World Football Summit speaks exclusively with Seven League’s Richard Ayers about the third digital revolution and its impact on sport. This interview features as part of the latest edition of WFS Digest, our new insider’s guide to the latest and most relevant thoughts and practises from within the football industry. You can subscribe to WFS Digest HERE.
“We’ve seen this before… a bunch of people excited about something that they don’t really know what it is yet, and which relatively speaking isn’t too difficult to do. What’s difficult is to get to the point of being a successful business.”
Richard Ayers, a former journalist, is an international authority in sports fans engagement through his work first as Manchester City’s Head of Digital and afterwards the creation of Seven League, an award-winning consultancy and agency management now part of IMG. He never liked football too much, ‘but now, after so many years’, he holds season tickets at his local club (Arsenal): ‘My wife and I love the fact that our neighbours have seats a few rows behind us and how on match-day everyone walks down the road. It is beautiful. I now don’t just intellectually understand football’s power, but I can also emotionally understand it too’.
His explanation of the process by which sports properties have lost the battle for the audience against the GAFAs is a must-read lesson for anyone interested in the sports industry.
World Football Summit: The pandemic has contributed to a very transformative moment for the sports industry, which places companies like Seven League at the heart of this second (or third?) digital revolution. However, communication and content initiatives are always among the first to fall in times of crisis. What has been the overall effect on business these two years?
Richard Ayers: It has been a strange time indeed. In the first year of the pandemic there were a number of times that we saw clients go into crisis mode. There were upsides, because people needed digital more than ever before, and they accelerated their transformation – which is broadly a positive thing. However they also cancelled contracts left, right and centre, because they needed to cut costs. It was really fascinating to watch different organisations react in different ways.
I’ve been doing this for 11 years now, and during the first five years it was all communication and marketing. Those guys really understood that the internet was powerful and that something could be done with it, but the commercial directors resisted for those five years. Then, for two years, they started to believe they should pay some attention, as it could make them some money (although some didn’t really understand it). In the last few years they have been asking how they can make more money and revenue from it. The shift has been very positive for the Seven League business; digital is no longer a separate weird thing done by the communication guys – it’s now right at the core of a business strategy.
WATCH: Ayers featured alongside Sir Martin Sorrell at WFS Europe
WFS: The facts are there for everybody to see… Sorare, for instance, has become the fastest startup in history to reach a unicorn valuation in France (in less than 3 years). Socios is UEFA’s global partner.
I lived through all the ‘dotcom’ days back around 2000, and people have lately been describing me as ‘the voice of reason’ (which makes me worry)… But I do feel like we’ve seen all this before. A startup manages to get a bunch of people excited about something that they don’t really know what it is yet, and which relatively speaking isn’t too difficult to do. What’s difficult is to get to the point of being a successful business.
Some sports organisations have to sign the big deals with these startups , because of the stress football has endured with COVID-19. Their responsibility, even if they think it might not work in the long run, is to take the cash and use it to their benefit. They’re probably not thinking about the long term; the commercial guys often only focus on the short term , so we have the risk of getting excited by short-term opportunities and jumping in too early. I say to them: let’s not do what we did with social media and wake up to realise that they have all the audience and all the money.
WFS: As of 2022, what percentage of clubs would you say have really made money with social media after a decade of work?
Ayers: 50% of sports clubs have made some money, but only 15% are in profit from social media. In football that’s probably more like 5%.
If it’s direct e-commerce, then of course it takes you straight to a purchase – the American’s do that a lot, they sell a lot of merchandising through social. But how do we count ticket revenue, after a lot of the promotion is done on social? What about sponsorship revenue, if it’s heavily predicated on a social media profile? Either way, football is still lagging behind the American sports, which are pulling that number up. Looking at just football, it’s still small numbers.
It’s a very complicated calculation, however; because, for example, what is the average revenue per user? If you are looking at that, you then ask the question if getting them in my database is worth five dollars and the lifetime value. You end up with a complicated equation because social media is the wide end of the audience acquisition funnel and the impacts are much wider than just direct revenue.
#WFSLive have got the band back together! @LuisDV, @1PeterHutton, @RalfReichert, @SportByFort are on now with @richardayers on sport's fightback from Covid-19. Richard has actual yellow and red cards to keep everyone in check… 😬https://t.co/tT7elZBb46 pic.twitter.com/aZeOLnct7c
— David Garrido (@SkySportsDavid) July 7, 2020
WFS: After this recent wave of professionalisation within the football industry, where clubs have been buying talent to improve their business performance and fan engagement strategies, are properties already prepared to enter the metaverse?
Ayers: No. It’s as simple as that. I have been asking them all for ten years now, after having somehow led the way with Manchester City, “why did nobody catch up, move fast and even copy what I did there?” There’s no point in doing it now, though, because it has moved on, because when I’ve worked with clubs like Tottenham Hotspurs or AS Roma I see the landscape has changed so much in the last decade.
It’s all about the fundamental digital DNA. It’s the DNA of the organisation: understanding the attention economy and technology focus.
When we work with sports organisations, it’s very much about helping them have the capability to think and behave like a media business. That means that we start by auditing them and thinking about their strategy, but also teaching them how to understand the strategy – so that when the next crazy tech thing comes along, they can react more quickly. Otherwise it’s not for the good of sports, which is what a lot of consultants and agencies will do: they will solve the problem in front of the clients, fully knowing there will be another problem in five minutes’ time.
I think that much of the success of Seven League has been not behaving like that, and the good reputation we have comes from people knowing that we will look at the whole business and try and help. We look at it as a whole, not piece by piece to take consultant or agency fees.
WFS: How would you describe in one sentence that major accomplishment at Manchester City that the rest did not learn from?
Ayers:The organisational change and the digital DNA were the key to it. The brand and team were on the rise, and although this is ancient history now, the support for what we were doing from the management team, from the most junior all the way up to the CEO and owners, was crucial. Manchester City still has a reputation for being the most innovative football club, and that is because of the agenda we set 10 years ago. Some organisations have followed that: look at what NBA did with Top Shot last year: by being forward-thinking, seeing an opportunity, getting onto it early and having digital DNA means you are the first out of the gate and make huge progress. Now, in this world of blockchain and crypto, brands will trust the NBA more than they may trust others, because they were the first through the door.
WFS: So your precaution towards the possible crypto bubble is compatible with the advice to get into the metaverse as soon as possible…
Ayers:In these cases, whatever the new technology is, it is a balancing act of understanding if there is a really fundamental opportunity. If you are talking crypto, blockchain and metaverse, I really fundamentally believe that there is a huge opportunity. However, that does not mean that you jump at the first thing that comes your way. It is about having the maturity to make the careful and right decisions. Sometimes people think about the American phrase ‘Fail fast, fail better’, but in Europe people are scared by the word ‘fail’, so I say ‘Test and learn’. Either way, that does not mean you can do random stuff and it’s ok if it does not go well; you do it fast, strategically, with maturity, knowing that if it goes wrong, you learn from it.
THROWBACK: Ayers featured at WFS18 speaking on the digital transformation in sports
WFS: Is the sports industry really facing its greatest challenge in the last decades?
Ayers:There is a really important change going on, or at least an opportunity for change. In Seven League we call it the Third Age. The First Age of sport was amateur sport, with people playing for the love of it, social cohesion, etc. The Second Age was ‘Let’s sell some tickets, let’s commercialise, let’s sponsor, let’s sell TV rights’… And we have pushed that as far as we possibly can; we have rampantly commercialised most of sport. So the third age is ‘Let’s just swing the pendulum back a bit and get some better balance’, because at the moment the money is going into the same few hands, and football can do a better job at distributing wealth and gaining a more healthy balance, both for business and society.
WFS: How do you see the European Super League in this context?
Ayers: The Super League’ challenges of last year are not going away. ESL was not a crazy new idea – it has been around for 10 years, and it is going to come back again. If you invite very rich billionaires into your party and they have a clear sense of commercial desires and need return on their investment, then it is not really a surprise. I was not surprised, even though everybody was surprised by how they did it; but the desire from them is in a way very reasonable.
A senior rights holder recently said to me: ‘Our strategy is that we sit back and let the tech companies do their thing, and in 10 years time they will have to come to us for the rights.’ The problem is that these tech companies that own and build the audiences do not care – they do not need you. They will go and get the audience through games, social, messaging apps, etc., and you are going to become irrelevant then. Sport is damaged too, because in 10 years time these tech companies will not need you, and there will be no cheque.
WFS: Do you think that automated broadcasting might save less popular, midsized sports from financial breakdown?
Ayers: I like what MyCujoo did because of the transfer of the data back to the rights holder and the monetization as a group. I also like what Recast is doing; it will handle the streaming service for small rights holders that cannot monetize themselves, but can do their own filming. I think there are some good and interesting projects that are helpful, but I still worry that the heads of those organisations feel that signing up to one of those services is a tick in the box, so they don’t have to worry. I am interested to see what happens with FIFA’s ott streaming service which is said to be almost out of the box. UEFA.TV as a service was actually really successful, and they had some really good growth numbers. As always, the change will happen with the small and the medium sized, and then it will eventually have a bigger impact. As ever, the good ones will be fine and thrive, but the others will not – and it could be very sad for sport.
WFS: So content is no longer ‘the only marketing left’?
Ayers:Definitely not. Content and marketing merged 10 years ago, and it has just taken this long for some people to understand that this is the same thing. The data behind it is the real battleground. Companies need to have content and data, and I am very happy to say that now we have become part of the IMG Endeavor we have that. We used to be able to do the consulting, the content generation, the publishing, the data collection… But we could not commercialise, because we did not have that capability and we could not do the scale, as we were a relatively small operation based in London. Now we are part of a much bigger organisation, with much more data coming in and capability to monetize, so we can go to our clients and help them with the whole journey,. I fully believe in the power of sports to help society and I fully believe that IMG can do that, as can Seven League now that we are part of it. I really believe their vision to help lead sports as we go into what I call this Third Age.
This interview features as part of the latest edition of WFS Digest, our new insider’s guide to the latest and most relevant thoughts and practises from within the football industry. You can subscribe to WFS Digest HERE.