AIRmail 11-14-22: Companies Doing Good in Sport...
Plus, Remembering The Words of Nelson Mandela, A Sports Anti-Sponsorship Campaign, Sports Investments Continue to Boom, Will Cavendish find a team for 2023?
Key Takeaways:
Companies Doing Good Through Sport
Remembering The Words of Nelson Mandela
A Sports Anti-Sponsorship Campaign
Sports Investments Continue to Boom
Will Cavendish find a team for 2023?
Last week we discussed the phenomenon of greenwashing in sports, and some of the companies who have been criticized for such behavior. But it's not all bad news. The Laureus Sport for Good Index is a new annual listing of those companies who are doing good for the world through sports. In its second year, the Index celebrates collaboration, innovation, and creativity by brands across the 17 Sustainable Development Goals (SDGs). Determined by an independent judging panel of industry experts, it is the product of a rigorous assessment of brand activities against six key selection criteria – impact, commitment, sustainable development goals, innovation, investment, and commercial viability.
This year’s leading companies included expected players like Patagonia and Rapha, but the list also included several other interesting and perhaps unexpected names among its 29 winners. Nike, Microsoft and Google show up on the list, along with a number of other athletic apparel manufacturers, financial services firms Allianz and Visa, and a few wildcards like water treatment company Xylem and toy manufacturer LEGO. Cited accomplishments range from environmental sustainability practices such as using recycled materials in products and specific carbon-neutral programs to cut down on fossil fuel usage, the promotion of women’s and under-privileged children’s sporting activities, to gender equity programs and financial aid to Ukraine.
It is encouraging to see these kinds of initiatives, even though some might call them greenwashing – and it brings to mind the prescient words of Nelson Mandela, at the initial Laureus ceremony in 2000, “Sport has the power to change the world. It has the power to inspire. It has the power to unite people in a way that little else does. It speaks to youth in a language they understand. Sport can create hope where once there was only despair. It is more powerful than governments in breaking down racial barriers.”
And as the World Cup in Qatar draws near, a “counter-offensive” has emerged in the sponsorship vs. sportswashing debate. British brewer BrewDog started an anti-sponsorship campaign – a public advertising campaign boldly drawing attention to some of the problems in Qatar. Said the company, “We are proud to launch BrewDog as anti-sponsor of the World F*Cup. To put it bluntly, we love football. So join us. Let’s raise a glass to the players. To the fans. To freedom of speech. And two fingers to everyone who thinks a World Cup in Qatar makes sense.” However, the company’s own labor have apparently been less than stellar, and skeptics pointed out that this “ambush marketing” was a pretty safe bet for the company, knowing the consumption of its own products would not be significantly impacted in places like Qatar.
We have noted many times over the past couple years that sport continues to be a high-priority target for financial investors. As Axios recently reported, “Sports is often narrowly defined: you're either an athlete, or you're a fan. In reality, the sports world extends far beyond that — and investors are increasingly taking notice.” Will Ventures, a Boston-based early-stage venture capital firm, just closed a new $150 million fund to continue investing in sports and sports-adjacent businesses. The firm, founded in 2019, has 17 pro sports team owners on board, and an exclusive deal with OneTeam Partners that allows them to leverage athletes to promote their portfolio companies. Not that long ago, the idea of a sports-centric VC firm was a foreign concept. “But as sports grows more intertwined with media and technology, "investing with a sports focus" is now a powerful thesis.” Sports is a major driver of digital media and the streaming revolution: health and wellness, and healthcare technology; the creator economy – some of the leading sectors within venture capital. However, as we’ve said endless times before, while the rest of the sporting landscape appears to be reaping the benefits outside money, cycling’s lack of a professional business structure makes it difficult for the sport to capitalize on this trend.
Nevertheless, investment interest in sports and entertainment seems likely to continue growing, and nowhere is this clearer than women’s soccer, and the unlikely darling of the current era – pickleball. As we’ve noted previously, the women’s UEFA championship was the most watched finale in FIFA’s Euro cup history, and it spurred a bidding war for the upcoming World Cup’s regional broadcast rights allotments. But pickleball – excellently summarized in Front Office Sports this weekend – is one of the fastest-growing sports in the world, and the newly merged Major League Pickleball venture has rocketed to the top of the sports speculators’ must-have investment list. The MLP’s co-ed team format and rapidly professionalizing level of play is likely to make a mainstream impact in 2023 – especially if newly minted team owner Mark Cuban – who made his fortune developing the streaming networks which were the forerunner to today’s on-demand OTT specialty sports content – has any say in the growth model.
There are lessons for pro cycling in pickleball’s rapid ascension into the sporting limelight, and in particular, its investment model, which is drawing in team owners from all corners of the celebrity sporting world. In many respects, the MLP venture and the new National Cycling League share some key DNA. Like the MLP, the NCL has some serious celebrity sports personality dollars behind it, and its coed format disrupts the traditional competition model. But there are also some key differences; one factor is the low barrier for entry into pickleball as opposed to cycling. Cycling’s barrier of entry is still economic – the high cost of racing-quality bicycles. (TeamTrak is similarly hampered by the geographic distribution of velodromes). Pickleball is much more accessible for people to play and understand, and the game is adaptable for older players, as well as skilled and agile younger players. And whereas pickleball is gaining recognition through its celebrity connections, cycling hasn’t hit a similar mainstream stride in the U.S. yet. (This fact was summed up during Saturday’s Trail Blazers vs. Mavericks NBA game when announcer Mark Followill referenced Tadej Pogačar after an explosive Luka Doncic dunk, to the confusion of his broadcast partner, explaining, “he’s a Slovenian cyclist – I was broadcasting for a small audience there.”) But if the NCL clicks with sports fans during its inaugural 2023 campaign, cycling may finally find the new breakthrough audience it needs to sustain growth.
Last week we discussed how the apparent rapid collapse of Team B&B Hotels has left one of the best sprinters of all-time, Mark Cavendish, without a team – and with no apparent sign of a new deal for next year. It seems a failure of imagination on the part of teams/sponsors that Cavendish, even at 37 years old, should be struggling to find a team because his presence would inevitably attract an overwhelming amount of media attention (and marketing ROI) even if he never won another race. However, the situation also illustrates just how much roster-building has evolved in the last few seasons; the premium is now on discovering new talent instead of spending significant team resources chasing yesterday’s winners. For example, just a few seasons ago, the Israel-Premier Tech team spent big money on veteran stars like Chris Froome, Jakob Fuglsang, Mike Woods and André Greipel; nevertheless, they are now facing relegation. Meanwhile, the sport’s biggest races have been consistently won by young or previously unknown stars (e.g., Tadej Pogačar, Marc Hirschi, Remco Evenepoel, Juan Ayuso, and others). Cavendish will likely find a landing spot for 2023 (there is a good chance it has happened already but simply hasn’t been announced yet). That said, it will likely come with relatively modest compensation, and most importantly, no guarantee that the team will back his bid for stage wins at the Tour de France, assuming it even gets invited. And to be brutally honest, Cav needs a start at the Tour more than most teams need him at this point; the longer he goes unsigned, the weaker his negotiating position. In cycling – so the saying goes – there are no gifts.