David Mackay on innovation in sports business models

Thanks to David Mackay a Partner at Strategic Project Partners for doing an awesome job in answering all the questions in Sports Geek Nation AMA.

Full Transcript available in the Sports Geek Nation Member's Area.

Here's the highlight question from the Sports Geek Nation AMA with David Mackay.

About David Mackay

David Mackay is a Partner at Strategic Project Partners, a general management consulting firm  that helps clients solve difficult strategic and operational problems through innovative approaches and robust analysis. David leads the company in the practice of sports, media and entertainment, consumer goods and retail and gives extensive advice for government, higher education and private sectors on research and commercialisation.

David was a former Sports Geek guest back in episode 83 where he talked about sports business strategy and sustainability in sports. He continues to fulfill his advocacy to develop world-leading sports capabilities in Australia.

Connect with David Mackay on Twitter @dgmackay, LinkedIn and Slack @dgmackay

Find out more about Strategic Project Partners at https://www.spp.com.au

Listen to David Mackay's episode in Sports Geek

#83 David Mackay on building sustainability in sports

Q&A Highlight

Edward Ernst Question for David Mackay

David Mackay:

Hi Edward,

The main area for innovation (or evolution) in sport is around the business model, and we have already seen where this is happening. Models obviously differ depending on where you fit in the ecosystem, but broadly at the top end we have seen media-driven business models based on monetisation of eyeballs in volume. This has mostly been accomplished through broadcast deals. However, we have already seen major disruptions of the media landscape, and the players who have been paying for these big media deals will struggle to sustain these models into the future. We have seen Amazon, etc. dabbling, and some sports will be holding out for the next rescuing saviour, but where we see the most change is around adopting a direct to consumer model. We have already seen some OTT offerings, but I expect a lot more innovation in this area in the future – service models, pricing, packaging, technology, etc. We will see a lot more fragmentation before we revert back to aggregation. The aggregation will arise because while some sports will successfully commercialise a niche, the bigger sports seeking mass markets (or grow new markets) will find that consumers can't afford to be taking out individual subscriptions for all their interests.

We see the subscription trend across many industries now and the premise is often “get X for the cost of just a coffee a day”. At some point, people will start reviewing their household budgets, particularly when economic growth stagnates, and will realise they are having 30-40 ‘cups of coffee' a day, which adds up to significant $ over the year, and they need to cut back on things. While entertainment is often quite resilient in discretionary spend, most households will struggle to maintain a dozen entertainment subscriptions on an ongoing basis. This will lead to more season passes, switching on and switching off. The tech and sales models will need to help support this.

At a more grassroot/community level, particularly in Australia, infrastructure funding models are in need of innovation. These are currently heavily reliant on government funding and unsustainable. I expect to see a lot more innovation around community sport business models as governments simply can't keep up with the demand being placed on them for sporting infrastructure, particularly sporting fields.

This may also lead to greater innovation in the onfield product. I expect that we will see more of shorter and smaller form factors of games. In Australia, Cricket and AFL are dominant sports, but they are played on very large ovals, and the games take a long time. We've seen shorter (T20 Cricket) and smaller (AFLX) forms of games evolving. I expect there will be more of this and it is largely driven by the need to be able to help growth in participation levels and in new markets, where there is strong competition for infrastructure (or the traditional infrastructure simply doesn't exist).

More Sports Geek Nation AMA Questions you missed

  • What is it about sport that attracted you to the industry?
  • How did you get your break into sports business?
  • Do you see the clubs/associations picking up the slack in this regard and doing the groundwork to build/implement?
  • What do you think is the biggest threat to grassroots participation here in Australia? Not just for mainstream sports but for all 32+ NSO’s?
  • How to communicate the ROI or cost savings to exec level or budget committee without going over the head of your contact in an organisation?

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2019-01-10T15:48:06+00:00

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