Introduction
The Sports Consultancy was founded in 2006 and since then our team have been fortunate enough to provide specialist management consultancy, commercial and legal services to the world’s leading and most innovative major events in the sport and entertainment sector as well as the governments, brands, retailers, venues, broadcasters, promoters and investors who form part of the sector’s critical ecosystem and supply chain.
During that time, we have advised on, negotiated and contracted well over $1bn in rights. Whilst much analysis has been done on three of the sector’s most significant commercial relationships – namely, broadcasters, sponsors and licencees – very little analysis has been provided on what we believe is one of, if not the, most important and most overlooked investor in sport: government. Hosts are the most direct beneficiary of a major event coming to town with substantial numbers of event visitors spending significantly over prolonged periods, substantial destination promotion in international event media and the potential to stimulate positive societal and cultural change – including improving public health. For these benefits, hosts have been prepared to invest.
In the first half of this decade alone the largest 5 events in the world by visitor numbers/spectators (World Expo 2020, Winter Olympics 2022 and Summer Olympics 2021 and 2024, UEFA European Championships 2021 and 2024 and the FIFA World Cup 2022) will, by our estimates, invest over $244bn in combined capital and operational expenditure. By comparison, those events will earn an estimated $25bn in broadcast and sponsorship revenue in respect of the same period.
Before a large increase in broadcast revenues in 2019, the principle revenue source of the world’s most valuable global sports series, Formula One, was host government investment. In 2018, revenue from host investment was $617m (34% of total revenue) as compared to broadcast revenues of $604m (33%). In 2019/20, host investment still makes up 30% percent of the organisation’s total revenue, double the revenues generated from sponsorship.Our business was built during the last great recession as a result of the financial crisis more than a decade ago. We learned then how important public sector investment was in stimulating the economy (the sports and entertainment sector included) long after private sector investment had faded away. It was then that we decided to make the relationship between major event and government one of the specialisms of our business.
Now we face another global crisis caused by the COVID-19 virus and, in all likelihood, a deeper and more serious recession will confront us in the future months and years. The economic, political and cultural impacts are likely to be profound. The central thesis of this report – surveyed before the COVID-19 crisis in 2020 – is unchanged. It is that:
a. the relationship between rights holder and host is very, very important to the sports and entertainment sector, and that
b. it is not well enough analysed or understood.
It feels to us that it there is, now, a huge opportunity for the major events industry and host governments to reset their relationships as the market returns to a “new normal” post COVID-19. To a greater extent than ever before, major events will have a huge role to play in our recovery in economic stimulation and boosting tourism, encouraging and inspiring physical activity and improvements to health and, as sport and entertainment has always done, providing diversion. Or even, at its at its most basic level, providing the thing we miss most at our darkest moments of ‘lockdown’: social interaction on a mass scale.
Government investment will continue to play a crucial role in investing in major events. Restarting with a clearer idea of each other’s needs and requirements as the world gets back to a degree of normality seems, to us, an urgent priority.
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