In modern sports businesses, the need to diversify the product offering and maintain profitability can have seriously detrimental effects if there isn’t a concerted effort to ensure the core business is looked after.
The core business of any sports team, organisation or club is the sport itself. It is the one thing that should be central to ongoing strategy and that should be continually improved, even as part of attempts at diversifying the product offering and business aims of the organisation.
Facility Farce
To give you a common example across the globe and one that I have seen first-hand, sports clubs and organisations in Australia often overextend themselves when it comes to facilities.
In this particular instance, a professional sports club was moving into a new multimillion-dollar facility. This was great news for the club and its stakeholders, especially the supporters. The directors, keen to inject some cash into the club and create a sense of community, tried to use the space to include some new business opportunities, which included some shops, an education branch, a swimming pool and crèche.
Unfortunately, they didn’t really have the knowledge, expertise or financial clout to pull this off. It was poorly executed and actually ended up costing them money. What’s more, the mess they made had an impact on the community and the support for the club.
Rather than galvanise their position and increase their profile, it had the exact opposite effect, to the point where their core business was affected. In this example, and in many similar situations, the club simply assumed that, by virtue of having the facility to do these things, they should just go ahead and do them.
They didn’t do the due diligence to ensure that all the staff had core competencies, and they didn’t strategise correctly to ensure that the whole suite of offerings were introduced in a timely and cost-effective manner. They could have outsourced the management of each business or simply rented the space to existing companies who know what they are doing, i.e. with it being their core business.
Walk Before You Run
Sports businesses trade on emotion, and they can rightly use their influence to create a host of alternate options for generating revenue. What they cannot do is run before they can walk! Success in one area of business doesn’t mean you will instantly be successful in another area.
Success
To give you an example of a club that is doing it right, a second-tier rugby-league club has created an annual food and beer festival that has become so popular it finances a fair portion of the sporting calendar for them. They built the event up over time and, because it is an annual event, it only pulls their focus away from the club once a year.
Not only that, the success of the festival further cemented their place in the local community and has increased their following. Gate receipts are up, year-on-year. The event successfully introduced new supporters to the club, many of whom then became members. The club clearly understood its target market and found a way to reach them within the local community.