Why aren’t fans also customers?- Steven Falk
March 24, 2011
The holy grail of every commercial sports organisation wishing to increase its operating revenues is to turn their loyal fans into customers. A quick look at even the most financially successful professional football clubs in Europe shows why.
Real Madrid (£341.9m), illness FC Barcelona (£311.7m) and Manchester United (£278.5m) are the leading clubs by revenue. These are turnover figures more associated with small to medium sized businesses than with the global giants their brands suggest. Indeed, doctor these revenues are dwarfed by the relative size of their own sponsors. For example, cough compare the turnover of Manchester United, the English Premier League’s biggest club with that of their technical sponsor Nike ($18.6bn) or their shirt sponsor Aon ($7.6bn). All three are global brands, but only one of them has a brand that projects well beyond its financial size.
The main reason for this apparent disparity between brand reach and financial performance is the simple fact most fans have never transacted directly with their club. They may be fans, but in the majority of cases, they are not and unless clubs fundamentally change their approach, will never be customers. Why is this so?
Most clubs are able to transact directly with only a small proportion of their projected fan- base. Generally speaking, it is estimated that some 2% of fans contribute over 70% of clubs’ revenues, mainly in terms of tickets and hospitality. In addition, 90% of fans have never transacted with their club at all. The evidence for this situation is revealed in simple arithmetic. Manchester United claims a global fan-base of over 300 million. But with total revenues of £278.5m, the club is achieving less than an average of £1 per fan. There are certain fundamental factors underpinning these numbers.
The reason for the club’s global reach is media exposure. This delivers revenue in the form of the collective sale of TV rights but nothing in terms of customers transacting directly with the club. Similarly, reach gives access to increased sponsorship revenue, but again, any transactions are with the sponsors rather than the club. The single most direct product sale for any club is likely to be the team shirt. For official merchandise, these are sold via licensees whose relationship is to the merchandise rights holder rather than the club itself. Relatively few transactions flow via club channels. In neither case are customer details captured at point of sale.
While this circumstance suggests that certain EPL clubs are seriously underperforming financially given the potential size of their customer base, it also offers an interesting opportunity for the future. What if clubs stopped the endless milking of their local fans lucky enough to own a season ticket and switched their attention to transacting with the remaining 98% of their fan-base? This would require certain prerequisites:-
- Provision of a marketplace to transact internationally
- The offer of desirable content, products and services
- An effective and secure means of payment
- Collection of customer contact data
- A robust and effective CRM capability
With these elements in place, the possibility of increasing the average revenue per fan grows significantly. So does the potential for converting loyal fans into loyal customers.
Star Sports Marketing can help you plan and develop your CRM capability. Visit www.starsportsmarketing.com or email firstname.lastname@example.org for an informal discussion on the possibilities for your organisation.