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MK803: Sports Marketing in a Global Context

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Question 1. Sports tickets are like any other commodities, and entities that provide them have to

factor ineffective strategies to determine the appropriate costs for the fans. If the sports

organizations sell tickets at a too high cost, they risk remaining with many unsold tickets. On the

other hand, if the tickets are too cheap, they easily sell out, and people resell them on different

platforms. Therefore, sports owners have to understand the optimum ticketing strategies that

would lead to profit maximization. The modern-day sports industry uses variable and dynamic

sports ticketing to determine pricing strategies to maximize revenue. Ticket prices of different

sports events will differ due to market demand and supply forces.

Sports ticket prices can depend on the day of the week. Weekends are more expensive

because many people are available, which increases demand. Many people save their weekends

to do leisurely activities like going to watch sports games. On the other hand, weekday tickets

may be cheaper because people may be tied up in their workplaces. Bad weather conditions like

the snow, heavy rains, or high heat can drive down ticket prices because the fans avoid the

discomfort. High winds and freezing temperatures can also turn off the fans because they will

have to watch the game in undesirable conditions. For example, in 2014, the NFL Super Bowl

XLVII prices dropped by 20 per cent due to a weather panic caused by heavy snow (Lawrence,

2014). The participating players can also determine the prices of tickets. The tickets for national

teams would be more costly than for local teams. The demand for tickets increases when popular

teams, popular sports or rivalling teams play. Another factor that determines the ticket prices is

the cost of operating expenses incurred in hosting the event. Therefore, the esports entities have

to put high ticket costs to cover the operating expenses that come with hosting the mega-events.

For example, the NFL is a massive event that hosts thousands of people and operating such a

magnitude of entertainment can be financially demanding, thus the high ticket prices. Lastly,
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sports ticket prices may vary according to the experience that the fans will get. Some tickets are

very expensive because the fans want to get maximum value for their money. Experiences such

as the half-time performances provide the fans with intriguing activities and an opportunity to

receive multiple forms of entertainment.

Sports entities cannot charge as much as they want because the ticket prices vary with the

market supply and demand. The ticket fluctuations in the sports industry mean that one could

buy them at one price today, but it changes tomorrow because of the changing circumstances.

Professional sports entities do not exploit the fans for ticketing revenue. For example,

Manchester City failed to profit in 2019 from ticketing (Schloesser, 2021). It is positive for the

stakeholders when the tickets are sold out because it brings in more sponsorship opportunities.

The sports entities only charge as much as the fans are willing to pay.

Question 2. Sports governance refers to the formalization of how a sports organization operates

its activities. Formalization refers to the structures and scope of procedures and rules that will

guide the organization. There are different strategies that an organization may adopt when

creating formal structures for governance. The organization may implement vertical or horizontal

subunits or departments in the organization. Decision-making can be centralized or decentralized

throughout the organization. However, as the organization grows, sports governance can become

more complex. Sports organizations may face challenges when implementing procedures and

principles of effective sports governance due to internal or external factors.

The external challenges include the changing external environment. The world is

changing faster, and it can be challenging to keep up. One of the changes that have occurred is

globalization, which puts the leadership of sports organizations under the scrutiny of the whole

world. The public is not more aware of every activity in the sports world. The media and
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government can now scrutinize every activity of the sports leadership due to technology. For

example, if there is a corruption or doping scandal in a sporting organization, the news will fill

all global media platforms.

For this reason, there is a lot of pressure on what the sport's governance can achieve for

their team and severe consequences in case their actions do harm. There is more pressure on the

governance team to carry out their activities with change, innovation, and transparency to

maintain the public’s trust (Henne & Pape, 2018). The external environment has less room for

unethical activities in sports organizations because technology and the changing trends in the

external environment demand that the sports governance bodies be able to keep up. Members of

the sports organizations are always facing the challenges of reform pressures from society due to

the rapidly changing external environment.

The internal challenges of governance involve the political mix that comes with

governance. There are many reasons for politics to develop among the leading parties of sports

governance. First, internal tension may develop due to competition, clashing, and contesting

among the sports leaders, players, managers, and policymakers. There can be an array of

conflicts that come with politics. Sports governance involves a lot of parties, ranging from

stakeholders, athletes, players, trainers, managers, and coaches (Blanco, 2017). In the process of

laying out rules and procedures, there will always be divisiveness, rifts, and people acting out of

strife due to politics. Some sports leaders and heads of governing bodies may wrestle each other

for power and media attention. In the past, political rivalries among leaders in the sports industry

that remained unsolved have caused deadlocks that led to resignations, sanctions, lifetime bans

from tournaments, and penalties. Another reason for politics is part of sports governance because

the roles usually involve a lot of commitment and sacrifice. In addition, people also love to
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acquire power because of ambition and greed. The last cause of politics in sports is when old

leaders hoard positions from the new generation.

Question 3. Sports organizations need sufficient funding to enjoy financial stability. Revenue

generated from the sale of media rights is arguably the major source for monetizing many major

sports. Broadcasting contracts are very profitable and more popular due to Covid 19 restrictions.

TV broadcasting networks are always willing to pay large amounts of money for TV sports

contracts because it also attracts viewers. Media sports rights reached an estimated $22.4 billion

in 2019 (World Athletics, 2020). The world’s top leagues like the NFL, EPL, Laliga, MLB, and

NBA generate the most revenues from media rights.

However, it is not healthy to rely on only one stream of income because many alternative

revenue streams are available to sports bodies. The facilities required by the sports teams to

deliver to the fans can be costly. Therefore, management bodies of sports organizations need to

identify and manage different revenue-generating strategies. Alternative sources of revenue for

sports teams can come from selling tickets. Sports can benefit from millions of fans willing to

pay to watch competitions. Sports organizations can make additional revenue from hospitality,

drinks, food, and merchandise during the match days. To research by KenResearch (2019), the

sports merchandise market was worth $26 billion in 2018. In addition, sponsorship contracts can

help clubs to boost their income. The Premier League has commercial partnerships with global

brands like banks, beers, soft drinks, snacks, and marketing partners. Sports organizations can

also partner with betting companies and fantasy sports developers to get additional revenue

streams. Sports teams can also sell official data to organizations like sports federations and

leagues. Sports data is essential because it can help firms like media outlets, betting companies,
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and broadcasters to control information. Lastly, sports organizations can get revenue from

external sources like government funding, donations, and fundraisings.

Figure 1. World athletics revenue vs expenditure in 2020 (World Athletics, 2020).

Assess the implications for fans and sports property owners going forward over the next

decade. Sports bodies are privately owned businesses with facilities and stakeholders. The

businesses need money for activities like facility usage, equipment, coaching and athlete

development, event management, travel management, and consultancy fees. Therefore, sports

organizations need to be financially viable to give fans the desired level of services,

entertainment, and facilities. The owners need the organization to be profitable to avoid

vulnerabilities from adverse economic events.

Additionally, sports bodies must have a sustainable source of income to avoid bankruptcy

or insolvency. Insufficient sources of revenue for clubs can result in changes in the team’s

expenditures. For example, Leeds United FC suffered dire consequences from financial

mismanagement in the early 2020s. The club had achieved great success in the1990s, but its debt
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started to rise beyond its capability. Leeds United was relegated to the 2003-04 Football League

Championship, and it had to undersell its players to pay its debts (Isaac, n.d.). A series of bad

financial decisions saw Leeds United FC miss out on profiting from the UEFA champions

league, which caused the club to go into administration.

Question 4. There is so much at stake for bodies that bid to host mega sports events, which can

lead to a lot of politics and manipulation. There has been a lot of criticism and scrutiny regarding

scandals on how sports federations manage sports bidding and the culture of the contest. The

public views the bidding processes as filled with strategizing tactics by various interest groups

like politicians, sports associations, and business groups. Cities and sports organizations host

sports events for various reasons. However, to some extent, I agree that bidding for and staging

mega (hallmark) sports events only serves the political and personal agenda of governments and

does little for the citizens in terms of economic benefit or increasing sports participation. The

modern-day sports events are commercially focused and driven by individual corporations like

event organizers, sports apparel, marketers, and the media, whose aim is capital maximization.

Mega-events like the Olympic Games and the FIFA World cup have become highly

commoditized because of the revenue that they can generate. Sports events have become

commercialized by individual bodies to lure capitalists. The people who bid for stagging mega-

events also have the motive for attaining global prominence. Some individuals who bid for

stagging sports events also aim to achieve prestige and project a particular image to the public.

For example, the People's republic of China participated in the 2008 summer Olympics bidding

to gain a new power identity (de Nooij & van den Berg, 2018). There are also concerns that

political motivations can cause leaders interested in the sports bidding process to take irrational

economic actions. Aspiring hosts may spend extensive resources and finances to compete for
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bidding opportunities, yet such resources could have benefitted other national development

projects.

Even though the politics behind bidding for mega sports events may serve the personal

needs of individual groups, it could also be beneficial for the citizens. Proponents of hosting

sports events claim that it has significant financial benefits for the locals. Mega events can be

good for the tourism of the local cities. During mega sports events, the cities become the center

of attention on a local and global scale. The increased awareness promotes the city's image to

tourists. For instance, the 2020 Olympics in Sydney contributed to promoting the city's image in

tourism (Cornelissen, n.d.). Likewise, South Africa experienced an increase in tourism after

hosting the 2010 world cup. Mega sports events can also improve the branding of a city or

nation. The country can show the world that it can successfully hist an event, boosting its

reputation. An improved image comes with long-term benefits like investments, exports, and

tourism. Hosting sports events also argue that it can stimulate exports. Hosting a sports event

also have a home advantage because it promotes local sports. Hosting an event encourages local

teams' participation and can also inspire them to improve their performance to qualify. In

addition, the interested groups may invest in the local athletes and their preparation so that they

can participate. 

Question 5. The sports sponsorship domain redefines the nature of relationships from

transactional-based exchanges to relationship-based exchanges. Sports sponsorship has always

been a common source of revenue for sports entities because it mutually benefits the corporates

through marketing as they support sportsmanship. The sports entities and the sponsors must have

a good relationship for the partnership to succeed. Both partners have to contribute to making the

sponsorship partnership a success. This calls for relationship marketing, whereby professional
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sporting organizations establish and maintain positive, mutually beneficial, and enduring

relationships with their stakeholders. Below are the key elements that lead to an effective

sponsorship;

Trust

The sports entities and their sponsors must have trust between them. Professional sports

teams must deal with their sponsors openly and fairly for them to build trust. The groups should

not make promises that they cannot meet because it can reduce the sponsor's confidence in the

partnership. The team should be open even in the case of unpleasant truths or when facing

conflicts. The sponsorship company should also be fair and honest to their partnering

professional sports organizations.

Mutual understanding

There should be a mutual understanding of the objectives of the sports sponsorship

partnership. Each party in the sports sponsorship partnership must be aware of the needs and

vision of their partners. When sports entities clearly understand their sponsors' objectives, they

can quickly help them reach these objectives. On the other hand, the sponsors need to understand

what the sports entities require for improved performance or financial help.

Long-term perspective

The relationship between sports entities and their sponsorship partners should be long-

term and not about spending money for a few seasons. Since both parties are looking for long-

term success, they should focus on building a relationship with each other. Both parties should

aim to create quality interactions to be part of their relationships. The sports entity should

intentionally transform the relationship with their partners from a transactional basis to a

relational oriented. It is now common for most business entities to seek a strategic alliance with
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their sponsoring entities. For example, Liverpool FC and Carlsberg have had one of the most

extended sponsorship relationships in football history that started in 1992 and ended in 2010

(Carlsberg, n.d.). Even at the end of a sponsorship contract, the sports entity should be grateful

for the sponsorships' longstanding relationship.

Communication

A successful sports sponsorship is based on mutual communication. The sponsor and

sponsee can undertake communication via several means like face-to-face meetings, e-mails, and

phones. Sporting organizations should openly provide relevant information on themselves and

any recent developments concerning the relationship. One way can be to create newsletters that

update the sponsors on significant events involving the sporting entity. For example, Skyliners

Frankfurt, a basketball team based in Germany, provides information like new players to their

sponsors (including Deutsche Bank) before it reaches the public (Nufer & Bühler, 2010). Since

the sponsors know about essential facts before the public, it gives them the feeling of having an

exclusive information advantage.

Question 6. The fans' experience in the sports industry is currently evolving. Due to the rapid

external changes, sports entities have realized the value of enhancing fan loyalty through

engagement. It is common for professional sports organizations to invest in maintaining their

relationship with fans. Teams that understand how to create a personalized can serve them better.

One way that teams can strengthen their fan's engagement is through technology and social

media. Technology and social media platforms have helped marketers overcome the challenge of

enhancing the fans' experience at sporting events.

Technology has enabled marketers to provide fans with sports analytics and statistics

information. Timely updates and data visualization take the fans' entertainment experience to a
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higher level. Fans have a genuine curiosity about detailed sports information. Sports entities can

use technology to create real-time statistics shared on their social media platforms. Additionally,

fans who participate in extra activities like fantasy sports and betting value data can win. For

example, the NFL introduced an online mobile betting app that enables fans to place ingame

stakes against their favorite teams. Technology has improved fan engagement by availing more

data to the fans through technology and social media.

Sports entities can use technology and social media to manage relationships and enhance.

Resources like social media platforms, apps, and websites can be used to reward customers for

their loyalty. One way can be by giving exclusive information on upcoming events to fans who

subscribe to certain platforms. Other loyalty programs can be promotional rewards that sports

entities can give out through digital platforms like giveaways, ticket discounts, and merchandise.

Loyalty programs can enhance the fan's passionate support towards the team because they can

also benefit from the experience. Social media and technology have made it easier and more

convenient to manage fan relationships through online loyalty programs.

Social media and technology can help professional sports organizations enhance the fan

experience through creative content creation. Most teams and sports personalities have invested

in their online presence to stay connected with their followers. For example, Manchester United

is the most followed sports team on social media, with close to 2 billion followers, and this acts

as their sentiment indicator (Choudhury, 2022). Instagram, Facebook, Twitter, and Reddit have

been useful in providing fans with highlights during sports events. Players can also hold

Livestream events on social media and talk to the fans directly, thus deepening connections.

Lastly, technology and social media have enhanced customer entertainment through interactive

gaming. Virtual reality and augmented reality can allow fans to feel like part of a game.
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Interactive games enable fans to partake in virtual participation in online games. For example,

NBA has an AR app that allows fans to take some shots on a virtual basketball hoop. The NBA

ARkit allows fans to turn any flat space into a virtual basketball court that gives the fans an NBA

experience (NBA AR Basketball, 2017). Likewise, smart stadiums provide sports officials with

the artificial intelligence to manage fans' movements in games.

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References

Blanco, D. V. (2017). Sports governance: Issues, challenges and perspectives. Asia-Pacific

Social Science Review, 17(1), 105-111.

Carlsberg. (n.d.). Carlsberg Liverpool FC Beer | The LFC Beer - Carlsberg. Carlsberg.

Retrieved May 6, 2022, from https://www.carlsberg.com/en/liverpool-fc-carlsberg/

Choudhury, S. (2022, January 26). Top 10 most popular sports teams on social media; RCB and

CSK in the top 10 list. TechnoSports. Retrieved May 6, 2022, from

https://technosports.co.in/2022/01/26/top-10-most-popular-sports-teams-on-social-media-

rcb-and-csk-in-the-top-10-list/

Cornelissen, S. (n.d.). Who Bids for Events and Why. Transparency.Org.

https://www.transparency.org/en/sportintegrity

de Nooij, M., & van den Berg, M. (2018). The bidding paradox: Why politicians favor hosting

mega sports events despite the bleak economic prospects. Journal of Sport and Social

Issues, 42(1), 68-92.

Henne, K., & Pape, M. (2018). Dilemmas of gender and global sports governance: An invitation

to southern theory. Sociology of Sport Journal, 35(3), 216-225.

Isaac, L. (n.d.). Sport Industry: Generating Income from Sport. LeoIsaac.Com. Retrieved May 5,

2022, from http://www.leoisaac.com/sportman/sportman08.htm

Lawrence, J. (2014, January 29). » How Would a Weather-Related Change of Super Bowl Date

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Nufer, G., & Bühler, A. (2010). Establishing and maintaining win-win relationships in the sports

sponsorship business. Journal of Sponsorship, 3(2).

Research, K. (2019, June 13). Global Licensed Sports Merchandise Market Research Report,

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https://www.kenresearch.com/blog/2019/06/global-licensed-sports-merchandise-market-

outlook-ken-research/

Schloesser, M. (2021, November). REVENUE LOSSES IN SPORTS: WHY PROFESSIONAL

SPORT ORGANIZATIONS IN EUROPE DO NOT MAXIMISE ON TICKETING

REVENUES. In 25th European Scientific Conference of Doctoral Students (p. 105).

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