According to a recent study released by Dr. Lisa Neirotti, a professor at George Washington University, travel sports or “sports tourism” is an $8-billion industry that accounts for 14% of all tourism. As a parent with two children who competed at the national level in high school, a good share of our time and household income was spent on traveling to tournaments around the country. But sports tourism doesn’t stop with youth sports. The adult travel sports segment is growing too as seen by record numbers at regional marathons and tennis tournaments around the country with many adults traveling long distances to compete.
Sports Club Advisors believes there are 10 trends that will affect the future of the travel sports industry in 2017 and beyond:
#1 – Facility Development. Designing and building a “premium” facility is becoming increasingly important to make the experience memorable and enjoyable for all participants, from athletes to spectators. The recent development of premier indoor and outdoor soccer facilities around the country is evidence of this.
#2 – Ownership Structures. In the past local communities, sports commissions, or counties have financed, owned and operated facilities. However, increasingly, we are seeing that well-run privately operated sports facilities create better overall experiences and are more successful. We expect more public-private partnerships to develop over time.
#3 – Social Media. Social media is not just for marketing events. It has become a tool to provide real time updates and highlights during events, changes in schedules and VIP sightings. Due to flexibility, convenience and cost, apps have replaced the printed flier or guide.
#4 – Volunteers. Many events are run by a combination of paid employees and volunteers. A pending lawsuit filed by a volunteer alleges she should have been paid for her work at a sporting event. The outcome of this case could have massive implications on the way events are organized and staffed, not to mention the economics of sporting events.
#5 – Partnerships. We are increasing seeing groups partner to create a world class sporting venue. Public private partnerships have been around for a long time, but we are now seeing partnerships between owners and concessionaires, service providers, sponsors, sports equipment manufacturers, etc. We expect this trend to continue.
#6 – Sponsors. In the long-term, sponsor involvement is more important than a sponsor’s money. It is arguably more valuable to have the Chicago Cub’s name associated with a baseball tournament or camp than to have their financial support. Through well planned involvement, the sponsor will get more out of the experience and so will you. Get to know your sponsors and let them get to know you before you ask for money.
#7 – Bid Fees. Host cities are less willing to pay bid fees, and are instead looking for a financial partnership with event organizers. This shared risk-reward model is becoming more common every day. In addition to diversifying risk, many host cities want a share in the financial results (just the upside) of the events they host.
#8 – Housing. Securing adequate hotel space for events and negotiating rebates and commissions with hotel operators is likely to become more of a challenge. At least one major hotel brand is exploring capping commission and rebate programs. The challenge of protecting rate integrity and of tracking room blocks and rebates (especially in smaller communities) may force the industry to revisit how housing is secured for travel sports events.
#9 – Helping Others. The most successful events have a charitable side to them that make participants feel good about competing. From charity runs to playground clean-ups these events do well by helping others. The question is, “How can we engage our target market and create a positive impact on our community.”
#10 – Creating Experiences. The NCAA Women’s Final Four slogan, “It’s More Than Three Games” says it all. Athletes, young or adult, and spectators at events want their trips to be an experience for the entire family. That means event organizers need to plan supplemental activities for family members to do (apart from the sporting event or competition) that will create memories. This is equally true for world-class running events to youth travel gymnastics tournaments. The more you invest in creating a memorable experience for all participants, the more successful your event and facility will be.
About the Author: Rich Jackim is a licensed attorney, an experienced investment banker, a sports industry entrepreneur and the managing partner of Sports Club Advisors, Inc. Sports Club Advisors is a boutique mergers and acquisitions firm that provides financial advisory services to clients in the sports, fitness and leisure industry. Rich may be reached at email@example.com.Read More
When it’s time to grow your fitness business, how you grow is important. There are two ways to grow your business: organic growth and growth through acquisitions.
Organic growth basically means doing what you currently do, just doing more of it or doing it better. That means increasing the amount of the products or services you sell. You can do this by fine tuning your marketing and operations, or entering new marketing by introducing new products and services or opening new locations. This is how most businesses grow. It takes time and effort, but it is tried and true. The only risks are those that are inherent in operating your business.
Growth through acquisitions, on the other hand, is buying companies and consolidating them into your own. It can be a good way to rapidly expand your business. It sounds easy, but a famous study at Harvard Business School showed that almost 50% of acquisitions do not live up to the buyer’s original expectations. So what determines a good acquisition from a bad one? How to you decide if it makes more sense to buy another club or business, or just start one from scratch? Should you adopt an acquisition strategy just to get bigger, or are there other strategic objectives to consider?
These questions lie at the very heart of every CEO’s decision on how to grow his or her business in a way that creates value for the company’s stakeholders – its owners, its employees, and its customers or members. While buying companies may sound simple, ensuring that you buy the right company is still as much art as it is science. When you acquire and merge two companies together, the result must be greater than the sum of the parts or the acquisition does not make sense.
A study published in the Harvard Business Review years ago concluded that successful acquisitions must do at least one, but preferably two things.
Eliminate Redundant Expenses
The first factor is an elimination of redundant expenses. What this usually means is that the acquisition or merger allowed the combined company to reduce costs. The largest of these cost savings are usually in the form of reduced payroll or reduced headcount. When two companies are combined, they typically don’t need as many people doing the same jobs. The second biggest expense reduction comes from the fact that the combined companies don’t need the same number of offices, warehouses, factories or retail locations. So rule number one is be sure the proposed acquisition will reduce your overall cost structure and enhance your margins.
Gain New Know-How
The second factor is a transfer of knowledge. Each company has its own proprietary knowledge base or skill set. Some companies have a competitive advantage over other businesses in their industry because they have developed proprietary products, a unique service models, an excellent training program, superior marketing or purchasing program, or some other skill or knowledge. When a company acquires another company, this knowledge or skill is an “off balance sheet asset” that is a big part of the value of the acquisition. The transfer and integration of these skills, requires a lot of work and careful thought, but is a major factor in whether or not the acquisition is successful. So rule number two is to be sure the acquisition you are considering brings some unique knowledge or competitive advantage to your business.
In the world of mergers and acquisitions, these factors are referred to as “synergies.” In our experience, growing for growth’s sake alone does not make sense. Growing to capture synergies is the key to growing through acquisitions. That said, one of the biggest mistakes buyers make is to underestimate how long it will take to see the benefits of these synergies.
Consider Impact of Culture
The largest obstacle in the realization of these benefits comes from cultural differences between the two companies. The stronger a company’s culture, the harder it is to assimilate a new one. In our experience, when culture and strategy clash, culture always wins, so buyers need to invest a lot of time and effort to understand their culture and the culture of the company they are thinking of acquiring to see if the cultures are compatible. Understanding and quantifying the synergies of a possible acquisition and helping to determine if the cultures are a fit are the keys to making a successful acquisition.
So, in short, when deciding whether to pursue an acquisition growth strategy, be cautious and get good advice from knowledgeable experts. Acquiring another company can be a transformative event for your company when done well and with proper thought. However, without a careful and objective process in place, it can be a disaster.
Rich Jackim is a partner at Sports Club Advisors, Inc., a leading mergers and acquisitions firm that serves the sports, fitness and leisure industry.Read More