The business of sports is over a century old. But a mature sports business is only just starting to emerge.
Now, sports is a unique industry. Sports properties are intertwined with community, emotion, and disparate consumption habits like no other vertical. But traditional businesses have long honed precise processes, mining every nook and cranny for opportunity and planning for next quarter and next year while keeping the long-term vision in mind.
Sports businesses are now starting to do the same, while taking advantage of the unique traits and circumstances of sports organizations. Borja Sordo is on the front lines of the industry’s maturation. The fact that a leading global consulting company like Accenture has a sports practice, which Sordo leads in North America, is as clear a signal as any of the massive, heretofore latent opportunities in the sports industry. Sordo noted the paradoxical nature of the analytics movement in sports, which kicked into high gear in the early Moneyball days but has taken longer to fully manifest on the business side.
“I would argue that some of these teams have some of the most elite data and analytics teams on the planet because they’re trying to find tiny edges, a tiny edge anywhere, to be competitive,” said Sordo. “But you still see front offices and back offices that are not actually applying the same rules of engagement. Seems like a shame.”
While other businesses can focus on just their bottom line, however, sports businesses live in a unique space where their success is woven into the surrounding community, if not the city or even the state as a whole. Sports teams (including and perhaps especially minor league teams) are fulcrums within their towns. A team’s success affects not just the mood of the populace but the economy around it, with significant impact on countless businesses and people.
That unique position can be both a feature and a bug. Profit and growth maximization may well be north stars for most businesses, but sports are less black and white. At the same time, a sports team and its locale can rise together. Sordo, who was born and raised in Spain before coming to the US for business school, reflected on this distinctive union, which colors strategic planning and execution in sports.
“I think when I talk about the business, it is important to think of running the business for your bottom line, for growing the revenue. But it is also equally important to think of the business as, how do you contribute to the enrichment of the community, the enrichment of the surrounding areas, the enrichment of your fans?” said Sordo. “And I would argue that the teams that are doing the best have been reinvesting some of that capital into their communities for longer, because they understand that growing the reach of a team is more than just growing the reach of the brand. It’s growing the reach of everything that surrounds that brand.”
Sordo cited the Golden State Warriors as an example: “The Golden State Warriors have made that area more desirable. It gets more tourism, it gets more visits, it’s in a higher standing globally. And that helps the Golden State Warriors also be more desirable. So it’s a balance. It’s all about synergy.”
With such an interconnected business, it can be complex and intimidating to implement meaningful change, let alone substantial transformation. But as the old aphorism goes, ‘How do you eat an elephant? One bite at a time.’ So, for Sordo and Accenture, often brought in to guide such metamorphosis, it’s a combination of identifying the simpler, instantly tangible wins, along with the larger, more long-term and ambitious opportunities.
“I have conversations with a few NBA teams right now where the focus is very much on, hey, we just want to see what AI can do for our day-to-day operations and then activate in a few kind of ideas to see how we can use it both in our operations, but also in fan engagement, for example. That’s great,” said Sordo. “A technology like AI is fairly transformational, but has to be wielded with caution. Let’s be careful here. But it is transformational. So, for a lean organization, suddenly [having] a powerful AI infrastructure that allows you to do more with less or with the same, that’s important, and that can affect your bottom line…
“Then you go kind of the other spectrum. It’s like, well, folks that have big, big developments or big redevelopments coming up, that’s a whole different story.”
Quick wins and grand visions carry different calculations. But whether you’re tweaking a daily process or scoping a multi-billion-dollar investment, every decision can have downstream effects. So every decision should be calculated, backed by consideration from all angles. Because what delivers a few more dollars today could also affect a lot more dollars in the future, and vice versa. This comes into play when planning out both major moves like stadium development or renovations and day-to-day decisions like tickets, merch, and concessions.
Consider the rise of premium inventory and experiences in sports in recent years. While suites have been part of sports venues for decades, premium has evolved well beyond the clubs and suites of years past. The importance of having ample premium seating, and the ability to create diversified premium inventory and experiences, is more appreciated than ever. Because fans across a wide range of means will pay for premium. It’s not just corporations with expense accounts, but everyday individuals, too. But teams can’t go all in on premium at the expense of opportunities to engage the down-market fans who still want to attend but will never pay for more, whether for lack of means or desire. If this is starting to sound like a complex puzzle to decipher, well, that’s kind of the point. But the rewards are well worth the effort if you can work through the complicated web of considerations.
Sordo, who fondly looks back on attending Real Madrid matches and University of Missouri football games, also pointed to the other side of that equation.
“There’s just so much potential,” he said. “And yes, [there’s] premium seating and suites. As a fan, I think it is important that we keep sports accessible. At least to me that’s important because I do think that sports belongs to all of us in that way. So I do think we need to keep it accessible.
“But if you’re building a new stadium, maybe you can find a way to maybe even make it more accessible, but also offering some more premium experiences…Because I’ll tell you, the five-year-old kid that gets to go to the NFL game and gets to see it, that might be a lifelong fan. And that lifelong fandom is worth way more than whatever you can charge for a ticket.”
It’s easy to get seduced by sizable investments or swings that can deliver exponential returns down the road. At the same time, Sordo noted, there is just as much compounding gold to mine from the seemingly smaller parts of the business. All you have to do is open your eyes and put yourself in the shoes of the fans.
None of this matters if the fan experience isn’t always front and center. A fancy suite won’t save the game day experience from a bathroom in disrepair. A mascot meet-and-greet becomes secondary after missing a quarter of the game because the line for a hot dog took forever. So, Sordo’s eye for opportunity goes beyond the spreadsheets and data to what he experiences as a fan. As an example, he cited a recent experience where the wait to go through retail and complete a purchase was something like 40 minutes. Mobile retail is a simple fix, and one that compounds.
“It’s little things that add up to a phenomenal experience and add up to a better, happier fan or customer. And from a business standpoint, you can get more throughput,” he said.
There are a million little things that can be circled for improvement, which could deliver meaningful change next month. At the same time, there are nine- and ten-figure opportunities for consideration that may not bear fruit for years. So, just like the side of the house focused on the field or court, it’s a balance of minding the next game and next season alongside identifying the prospects who will be the team’s leaders next decade. All while bearing the responsibility of a community’s welfare, both fiscally and, often, psychologically.
Sordo pointed out that this is where traditional businesses and sports commingle. Because while all businesses have short-term concerns, those often have to be balanced with longer-term goals, plans, and investments.
“I think that community engagement, that long term thinking helps your valuation be higher. But again, you have to have a plan; no business operates month to month. Every business has a short term and a long term plan. That long term might be three years, might be five. Some really blue chip companies are looking at even longer than that. But you have to have that plan and then you have to kind of act on it. And yeah, it’ll tweak, you’ll vary it, but you need to have that roadmap.”
Now, there’s one key variable that can disrupt such best-laid plans — the millions of customers, better known as ‘fans’ (short for fanatics), who will always tell you what’s on their mind, and many of them will interact with you every day. And, in the end, the majority are ride-or-die. While sports fans’ psyches are notoriously subject to the typical ebbs and flows of a season, the business can learn and adapt quickly, perhaps more than any other industry, thanks to an always-on, instantly responsive focus group of millions.
Sordo invoked a hypothetical poor app introduced by a team like the New York Knicks to make the point, explaining why other industries should be jealous of such vocal, passionate customers.
“Your lifelong Knicks fan, if you put a bad app in front of them, they’re not going to go, ‘Well, screw the Knicks. I’m not there anymore.’ They don’t care. They’re fine,” said Sordo. “They’re going to be a Knicks fan, but…they’re going to tell you loudly, ‘Hey man, that sucked.’ So you’re going to get feedback so much quicker…
“[Most other] companies don’t have that quick feedback that sports teams have access to, and [teams] really need to capitalize on that.”
But not all fans are engaged in the same way, nor do they all necessarily care about the same aspects. The modern generation of sports fans is more multifarious than any preceding one; sports fans are no longer a monolith. There are fans who show up for the fits, others who see sports through betting, some who like a related show or book, a group that just loves the merch, and countless other permutations.
That means broadening the view of sports fandom. Take the many fans who discovered Formula 1, and its plot and characters, through the prism of a Netflix show.
“I think that’s a great example to start with,” said Sordo, referencing Drive to Survive, the Netflix docuseries that has run for eight seasons since 2019. “Are you a Formula 1 fan? I don’t know; maybe you’re not, but you’re certainly a sports fan that likes Formula 1 in some capacity. Now, maybe you’re not going to every race…but you’re certainly consuming Formula 1 as a sports engagement, and the vehicle is a Netflix documentary or series about it, so in some capacity that is valuable to Formula 1. I mean, we all know that because we’ve seen what Formula 1 has done over the last six years.”
Not all fans come in through the same door. But when you have millions of fans, every seemingly minuscule movement in frequency or spend adds up very quickly. When you’re talking millions or billions of transactions, a tiny percentage can mean millions of dollars, and then multiply that over the course of several years to come and legions of lifelong fans. So, the way Sordo sees it, it’s not just about attracting new fans, but moving every fan up the ladder just a little bit more than they are today.
“I think it’s about moving the spectrum continually to the right,” he said. “If you have somebody that goes once or twice a season and you want them to come four times a season, congrats. You effectively just doubled your yield for that fan. In any other industry, you would be uncorking champagne and celebrating that win. It’s just that the sports metrics don’t align to that, so that’s not what happens. But that is a huge accomplishment in itself.”
No matter where fans are on the spectrum, any growth of the total fan base is coveted. So, when considering fan growth strategies, it’s beneficial to start by looking at each of the existing cohorts to identify which have fruit ripe for the picking.
Sordo’s roadmap starts simple: understand your core market and demographics, then find the easiest growth path. If you already get 90% of the city into your stadium, for example, “how about the adjacent areas?” he posited.
“But, digitally, if you start to think beyond that, it’s like, okay, great, who’s actually watching, and where are they watching?” he said. “Should teams, for example, own more media concepts?”
Sordo raised Heated Rivalry, the HBO Max/Crave hockey romance series, made without NHL involvement, that piqued the interest of countless potential puck fans.
“I’m sure they were not unhappy with the amount of extra traffic it drove to the NHL,” he said. “So should some of these leagues be thinking about media properties that might enhance the value of the league and the sport?”
The docuseries growth strategy has been well-chronicled and discussed: Drive to Survive and its many imitators across sports. The scripted series lever, marked by serendipitous successes like Heated Rivalry and Off Campus (Amazon Prime Video), is only just starting to emerge. Multiple NFL teams are standing up their own studios, the league has teamed with Hallmark on a run of team-centric holiday movies, and others are simply licensing their IP. Recently, the Chicago Cubs made headlines for Nine Innings to Love, a scripted series exclusive to TikTok, produced by their in-house crew.
As consumers across all cohorts and demos watch more media than ever, ideas are flowing rapidly, and concepts are constantly being tested to determine return on investment and content approaches.
All of these experiments and strategic plans aren’t made willy-nilly. There is, indeed, a method to all the madness, whether it’s a small change to a day-to-day task or a billion-dollar investment that will take decades to deliver value. Sordo doesn’t pretend to have all the answers, but it’s not about knowing with 100% certainty how things will net out. The key is to have a sound process, backed more by data than gut, to decipher where investments make sense and how to transform businesses that have thrived for over a century, despite being slower than other industries to change.
None of this is necessarily easy. Even when analytics invaded the territory of scouts, who for years relied on stopwatches, radar guns, and their own eye tests, transformation didn’t happen overnight. But now, just about every in-game decision, every trade, every free agent signing, and every forward-looking draft pick is informed by a prodigious amount of data and insight.
The on-court and on-field sides of sports are well into their Moneyball era. The business side is just getting started. And getting it right is worth billions.
