I and the role I play in the creation of Brand Baron.
drew_2_10-04-2024_120812:is true. I owe almost my entire life to you.
richard_2_10-04-2024_120808:This is now we're going back, what, 25 years old. And I remember you came into the sport business office and we said, right, there is a future CEO of British Aquatics. ever I've seen one.
drew_2_10-04-2024_120812:I probably should have worn Speedos to my first day though, to be fair.
richard_2_10-04-2024_120808:are compulsory in the office today, aren't they? That's one of your first
drew_2_10-04-2024_120812:still. That was a long time
richard_2_10-04-2024_120808:But it was a long time ago. It was a long time ago, but it was, uh, you don't look any different. You look, you look exactly the same as you
drew_2_10-04-2024_120812:sadly not. I think I'm one of those few people that has stayed the same looking. We're bad in your 20s, not so bad in your late 40s.
richard_2_10-04-2024_120808:Well, that's good. It's like, it's like sort of very bald people. They don't age. It's really irritating.
drew_2_10-04-2024_120812:I'm in a group with bald people. Excellent. Sorry,
richard_2_10-04-2024_120808:a good. Good conversation for me. Right, Ben, I think you should kick us off. Cause obviously we're bouncing off. There's the squeeze middle. We had the series that we've run previously, and that is a term which obviously we created, we invented but a meme, it was a movement if, if
ben_2_10-04-2024_120810:Well, it could have been a cultural movement, Rich. Let's, let's, let's not stop at meme.
richard_2_10-04-2024_120808:People were talking about it on the streets.
ben_2_10-04-2024_120810:Kids.
richard_2_10-04-2024_120808:the kids, Gen Z, so the squeeze middle. And then you've, you've got a report, which you've done the sports leadership benchmark. So PTI have created this. I just need you to just explain what this is. And then we'll talk about it. And we'll get Drew's view on it.
ben_2_10-04-2024_120810:Yeah. So, so, uh, well, thanks for having us back on and it's, it's great to, to reprise, uh, the, the meme of 2023, the hit meme. I think it's, yes, could well be in the Webster's dictionary off the back of it.
richard_2_10-04-2024_120808:there. Your photo view is up there with that Turkish sniper so sorry, Ben, I interrupted.
ben_2_10-04-2024_120810:Yes, so when we did the Squeeze Middle series last year, which was a really fascinating dive into the impact of a whole number of trends that we had seen happening and which were accelerated by COVID, I think we think of that as the as the qual, which was very much trying to take a view on some of the theses that we, we've been talking about more publicly at that point, this was very much the quant. So, uh, we wanted to follow up, uh, this year with a more in depth, uh, survey of, uh, senior leaders in, uh, the sports industry. To understand a number of things. Firstly, how they viewed their financial prospects. Secondly how, uh, they, and that was a short, medium, long term outlook. We then started to look at their relationship with data because it's such a hot topic in the industry, Rich. And we've talked before about, uh, So the fact that we don't think necessarily people really understand what they're doing in that space as well as they might. Uh, and then looking at their, uh, their relationship with technology, which, you know, is quite a wide ranging subject, but it's an area that we are, uh, we are investigating and, and we do a lot of work with, with our clients. Again, we see a real lag versus what's going on in other industries in sports around how we procure technology, how we design technology ecosystems, and then how we deploy it on an operational basis, a marketing perspective, etc, etc. And You know, I think the general thesis around what we're trying to sort of talk about here is, is that revenue generation is, is exceptionally difficult. The sports commercial model is being squeezed for a whole number of reasons that we explored in Squeeze Middle Series. And we are basically trying to get to the nub of how do we crack the data nut? How do we actually use data, uh, more effectively, more efficiently? And how can we start to think about technology, uh, in the real world? not only as a growth driver, but also as an efficiency driver across the business. And the report actually, I think, has thrown out quite a lot of interesting data, which we can get into, uh, around how sport is, is actually leaving an awful lot of value on the table across all of that different spectrum of topics.
richard_2_10-04-2024_120808:So in terms of the people who contributed, you've got three tiers of people, organizations. Just to give people an idea Where this has come from?
ben_2_10-04-2024_120810:so when we were talking about the squeeze middle, we were, we were thinking predominantly around those sports rights holders who are uh, not necessarily sort of buffeted by big TV and sponsorship income, but still have quite large cost bases. And, you know, these guys are the ones, understandably, with, with a, you know, a high fixed cost base and then a volatile variable revenue model, these are the people that are going to be struggling. So we split the respondents into three different tiers, uh, and as we said in the squeeze middle, you've got, you know, We see this across multiple different sectors where, you know, the rich get richer as always happens in times of economic, difficulties. Then you've got the guys at the bottom in tier three who are, they used to not having big income. They cut the cloth accordingly and actually tend to be. unaffected by, those macro economic headwinds, cause that's just how they operate and they're used to it. So we've looked at the guys in the middle in tier two and in there, we've got a lot of, championship football clubs, premiership rugby clubs, Scottish football clubs, County cricket, and then a lot of NGBs in that space as well.
richard_2_10-04-2024_120808:Okay. So Drew, I mean, people will know you now from British Aquatics, but before that you were at Football League. So you're not talking specifically from, aquatics perspective. You can do if you want, but there is a, there's a sort of sense that you're covering a few bases for us. So that's why you're a useful guest in this sense. What was your first sort of key takeout here? Quite a lot of people are seeing a projection of a flat outlook in terms of the, there's not many lines going sharply up to the right in terms of their expectations of what the commercial market is like. I'm just, what, what do you're at the sharp end of this stuff? What, what do you see?
drew_2_10-04-2024_120812:It's definitely hard. I think a lot of the results that came out of obviously the research that Ben and his team have done is pretty accurate. You know, I think if you're out there at the minute trying to sell these kind of properties in whatever form that that takes, It's incredibly difficult. And you're being challenged in a way that you've never been challenged before from the sources of those revenues, whether that be sponsorship or, or other forms. So I think we're definitely in a world whereby there is a disconnect between what people are wanting to buy and what we've got to sell. And I, and I think that's kind of what I've experienced certainly over the last, I mean, it's been a lot more painful, probably the last sort of three to five years, but I reckon this trend started, what, 10 years ago, something like that, where they started to be, deals weren't easy. I mean, even, I mean, the bear market that we're currently living in has probably only been in existence for about five or six years, but like, even before that, there were signs that, You were getting pushback. It wasn't, you couldn't just go, Hey, isn't sport cool? And here's a big number. Here's a big media number and away you go. You know, that didn't really, sort of get the deals over the line. And obviously the combination of it's happened and squeeze middles and accurate, accurate terminology is that the outside market in terms of investment potential has, has obviously changed. You know, there isn't as much money available full stop and the money that is available, they're asking tougher questions. And certainly my experience having worked in. Well, I would call one rights holder and one NGB and it's interesting the terminology there because it's the intent, the commercial intent, like when I was at the league, the intent was absolutely the absolute hard and fast KPI number one, make money. You come into the NGB world in which I currently inhabit, that's not KPI number one. So there's a, like, the starting point is almost different even within those two types of organizations but fundamentally, uh, for both of those types of organizations, it's been hard because the capability in terms of selling has always actually been down to other people largely, you know, predominantly, you know, for the top end, it had always been the broadcaster. You did one big broadcast deal that kept you going. And then the broadcaster went and sold to the fan. So did all the data points, all the reactions, all that kind of stuff. And at the NGB world, you know, for the vast majority of the world that I inhabit, we're we're paid for by the government and the national lottery. And that's kind of 95, 90 percent of the revenue in. You know, I heard some astonishing statistics the other day that across Olympic sports, I mean, it was only in NGB where there's only been one major deal done in the last five years. So it shows you how hard it is but then you look at like football clubs and cricket clubs and rugby clubs, obviously, they're doing more deals, but the value of those deals has decreased. So I think there's a lot of in the report that is, that is accurate, but I think the biggest thing for me that's changed probably over the last, you know, started 10 years ago and has come really to the forefront in the last five years is that disconnect between what we're offering and what people want to buy. It's just not there.
richard_2_10-04-2024_120808:That's really interesting because so, so it's easy to fall into. This is a cycle. This is just part of the economic cycle. We're in a downturn by definition. We'll find an upturn at some point and everything will be okay. What you're saying is actually, this is structural. This is, there is a fundamental change in what the supporters of sports, but traditionally, so let's call them, you know, sponsors start there, what they want, what they want to buy now. So we then get into what does that mean in more detail? What do they want and what is it that is being sold?
drew_2_10-04-2024_120812:So there's, there's two things that, well actually there's kind of three things I think that the sponsors broadly want. If we talk about that specific revenue stream, They want the big media number, the eyeballs and the reality is that what's happened particularly with the way that the media market's fragmented and there's everybody's got so much choice but yes world cups and olympics and things still generate huge great big volumes of Depends what, what research you believe, but you know, the many millions of people who are watching those things and what's happened is that the, anything below that, broadly speaking, the viewing figures are starting to decrease, certainly in terms of longevity of how much you're watching. So I think that media number naturally is increasing. Has decreased, you know, for those kinds of properties. So the media number argument is, is getting harder. The second two, the second and third thing that, that sponsors want one is the sort of next step of that audience. If you're, if your media number is getting your mass eyeballs, what's the bit that we can directly reach? Which tends to form a question of how big is your database tends to be the, nutty crunch, crunch question. You know, and that's hard for a lot of organizations because that database is often sat elsewhere. Or not existed at all in all honesty, you know, so you look at something like, uh, when I was obviously at the BFL, you know, that database of fans largely historically sat with Sky Sports or the broadcasters, you know, and, uh, it didn't in terms of its sophistication. It didn't really sit. I mean, yes, there was ticketing data, but I mean, that's evolved a lot over the last four or five years and because it's had to, but but that kind of database didn't really exist at that point. So. Yeah. If you've got one is mass market eyeballs, which is the general media play. Second is the direct access point, which this group of rights holders that we're talking about has not historically been that strong at in terms of its sophistication of use. And then the third bit that's really come into play and, you know, without going too deeply down the kind of purpose rabbit hole is this idea of brand. This idea that organizations want to invest in something that replicates their values and their approach and their desire to be seen as a business. And sometimes sports good or bad, sometimes not so good. But historically it's not being able to express itself in the way that a brand marketer would. So I think if you see those are the three things that sponsors want, like each one of those things has been challenged you know, and, and I think it depends also on the nature of a sponsor, like if you're coming in as a startup organization, we saw this a bit with some of the car brands that came in over the last five years, your Kazoos, your Sinches, etc. They just wanted the brand awareness piece. They wanted the media eyeballs piece. So you naturally gravitate to those kind of properties. But they don't come along that often. Uh, and then you're left with everybody else sort of fighting the scraps over, over the other two pillars that you, that you need. And, you know, I've sat in two organizations in the last 10 years. That have both been challenged in those areas in terms of what you've actually got. So I think it's the change of approach of, I mean, came across a little bit in the, in the research as well of, not only is the strategic play that you're putting out there into the market a lot different than it was 10 years ago, it's also the capability set of being able to, A, have it and B, articulate it. Because I think that is, You know, certainly in my experience, that's where both of the organizations that I've worked for have, have, have been, have struggled a bit because they just don't have those capabilities in house. And then you get sucked into the vortex of, well, I haven't got the capital investment to then bring those capabilities. And then there's this weird nuance thing of understanding sport, which lots of people talk about in lots of different ways, right? I remember there was a, I think it was, I've seen a couple of sports sort of organizations go through that thing as, you know, what we need is somebody who's worked for Amazon. Because they don't understand it. Those people then come in and then can't work in sports in inverted commas because they don't understand the politics of play. But then the people who are working in sport don't necessarily understand the data. And you end up in that kind of weird world where neither version works because you're looking for a hybrid which actually hasn't existed. It may take a generation of people to learn how to do that hybrid role. Because I mean, I'm not going to name names, but I've seen a few sort of come in from the outside world with amazing CVs and really, really know their data strategy. Because they don't know how to talk to a head coach, because it can be that basic. So, you know, there's a few things like that that have happened. It's immediately springing to mind, but I'm not going to make anybody blush by saying it. But yeah, I think there's a, there are a few of those kind of nuances that are at play. So. I think it's, it's almost taking a complete change of mindset. And that's hard. You know, if you're talking about whole sector has to suddenly go, we've got to think completely differently. It's going to take time. There's going to be casualties along the way. And we're in the middle of that right now. So, so yeah, I think a lot of what's come out in, in obviously the research is, is accurate. I think the hard bit is on a practical level is how do you, how do you resolve it? How do you get better at it?
ben_2_10-04-2024_120810:I think that's right, drew, you, you've almost jumped to the, the, the conclusions from, the report which is I think, a nice little sort of platform to jump off to, which is, I think it's a human nature thing to look for silver bullets because they're quick, cheap, and easy. And, you know, we are very good at, in our industry that, you know, we saw it during Covid where suddenly NFTs and crypto were gonna be there. The white horse coming in and saving the day. And, and that feels quite comforting, but, but you talked about structural problems and that is the issue that the issues are mostly around, mindset the lack of maturity that we've seen in the report around both data and technology is a, is a function of that. But rather than it being, the data itself, and I think a lot of the blockers that you've talked about, about not moving forward. We've all worked client side. We know the realities of the problems, the lack of time, the lack of budget. But I think a lot of these things are circular. Ultimately, there's not enough budget to invest in innovation because there's not enough money coming in. So how do we get enough money coming in? And I think the lack of time thing is a lack of prioritization in a lot of cases, because I think there's a real argument about What is the danger of not innovating versus, you know, the risk of innovating. human nature is usually risk averse. I think that's pretty similar in our industry we'll just hire someone from Amazon because that will solve all that problems is exactly right. We have seen that in a number of organizations and you're right. You've got to blend high level strategic expertise with. The practicalities of the fact that, you know, we've got 2000 tickets to sell on Saturday and, it's all hands on the pump. And I think that is the challenge ultimately for sports organizations is that we all want to behave like Amazon and certainly generate revenue like Amazon. We're as probably far away from that as we can be based on the output of this, but we can't just flick a switch on a Friday night and come back in on the Monday and then we're Amazon. So there has to be a transition phase. And, you know, we at PTI have moved away from. The phrase digital transformation the last few years because it's not actually digital transformation. It's basically change management. Ultimately it starts with the mindset piece that you talked around and how do we then deploy data and technology to solve those objectives? We see this in a lot of clients that we audit where we're brought in to look at technology ecosystems and data ecosystems, all that kind of stuff and give them a view. And what they've got will be, varying levels of. bad to good. But fundamentally, if the business is just set up to try and sell out Saturday 20 years a day, there is a limit to what you can achieve. So it's almost a moot point. And it comes back to the question around, you know, what kind of businesses do you want to be? Because as you rightly said, and as the report shows people are not massively excited about the growth potential for, the traditional areas that sport is so comfortable with. And I think when we delve into it a little bit more and Rich, I know we talked on, the WhatsApp group a lot about DTC in recent weeks. There's a real disconnect between what people are hoping will happen and what they're set up to achieve based on the data that we've got in this report. So yeah, there's a lot of practical considerations in there as
richard_2_10-04-2024_120808:So there's a, there's a question I've got, which I keep coming back to, and this comes in various guises, which is about pooling, I guess, is the ultimate question in terms of, can swimming do this on its own? Question mark, people who are sort of, of a certain age will say, okay, yeah, but we did this before. We tried this before we tried to sell media rights of the NGBs coming out of an Olympics coming out of 2012. We tried to collate all these things together. It looks from the side to think actually, if the journey is going to be, to an Amazon like state, if, you know, if that's the sort of descriptor, what has to happen? Can you do it in collaboration? I can see all the problems of, of doing this as a single NGB. I can also see lots of political issues of getting in bed with swimming and cycling and athletics and boxing and squash. And you get into that world, which again, there's history there in terms of how that works and how that collaborates, but it does feel like there's, there's something missing. And these are really hard organizational change questions that we're asking. And I can see a future where. You'll have a bit of an arms race where someone will get ahead, they'll, something good will happen. Aquatics will get ahead, the big ones will get beyond the smaller ones. Is there a central piece to this? is there a way of collating this, this work together?
drew_2_10-04-2024_120812:I mean, it's funny you mentioned this because this is within the kind of certainly the Olympic space. This is a relatively hot topic at the moment. Because if you think about that space and then think about how it's currently funded in predominantly by the government and the national lottery check, it's been sold to the government and national lottery as, as a multi sports. As in, you're feeding the beast of a, you know, of this massive thing. So absolutely collaboration exists, you know, in terms of delivery against that, you know, right across that ecosystem, you know. And I sit regularly in meetings with my peers at the other sports and we all talk about collaborative approaches and all the rest of it. So there's definitely, there is an existing mindset there that you could tap into. Where I fundamentally get to the problem of the challenge is that that kind of works when you're talking about performance systems and generating best in class athletes and all that kind of stuff. When you're talking about essentially commercializing audiences, they're in competition with each other. Because actually the individual who you're trying to target, whether that to watch something on a, digital device or buy a digital product or, you know, or engage with your sport in some way is probably getting the same messages from the other sports and you're fighting for attention. So you end up in this slightly weird world where if we all collaborated to the fullest extent on building a tech stack and a data plan and all the rest of it, I'm actually feeding the, propositions. Of the exact thing that I'm going to be going up against, whether it's fighting for consumer attention or fighting for a sponsors check. And that's where it slightly falls down, is that collaboration's great, and I'm all for it, but at some point, when you're talking commerciality, you are going against each other. Can you imagine if you asked VRFU and the ECB to start sharing data packed systems? That's
ben_2_10-04-2024_120810:It's interesting. It's interesting, true, because we've been involved in a number of projects like this, and you're right. Those are challenges. And aggregation is a thing that's happening a lot. We're involved in a number of conversations now with a lot of rights holders that are looking at this because they've got You know, multiple constituent bodies or allied parties that everyone's paying twice for systems. you've got a cost inefficiency at one end, and then there's no multiple in terms of the revenue on the other. And my, my counter to that, although this is not straightforward is, is that I think there's opportunity to cross fertilize data is, is the first piece and actually might be better off as a consequence. You might not, but. You know, you need to scope out and understand what the opportunity is. And, this is not straightforward, but it is, I think is the benefit. The other thing I think is more existential is that our competitors are not each other in my mind, and particularly when we're, we're talking about next generations. And, you know, we had a, a, a lovely contributions report from Joe Redfern, who's an expert on this space, is. They may just go somewhere else and actually sport loses their share of attention, share of wallets and they're going off and they're on Roblox or YouTube or, or something else because there are myriad now other opportunities and that is an argument that we, we make in the report is that, you know, the battle ultimately is who, who has the best data. We're in a, we're in an attention economy. I think personally that the collaboration will be 100 percent agree with you. The fact is not straightforward at all. Is the only route for a lot of sports to go ultimately.
drew_2_10-04-2024_120812:I kind of get, I get the logic on the, you know, the attention, you know, gaming, et cetera, et cetera. Yeah, I totally understand that. I think the, the challenge when you're talking about existing systems in terms of big revenue from things like sponsorship and all the rest of it.'cause the reality's quite a lot of sports. Even if you commercialize those ordinance, they're quite small pockets of communities. You know, it's not. You know, but they don't have the volume of say a football that I've worked in where you could always get away with the fact that you just have this huge great big volume of fun level. So I think there's, there's a, there's a bit around that. But I think that the bit that is probably the real kind of a head scratcher right now is, is, How do you afford to do it? It's almost like, you know, the direction of travel that you want to go, but the capital doesn't exist. And certainly for the road, you know, you see, we've seen the trend of the last five years about private equity, right? There's a reason why those bigger rights holders have gone down that road is because they're trying to unlock capital investment to enable them to create the change that we're talking about. When you're at the level below and the private equity argument doesn't stack up. because the numbers aren't big enough to generate the return that they would require or the exit strategy that they would always look at, you know, in terms of getting their money back. It becomes quite difficult and that's where, where collaboration has almost become the only option. So I'm certainly not dismissing it in any way, but it does come with a fair degree of challenges about how you share the potential upside.
richard_2_10-04-2024_120808:I've got a question about just on that sponsorship aspect of this. So the, the new rights, let's call them that. there's a bunch of rights that sport has traditionally sold. And Brand. perimeter board, hospitality, tickets, all of that stuff that, you know, has been the traditional sponsorship package. And then you've got the, okay, brands are less interested in that, but they want digital. They want new digital products. They want to appear in different channels and that's what they want. a marketing arm of a governing body or a sport to deliver. Are they paying the same sort of price? Just work out for me? Or just give me a steer in terms of, is it the same value? are you talking about the same price point? If you say, right, okay, now we're going to go from an old model. Old bunch of rights in an old package into this glitzy new one, which we've created, where we're everywhere you want us to be. We've created digital stuff. We've taken all the best practice from all the rights holders that are doing new things out there in the, you know, on Tik Tok and, YouTube. But is the price the same?
drew_2_10-04-2024_120812:Think there's the difference in traditional and new, so call it, for sake of argument, non digital and digital, because that's broadly speaking where it sits, is digital doesn't have many limits. Traditional always had limits. You know, there was a, there's a capacity of how many people you can fit in a stadium. There's a volume of how many perimeter boards you can put in. You know, we always had limits there, and I think with, with the digital thing, is there aren't, those limits don't exist, because in theory you can reach everybody. And you can sell any number of different products on multiple occasions, you know, so you don't get into the kind of the sporting argument. Oh, we've got too many games. Athletes are overstretched, blah, blah, blah, you know, it plays out day in day out in football. You know, in theory, you can, you can re branch the content, re branch the product in lots of different ways. So I think they're not like for like.
richard_2_10-04-2024_120808:you know, there's a somewhere endless what it could be.
drew_2_10-04-2024_120812:And they get, and they get to co create in a way that they can't do with the field of play. Unless there's a very specific kind of sports kit approach. So I think it's the lack of limitations that, that, that switches people over and says that, right, the traditional revenues are here and the new revenues are here. The opportunity with the new revenues is significant, but I think it's, it's a capability thing. And I think where I sort of saw it probably play out in its most sort of. Hard terms or, or, or most obvious terms is when I was at the EFL and we launched the iFollow streaming product which You know, I mean, people have that view on how that whole thing worked out, but we were one of the first ones to go D to C at the time. I mean,
richard_2_10-04-2024_120808:Drew, I always say you, you're like Martin Peters. You're 10 years ahead of your time. That's,
drew_2_10-04-2024_120812:look like Martin Booth.
richard_2_10-04-2024_120808:that's, that's one, that's one, that's one for, that's one for Gen Z. Google it kids.
drew_2_10-04-2024_120812:But yeah, I think, I think the issue there was slightly too early from a tech perspective. Obviously, the tech kind of didn't, wasn't as reliable as you maybe wanted it to be, but it got a lot better and certainly was there. But I think the biggest bit where we could never really realize its full potential, both at the league and in terms of across the 72 clubs, was the market. The view that we'd never really dealt with digital product churn in the way that a broadcaster would have done because you can create, you know, you have the opportunity because you have the rights to create a kind of exclusive offering in terms of something that millions of people wanted, which was watch a match. But in terms of the experience and the capability to actually, you know, sell that digital products and keep customer churn down and keep everybody coming and keep everybody happy with the, that was a whole new world. You know, when we were doing it really with a sort of skeleton team, whether you look at our league level or, or club level. So I think suddenly sort of, that's the most obvious switch where I've seen that the model switch from sell the right to somebody else who knows how to talk to the customer to let's do it ourselves. And it reflects very quickly into that world and found out the hard way in terms of, in terms of what that looked like. But still. I'd still look back at that and go, that was the first new multi million pound revenue stream that the AFL had had in a generation. It perfectly, it was multiple seven figure sums of new revenue.
ben_2_10-04-2024_120810:And yeah, so you guys deserve massive, massive credit for that. We talk about DTC and all this is quite a lot. And I think you know, the easiest thing for you guys to do would have been to have done nothing, but you dip your toe in the water and had a good go. I think going back to your point, Rich, about, you know, digital, I mean, the reality is, that vast majority of organizations that we work with, we audit, they haven't invested in this space. businesses are siloed. So people are launching websites in the absence of any real engagement with other parts, other stakeholders in their business. This comes back to the whole debate around technology as a cost versus an investment is, you know, a new website, which is slightly better than the other one. But actually, if we'd actually scope this out properly, and you know, ended up spending three or four times more. The returns are 10x, for example. And this is a challenge within all sports organizations. Technology procurement and all that kind of thing. And so it is difficult. A lot of technology projects are set up to fail because they are done in a bubble. And it's not because people aren't thinking about it or sort of having the courage of their convictions, the ROI model tends up being not particularly brilliant because actually it was never going to be particularly brilliant because of the way it was structured in the first place. With Premish at Rugby when we launched PRTV Live a few years ago and, you know, They were they approached exactly the right way. This is part of a wider strategic play. We're not going to turn this into, a gigantic revenue machine, although it generated good revenue, but the benefit was elsewhere in terms of opening up you know, windows to audiences who, for example, didn't want to spend, 30 quid a month with BT Sport as was. on an 18 month contract, people at what would sort of free fee afternoon could dip in and buy a match pass for five quid. And it created huge amounts of data. And then we were able to track where that data went, how they then spent with premature rugby in other places. And you start to build a much richer ROI model, which is exceptionally difficult in a lot of sports organizations because those departments just don't know how to do it. Often don't talk to each other. We find that in our audits when we, you know, when, when we had it with one client who they wants to, you know, they wants to procure a B2B, uh, system across, you know, three different parts of their business and I said, well, that's great, we need to do that. But the three heads of those departments don't like each other. They don't even talk to each other. So we can spend a fortune on tech, uh, but they won't use it. You talk about competition, Drew, they were competing with each other within the business.
drew_2_10-04-2024_120812:mean, in my experience, one of those departments may not have even existed.
ben_2_10-04-2024_120810:Well, there we go. There we go. So, so, you know, a lot of these things, you know, a lot of these things are, and they are human, you know, this, this starts with, with strategy. It starts, you talked about mindset, Drew, is, you know, do we even recognize we've got a problem here? A lot of people don't recognize that. Because of all the shifts and then the trends that we've talked about and then how do we go about that? And the key bit there is, is taking your time. You know, it's a natural thing when you realize you've got a problem is to panic and just do something about it. You actually want to take a step back and think about how do we approach this in the most effective, efficient way going forward because we see all the time where people have done that and then thrown a load of money at technology and all sorts of things. And it's not worked because guess what? It wasn't properly designed and procured and all those kinds of things, but what we see. This is being a big opportunity because as you say, times are tough. we have to start thinking about things a bit differently. In our view, we've been saying that for a number of years. The general outlook now from a financial perspective across our sample is, is that the here and now is not particularly great. That's not a surprise to anyone that reflects exactly what you were saying, Drew, the optimism starts to get a lot better as we start looking 12 months and then five years hence. But then when we start looking at the individual forecasts for how different revenue streams are going to be affected, there's not a huge amount of connect connection between the, the growth forecast in individual areas and the macro look. So the big question for us is where is that growth going to come from? The two areas where people are most excited are sponsorship, which, as we know, is a tough market. And the other is this magical D2C space, which when we delve again, even further into the data in the report is, most organizations are just not set up. To be on the front foot to drive the benefit from a D to C opportunities. It's, it almost feels for a lot of people. It's they're just waiting for it to happen to them rather than getting on the front foot and controlling it.
richard_2_10-04-2024_120808:The other bit to it, which again, links back to the iFollow example, actually is, is new product and, you know, however that's defined. So whether it's a new media channel like iFollow, the clever conversation is, well, launch, test and learn, governing bodies. Sports teams, they find it really hard to sort of launch an imperfect product and then iterate in public because the fan base, the media just jumps on the first thing. We've seen it time and time and time again. It could be, you know, we were taking the mic this morning about the club world cup on a different podcast. That's a new thing. and people are skeptical and then it grows or it might not or whatever. So there's a format question and we are bombarded, aren't we, with new sporting formats. Talk about them almost on a daily, definitely a weekly basis. Just seen a, you know, an Indian Masters Cricket League being launched with Tendulkar and Gavaskar and, you know, all of that. That's all fine. And initially there's a sort of excitement. You can see. Some of it comes from within, within a governing body or within an organization. Some of it is an outsider, a live golf type disruptor. But the sports marketplace is, it's popping with all these, all this stuff. And the question, I guess, is how to approach that, because then that's tempting. When I look at your outlook and thinking there's a flat, Outlook. The temptation is, okay, we need something new. We need something new and fresh, and we're going to devote some time, energy to this. We're going to, it could be a new format or a new property that we launch. It may or may not, like the Club World Cup, could sit outside of its existing commercial framework, in which case you give it, to your point, Jew, a different, there's a new thing that, makes money suddenly pops from nowhere and everyone is looking because of this flat assumption of flat sort of projections looking for new things that they could get out from under that graph and create new things i'm just wondering what you think is going to be the sort of the implication of that because again from a from a viewer's perspective you get bombarded with stuff new things popping up all over the place but some of them will stick
drew_2_10-04-2024_120812:that's the implication is that it's the classic thing of you're going to see a hundred new product launches and probably two of them might work. The problem you've got is, certainly the more vocal end of our industry, or indeed of the fanbase yeah, they love, they love, they love governing bodies to fail, let's be honest. Like, everybody likes to sort of, you know, bash B N G B. You know, and I've certainly felt that the hard way, but It's been, the difficulty is there's so much of it that you are learning as you go, because your particular organization has never done it that way before and there's been propensity to, to be brave and accept that you're going to fail in order to succeed in, in many environments. That's a hard one to do because everybody's worried for their own sort of personal security of their roles and all that kind of stuff. And, and I'll give you a little. So an idea, I remember this in the very sort of early days of I follow launching and we were on the crazy thing about that was you were trying to live stream 36 matches simultaneously on the same day, having never done it before. And I remember seeing with my kids who were pretty young at the time on a Saturday afternoon, it was like 10 to three and I fielded three phone calls on the bounce, one of which was an argument between two cameramen about The drainpipe above them was dripping on one of their heads and they wanted to switch positions, but they were arguing about who had the best position on a rainy Saturday in, I don't know, Northern Town, but I'm not going to reference. So that was one phone call. The second one was from a very, very wealthy man who owned a football club and was lying on a beach in Miami and forgotten his password to log into the streaming. And the third phone call was from a disgruntled customer who couldn't understand why it wasn't on Sky. So you kind of, in a nutshell, that's just, that all happened in two minutes, three minutes before 3pm kickoff. But that was that kind of scenario was exaggerated by 36 games and however many millions of people who were involved in it and You're doing it with a kind of team of four or five people who are not experts of a field in any one of those areas So naturally things start to fall down or gaps appear and I think that's the big challenges is that they're just not set up right now With the people and the capability to make that transition smoothly. So there are going to be problems and there are going to be issues. It doesn't mean they're not capable of learning as they go and doing it. But there are going to be issues and it's, it's the, the impatience of the audience or the desire for, to, for people to fail and point the finger and go, ah, I told you that wasn't going to work. Exists all the way across the piece. And you kind of, you know, maybe look at this for hardware BFL, but you need very broad shoulders and very sort of tough exterior to just keep going and go. You know what? This is the right thing to do. I believe in it. We'll get better every week. And it will eventually reap the rewards. But it's not everybody gets that time and space to do that.
ben_2_10-04-2024_120810:I think that's right and I think people, goes back to my whole point about looking for silver bullets, you can't launch a D2C product with a, a rickety and not fully specced out tech spec, which is being value engineered. Because of understandable budget with, you know, then a team who may not be particularly expert and also, by the way, have 1000 other things they need to do by tomorrow and expect that then to be, you know, the new Netflix. It's either a strategic play for the business and you do it properly. Or you probably don't do it, you can't then look at it and say, well, it was a failure because actually probably you never gave yourself the best chance of making it successful. I'm not saying that I fall. I'm talking more generally, the challenge we have in our industry where, They're almost sort of doomed to fail, and then it gets written off and everyone's like, oh, don't bother doing that because so and so did it and it didn't work and it cost them a ton of cash. let's get into the weeds of this and actually work out how they approached it. And yeah, okay, they were looking for panacea, they were looking miraculously solve all their problems, for next to no budget and no time. Patience is, in short supply in our industry. We know that. It's not overnight, but there's just not enough people starting on that journey in our view. And as I say, the data in our report sort of backs that up a little bit.
drew_2_10-04-2024_120812:But the problem is by far is the pressure that's on them now. You know, I mean, in the majority of football clubs, you know, even outside of the tournament. Maybe top five or six in the Premier League, you know, they're not, it's not, they're operating in huge volumes of profit, you know, you're operating in a world where you're constantly, you know, need a cash and that is all the way down. So trying to pledge somebody to something that says, invest in this quite heavily, you know, money, time, resource, and you'll get your money back in five to 10 years time. That's a very difficult sell,
ben_2_10-04-2024_120810:a it's a tough sell, but you don't need to spend all at once. You can build in modular ways, which I say is why the design component is so important and ensuring you're not ripping and replacing, which is, again, is something we see quite a lot. But I think our argument is very much then back to your point, Drew, you know, about the start of the conversation, you know, broadcast, Right to probably peak 10 years ago. So well before the pandemic, and we've been arguing for a long time that this stuff needed to happen 10, 15 years ago to get ahead of where the industry was going. And I think, you know, for some now, it may be too late, but for others starting today is better than starting tomorrow. All the pressures you talked about are not going to get any easier. And back to the point about, you know, Gen Z, Gen A. And I know everyone always talks about every generation behaves differently, but the behavior, the attitude, certainly towards paying for content is just so markedly different. And then you ally that to the fact that technology is driving the ability for people not to pay for content. Even if they wanted to, they can get around paying for content quite easily. You know, obviously Richie did a big series of Matt Cutler on that on piracy earlier on the year. So you've got this. You know, maelstrom of different things going on this sounds quite apocalyptic, but, you know, a lot of people we, you know, we're talking to here may not be around as, as organizations in 10, 20 years time, or they may be existing in a very different form because there just isn't enough cash to go around unless we get on that journey sooner rather than later. The argument is always there's 2000 seats to sell for Saturday. Well, rather than, putting all hands on the pump to try and sell them out again, like we did last week. Should we not try and understand why we're not selling those seats out and do something about it, which may mean that we don't sell out Saturday, but over time that starts to sell out on a much more efficient basis. And it's, it is a challenge. And I think a lot of it is, is down to a mindset that this is how we've always done it. And that's a, That can be a comfort blanket in a lot of organizations that we come across, you know, people lapsed into that comfort zone. This is how we've always done it. Let's not challenge anything. And that's all we're trying to do really through, through the work we're doing in the report is to try and challenge thinking around, you know, generally around the model, but specifically in the areas that we've addressed in this report. So, Yeah, and it's not easy.
richard_2_10-04-2024_120808:Ben, we should say where people can get hold of this report that we've been discussing. Yeah.
ben_2_10-04-2024_120810:It is available from our website ptidigitalgroup. com visit the website, hang around, have a look around, some great case studies on there, but yeah, download the report, it's, uh, you'll find it on the homepage, very easy.
richard_2_10-04-2024_120808:Okay. And we will put links obviously in the show notes to this podcast, but until then, Ben Wells. Thank you. And Drew Barron. Thank you.