UP323 The Squeezed Middle

How is sport impacted by the cost of living crisis?
The answer depends on where you are in the marketplace.
The small global elite of sports rights holders are doing just fine. Billions of dollars in media revenue chases must-see content, from the NFL in the US, Premier League in England, the IPL in India through to the major quadrennial extravaganzas such as Olympics and World Cups.
Likewise, there are clubs and institutions in the lower reaches of the sporting pyramid for whom not much has changed and who cut their cloth according to the local demand for traditional revenue generators such as sponsorship, match day tickets and merchandise.
It's the middle of the market where much of the pain is being felt.
The situation was described in a recent essay by Ben Wells:
'Economic crises tend to cause money to move in one of two ways: to quality or to price. Those in the middle, who are not able to compete on either front, are squeezed.

In the last 12 months, not one major Olympic NGB was able to sign a primary sponsor, with the biggest deal of the year – British Cycling’s tier-two sponsorship with Shell – bringing significant amounts of criticism. In parallel Müller ended its long-running main sponsorship of UK Athletics after seven years. UK Athletics is currently teetering on the brink of bankruptcy.

This isn’t a situation unique to athletics. Headlines in rugby, cricket and the second and third tiers of football report of similar tales of woe – the result of unsustainable commercial models.

And all rights-holders in the Squeezed Middle need to be taking note. Economists predict the Cost-of-Living Crisis will last possibly until 2028, and those unsustainable models – trying to grow revenues in a business built around live events, which are limited by number and venue capacity and whose cost-bases are rising with rampant inflation – are the norm."

Today's podcast is the first in a series created in collaboration with PTI Digital, the strategy and technology consultancy. 

Our guests are Ben Wells and Charlie Simpson.
Ben is CEO of PTI Digital and previously held senior commercial roles at Chelsea FC, Reading FC and Bath Rugby.
Charlie Simpson is a former rugby player turned chartered accountant who moved from EY to Scottish Rugby and leads on commercial strategy for the governing body.

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