We live in a world where data is considered to be the new oil, and businesses that can leverage this valuable resource are striking bigger revenues and driving enterprise to a whole new level. That said, since the Moneyball era, the excitement of data in sport has created a revolution that, when compared to other industries, has over-promised and under-delivered.
Why has data in sport been so underwhelming?
Thanks to the proliferation of technology in today’s sports industry, many teams are spoilt for choice when it comes to investing their performance budget. Many of the technologies that teams invest in revolve around improving team health or performance through maximising individual qualities such as speed, size or skill. Yet despite the number of teams that invest in these resources, very few of them can justify the expense and accurately measure the return or the impact it has had to the bottom line of the business. Perhaps that is why data in sport has underwhelmed us, because we are yet to see a more evident impact on our total earnings.
The concept of return on investment (ROI) is a fundamental principle for any business to follow to ensure their longevity. Therefore, it makes sense that we assess the ROI on our performance and medical expenditure in the same way. The first step, then, is to clearly define how we measure this and understand what is the expected impact to the business from this investment.
If your goal is to improve business revenue…
The number one attribute and revenue driver of any successful sport is its entertainment value. Not only is this why the Premier League sits as the wealthiest of all sports leagues, it also explains why football is the world’s most popular sport. For global audiences, the allure of sport is caused by the fast-paced action, the unpredictability and the exceptional aesthetics of the athletes themselves. In fact, survey research into consumer trends showed that the number one reason people attend or watch sporting games is for the aesthetics – as one respondent put it, ‘to see something amazing happen’.
Yet something amazing only happens when you have the right talent on your team and on the field. To ensure athletes remain available and in peak physical condition, the back office team need to invest in the right staff, the right resources and the right technology.
A guide to quantifying performance investments
If your objective is to increase revenue, measuring the ROI on performance resources is easily done through answering a few simple questions:
- Does the investment directly increase the number of games played by my key athletes?
- Have we been able to improve key attributes that relate to individual performance?
- Has having my key athletes available also improved my team’s win rate?
- Has having a more successful on-field team increased ticket sales, fan engagement and sponsorship opportunities?
An investment that is guaranteed to improve revenue
If we can answer the above questions, we can start to quantify the ROI and understand how much a dollar spent on performance and health actually relates to the bottom line for a club.
To put it another way, if you knew that spending $500K more on your performance department resulted in another $10M worth of talent available on field, and another $100M in ticket sales, merchandise and prize money, would you make that investment?
The answer of course is yes.
But can it be any kind of investment?
If it were really that simple, a lot more teams would be doing it. Yet the truth is many teams have all the data they need, collected by the back office staff. They just lack the ability, time or resources to link it back to the problems they are trying to solve, like decreasing injury or improving performance.
However, a truly smart investment will also increase the return on previous investments. For example, if teams had the ability to quantify how the specific physical or tactical traits of players will impact performances in game, then they are not only leveraging the data they already have but they are also maximising the talent they have invested in. By linking data back to performance, teams can maximise their time with athletes by structuring daily training sessions to be specific and improve important physical or tactical traits that matter in games. In turn, improvements to game performance will likely improve team win rate and, therefore, positively impact the business by increasing revenue opportunities.
The bottom line? Player data is everybody’s business
The above is obviously a high-level approach but the point here is that data collected by the back office is applicable across the whole business and, if used logically and holistically, can improve the whole enterprise. There is no business sense in continually adjusting budgets to secure talent whilst at the same time maintaining a static budget for the department responsible for developing and optimising these players. Ensuring the right people and resources are in place to maximise player health and performance is a smart business investment and one that will guarantee a financial return. To better leverage the value of data in sport, we need to willingly seek investments that have a measurable impact to the business (refer to steps 1-4), because if they are not adding to it, then what’s the point?
We have been sitting on oil in the industry of sport for too long. Now is the time to start mining it.
About the author:
Stephen Smith is the CEO and Founder of Kitman Labs, a sports science technology company that works with over 155 elite sporting teams worldwide. Kitman Labs’ award-winning Athlete Optimization System™, which won the inaugural Performance Technology of the Year prize at the prestigious BT Sport Industry Awards 2018, uses machine learning and artificial intelligence to unlock unique insights about health and performance that help elite sports teams succeed on and off the field.