Tag Archive for: Investment

BLOG: Will the Pandemic accelerate the growth in larger sports clubs and leagues at the expense of the smaller ones?

I have read with interest various interpretations of how the Covid Pandemic will impact the sports industry. The general consensus is that it will accelerate the already rapid changes taking place as a result of consumption (how we follow, watch and attend sports events) driven by the smartphone and the rise of web 2.0 which will, in turn, accelerate the gaps between the richest and poorest sports federations, leagues and clubs, affirming a new world order. 

There is no question that changes in consumption have been driving a greater gap between rich and poor in the last few years and this has shown in the numbers. 

The biggest events increasingly command a greater share of fan attention, resulting in the bigger sports growing at the expense of smaller sports where audiences are falling.

There are lots of reasons for this including social followings increasing the importance of celebrity, meaning the biggest stars with the biggest followings drive interest in the team they play for and this drives the overall following and viewing of the league and sport overall. Witness the impact of Cristiano Ronaldo’s signing on the Juventus share price. However, whilst the Pandemic has certainly accelerated some consumer trends, I actually think that it will shake things up rather than simply follow the same path.

First of all bigger doesn’t necessarily mean less vulnerable. Larger event organisers, venues and clubs have larger balance sheets, but also far greater operational expenses which leave them exposed when there is no income coming in from live matches. It is well documented that Premier League clubs lose money when times are good. As a result of the Pandemic, the Premier League is having to offer rebates to its broadcast partners and 20% of the average club income is from matchday, which may not return for several months. 

Secondly, bigger businesses are often less nimble or adaptable to change and this could be a problem. As McKinsey research shows, organisations with an agile operating model are far more likely to show improvements in both execution pace and productivity. The break in the sports calendar has offered them a chance to focus on adapting products and business models to the new norm and the price for not doing so may be very high. 

Many sports in Europe are not centrally organised, which creates a fractured decision-making structure that can be an additional barrier to adapting to the current situation.

By contrast, smaller leagues and federations may be forced to work together to invest and adapt and this could be a big factor in growth, particularly in digital audiences and resulting revenue mixes. More McKinsey research shows that as much as five years of consumer and business digital adoption has happened in the last eight weeks. 

However, this accelerated change does not necessarily mean that change has followed the same path that it would have without the Pandemic. Covid has changed the way we think about hygiene, the way we interact and the way we work and this will have a lasting impact. 

The accepted norm in sport that the big will get bigger and the smaller will struggle to survive is hugely over-simplifying matters.

Many smaller sports have been dealing with the reality of not being one of the chosen ones scheduled on linear broadcasters for some time and have adapted their business models accordingly.  The Americas Cup and the World Surf League have pioneered this approach over a number of years and it has actually led to more broadcast deals as a result of the success of its digital-first strategies, exponentially growing global audiences in the process. 

We may well see a change in the world order as a result of the Pandemic but not necessarily as we might have expected. Strong leadership that is prepared to adopt change thinking combined with investment in the right areas will be the key differentiator, regardless of whether your organisation is large or small. 

 

Albion Ventures invests in InCrowd

Albion Ventures LLP (‘Albion Ventures’), one of the largest independent venture capital investors in the UK, has led a £1.65m funding round in the mobile fan engagement and sports marketing company InCrowd Sports (“InCrowd”). Albion Ventures are investing alongside Sky and a number of angel investors.

The management team is led by Aidan Cooney who previously set up the world’s leading sports data company, Opta, also backed by Albion Ventures. He is joined by two IMG executives and a technology group borne out of the University of Sussex Innovation Centre.

InCrowd develops mobile apps for professional sports clubs underpinned by the unique technology solution developed by the team at the University of Sussex. The technology solves the problem of poor connectivity in crowded places and allows phones to share all available connectivity, rather that compete for it.

InCrowd apps contain real-time content, match analysis and interactive fan games which directly engage sport’s most committed fans. InCrowd currently works with 10 football clubs including Middlesbrough and Watford and will be investing heavily in technology to create digital sponsorship rights for clubs and leagues. With over 50% of the UK’s advertising spent on digital, this will be a major growth area for sport sponsorship over the next five years.

Ed Lascelles, Partner at Albion Ventures said:

“We are delighted to be working with Aidan again after our successful time together with Opta. He and his team at InCrowd have a huge opportunity to transform and enrich fans’ experience at live sports events, while at the same time offering rights holders and brands hyper targeted access to a large and valuable market.”

Emma Lloyd, Director of Corporate Development & Strategic Investments at Sky, said:

“This is the latest in a series of Sky investments in pioneering technology companies, which we know bring real benefits to customers. We’re really looking forward to working with InCrowd, a company that shares our passion for innovation, and for finding new and exciting ways to deliver content.”

Aidan Cooney, CEO of InCrowd said:

“This round of funding not only enables us to invest in the technology needed to improve experiences for fans, clubs and sponsors but also brings with it a number of incredible people who will help us on our journey.”

ENDS

For further enquiries please contact:

Patrick Evans / David Sells (for Albion Ventures)

+44 (0)20 7282 2863 or Patrick.evans@citigatedr.co.uk / david.sells@citigatedr.co.uk

 

Archie Woodhead (for InCrowd)

+44 (0)20 3137 9873 or archie.woodhead@incrowdsports.com

 

About Albion Ventures

Albion Ventures LLP is a leading venture capital investor which has been managing investments in small unquoted UK companies since 1996. Albion has over £270 million under management across six Venture Capital Trusts and a portfolio of around 60 businesses.

Albion Ventures looks to invest £1-10m in growing businesses within a variety of sectors including healthcare, technology, environmental, travel and leisure, and asset-based businesses. Our approach is to provide strategic advice as well as financial resources in order to realise the full potential of the business invested in and so create returns for our shareholders.

Albion Ventures is authorised and regulated by the Financial Conduct Authority.

About Sky

Sky is Europe’s leading entertainment company, serving 21 million customers across five countries: UK, Ireland, Germany, Austria and Italy. Sky offers the best and broadest range of content, deliver market-leading customer service and use innovative new technology to give customers a better TV experience, whenever and wherever they choose.

Sky has annual revenues of over £11 billion and is Europe’s leading investor in television content with a combined programming budget of £4.9 billion. The group employs 30,000 people and is listed on the London Stock Exchange (SKY).

About InCrowd

InCrowd is a sports marketing company that uses technology to bring fans closer to the teams they are passionate about. They build club apps based on proprietary TribeHive Connect software, which networks all phones with the app installed, boosting connectivity in sports stadiums, dramatically improving fan’ access to data.

InCrowd enables fans to directly participate via their smart phone, expressing their views, opinions and predictions to each other and via the stadium’s big screen. This also provides a platform for clubs to build one to one relationships with their fan base, whether they’re watching from the stands, the pub, or their home.