Can the sports business be cautious AND bold in 2022?

by Shawn Quill, KPMG U.S. National Sports Industry Leader

Most sports business executives are optimistic about 2022 regardless of team performance, as revenue continues to be significantly impacted by other factors as well.

Over the last year, KPMG has regularly gathered professional sports team CFOs from the NFL, NBA, MLB, NHL and MLS to explore struggles, share solutions and exchange insights across the sports industry.

Most sports CFOs are hopeful but cautious about potential headwinds. Concerns vary. While NFL teams’ confidence is buttressed by the new TV contract and collective bargaining agreement, MLB teams are facing the current player lockout with trepidation as spring training and the 2022 regular season loom. Indoor hockey and basketball face more health risks than open-air sports.

Common concerns across the industry include several factors, such as the challenging labor market, cost uncertainty due to rising inflation, fluctuations in season tickets as fan behavior changes, and constant adjustments to evolving COVID conditions and their impact on fan attendance.

In the face of these obstacles, almost every pro sports team has made strategic adjustments over the past year to bring fans back to in-person games. From cashless transactions and mobile ordering to gate and security screening enhancements and COVID-19 protocols, technology has been central to a more efficient, safe and improved fan experience.

Despite these enhancements, many teams have acknowledged their difficulty in obtaining pre-pandemic levels of fan attendance and maximizing capacity. Some fans have become more comfortable watching from home. With fewer people in downtown areas, more remote workers, reduced travel and entertainment, and declines in group sales, there are new challenges to filling stadiums and arenas. Teams are examining even more closely the factors generating high and low demand in their dynamic pricing models such as game day or time and opponent popularity. They are seeing more volatility in attendance between “hot” games vs. “cold” games than pre-pandemic times.

Overall, executives are optimistic that fans will continue to come back as the live experience cannot be replicated. A positive fan experience is crucial and has long been a top priority for pro sports teams.

One hurdle to an outstanding in-game experience is the current labor shortage. At the moment, the battle for game-day and seasonal labor is the number one issue facing sports executives. It impacts every aspect of the business, including lines, concession stands, service quality, team operations and even back-office support. With strong competition from other teams and industries, many sports teams are accentuating the intangibles and providing incentives to secure staff. Executives are thinking about creative ways to enhance employee perks and benefits, noting that in some cases the allure of working for a sports team has lost some of its luster.

When teams have been able to bring fans back, transitioning to cashless and mobile ordering has increased per capita tabs as fans buy more food and merchandise. Enhancements to fan loyalty programs, such as interconnecting technology systems that share fan information, concession pick-up and in-seat delivery, could further boost revenue.

Teams have been working to increase fan engagement outside game day through fan incentives, multichannel communication and celebrations of team performance and historic milestones. These measures are targeted to convert ticket sales to fan attendance. Many teams have experienced an increase in no-shows for games, highlighting the need to encourage fans to redevelop the habit of attending games.

Amid all the challenges, there is a lot to be excited about in 2022. Sports team executives believe that fan attendance and engagement will continue to rebound, and they are hopeful for a decline in COVID-19 cases. To take their business to the next level, forward-thinking and strategic leadership should make the most of developments such as legalized sports betting, new media rights deals and investments in stadiums and practice facilities. New areas of industry growth such as sports betting have massive potential, and we’ve only seen the tip of the iceberg. Expect to see more bold moves in sports in 2022.

To arrange an interview with KPMG’s Shawn Quill, please contact Mike Alva. You can read more KPMG insights into the sports industry here

Media Contact

Mike Alva

Mike Alva

Director, Corporate Communications, KPMG US

+1 925 878-5488

 

 

Shawn Quill

Shawn Quill

National Sports Industry Leader, KPMG US

+1 201-505-3565

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