The Future of Startups Within Sports
My first start-up, a fantasy sports gambling business, was born out of my obsession with football. The company was based on the work I did at university — my dissertation was titled “Applying the Moneyball hypothesis to football” (I tried to avoid anything too boring in my Economics degree at all costs… It was a struggle). Since then, I’ve maintained an avid interest in the intersection between sports and business, from my own despair at the Clearlake ownership of my beloved Chelsea to excitement in the latest technology powering sports teams/organisations and their accessibility. With this in mind, I thought I’d provide a few of my thoughts and opinions of what the future has in store for the sports industry as a whole.
Firstly, the industry has transformed dramatically in recent years, evolving from local and physical to global and digital. Today, technology democratizes sports content, allowing fans from all over the world to tune into their favourite games in real-time, broadening the reach, impact and potential revenue streams of sports organizations. From live streaming services that bring the game to your pocket to social platforms that offer a digital stadium experience, the landscape of sports fandom has expanded immensely. Data analytics and cutting-edge performance tech have started reshaping strategies both on and off the field. Now, decisions are increasingly driven by data insights — from optimising training and preventing injuries to refining game tactics (some use this more than others… Not sure a computer can tell Sean Dyche how to set up his team…).
As we look to the future, the intersection of AI, virtual reality, and IoT with sports holds incredible potential. These advancements are not merely enhancing sports but are setting the stage for a new era of engagement and performance. However, whilst technology is great and innovative businesses are fantastic… They’re not always great “businesses”… Let’s take a look.
We begin by looking at some of the technological advancements shaping (or being touted as shaping)the sports industry, I think there are 2 main areas:
Athlete Performance Tracking and Analytics: Innovations like wearables and IoT sensors are revolutionising how athlete performance is monitored as well as the use of AI and machine learning to track and analyse in-play performance data quickly. These devices track everything from on field performance metrics to physical heart rate and muscle exertion to sleep patterns and nutrition, providing a holistic view of an athlete’s health and performance. In football, Arsene Wenger was the first to make use of these companies as early as 1996 — if you’ve heard of the “red zone” referring to players’ injury likelihood, that’s a term he coined. OGs in the space like Opta to new-age companies like Catapult and WHOOP are all at the forefront, offering solutions that not only collect data but also provide actionable insights through advanced analytics. However, the major problem I see here is the size and depth of their markets. Opta, initially built to power elite sports team (football specifically), had to evolve into a major supplier for gambling companies. At the very elite level of sport (where nearly all the capital is) there are only a small number of potential customers — the Premier League and Championship only have 44 teams combined yet these are the only realistic potential customers (any smaller clubs simply don’t have the cash). Expanded out into wider sports we are still only talking about tens of customers. Where Woop succeeded was that they made an affordable consumer option… on the B2B side, it’s much harder.
Fan Engagement Platforms: Technologies such as virtual and augmented reality are transforming fan engagement by creating immersive viewing experiences. Platforms like NextVR on META enable fans to watch live games in VR, placing them right in the centre of the action, regardless of their physical location. Additionally, mobile apps and social media integrations allow for real-time interactions during live events, enhancing the communal feel of sports. Further, on the B2B side, there is still a massive gap in the commercialisation of fan engagement in the form of middle men and agencies. IMG, Wasserman, CAA and the likes all do a fantastic job of getting their talent commercial deals however for the large sports enterprises/clubs/teams, there is still a lot of room for improvement on their own social media real estate. There are a few great budding startups out there for this, but no doubt there will be many more. I think this is an area where a B2B player can take significant market share.
I think those will be the bull areas of the with regards to fan engagement and community… What will NOT be are new social media apps or engagement platforms that let you have a chat with a player or speak with other fans (seen tonnes of them, doesn’t work, working with the talent is a nightmare, it’s a strong no from me). META, YouTube etc have won that.
As alluded to above, I believe as a b2b business in particular, the sports industry is one of the hardest to crack…
Scaling in sports tech presents several challenges:
· Market Acceptance: Convincing traditional sports institutions to adopt new technologies can be difficult due to cultural resistance and skepticism about the ROI of tech investments.
· Integration with Existing Infrastructure: Many sports venues and teams have legacy systems in place. Integrating new technologies without disrupting existing operations is a complex challenge that requires both time and technical expertise.
· Competition: The sports tech landscape is highly competitive, with numerous startups vying for a share of the market. Standing out requires not only innovative solutions but also effective strategies for market penetration and customer retention.
· Quasi-Public / PR: Sports companies/target clients in this area have such huge communities behind them that the optics and PR they have to worry about lends itself to being similar to that of a public company. For instance, the first question a sports team/club will ask is “how will it look to the fans?”. This needs to be taken into consideration by any business approaching them.
Long-term Implications of Tech Integration
The integration of technology in sports is set to reshape various aspects and offer more and more opportunities for innovative businesses to thrive:
· Cultural Shifts: As data-driven decisions become more prevalent, the traditional gut-feeling approach of coaches and managers may shift towards more analytics-based strategies.
· Training and Game Rules: Technology will continue to influence training methods and could lead to new rules to accommodate tech enhancements in gameplay or provide opportunities for more companies to have a role.
· Viewing Experience: Technologies like VR and AR, along with personalised streaming services, might redefine how fans engage with sports, offering more personalised and interactive experiences.
The intersection of technology and sports is creating vast opportunities for B2B businesses. These businesses can not only enhance the operational aspects of sports organisations but also redefine the engagement paradigms for fans. However, how much it will cost a business to carve that initial niche and grow laterally is difficult to say… I’ve not seen a startup do it… Yet.
