Sports shapes Africa’s social fabric and businesses on the continent are aware of that. The sports market continues to be the pretty bride for businesses searching for a suitable spouse. It is therefore not surprising that several businesses in Africa scramble for a share of $388.3 billion which is the current worth of the global sports market. Consider the case of Namibia, with a population of 2.6 million people where MTC just announced a sponsorship to the value of $6.7 million for seven sports codes. This deal is the largest ever to be announced in Namibia. Similarly, in South Africa, DHL Express confirmed the sponsorship for the Springboks and the British Lions Rugby tour.
The love, emotional appeal and enormous fan base of major sporting events entice business players looking for viable investments on the continent. Yet, all that glitters is not gold. Several sports business managers in Africa fail faster than envisaged. The high failure rates are not just because the sector lost $61.6 billion to the COVID-19 pandemic. Our thirty-five years of cumulative business experience suggest that there are more fundamental reasons.
Sports business managers in Africa tend to have three misconceptions. The first is the perception that sports events are money spinners. There is nothing further from the truth. Africa’s sports market is grossly under-funded. Paradoxically, Africa’s sports market attracts both the lowest state funding in the world and the highest state control. The financial burdens on sports business managers are huge and cannot be taken for granted. The second misconception is that sports content consumers are also content purchasers. Several managers enter the continent’s sports market, assuming that Africa’s young and large demographic guarantees a limitless supply of consumers.
These managers sadly discover that most young consumers of sports content on the continent rely on a smaller group of friends, guardians, or sponsors for access to purchased content. Africa’s potential sports market is enormous, but buyers are significantly lower than consumers in the market. The final misconception is that skillful sports practitioners make good sports business managers. Skill and passion are important, but managing a sports business requires other competencies. So, what are the seven habits of successful sports business managers in Africa?
1. Consumer-centric Thinking: An intricate understanding of the African sports consumer is critical for success. Sports in Africa is not just one other product, experience, or service. Sports is a way of life and the heart of discourse on national unity, poverty alleviation, social mobility, lifestyle, and economic empowerment in Africa. The implication is that the consumption triggers for sports content vary and must be identified to unlock value. Some consumers value convenience over affordability. Other consumers value customization over personalization. There is also the growing preference in Africa after COVID-19 for individual forms of sports and indoor exercises. Consumer-centric managers understand that Africans are mobile-first consumers who are hungry for sharable and on-demand content. Critical questions consumer-centric managers in Africa must answer include:
- Who are the major actors in the buying process for sports content?
- How is my business equipping African consumers to curate their own sports content and take control of their live sports packages?
- How will sports mobile consumption evolve as the COVID-19 pandemic continues?
Sports business managers with simple answers to these questions will stay ahead of the rest on the continent.
2. Scenario planning: Every day, businesses breathe the air of political and economic uncertainty in Africa. The continent’s sports market is no different. Several African nations have unstable economic policies to promote private sector investment in sports. Security challenges and the continuous rancor involving fragmented sports associations increases the exposure to economic uncertainty. The COVID-19 pandemic has also sped up business failure. For instance, ABSA bank ended a 13-year sponsorship relationship with the Premier Soccer League in South Africa, which amounted to $9,3m or R140m per season. Every manager must have scenario planning skills to navigate the murky waters of Africa’s sports market. Managers must have the foresight to plan for uncertainty. Scenario planning requires understanding that some sporting events are less exposed to uncertainty than others. For instance, managers of outdoor individual sports and home workout businesses were better prepared for the pandemic than those managing outdoor team sports who suffered massive losses. Careful and insightful thinking about scenarios of uncertainty can help sports business managers to avert financial failure.
3. Data Analytics: The near absence of credible data on the sports business landscape of Africa presents a challenge, and a hidden opportunity. Sports business managers need to be skillful at creating and analyzing their own data sets. There is an enormous opportunity for sports businesses to use data to create new knowledge on the nuances of doing business in Africa.
4. Political and Emotional Intelligence: Sports is highly politicized in many parts of Africa. The sports sector is probably one of the most state owned and controlled sectors in Africa. This situation implies that managers in Africa’s sports sector must understand the political landscape, negotiate partnerships with public sector parastatals and develop public sector engagement activities. Engaging public and private sectors for sports development also requires a great deal of emotional intelligence. Sports is a highly emotive event and managers of sports content need to understand how emotions affect sports decision making. Emotional intelligence will prevent sports business managers from making irrational decisions.
5. Ecosystem Building: The business of sports in Africa can be the platform for integrating business activities occurring in various sectors such as healthcare, fin-tech, insurance, banking, education, and manufacturing. To achieve integration, sports business managers must move away from silo linking. Sports is not just about entertainment in Africa, it is a platform for building a formidable ecosystem for inclusive development. Ignite Megastars is an example of an ecosystem builder. This is a platform that uses a sports reality TV show to nurture talent and build an ecosystem of judges, coaches, viewers, educators, and sports associations. Managers prepared to embrace significant change require long-term thinking and must be prepared to sacrifice short-term gains.
6. Talent Management: Managers in Africa’s sports market must be skilful talent managers. Talent management is not just about supervising athletes, it is also about competency development for coaches, club managers and other stakeholders in the sector. Sports business managers cannot adequately manage talent without the support of credible educational institutions on the continent. Lagos Business School is taking the lead in this direction by developing a Sports Business Management Programme.
7. Innovative Thinking: Complacency is the recipe for failure in Africa’s sports market. There are several challenges that hamper efficient sports business management. Top on the agenda is access to funding. Sports business managers must move beyond the endorsement and sponsorship models to create sustainable models. Innovative thinking is necessary for achieving the aim. An innovative mindset would also support sports business managers in integrating online and offline sports content channels seamlessly. The story of Brila is a good example in this direction. Brila started as Africa’s first sports radio and only licensed sports thematic station in Nigeria. The organization has since evolved to successfully integrate physical and digital services such as Brila online sports TV on Facebook and YouTube. Brila’s innovation was a response to customer demand for consistent access to sports content across multiple platforms. The return of sports spectators over the coming months will require innovative touch points.
There are still passive opportunities for success in Africa’s sports market. Managers who adopt these seven habits will have a higher chance of success.