How sports and entertainment merge – Economy

How sports and entertainment merge – Economy

Supposedly three million tickets could have been sold, so great was the interest in the first regular game of the National Football League (NFL) in Germany last November. After the successful premiere in Munich, there will be two NFL matches in 2023, probably in Frankfurt. The sport is booming in this country; RTL has just secured the TV rights for five years. The US league turns the big marketing wheel, even with the Shrove Monday parade in Düsseldorf, an NFL motif car drove along. Football is played in physical education classes in 20 Hessian schools. Sponsored by the US League, but to the chagrin of the GEW union, which suspects it is purely commercial. After all, it’s not just about developing a sport, but also about selling tickets, streaming subscriptions, equipment, merchandising, marketing and advertising.

Sport is a mega business and that is changing. “Sport used to belong solely to the athletes and the clubs,” says sports manager and investor Marcus Höfl. “Today, however, the interface between sport, culture, consumer segments and regions is more important than ever.” In other words: the pure competition, the trappings, the staging, entertainment and lifestyle all mix. And at the same time, “digitization and the associated internationalization are opening up completely new economic opportunities,” says Höfl. A development in which he and some business partners want to be a part. You launched the German-American fund Cerro Capital. Around 250 million euros are to flow into sports investments that have gone beyond the start-up character and now need growth capital.

On course for growth

“Sport and entertainment are crisis-proof,” believes Höfl. The global sports market is on a robust growth course; experts put its volume at more than 500 billion US dollars in 2019, in the coming year it should already be more than 670 billion euros. The business with marketing, but also with sporting goods, streaming and other services, including betting exchanges, is booming. The development even changes Germany, which is very fond of football. Other sports and foreign leagues will benefit from the fact that traditional television is losing its importance as the exclusive channel for showing moving images and the transmission business is increasingly shifting to the digital world. Who his sport in the ARDsports show or in ZDF-Sportstudio missing, she just streams it on the net – for a fee.

Höfl knows the sports business from many perspectives. He worked at Adidas (where his father sat on the board), later he managed Franz Beckenbauer (whose global personality rights Höfl still represents), and his wife, the ski racer Maria Höfl-Risch. Höfl helped the beverage giant Red Bull to set up a global football network. He appears as a consultant, and as an investor he was a co-owner and member of the supervisory board of the Bundesliga soccer club FC Augsburg for five years until 2021.

Many investors would like to invest directly in German professional football clubs, but shy away from the “50-plus-1 rule”, which guarantees the club in question the final say in decisions, regardless of an investor’s stake. “From the point of view of investors, the rule is the big obstacle,” says Höfl’s ​​business partner Thomas Rudy. But if you want to invest in professional sports, you don’t necessarily have to do it in clubs and players. More and more money can be made with digital media that broadcast competitions. With companies that collect statistics and data, or with online betting exchanges. Or with film productions. The best example is the “Religion of Sports” documentary series co-financed by US football star Tom Brady and Cerro Capital, which stages different sports. Most recently, “Drive to Survive”, a Netflix series about Formula 1, sparked enthusiasm, especially in the USA, and helped the racing series to a third Grand Prix there. The success is based on the staging of the sport beyond points and goals, times and tables. Triumphs and dramas are staged at high speed in an elaborate optic, giving the viewer the feeling of being very close.

An example of the business model is ex-world footballer Cristiano Ronaldo

“Sports that can be easily internationalized in terms of marketing are attractive,” says Höfl. The team at Cerro Capital also includes German ex-golfer Tino Schuster and former investment banker Thomas Rudy. “Many sports investors are looking for a bridge between the US and Europe,” says Rudy, who comes from Lake Constance but has lived in the US for a long time. The example of the NFL shows how strongly the American professional business is pushing towards Europe. Conversely, experts rate the market for sports betting in Germany as saturated, while it is banned in some US states. Still, because loosening is being worked on and European betting companies are ready with their expertise.

However, investors like Höfl also see potential for skaters, snowboarders, sailors and other fringe sports (judging by football). Thanks to digital technology. It not only helps to spread fringe sports, but also to globalize regionally important disciplines, such as cricket in India. E-sports are still a growth market.

Gone are the days when professional football clubs only found supporters in their own region or in their own country. All major European clubs have marketing offices in Asia and North America. An example of the business model is ex-world footballer Cristiano Ronaldo, whose involvement in Saudi Arabia has brought international attention to the meaningless league there. Or, a few sizes smaller, SC Freiburg. The commitment of the player Jeong Woo-yeong alone has given the club new fans in its home country of South Korea.

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