Elite sports are loved for their close finishes and extremely fine margins. Heartbreak and euphoria are so closely related that the advent of one, almost without fail, summons the other into existence as well – only for another set of supporters. It is for this reason that leading sports organisations have long attempted to analyse every bit of data accessible to them in the hopes of tipping the scales of fortune in their favour. The collection of this data and the attempt of discerning signal from noise are driven by the idea of the knowledge-based view, which identifies knowledge and information as the leading factors of a sustainable competitive advantage.
Spectator sports in the United States alone are estimated to be worth hundreds of billions of dollars and represent a top 10 business market worldwide. Therefore, it comes as no surprise that the literature on sports analytics is abundant. And as abundant as the body of literature itself, are also the applications for sports analytics.
Many analytical attempts have been made to better facilitate and evaluate the performance of athletes and teams. Where there was once the “eye-test” for scouts looking for the next big thing on the football pitches of Europe, there are now q-values plotted along a q-function to derive the Goal-Impact-Metric, which acts as the best currently known predictor of performance in football (Liu et al. 2020).
And where there was once the idea of team chemistry and bonding to form individual players into a well-oiled team, we now have player types derived from different clusters, which are – via regression – related to overall team performance and evaluated based on contribution and fit.
Times are truly changing in the world of elite sports. But sports analytics also find application in more graspable subjects – like the pricing of tickets. Generally, there are three advanced pricing methods discussed in the modern literature. Tiered pricing concerns the discrimination between different seats within a stadium. It involves the creation of seat categories, which are offered at different prices. Variable pricing is all about game categorization and setting different price floors for games of different attractiveness and importance. Lastly, dynamic pricing is a technique in which single game ticket prices are refreshed and re-optimized dynamically and in real time according to supply and demand. All three are shown to outperform traditional and more static pricing models by several percentage points and implementation in real life is becoming more and more frequent.
Sponsoring is another field which is heavily observed by sports analysts. Are all the fancy sponsorships we see, reaching from big tournaments like the world cup to the shirt of our local football team, really worth it? The answer might really shock you: It depends…
Though to get into more detail; generally, sponsorships are positively regarded in the literature. But there are different drivers of the creation and the destruction of value through sponsoring.
Sponsoring firms should always look to find a functional and geographical fit between themselves and the organisation they choose to sponsor. To better illustrate this, we may look at one of the biggest success stories of sponsorship in modern history. In 1968, the unknown American sports drink Gatorade signed a sponsorship deal with the NFL for 25.000USD. In 1983, it became the NFL’s official sports drink and was presented on the side-lines and consumed by players during matches. Today, Gatorade creates billions of dollars in revenue and is owned by PepsiCo. It is regarded as the sports drink for athletes and still, to no surprise, sponsors the NFL.
Consequently, geographical distance is shown to destroy sponsorship value along with the sponsoring of very niche events, where sponsorship can be viewed as intrusion. Another factor is the time-context in which the sponsorship happens. During economic crisis and recession, sponsoring is more often viewed negatively than during more hopeful periods in the fiscal cycle.
Sports analytics can also grant us insights into the future of advertising. Virtual advertising is a form of technology that allows for the seamless insertion of computer-generated images into a broadcast or livestream. These advertisements are not seen by viewers at the actual event, but rather overlay traditional billboards within the stadium or can be placed onto the field or in the stands. Virtual advertising allows for the multiple sale of one and the same advertising space and can be customized and differentiated within countries and regions increasing the efficiency of the advertisement.
The advent of sports streaming services like DAZN and Amazon Prime is changing the sports streaming rights market and virtual advertising along with it. These sites function through recommendation algorithms which create user profiles and further increase the efficiency of personalization and differentiation within the virtual advertising industry. Technology and big data could revolutionize virtual advertising in sports to a point where advertisements are personalized to the account accessing the stream.
To summarize, the accumulation and analysis of data can assist managers with the knowledge to achieve sustainable competitive advantage and facilitate topline growth. Data has the ability of making us aware of our biases and exposing gaps in knowledge.
Regarding ticket selling, the presented methods need should be evaluated by every organization dealing with the sale of tickets, as serious upside potential is rather realistic with good implementation.
Sponsoring should be embraced and good sponsorship fits should be actively searched for. A good sponsorship can make a brand and build relationships with existing and new customer bases much more efficiently than advertising ever could.