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The 2020-2021 season has been unlike any other in the well-documented history of modern professional sports. Ticketing revenues declined, sponsorships tightened up and gameday profits evaporated as leagues shut down during the pandemic. Shortened season schedules and return-to-play bubbles have softened the blow, but sports teams around the globe are still reeling from a world without fans.
In the U.S., revenues in the Big Four sports leagues (NBA, NFL, NBA, NHL) dropped by at least $14 billion last year, according to this analysis from Forbes. In Europe--where a deep passion for football (a.k.a. soccer) is ever-present--KPMG predicts that overall losses will eclipse ~5 billion for top-division football clubs.
However, with vaccination rates rising and stadiums starting to open their doors (albeit in varying capacities), sports teams are exploring new ways of driving revenue with a renewed focus on safer and more engaging fan experiences. The NBA's Milwaukee Bucks, for example, have rolled out a cashless, ticketless and touchless stadium infrastructure to prioritize fan safety--but also to encourage fan spending. With a new mobile app, guests at the Bucks' stadium can order drinks, buy merchandise and plan a ride home from their seats. There's actually a pretty strong business case for this--because when Atlanta's Mercedes-Benz Stadium went cashless in 2019, food and beverage revenue rose by 16% at NFL and Major League Soccer (MLS) games. NHL venues are following suit as well, as in-arena purchases account for 70% of every team's earnings (compared to about 40% for the NFL, NBA and MLB).
For finance and operations teams in the sports world, these developments raise important questions: How can you keep people safe, maximize profitability and still make sure fans have an awesome gameday experience? How can you leverage data to inform strategic decisions as you work to overcome losses and prepare for the next five years?
The answers to these questions will vary between leagues and franchises, but the need for data-driven business planning still rings true for everyone. After all, as this Deloitte report points out, understanding your profit drivers and planning for innovative fan engagements is the key to unlocking new revenue streams both in and out of the stadium. That's why finance teams in sports need to make planning more collaborative across departments--so check out the tips below and learn how to do that effectively.
Between ticketing, concessions, facilities, sponsorships and more, there are lots of moving parts behind the revenue and expense figures on your income statement. You need to understand how each department is moving the needle--because your leaders can't optimize fan experiences without a clear picture of what works and what doesn't.
The challenge, however, is when departmental budget vs. actuals reporting is managed in a silo by your finance team. In that scenario, analyzing the profitability of each business unit gets pretty tedious--especially if you're pulling numbers manually from your ERP, HRIS, fixed asset system and other data sources. Also, with no quick way of knowing how their departments are performing in real time, budget owners won't feel empowered with the information they need to collaborate with other department heads and shift strategies when priorities change.
Solving this problem starts with integrating your data sources and establishing one source of truth for departmental budget vs. actuals reporting. In addition to freeing your finance team from the perils of manual consolidation, you'll also be able to:
When budget owners can clearly see how their departments affect profitability, they'll be motivated to look for improvements instead of maintaining the status quo. And if 2020 has taught us anything, it's that the status quo in sports is never guaranteed anyway--that's why budget vs. actuals reporting is so important to get right.
Thorough what-if analysis is absolutely crucial for testing the viability of new fan engagement initiatives. And if you have one source of truth for financials from every department (see above), you won't have to wrestle with spreadsheets to model new revenue and expense assumptions. Then you can use the results to determine what's best for the franchise, ensuring that every decision you make is supported by up-to-date data.
Think of it this way: If you don't run detailed scenario models for every fan-focused initiative on your radar--including stadium upgrades, event sponsorships, ad campaigns, etc.--you won't be able to illustrate the potential ROI of each project. That might make it difficult for your leaders to justify the investment and feel 100% confident in the plans your team is producing.
Scenario modeling can also help you foster productive collaboration between departments, which is a fundamental aspect of any successful fan project. The Kansas City Chiefs--who are one of the most dominant teams in the NFL right now--put forward a great example of this during their 2020 playoff run. The team introduced outdoor standing suites so fans could come to games during the pandemic, which took a lot of last-minute coordination between hospitality, operations and finance. Agile what-if analysis helped them determine the suites would be profitable after stakeholders from each department worked together to iron out requirements. Now the Chiefs are looking at doing the same thing again in 2021--and that's what teams can accomplish when they're empowered with reliable data.
Let's imagine, for example, that a recent high-profile player signing causes a sharp and sudden increase to your monthly revenue from jersey sales. Ownership wants to know how this development will impact your profits, with a month-by-month projection of total jersey sales for the rest of the year. What do you think would be best for delivering this message effectively: A bunch of numbers on a manual spreadsheet, or some nice graphs on an automated dashboard?
You don't need a degree in finance to know the graphs are a far better option. Visualizing your numbers with dashboards is a key aspect of data storytelling because it's an engaging and effective method for bringing your numbers to life. When ownership can actually see how your franchise is making more money in real time, they'll also be able to feel the impact of all your hard work.
Dashboards are just as useful when you're planning new ideas for your fanbase. Once you've built out your plans and modeled the potential outcomes, graphs are an easy way to communicate their impact on revenue. This will make it easier to secure executive buy-in and to gather support from your colleagues as you turn your ideas into reality.
Sports teams have a lot to look forward to as fans start flooding back into stadiums, which means it's time to prepare your franchise for a nice little bump in revenue. And if you make planning more collaborative with the right tools for the job--i.e. reporting from one source of truth, on-demand scenario analysis, easy-to-read dashboards, etc.--you'll always be ready to capitalize on opportunities to maximize profits and to keep your fans engaged with a world-class gameday experience.
Evan Webster is an experienced sales professional and storyteller with a passion for innovative technology. He currently serves as a Senior Area Sales Manager at Vena and previously worked as a Content Specialist. He continually strives to inspire finance professionals to become strategic business partners and is dedicated to helping them automate and streamline their planning processes so they can make better decisions with reliable, data-driven insights—enabling meaningful growth for organizations across the globe.
