5 Ways Mass Participation Sport Can Survive COVID-19

Diccon Loy is Director and Founder of Participation Sport Ltd

COVID-19 will have significant impact on us all. Whether health-wise or economically, to ourselves and our loved ones. So, our first thoughts are to everyone affected by Coronavirus and to the amazing army of care workers, key workers and everybody leading the fight against this virus. This will end - and we come out stronger. 

Once the virus is contained and controlled, we will start to explore the economic remedies. Here, I take a longer-term look at the likely impact of and possible remedies to the COVID-19 crisis on one sector in particular. Coronavirus has stopped the mass participation sport events (MPSE) industry in its tracks.  Every sector of business has or will feel the impact of the shutdown. MPSE was one of the first sectors impacted. By definition, our events bring people together, which of course is something currently being actively discouraged. 

Participation sports events are being cancelled, postponed and shelved. Nobody is immune – from the Virgin Money London Marathon to parkrun, all events, regardless of size and importance are closed. Some organisers or events may not be able to endure the crisis and continue in the race. However, this is a marathon, not a sprint, and with change, there is reason to be optimistic. So, here’s 5 ways MPSE can survive COVID-19:

1.     Entry Fee Increases – This may be counter-intuitive at a time of likely recession and every MPSE business seeing their income dramatically decrease, but please bear with me. Entry fees need to increase, and in some cases dramatically.

The industry needs to accommodate all price levels and when charging higher fees, it needs to deliver on event experience. The MPSE industry in the UK is dominated by one event in particular – The Virgin Money London Marathon. The London Marathon is an incredible fundraising event (£1bn charity fundraising) and unforgettable event experience. This must-do event is attracting exponentially higher applications each year. Ballot entries have increased from 173k in 2015 to 458k in 2020. As amazing as the event is, it may have inadvertently had another impact on the wider UK industry. The insight below is taken from academic research that I conducted last year.

Now is not the time to explore the London Marathon charity model or entry policy, but let’s just say that the event is incredibly cheap to enter - £39. However, not many non-competitive runners get the chance to pay that amount, and those that do, have lucked out in the ballot. The chances of a successful ballot application have fallen from 6.9% in 2013 to just 4.2% in 2019 (Haswell 2018).

Is this low entry fee enabling all interested entrants from entering by removing or lowering a financial barrier? Possibly. However, there is arguably a wider impact that the London marathon’s entry fee policy has on the UK’s MPSE events. Events that should and would like to charge higher entry fees feel they can’t as the London Marathon entry fee is an industry benchmark, which can be exceeded, but not by much!

This is one of the reasons why the UK MPSE industry has such strange anomalies. £46 to enter a half marathon, £55 to enter the marathon in the same city. Almost double the costs of road closures, yet only 20% increase on entry fee. There is some evidence that the VMLM entry fees may influence the price of domestic marathons:

·      Average entry fee of the UK’s 10 biggest city marathons is £54 (£15 or 38% higher than the premier event in the territory – the London Marathon)

·      Average entry fee of Abbott World Marathon Majors is £132 (almost 3.5 times the entry fee of VMLM)

·      Global major city centre marathon average entry fees: USA (£150), Japan (£95), Germany (£86), France (£70) and UK (£54)

Potential organisers could be deterred from entering the market due to the profit potential from lower entry fee levels: 

·      Out of the UK’s 33 largest cities, just 11 have city centre marathon events

·      In the USA 32 out of the country’s largest 33 cities have city centre marathon events.

This is all on the backdrop of a growing marathon industry in the UK. The 10 largest marathons in the UK in 2019 attracted 34% more participants than in 2015. There is evidence of a growing demand for large, premium city centre marathons, but the entry fee has not been able to grow alongside this increased demand, thereby stifling growth of events and the sector.

The example of Ironman is interesting. £450 for an entry, not including insurance or registration fees. That’s £150 per sport. You’ll probably be struggling to name many single-day sports events that you’ve paid £150 for. The investment is in the journey, not race day. In some ways £450 to be able to “brag for the rest of your life” could be incredible value. The brand value of Ironman is significant and that’s why the property has been sold for $650m to Wanda and most recently for $730m to Advance. Whilst none of us would not want all MPSE’s to be Ironman clones or increase their fees to such a level, the message here is that you can increase entry fees. The level of entry fee increase should be down to a case of business strategy, level of event experience and consumer demand, NOT what the other guys charge.

The result of entry fee increases needs to be considered. Consumers have constraints on their own disposable income too. Maybe there will be a move towards participants entering fewer, but more high-profile events each year. Maybe the result will be a ‘squeezed middle’ – the high-cost, high-experience and the free and low-cost events booming, whilst the mid-market events struggle?

2.     Commercial Partners – need to be enticed by new thinking, new opportunities and not the same old rights that have been sold before. Commercial partners are a key ingredient in the mix for a successful major MPSE. There are a number of examples of long-standing commercial partners supporting high profile UK events, many of which are soon coming to an end. These partners have been incredibly important and influential in the growth and development of these events and sports.

Whilst these brands need to be lauded for their contribution, the brands themselves need to take care not to exit at the wrong time (at a time of crisis, e.g., now), leaving the event (or sport) in peril. In reaction to the wider COVID-19 crisis, outside of sport, there has been good and bad examples of brand responses. Consumers are aware and watching, and in sports the UK public is incredibly passionate, knowledgeable and invested.

Now is the time for brands to show real leadership, support of an active lifestyle and deliver enhanced MPSE experience. Brands that continue to, or start to support sport, events and its participants, and do not desert in the hour of need, will be remembered fondly, revered and rewarded with customer loyalty and brand-love.

However, events must not rely on the altruism of brands to support them through their time in need. The days of badging or simple naming rights are long-gone. Rights holders need to re-boot their offer, really understand the partner and innovate to create new enhanced opportunities for brands to connect with their audience. MPSE are competing against a myriad of other opportunities to engage. It is a current failure of the industry that more brands are not being attracted to the sector. The value of rights in MPSE is still largely unmeasured and not fully understood with cross-industry research. There needs to be far greater levels of industry-wide collaboration, insight and research.

Brands will be ever-more demanding and rightly so, if we want them to invest their increasingly scarce funds.

3.     Charities – A key partner and revenue source of MPSE is charities. There is evidence of the charity sector struggling with the COVID-19 crisis and they will need the future fundraising from MPSE more than ever.

The charity-model, originated in the mid 1990’s was created by the London Marathon is now much-copied. However, this model only really delivers charities a return for a few, select sell-out events. There needs to be further innovation in this area. Even if an event is a sell-out, the charity model only really kicks in after sell-out, so the window to recruit and fundraise can be very limited in all but the most in-demand events.

Rights holders will need to innovate more to ensure their partner charities can generate a return on investment. Equally, charities themselves may need to become less risk-adverse and invest in and develop their own properties.

 

4.     Stakeholders – are critical to continuing and creating event opportunities. The significant value, economic impact and multiplier effect that MPSE can bring to a city will hopefully be more recognised post COVID-19. For some events to continue, there may be a need for flexible terms with venues or city councils.

Everything has changed with the Coronavirus shutdown, so no-one, not even city councils, land-owners or iconic venues can expect identical returns from events over the next few years. Excellent stakeholder relations will be needed to continue to gain permissions, negotiate terms and host events. Many MPSE’s provide important regional identity as well as economic impact, so a partnership approach is vital for events to thrive and survive.

 

5.     Business model innovation – This is an area that only the MPSE industry (or new entrants) can address. The three events mentioned in the above are all fantastic examples of business model innovation – parkrun (free, community-led), London Marathon (creators of the charity model) and Ironman (high-end, higher price than any other events). It comes as no surprise that future business model innovation is likely to need to be tech-related. Tech has not even started its warm up!

If the COVID-19 crisis has shown us anything, it has brought digital to the fore. From Joe Wicks live streaming simple workouts to a million people a day on YouTube, huge increases in online searches for home exercise equipment (up 162% - Social Media Today) or the genius of Peloton. The latter announced today the suspension of all live broadcasts, but their back catalogue should be enough to keep their growing community engaged.

Over the past fortnight MPSE operators seem to have all suddenly discovered virtual events. But only real insight, investment and understanding of the area will result in the development of a scalable, long term asset. These assets should be capable of being seamlessly built into the live event experience and ultimately add value to brand partnerships and participant experience.

I have little doubt that the next business model innovation in MPSE will soon appear - necessity is the mother of invention. The reason for publishing this article now, rather than as we come out of lockdown, is that we as an industry now have time to reflect, learn and connect. And be ready to develop game-changing innovation.

Whatever happens following this very challenging time, MPSE will continue to be created, evolve and be an important part of our lives. Afterall, we are an endurance business.

Some of the research referenced above is available on request

 

 


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