Impact of Digital Transformation on Sporting Organizations

In this week’s View From The Middle East, David Portas – Executive Chairman of Portas Consulting pens down the impact of digital transformation on sporting organisations.

We need to approach our predictions for digital technology in sports with optimism, a dose of humility and some scepticism. 

In 2007, the Microsoft founder and entrepreneur, Steve Ballmer, confidently declared, “There’s no chance that the iPhone is going to get any significant market share. No chance.”

Clearly, predicting the future is a sport in itself. 

We can all see a big opportunity, but it still feels distant at the sports’ organisation board table. We have been talking about this “transformational opportunity” for at least 10 years – but who within the traditional legacy sports bodies have led the innovation to make the transformation happen? Have they truly embraced the immense opportunities for   collaboration and integration between sports and technology?

The main aim of this article is to provide an understanding of how to capture the value of digital transformation in sport and technology. 

Technology is already helping to enhance performance and fan experiences

There are many examples: 

  • AR applications in stadiums, such as the fan experience enhancements seen in the NBA, increase fan engagement and attendance. Recent research also suggests AR is a key driver of para-athlete enablement (Loughborough University).
  • The Tokyo Olympics in 2021 garnered 5 billion digital views globally. Accessibility is no longer a challenge; it’s an opportunity. (IOC)
  • Sports teams employing data analytics, like the use of Sabermetrics in baseball, have seen a 20% improvement in player performance. 

The industry has only scratched the surface of this immense opportunity. 

It is predicted that investment in sport technology will grow significantly. To give some idea of the scale of the opportunity: 

  • While there is no global reference point, a conservative prediction suggests the global sports technology market is currently valued at $15-30 billion and is projected to grow at an annual rate of 20% to reach $50-100 billion in 2030. Grandview Research, PwC Sports Industry Outlook (Emerging technologies help transform the sports experience) 2024
  • This is a real opportunity in Asia with the sports industry expected to grow at an annual growth of 6.5%, second only to the Middle East at 13.5%, with Sports Technology leading the charge at 17% CAGR. (Grandview Research, Asia Sports Tech)

Numbers and future predictions for sports tech over the years have been based on weak and often quickly outdated research, gross generalisations and extrapolations. Nevertheless, most industry practitioners agree on the overall orders of magnitude, and that sport has a unique opportunity to embrace digital to truly drive transformational change and extract value by transforming the industry using technology. 

A Reality Check

However, despite these numbers, we have also seen a gap between expectations and reality. For example:

  • Even in the realm of esports, forecast to be $1.5 billion in revenue by 2025, the anticipated mainstream breakthrough has been slower than expected, despite significant investment and interest.
  • The use of VR for athlete training and fan engagement, while extremely promising, has yet to reach its full potential due to cost, technical and accessibility challenges.
  • In wearable tech, the anticipated widespread adoption for personalized fan experiences or health monitoring, has faced cost, privacy concerns and integration issues.

This implementation gap between expectations and reality has consequences in terms of a value capture gap 

The Value Gap

Unlocking the benefits at scale has proven challenging even for legacy industries. The structure of the sector is changing. But there are major differences in conduct and performance. Research aross other industries has shown that ‘leaders’ in digital transformation have grown revenue at 5 times the rate of ‘’laggards’, and there is no reason to believe sport is an exception. (Accenture)

In fact despite the bullish predictions we estimate there is a $10-15bn prize at stake. This is a very conservative estimate.

Why is this and what can we do?

The following insights are based on Portas client experiences, and recent research carried out in partnership with GSIC (Portas – GSIC joint research ‘ Digital Transformation in Sports’).

This issue is the result of 3 main themes:

  1. Digital strategy and plans
  2. Digital infrastructure
  3. Organisational capacity and capabilities 

Digital Strategy & Plans

While a holistic digital approach is acknowledged as crucial by 88% of sporting organisations we surveyed, a mere 30% of sports organizations have dedicated and robust digital strategies or plans. In other words, while most sports organizations recognize the importance of digital transformation, only a fraction have a dedicated strategy towards achieving their ambitions. Over half of the respondents have already invested more than $0.5m in technology and innovation, but with limited strategic focus. 

This is a distinct opportunity for disruption, innovation, and leadership.

Those who act now, prioritizing the development of a focused, flexible, and fit for purpose digital strategy, stand to gain a significant competitive advantage in a rapidly disrupted industry.

Digital Infrastructure

Portas and GSIC’s joint research indicated that upgrading digital assets, creating social content, and incorporating AI ranked highest among the digital technology priorities of sporting organisations. Anecdotal evidence and interviews highlighted that many respondents didn’t fully understand what these would actually entail. And this gap in understanding is widening.

In a world of real time data, evolving customer expectations and the rapid emergence of technology, an approach to follow customer trends and deploy the latest application poses risks in achieving broader business objectives. Especially as investments in enabling infrastructure lag behind other customer facing offerings.

It also poses some major challenges for organizations currently grappling with where to play and how to play. Technology is evolving so fast, investments committed to last year may no longer be relevant. “Late adoption” is therefore not a long-term winning strategy.

According to Accenture, organizations investing in digital enablement have seen a 30% reduction in operating expenses (Accenture, 2022). However, there has been a spike in the volume and type of cyber-attacks affecting organizations in the last 12 months. 

Therefore, creating a robust enabling architecture that supports digital transformation will require investing not just in front-end customer-facing technologies, but in establishing clear, consistent, and holistic digital platform strategies that can unlock potential in the long term and protect the organisation. 

This shift signals a move towards a more interactive, secure, and commercially viable approach is not a choice. Developing the right digital infrastructure is not just a technical necessity; it’s a strategic and commercial imperative. By investing in enabling capabilities, organizations can unlock the full potential of digital technologies, leading to improved operational efficiency, security, and more immersive fan and client experiences. 

Organizational Barriers

Limited organizational capacity (an issue for 95% of respondents), financial constraints, and a lack of digital talent were cited as the biggest barriers. 

Very few leaders in sport would describe themselves as ‘digital natives’ or even ‘digital immigrants’. They cite the lack of quality advice from those who understand the sports industry, business and digital opportunities.  These are being termed ‘digital interpreters’.

Addressing organisational challenges, financial constraints and talent gaps is crucial not just for digital transformation but for organizational resilience in this digital age – overcoming these barriers is essential for fostering innovation and securing a leading position in the digital sports arena they now operate in. 

Requirements for fundamental change

There is no question the industry stands at a pivotal moment where the future of sports is being reshaped by digital innovations.

But it is questionable if sports is truly ready to bridge the gap between its traditional values and the emerging digital world. These organisational challenges require collaborative solutions, innovative thinking, and a willingness to invest in the future.

Instead of simply digitizing our existing business, how can we truly disrupt an industry and challenge the status quo? 

Client experience from across the globe in sport suggests that this innovation will mainly not come from inside the industry today.

Rather, true disruption and innovation will occur from outside the sector, as both emerging and established companies globally recognize the opportunity that is in front of them.

Winners will embrace 4 differentiating actions:

  • Innovation: Sport is naturally conservative and resistant to change. It needs to unlock innovation and create opportunities for teams to challenge the status quo, try, test, succeed or fail, and learn rapidly. Leaders need to disrupt: embrace new business, operating, and engagement models that fundamentally challenge the existing way of thinking. 
  • Integration: The future of sport will not look like it does today. It must create opportunities and structures where to engage and collaborate with multiple partners and stakeholders in new ways – e.g. on-demand and flexible resourcing models or simplified commercial arrangements. Finding ways to integrate far better within their organisations across the many silos that exist in legacy sports’ organisations.
  • Improvement: This will all require a mindset shift within sport – including an increased bias for action within organisations, developing digital capability to ensure faster adoption of new ideas and proactive management of transformational change. The sport industry will not ‘think itself into a new way of acting’ but needs to turn that around and ‘act its way into a new way of thinking’.  
  • Investment: Finally, it needs to look to new sources of investment to significantly increase funding into physical infrastructure, systems and human resources. Leaders need to explore new financial approaches and investment partnerships to secure the funding required. Legacy public funding, grant applications and sponsorship approaches aren’t enough.

Summary

The key to unlocking the value of the digital revolution in sport and technology is nothing less than a fundamental organisational transformation.

As sports leaders navigate this future, they need to remember the unpredictable nature of progress. This transformational journey requires agility, foresight, and a commitment to blending tradition with technological advancements. 

They also need to embrace this digital transformation with a collaborative spirit and pragmatic approach. Not everyone in sport is a ‘digital native’ and so ‘digital interpreters’ are clearly needed to help guide them into unknown territory.

Only this way can leaders drive the future of sports towards a more impactful, inclusive and sustainable era using digital technology.

Sportz Interactive appoints Alex Chamberlen as Director – Head of UK & EU Operations

Sportz Interactive (SI), a technology and content solutions company and a part of the Sportz Solutions Group, continues to expand its global footprint by strengthening its UK and EU Operations with the hire of Alex Chamberlen as Director – Head of UK & EU Operations.

This marks another significant milestone in its journey towards becoming the world’s foremost provider of sports technology and content solutions, following its successful venture into Singapore.

Alex Chamberlen brings a wealth of experience in business development and operations across renowned organisations such as Cricinfo, Omnigon, Engage Digital Partners, and Trippant Communications. His profound understanding of the sports business sector across diverse regions including the UK, Europe, India, and North America will be instrumental in driving Sportz Interactive’s growth trajectory in the UK and European markets. Chamberlen will be based out of London, UK. 

Commenting on his appointment, Alex Chamberlen expressed his enthusiasm, stating, “I am honoured to join Sportz Interactive at this pivotal moment in our journey. With a strong foundation built on 20+ years of experience, SI is already making a significant impact on the global sports technology landscape. I am eager to leverage my experience and expertise to lead the company’s expansion into the UK and EU markets.”

Arvind Iyengar, Chairman of Sportz Interactive remarked, “We are delighted to welcome Alex Chamberlen to Team SI. His proven track record and deep industry knowledge make him the ideal candidate to spearhead our global expansion efforts and further strengthen our existing relationships with 15+ customers in Europe. This will help us drive our global growth as we look to help sports organisations maximise their fan affinity and supercharge commercial outcomes.”

With existing customers that include the likes of the International Olympic Committee, NBA, UEFA, Disney, Google and Formula One, Sportz Interactive’s continued expansion into the UK and EU markets reinforces its commitment to providing fanalytics offerings and digital transformation capabilities for sports organisations around the world. 

Rajasthan Royals appoints Neom as principal partner

NEOM, the sustainable development taking shape in the northwest of the Kingdom, has been appointed as principal partner of Rajasthan Royals, one of India’s premier T20 cricket league teams.

Under the terms of the agreement, Rajasthan Royals will sport NEOM’s corporate brand logo on the chest of all official team clothing during India’s premier T20 cricket league in 2024 and 2025, thereby imprinting further awareness of NEOM on a wide global audience. The partnership builds on the success of a 2023 pilot program, with this year’s initiative marking another step forward in NEOM’s commitment to nurturing a physically active and healthy society.

Its work with both Rajasthan Royals and the Saudi Arabian Cricket Federation will enable NEOM to provide cricket opportunities for men and women, nurturing young Saudi talent to excel in the sport.  NEOM’s commitment to establishing a foundation for the cricket ecosystem, along with its ongoing improvements to its cricket facilities, aligns with national-level efforts for the growth of the sport within the Kingdom.

HRH Prince Saud bin Mishal Al Saud, Chairman of the Saudi Arabian Cricket Federation, said: “We are thrilled to see the formalization of NEOM’s cricket partnership with Rajasthan Royals, which holds great promise for the growth of the sport across Saudi Arabia. It’s important that we continue to develop a vibrant cricket community that can be enjoyed by all.”

Jan Paterson, Managing Director of NEOM Sport, said: “Following a successful pilot program last year, we are excited to take our partnership with the Royals to the next level as a principal partner and continue growing cricket as a tool for social growth. Working with the Saudi Arabian Cricket Federation and Rajasthan Royals will enable us to provide cricket for men, women, girls and boys alike, across NEOM. This will pave the way for development at an individual level and contribute to the growth of the sport across the Kingdom, while amplifying the NEOM brand globally.”

Manoj Badale, Lead Owner of Rajasthan Royals, said: “We are delighted to welcome NEOM on board as our Principal Partner. This landmark deal, emblematic of our global reach, national appeal as a franchise and cricketing expertise, signifies a shared commitment towards creating a positive societal impact. Over the past year, our collaboration has not only elevated cricket within NEOM through the strategic implementation of our workforce cricket program but has also contributed significantly to their mission of fostering a physically active and inclusive society. We are excited to be the flag bearers of cricket in NEOM, with the potential to contribute to the overall growth of the sport across the Kingdom, which is being driven by the Saudi Arabian Government and the Saudi Arabian Cricket Federation. This partnership also provides us with the opportunity to work as a conduit for fostering connections between NEOM and our passionate Indian supporters.”

Atos to open a Sports Technology Centre of Excellence in Saudi Arabia

Atos has announced plans to open a pioneering Sports Technology Centre of Excellence within a newly established Atos MENA HQ in the second quarter of 2024 in Riyadh, Saudi Arabia.

Announced at LEAP 2024, the Centre of Excellence will leverage Atos’ global track record in providing best-in-class IT services and solutions to global sporting events. The Centre will develop cutting-edge technology applications to benefit athletes, fans and the sports movement in Saudi Arabia. 

This pioneering move comes at a time when Saudi Arabia is undergoing a major development in shaping the future of the economy and sport within the Kingdom’s “Vision 2030”, as it seeks to become a destination to host the world’s most important and prestigious international sporting events. 

By establishing its MENA HQ in the Kingdom, Atos will be at the forefront of the digital transformation in Saudi Arabia and the region, fostering a thriving economy and accelerating innovations for local initiatives in the private sector.

Marc Veelenturf – CEO Middle East & Turkey at Atos said: “Through the Sports Technology Centre of Excellence, Atos will empower organisations in Saudi Arabia with the technologies needed to thrive in the Kingdom’s digital economy. Drawing upon our best-in-class digital tools and IT solutions, the Centre will become the epicentre for major events technology and digital innovation in the region.” 

The MENA HQ and the Centre of Excellence will significantly contribute to both the Kingdom’s Vision 2030 and the National Transformation Program by supporting public sector initiatives, transformation projects, and various giga projects and smart destinations such as Expo 2030 and Saudi Entertainment & Amusement (SEA) Expo. It will leverage Atos’ global know-how and experience to serve these global initiatives.

Mutaz Salem – General Manager at Atos said: “Atos will enable Saudi’s major projects to become pioneering, future-proof smart destinations rooted in tradition, sport and culture with strong expertise and experience.”

Javier Escudero – Commercial Director at Atos Major Events said: “The Atos Sports Technology Centre of Excellence will be located at the heart of Riyadh to provide major events with seamless technology, orchestrating flawless operations and secure data flow. Our unique track record in sport includes over 25 Asian projects such as the Olympic Games, and Asian, Arab and Gulf Games. Atos innovative solutions will serve as the backbone, enabling organisers to captivate audiences worldwide while ensuring reliability and precision behind the scenes.”

Specifically, the Centre will serve as a dynamic business hub hosting a range of activities under the umbrella of “Club Atos”. These include keynote sessions, roundtable discussions, technology demonstrations, workshops and networking events. These engagements will provide a platform for industry leaders, event organisers, clients and partners to explore the forefront of digital transformation, cybersecurity, cloud services, decarbonisation, application modernisation, DevSecOps and edge computing. 

Atos is the Worldwide IT Partner of the Olympic and Paralympic Games and is now working on the preparation of the Olympic and Paralympic Games Paris 2024. Atos is also the Official Technology and Digital Services Partner of the European Olympic Committees for the next editions of the European Games until 2027 and the Official Information Technology Partner for UEFA National Team Football until 2030. 

SportAccord 2024 to kick off with a spectacular opening ceremony

SportAccord is granting a special discount (10%) on the standard price on a first-come-first-serve basis (i.e. the first 50 subscribers get the discount) for iSportConnect members.

Standard price is and will remain at CHF 2,000 (we are not increasing the price to CHF 2,500 as of Feb 29) – https://register.event-works.com/sportaccord/birmingham2024/e/ce/g/144240/

Birmingham and West Midlands – the famously friendly city and region, with world class sport and major events expertise and a spectacular cultural and industrial reputation – is set to make a lasting impression on over 1,500 delegates and exhibitors at SportAccord World Sport & Business Summit on 7-11 April.

SportAccord – the social scene

SportAccord’s 2024 “The Power of Sport” edition is leaving no stone unturned to welcome leaders and key decision makers from over 120 International Federations (IFs), the International Olympic Committee, host cities and organisations involved in the business of sport to the industry’s most influential gathering.

Alongside the highly stimulating five-day conference tackling sport’s biggest challenges and opportunities – with renowned global experts in sport, industry and academia – an extensive social scene awaits, to leave a lasting impression of a city and region always on the lookout for new hosting opportunities.

The social events staged across SportAccord 2024 are designed for maximum energy, connectivity and understanding of Birmingham and the West Midlands – here’s a closer look!

Spectacular Summit opener

SportAccord 2024 kicks off with a spectacular opening ceremony on Monday 8 April featuring the Symphony Orchestra and Royal Ballet – both calling the West Midlands home – giving us a taste of why over 141 million people visit Birmingham and West Midlands every year.

Sports odyssey

Did you know that Birmingham invented rugby, lawn tennis and the Football League, hosted the forerunner to the Olympic Games in Much Wenlock, and regularly hosts county, one-day, test and international cricket?

Grab your ticket for SportAccord’s sports odyssey – visit the legendary Edgbaston Stadium, Villa Park and School Close, where in 1823, local schoolboy William Webb Ellis, ‘with a fine disregard for the rules of football, took the ball in his arms and ran with it’, originating the game of rugby.

Peaky Blinders fans – look no further

We’ve been reliably informed that many of our Summit delegates are major fans of Peaky Blinders – the most-watched English-language Netflix series globally.

So we’ve organised a visit to the open air Black Country Living Museum, the location of iconic Peaky scenes – all amid rumours of a film adaptation in the making…

‘To see or not to see, that is the question’

You can’t leave Birmingham and West Midlands without visiting Shakespeare’s birthplace in Stratford-upon-Avon, complete with the Royal Shakespeare Theatre, rowboats and swans – join the tour!

The same goes for UNESCO World Heritage Site Ironbridge Gorge – prepare to be amazed at the birthplace of the Industrial Revolution.

Energise at SportAccord – before-breakfast activities

SportAccord 2024 is all about productivity – so bring your running, walking, gym and golf gear!

Wake up with the sun and join Run of A Kind and walking tours visiting landmarks that have made Birmingham and West Midlands famous – from the hangouts of the world’s best selling music artists, including Black Sabbath and Led Zeppelin, to the Jewellery Quarter where 40% of the UK’s jewellery is made, and the home of JRR Tolkein whose Lord of the Rings gave birth to one of the world’s highest grossing film series of all time.

Is Muay Thai or Pilates more your thing? You can do both – all before 9am.

You can even work on your handicap while revisiting the Ryder Cup on the majestic fairways and carpet-smooth greens of The Brabazon at The Belfry – grab nine holes of golf!

SportAccord 2024 – bringing global community together

With an action packed SportAccord 2024 programme featuring an exciting central conference with four specialist streams – CityAccord, HealthAccord, LawAccord and MediaAccord – and world-class speakers, great care is being taken to ensure delegates explore new solutions and head home with fresh ideas and inspiration.

Alongside the city and region visit opportunities, daily Summit AfterHours Social events will give delegates the perfect networking and collaboration opportunities.

“SportAccord has always been famous for its top quality networking and bringing people together from all over the world. I have often heard people say they attend for the sheer efficiency of being able to organise so many meetings over the course of several days and with a compact city centre format this year, Birmingham and West Midlands will deliver an extremely vibrant and engaging SportAccord Summit 2024 for our delegates from around the world,” said Martin Gibbs, Managing Director of SportAccord.

“So we’re excited to be staging SportAccord here – in less than forty days, SportAccord will be back and we are excited to welcome our IFs, the IOC, the wider Olympic family and all the hundreds of decision makers in sport and the business of sport who will join us.

Join the world’s leading sports industry experts

Register now for SportAccord 2024:  https://register.event-works.com/sportaccord/birmingham2024/e/ce/

Want to join the SportAccord 2024 Summit socials? It’s a simple click at registration or just turn up on the day!

AI, Fandata and Multi Club Ownership

Multi-club ownership (MCO) has gained traction across the industry in recent years. The increasing trend of multi-club ownership in sports can be attributed to several factors like financial diversification, globalisation and market expansion, synergies and economies of scale, strategic partnerships and networks, player development and talent pipeline, brand building and global visibility and investment returns.

Sir Jim Ratcliffe’s imminent investment in Manchester United to buy a 25% stake in the club has put multi-club sports ownership in the limelight once again. Ratcliffe’s  Ineos Group already has several football clubs including OGC Nice, FC Lausanne Sport, and Racing Club Abidjan, a Cycling Team INEOS Grenadiers and Formula 1  Team Mercedes-AMG Petronas in their portfolio. However, they are not alone in their quest to expand their dominion in the sports kingdom.

The guide titled ‘Data analytics and AI for multi-club ownership groups’ by EXL focuses on managing data to delight fans and achieve commercial goals. While synergies on player scouting and performance have long been leveraged by MCO groups to improve club standings and records, leveraging fan data to optimize financial performance presents a different set of challenges. Fan data includes information on fan behavior and preferences, as well as transactional data, such as ticket sales, merchandise purchases, social media interactions, and more.

Smart owners apply advanced analytics to their data to improve fan experience and achieve business goals related to revenue opportunities and stickier engagement. However, fan data is also the subject of various global data privacy laws. As a consequence, MCO groups must take care that their usage of fan data and analytics architecture complies with the growing complexity of cross-border regulations and legislative bodies.

 EXL’s sports data analytics and AI experts have seen three potential architecture options deployed in today’s complex MCO environment. These include:

1.      Central platform with federated architecture

2.     Third-party platform with federated architecture

3.     Dedicated platform for each sports property

     The unique insights contained within this guide will help CEOs, strategy, commercial, marketing and digital leaders working in MCOs to navigate the dynamic landscape of fan data and analytics helping them to understand how a more strategic approach can help them deliver financial diversification, business synergies and market expansion goals etc.

Download the full article here. For further information on EXL, please reach out to Sameer Jain – Sameer.Jain@exlservice.com.

Formula 1 and BeIN Sports agree ten-year deal to exclusively broadcast F1 across MENA & Turkey

Formula 1 has announced a ten-year agreement with beIN Sports to exclusively broadcast F1 in the Middle East, North Africa (MENA) and Turkey.

The multi-year deal, which runs through 2033, will cover 25 territories across MENA and Turkey and grants beIN rights to broadcast every F1 race weekend. This includes all practice sessions, F1 Sprint events and Grands Prix across beIN SPORTS channels and its live-streaming app TOD.   

A key pillar of this deal is the formation of a regional content production partnership that will see beIN and Formula 1 work closely together to develop localised content for the MENA region, across different formats and platforms to better engage and grow the F1 fanbase.

Since the first Bahrain Grand Prix twenty years ago, the Middle East has established itself as a hub for Formula 1. Over half a million fans in total attended the Abu Dhabi, Bahrain, Qatar and Saudi Arabia Grands Prix last year and the region boasts one of the youngest and most diverse fanbases in the sport, with a high demographic of female followers and fans under the age of 35.

More than 50% of new fans in MENA started following the sport in the last four years. This partnership reflects the growing appetite for Formula 1 amongst a digitally savvy and connected fanbase and further solidifies beIN’s position as one of the leading broadcasters in the sport, following the group’s deal to secure the rights to broadcast F1 in ten territories across Asia last year.

Stefano Domenicali, President and CEO of Formula 1, said:

“Since Formula 1 first raced in Bahrain in 2004, we have seen the growth of a passionate fanbase in the Middle East who love to go racing. With beIN, we have found a partner who elevate the broadcast experience and create best-in-class programming that delivers against our mission to showcase the drama and spectacle of Formula 1 for our fans at home.”

Ian Holmes, Director of Media Rights and Content Creation at Formula 1, said: “With four races and a rapidly growing fanbase, demand for Formula 1 in the Middle East and Turkey is at an all time high. In recent years, beIN has established itself as one of the leading sports broadcasters in the world, offering fans unparalleled coverage across its sports portfolio. We look forward to working with them, utilising their extensive production capabilities in Doha, to continue to elevate F1’s broadcast programming and create tailor-made content that engages fans in the region and encapsulates the drama and excitement of Formula 1.”

Yousef Al-Obaidly, CEO of beIN MEDIA GROUP said: “We are delighted to see the return of Formula 1 live and exclusively on beIN across 25 countries spanning the MENA region and Türkiye. beIN continues to be the undisputed home of sport across MENA and Türkiye, with Formula 1 the centerpiece of our incredible portfolio. We look forward to creating thrilling Formula 1 experiences for millions of fans and growing a new generation of followers through exciting regional content and innovative broadcasting. This deal is also testament to the fantastic long-term success and continued ambitions of beIN Media Group as one of the leading sports, entertainment, and media groups in the world.”

MLS Team Valuations 2024: Messi pushes average value near $700M

In this View From article, Kurt Badenhausen Sportico’s Sports Valuations Reporter, looks into the MLS team valuations in 2024.

Major League Soccer kicked off its first season in 1996 and has long fought for attention in the U.S. compared to its more established major sports league rivals. The same applied on the global soccer stage. Six months ago, that all changed when arguably the most famous living person on the planet announced he was coming to America.

“This is a fantastic opportunity, and together we will continue to build this beautiful project,” Lionel Messi said in a statement announcing his signing with Inter Miami CF. “The idea is to work together to achieve the objectives we set, and I’m very eager to start helping here in my new home.”

Suddenly, the eyes of the world were on MLS, and Messi’s arrival helped goose two league initiatives—an Apple streaming deal and Leagues Cup in-season tournament—that began in 2023. Messi matches became a must-see, as celebrities, such as LeBron James, Prince Harry, Leonardo DiCaprio and Kim Kardashian, attended Inter Miami games and fans scrambled to sign up for MLS Season Pass on Apple TV. Inter Miami revenue more than doubled with a half-season of Messi, and nearly every club had a halo effect from the arrival of the eight-time Ballon d’Or winner.

MLS clubs now have an opportunity and challenge: how to lock in a portion of those newly introduced fans long-term with the World Cup in North America in 2026 another catalyst for the league.

During the last month, Sportico connected with more than 60 people around MLS, including team owners, bankers, executives, investors and consultants to gauge the health of the league and what’s next for its soon-to-be 30 teams—San Diego FC joins MLS next season. The Messi, Apple, World Cup and Leagues Cup quartet provides a foundation for the league to increase revenue and grow into its rich revenue-multiple valuations.

The average team is worth an estimated $678 million, up 16% from Sportico’s last MLS deep-dive in September 2022. Four clubs topped the $1 billion mark, including Los Angeles FC ($1.15 billion), Atlanta United ($1.05 billion), Inter Miami ($1.02 billion) and LA Galaxy ($1 billion). Collectively, the 29 teams are worth $19.7 billion, including real estate and team-related businesses held by owners, such as NWSL clubs.

Click for a ranking of all 30 teams or a data visualization comparing the teams.

The Power of Messi

MLS teams generated an estimated $2 billion in revenue last season, up 27% compared to the prior year. It includes local revenue, including non-MLS event revenue for teams that operate their stadiums, as well as their cut of league revenue from media deals, sponsorships, merchandise, shared gate receipts and Soccer United Marketing (SUM). Revenue growth was driven mainly by Messi, more matches and a new club (St. Louis City FC).

Local revenue represents more than 85% of the total. Teams don’t actually receive an annual check from MLS, as its single-entity structure means player contracts are “owned” and paid by the league. The cost of players and league operations outstrips central revenue, requiring teams to fund those expenses via an annual assessment.

The league incentivized teams to increase revenue last year when it cut the share of ticket revenue the league collects from 33% to 10%—it still collects the higher rate for crowds over 30,000 fans. The logic was to reward teams who are making the biggest investments in their stadiums. The move juiced the revenue of clubs like LAFC and Atlanta United, as well as anyone who got to host Messi.

Miami’s revenue hit an estimated $127 million, up from $55 million. Last season was just an appetizer for the club’s finances, as revenue could hit $200 million this year with a full season of Messi that includes preseason tour stops in El Salvador, Saudi Arabia, Hong Kong and Japan.

Inter Miami signed sponsorship deals in recent years that included escalators if it signed a player with multiple Ballon d’Or awards—Messi and Cristiano Ronaldo are the only active players that fit the criteria. In December, it added Royal Caribbean as its new front-of-jersey sponsor. Messi is signed for another two seasons and helps Miami lay a revenue foundation when its new stadium opens in 2025.

The Messi pixie dust touched clubs around the league. The Chicago Fire have one of the league’s lowest season ticket bases and play in an NFL stadium, which allowed the club to fully capitalize on its Miami game with an MLS record $10.5 million gate. Nashville hosted Inter Miami in the Leagues Cup final, which fell outside its season ticket package and produced a nearly $10 million gate.

The impact went beyond just one game. Viewership for Nashville games on Apple jumped roughly 30% for the rest of the season after the Leagues Cup final. Chicago doubled the size of its corporate partnerships team and tripled its sales staff. “It allowed us to be in a position to really leverage the opportunity when Messi came to town,” Dave Baldwin, Fire president of business operations, said in a video interview.

Messi missed the Chicago game due to injury, but the Fire enticed the huge crowd with discounts on 2024 season tickets that have boosted those sales by 75%. The Inter Miami game was the first time that the Fire had sold out all 130 suites at Soldier Field. It offered a free suite to the game for anyone that leased a suite for the entire 2024 season. The club did not sell any suites on an annual basis last year at Soldier Field but is expecting at least 50 sold by the start of this season. Sponsorship revenue rose 100%, including Carvana as a new jersey sponsor after playing 2023 without one.

Messi is playing in Kansas City this year, and the team moved the game from its 18,500-seat home, Children’s Mercy Park, to 76,000-seat Arrowhead Stadium, home of the NFL’s Kansas City Chiefs. The team debated keeping the game at its home venue but recognized the opportunity to reach a larger audience.

“You are going to get a lot of first-time people at a Kansas City soccer game,” Sporting KC CEO Jake Reid said in a phone interview. “We are going to expose 70,000-plus fans at the loudest stadium in the world to the greatest player of all time, and at that point, it is on us to reach out and convert them.”

Reid says they have a plan in place to activate these new leads as long-term customers and points to the team’s experience in 2010 when Manchester United played there.

Messi’s Inter Miami arrival coincided with the opening game of Leagues Cup between Inter Miami and Cruz Azul. It was a marketing hat trick for Apple and its new MLS service as subscriptions doubled post-Messi to a peak of nearly 2 million, which dipped only slightly after Leagues Cup was over, according to multiple sources familiar with the signups. Subscriptions blew past the original projections in 2023, and now the focus is on renewals heading into 2024.

The subscription numbers include season-ticket holders, who receive access to MLS Season Pass as part of their ticketing plans. Multiple teams highlighted the free access to the Apple subscription as a marketing tool that has helped boost season ticket sales in 2024.

The 10-year, $2.5 billion Apple deal is a critical one for the league. The rights fee alone provides a shot of revenue for teams, but the key is to get into the revenue sharing part of the contract. Many clubs thought the back half of the deal is when they might capture some upside, but the robust Year 1 subscriptions have bumped those expectations to 2025 and even this year in the most optimistic viewpoints. Even if revenue sharing is not part of the 2024 equation, the net revenue for MLS from the Apple deal should jump after hefty upfront costs last season for production.

Leagues Cup featured 77 matches between 47 clubs in MLS and Mexico’s Liga MX and will be back in 2024. The tournament got its storybook ending with Miami title, and it provided another chance to introduce new fans to MLS. CF Montreal hosted Pumas in a game that attracted a large Mexican audience to Saputo Stadium. This season, Montreal sold out season tickets for the first time in franchise history, boosted in part by a visit from Messi in May. 

The U.S. has an influx of soccer competitions ahead with the 2024 Copa America, 2025 Club World Cup and 2026 men’s World Cup all set to be played here, with a bid for the 2027 women’s World Cup also submitted.

“It’s really about, what do we want to be by 2027,” Don Garber, MLS commissioner, told the media in December ahead of the MLS Cup. “We’re going to have the eyes of the world on us. The soccer market here in the United States is going to be exposed to the entire global soccer and football community. That is the pressure that we’re under to ensure, as everybody’s paying attention to us, what is the product that we can deliver?”

It is a question teams and the league are pondering. Clubs were taken aback when Jorge Mas committed $150 million to Messi over two-and-a-half years, including an equity stake in Inter Miami, but his big bet has proven fruitful with the value of his club up more than $400 million in a year. There are not any other Messis available, but attracting better talent requires more funding, and almost every MLS team operates in the red after debt service.

The league is considering tweaks to roster rules and potentially some kind of player acquisition fund that could be backed with third-party money, according to multiple people. In 2012, the league sold 25% of SUM to Providence Equity Partners before re-acquiring the stake five years later. The deep pockets of the existing ownership groups could also bankroll any initiatives to target more stars. MLS’ powerful product strategy committee, which is co-chaired by owners Clark Hunt (FC Dallas) and Greg Kerfoot (Vancouver), is expected to issue its recommendations later in 2024 to the full MLS ownership.

Team Sales

“While the motivations behind investing in a team may be similar, the strategies and requirements behind investing in an MLS franchise and a European football club will meaningfully differ,” AJ Swoboda, managing director at sports intelligence firm Twenty First Group, said in a phone interview. “MLS represents different economics, a different ecosystem, different time horizon—all of which present unique opportunities and challenges for investors.”

He ticks off the bull case: world’s most popular sport in the world’s richest sports system, cost controls, long-term owners with “patient” capital, new stadiums, blue-chip partners, and a single-entity structure impacting ownership collaboration and innovation.

MLS clubs have traded at high revenue multiples based on this promise and continue to be valued at nearly 10 times revenue, which is down slightly from last year but ahead of every major U.S. sports league besides the NBA, which is at 11 times revenue. MLS also benefits from the currently insatiable appetite for sports team assets that led to one-year value increases in the NBA (33%), NHL (29%) and NFL (24%); MLB is most challenged by the meltdown in the RSN model and increased values only 2% last year.

One critical difference between MLS and its sister U.S. sports leagues: The other sports have cornered the market on player talent and subsequent revenue driven by it, while global soccer has dozens of leagues competing for players, eyeballs and revenue.

It has been two years since an MLS club was sold, dating to Real Salt Lake’s purchase by David Blitzer and Ryan Smith on the heels of team sales for the Houston Dynamo and Orlando City SC. The three transactions were all completed at valuations of roughly $400 million or slightly lower. All three deals also included NWSL teams, which were typically valued at $2 million to $5 million at the time. Since then, the value of NWSL clubs has soared to an average of $66 million, helping propel double-digit one-year value gains for their parent companies. The Portland Timbers recently sold their NWSL club, while Seattle Sounders ownership is close to a deal for the Seattle Reign; our $795 million value for the Sounders does not include the Reign.

The current crop of MLS owners are largely intent on holding onto their assets to see where this league goes heading into the 2026 World Cup, but teams have tapped investors to raise funds in minority interest deals to help fund stadium improvements, training facilities and real estate developments. The Dynamo raised money at a $750 million valuation, including the NWSL’s Dash, while D.C. United sold a small LP stake at a valuation north of $1 billion, including its mixed-use development around Audi Field.

At least a half-dozen other clubs are exploring raising money through LP sales.

MLS stands out from the other major U.S. sports league for its teams’ ability to raise funds at valuations well above what most bankers think a control sale would occur. A smaller check size can also get you in the door in a much different way than what is available in the NFL or NBA, where the average valuations are $5.1 billion and $4 billion.

Sportico’s valuations are based on a control transaction where a new owner takes over. We value control of Houston at $550 million and D.C. at $720 million.

The league continues to have success with its newest clubs. St. Louis City SC, which we value at $635 million, kicked off play last year and was an instant hit on and off the field. It broke the record for wins by an expansion team on route to the Western Conference title. The stadium was sold out for the season, and the club established a season ticket waiting list. Only Inter Miami had higher merchandise sales.

San Diego starts play this year after paying a record $500 million expansion fee. Egyptian billionaire Mohamed Mansour is the lead owner and will pay the expansion fee over multiple years, resulting in a net present value of between $400 million and $450 million, depending on the discount rate applied. Mansour is also on the hook for startup costs and a new training facility.

Inter Miami was the biggest valuation gainer, up 74%, followed by LAFC (28%), Austin FC (27% to $800 million) and Philadelphia Union (23% to $685 million).

Last year, LAFC signed a 10-year, $100 million naming rights deal for its stadium with Bank of Montreal, and its non-MLS events at BMO Stadium have soared. It sold 1.3 million tickets for concerts, festivals and soccer matches in 2023.

Austin has taken advantage of its spot as the only major pro sports franchise in the Texas capital. Fans have embraced the club with sellouts for every game since it started play in 2021. It has a paid season ticket waiting list of 26,000 fans.

And after Philadelphia’s dominant 2022 on-field performance, where the team made it to the MLS Cup final, fans snapped up Union season tickets. It was one of just four MLS clubs—LAFC, Austin and St. Louis—to sell out every game last year.

Why does sport have such an issue with good governance?

There is a deep irony in the fact that if you care to study how any sport is administered and run it is invariably one of the least co-ordinated and fragmented endeavours you will ever see. In this week’s Member Insight article, Richard Brinkman looks at the perhaps slightly dull issue of good governance in sport. He has shown why it is so important and how poor governance holds sport back. He has used a particular scenario around the governance of Pickleball in the UK to illustrate some points as well as taking a slightly challenging tone in order to make people rethink this mostly overlooked issue.

You would think that every sport would want to optimise the process by which it makes and enforces decisions. That, given the influence and importance each sport purports to have in society, it would want its decision-making, rule-setting and enforcement mechanisms to work efficiently. After all effective governance is essential for maintaining order, addressing the needs of its community/members and achieving any objectives. Furthermore, good governance promotes transparency, fosters trust amongst stakeholders, and adapts to changing circumstances ensuring that any governing body remains responsive and resilient in the pursuit of its goals.

So, in a nutshell, good governance is important (if not vital) to any sport. But yet governance of sport remains uniformly weak and/or poor. Even worse, it seems to be accepted with a shrug of the shoulders with a range of standard “immovable” reasons usually trotted out.

Surely the fact that it can be a dull, worthy and rather dry topic is trumped by its importance? Surely it cannot just be down to the legacy of most governing bodies being formed in a different era with different priorities? Surely the “turkeys voting for Christmas” defence does not really hold water? After all, if this were the case Parliament would still look as it did at the restoration of the monarchy in 1660 and every major boardroom would look, act and feel as it did when the business was founded.

Change is possible and, indeed, desirable if those that are the trusted guardians of each sport are to best serve the interests of their sport. Too often one hears the followers of a sport speak of its governing body as “getting in the way” and actively making growth of the game harder. There is a lot of shiny digital content but not a lot of practical assistance or investment.

Does the lack of good governance ultimately really matter though?

In a country where approximately half the population does not really care about sport and where every significant sport (even football) is reliant on some form of tax-payer funding it is inevitable that dispassionate objective bodies will start to ask awkward questions and will expect to see transparent, effective and efficient decision-making that delivers results.

It must surely be a warning-sign to those running sport in the UK when the majority in Parliament believe an “Independent regulator” (of indeterminate shape or form) is needed to oversee the activities of the country’s biggest and most popular sport. 

Given the EPL’s offer of a £900m stipend paid across 6 years to support the rest of the football pyramid on which much of its wealth is built it is hard to argue with the parliamentary view. For context, the 23/24 player wages (for a single season) is reckoned to be nearly double the £900m offered (across six years). Meanwhile, deafening silence around the issue from the FA – English football’s governing body.

A major issue, of course, is the over-reach and lack of focus that each governing body usually embodies. Typically, this manifests itself in trying to bridge the often conflicting interests of grass-roots participation, the development and implementation of the rules/processes/procedures/sanctions and the event and media focussed elite end of the sport. 

Frequently you will also have thrown into the mix the additional demands of major events in the same sport that have significant financial pull and consumer interest in which a governing body is a key stakeholder but ultimately has no direct control over (think LTA and Wimbledon, the golf Tours and the Majors, the FA and the Premier League etc).

These kinds of conflicts and their complications are nicely illustrated by the current debate raging relating to who should run Pickleball in the UK moving forward.

On the one hand you have a highly dedicated and passionate group of volunteers who have rapidly built-up a regular player base of around 12,000. This obviously has scope to grow given its current trajectory, the path of Padel and a playing base of some 9m (still only c3% of the population) in the US.

On the other you have the professional experience of the LTA, its 350+ full-time employees and £80m+ annual income. 

The LTA can clearly point towards 2023s best UK participation in tennis figures in over a decade and many years of experience (and many lessons learned) in how to grow a player base whilst developing facilities and infrastructure.

The concerns of those currently running Pickleball is that it will just become a poor relation to the LTA’s main concern of growing traditional tennis. 

Padel was formerly merged into the LTA in 2019 having grown rapidly since it arrived (in a structured form) in the UK in 2014. Padel is currently reckoned to have c175,000 regular players so dwarfs Pickleball. However, there are reports that there is disquiet amongst the Padel community about how it is viewed and treated by the LTA. Most of the 300 new Padel courts built since 2019 have been developed by private investors and only £3.9m has been loaned to tennis clubs in relation to Padel.

Inevitably there is also some ego involved in the debate. Those passionate people currently running Pickleball are very upset that the LTA seems not to accept Pickleball as its own sport but rather see it as a feeder into tennis, part of their “Tennis Opened Up” strategy. One can appreciate their point but, taking an objective view, when one is a niche of a niche using wider and deeper professional resources to encourage more people to get moving and involved in racket sports is surely the only way to go.

The alternative is for Pickleball to continue to plough its own furrow and rely on its own income streams. This will likely leave it a small, dedicated and admittedly probably happier tribe.

A board meeting of Sport England will decide Pickleball’s fate in the coming weeks. If you were cynical you might say this is akin to appointing Anne Widecombe or John Sargeant as Strictly’s next head judge given SE’s questionable track record over the past 20 years of getting the country moving/more active! However, I am sure that the weighty process and procedures generally followed by Sport England will ensure that a reasonable decision is reached.

My betting is that that decision will suit the larger majority, assuming they are represented by the LTA, rather than the dedicated band who love Pickleball. The fact that Pickleball England recently filed freedom-of-information requests into SE’s decision-making process suggests they may be suspecting the same. 

My advice would be to brace for the inevitable and focus on getting as influential a voice for Pickleball within the existing governance. After all, this is what good governance should be – a reactive and responsive system that adapts to changing circumstances and reflects the needs of its entire community through a transparent process. Perhaps, this compromise can even be reached without Sport England’s involvement – or would that be asking too much of those that represent sport’s best interests?

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