Prevailing During Unfavourable Economic Conditions- Darren Beazley
March 12, 2012
Business in 2012 is hard. The economic climate would have to rate as one of the most testing in recent memory and it is not about to become any easier.
For the sports industry, the ability to secure the necessary financial support is a challenge in the best of economic conditions and for a sport such as sailing, it can be incredibly difficult.
I have been fortunate to work in some extremely testing sporting organisations during my long sports administration career. I say fortunate as it was by working in such environments that I learnt how to be able to generate profitable commercial partnerships when others could not. When placed in such challenging environments, working for a sporting brand that is not well respected hardens the commercial operations teams and ensures that they are looking for every way possible to be competitive and to secure arrangements against the odds. When you have to be creative in conveying your brand and the story of your club, event or sporting association, it brings out the best in people. In my view, it wins the attention and respect of the commercial sector who can see that you are trying something different and to make a difference.
What I have learnt about prevailing when economic conditions are not favourable can be summed up simply – success will depend upon good strategy, diversification, talent and the ability to execute.
Early on, successful organisations develop a clear and concise strategy based on the merits of the sport or club and match this with prospective suitable commercial partners. In my experience, the second part of this phase is not done well, with many sporting brands ‘drinking the coolade’ and becoming arrogant. The message such clubs send is that “your company would be lucky to join us” and here is where you sign. The tolerance from the commercial sector for this approach has lowered in recent years.
Even if a major sporting club or the code itself does attract commercial partners with this approach, long terms partnerships are rare in such an environment as the partnership has not been built on a foundation of mutual respect, crucial when times are tough.
To succeed in this economic climate, consider carefully the needs of ‘prospect’ in the short to mid term. If their strategy is all about increasing market share, then a strong data base and the ability to interact with the fan base is commercially attractive and your strategy should be developed about this premise. Today, it simply cannot be a case where a sport (particularly sailing) has a ‘one size fits all’ offering and builds a ‘strategy’ to that end.
Diversification is key to succeed in the current climate. My recent experience reinforced this very clearly. The Perth 2011 ISAF Sailing World Championships had ten different revenue sources and we raised over $4M through these sources. Sponsorship was one, but interestingly only contributed 56% toward the total gross revenue. Supply rights, corporate hospitality and events and corporate sales all contributed greatly to the final commercial outcome. Media content rights and of course licensing and merchandise are also lucrative revenue sources, although they commitment and focus to provide a financial return.
However, diversification is not just about defraying risk, it also becomes a powerful sales tool as the depth of the commercial offering increases when your event or sport is offering more than the opportunity to slap a logo on a jumper. The fundamentals of business must be reflected in what your sport is offering and delivered upon. Sports marketers must be able to deliver a tangible result and by not relying on one approach to deliver such outcomes, increases your chances of success.
Talent is important in sport, on and off the water or the pitch. The best organisations fill their teams with talent that have the experience, skills and knowledge on how to interact with the commercial sector in a professional manner. It is not all about passion; it’s about business and whilst sport should always be fun, the smiles dry up pretty quick if a sponsor feels that they have been ‘led up the garden path’ and the organisation will not actually deliver on the ‘brand promise’.
The commercial team must be prepared to achieve win/win outcomes at all times and should always think long term. Being prepared to understand that the economic climate is challenging everyone including your commercial partners might seem self evident, however, it rarely is.
I once made an arrangement to allow a sponsor to reduce the payment of the second year fee by 50% in recognition of the fact that their business sector had been hit hard by economic conditions beyond their control. It was such a simple gesture and yet when then third and final year of the arrangement arrived, they paid what they’d owed from the previous year and signed a new agreement for 5 years. In short, build a team around you that understands that it’s not about ‘gouging’ your partners – you are not competitors. It is all about emotional maturity and sound business acumen. Successful sporting organisations understand this.
Finally to succeed in unfavourable economic conditions, you need to be able to execute the plan. Strategy is fundamental, but if you and your team can’t actually ‘get the ball in the net’, it is worthless. Implementation of sound operating procedures, policies, communicating your terms and conditions, developing nimble structures are all crucial in good execution.
Regular monitoring and reviewing against the plan are simple steps in the execution phase, yet require discipline when working in large events to ensure they actually transpire. I was told that such discipline wasn’t possible in an international sporting event such as Perth 2011, as during the final few months prior to delivering the event, you don’t have time to review progress against the plan. My team made the time and it was without doubt the critical factor in ensuring that we met and exceeded all KPI’s from the multitude of stakeholders we had.
There is no magic formula to succeeding in tough days like these. In my opinion, take the time to be clear what you want to achieve, have more than one “string to your bow”, surround yourself with talent and have the discipline and commitment to deliver on the plan.
About Darren Beazley:
Darren Beazley is the COO of the 2011 Perth World Championships, where he is responsible for all commercial aspects of the Olympic qualifying Event, including marketing and membership, licensing and merchandise, media and communications, sponsorship sales and events and innovation.
Darren arrived at Perth 2011 from Australian Rules football, where he worked for many years in both the football operations and commercial aspects of the game. He worked with the West Australia Football Commission from 1994 – 1998 and was then recruited by the AFL to be the General Manager of the Tasmanian Football Development Foundation, where he also served as Acting Chief Executive Officer.
After three years working with Funge Systems in the USA, he returned to Western Australia and was appointed General Manager, Business Development with the West Australian Cricket Association (WACA).
In February 2005, Darren was appointed General Manager – Strategic Partnerships for the Fremantle Football Club.