Sports Business Journal – The Equation for Brand Success

By Greg Economou

The dismal state of the global economy is having an unprecedented effect on the business of sports. Once thought largely immune to economic downturns, the sports industry is getting hit as hard as almost every other industry, especially at the team level. It has quickly become more difficult for professional sports franchises to execute the fundamental aspects of a sustainable revenue model, which means selling tickets, peddling luxury suites, selling broadcast advertising, and/or creating corporate partnerships. And, to make matters even more daunting, the proverbial “light at the end of the tunnel” is nowhere in sight.

In the face of such economic uncertainty, it is more imperative than ever for sports organizations to be as efficient and effective as possible in all business endeavors. Whether it calls for intelligent cost containment or the implementation of strategies to simply maintain revenue, organizations need to be smarter than they ever have been, and more understanding of the basic equation for success.

Conventional wisdom has successful revenue generation inextricably tied to the strength of the individual team brand, highlighting the premise that it is always much easier to sell something that someone values. Brand equity can be a great equalizer in tough times; therefore, it is critical to determine how to drive positive equity to a point where it creates brand loyalty in its consumers.

Brand loyalty can be the single most important factor in consumer decision‐ making, many times determining whether or not they will make an investment and to what level. In general, sports properties have gotten more sophisticated in how they go about building brand equity and loyalty, utilizing more research, data, and information than ever in the formation of their business plans.

However, there is another part of the equation of success that needs to be realized and addressed, something that is usually not tied to brand building or sales. In order to maximize brand equity, which will, in turn, maximize revenue potential — the organization itself must be highly functional and dynamic. Research shows that highly functional organizations generally maintain much more effective corporate cultures, inspiring individuals to be more productive and collectively emanate the strength of the organization to all stakeholders, thus building brand equity.

So, what are the keys to building a successful and highly functional organization? The answer is complex and generally customized according to the dynamics of each individual organization; however, there are some basic common elements that each organization should examine. These elements can be grouped in three categories: foundational, tangible, and intangible; and, for each of the elements, there are corresponding factors that define success. Moreover, for each factor, there are

myriad questions that need to be answered by the leaders of sports franchises, which, if addressed thoroughly and thoughtfully, can become the foundation for organizational success.

 

Foundational elements

  • Purpose: Why does the organization exist? What is its purpose in context to 
its marketplace?
  • Mission: At the highest level, what does the organization plan to do to fulfill 
it’s potential and purpose?
  • Vision: What direction is the organization headed? Is this direction clearly 
articulated? Is this vision realistic?
  • Values: What are four or five basic qualities that define the organization — as 
a business and sports entity? Can every stakeholder recite each of them on command? Are these values communicated consistently to the organization’s customers?
  • Value proposition/brand positioning: What is the organization’s promise to itself and its customers? Is this promise believable? Does this promise differentiate the brand from its competition?

 

Tangible elements

  • Infrastructure: What is the organizational structure? Are reporting lines, job 
descriptions, and growth opportunities clear and concise? Does the business 
plan mirror the structural elements?
  • Plans and strategies: Does the business plan define every action the 
organization takes? Is this plan linked precisely to the organizational structure and the annual budget? Are the macro goals of the organization clearly spelled out? Are the goals of each division identified and achievable? Have the corresponding strategies and tactics — that will lead to the fulfillment of each goal — been developed and implemented?
  • Compensation plans: How clear are the compensation plans of individual employees? Are they consistent and fair? Do these plans inspire employees to work harder to achieve goals?
  • Evaluation: Is the appraisal process in sync with the organization’s business plan? Is the process rigorous, transparent, and done consistently?

 

Intangible elements

  • Leadership: Are all stakeholders inspired by the organization’s leadership? 
Do the leaders reflect the organization’s values? Most importantly, is there an 
environment where complete trust exists throughout the organization?
  • Communication: Is the organization completely transparent? Does the trust 
that has been developed lead to open and candid dialogue?
  • Engagement: Do the leaders of the organization trust their personnel and 
empower them to be innovators and problem solvers, meeting the expectations of the plan? Is leadership accessible and always part of the solution?
  • Accountability: Is each person in the organization held accountable to meet the requirements of their job and the fulfillment of the business plan, including the leaders?

In essence, if the leaders of sports organizations have the discipline and determination to understand each of the three elements and their corresponding factors (and take the time to not only answer the questions posed, but to implement those answers into their everyday practices), they will become more functional and dynamic, and will continue to grow stronger over time. If not, they will most certainly suffer some level of business failure, which is hazardous in the current environment.

Therefore, the equation for success is quite simple: build and maintain a strong and highly functional organization, which will help maximize brand equity, which, in turn, will drive revenue results, fueling the continual success of the business and helping stem the rising tide of economic turbulence.

Greg Economou is a veteran sports marketing and management executive with over fifteen years of team, league, and agency experience.