Sports Industry Trends to watch out for in 2024 & highlights of 2023
So here we are. As the sports industry year draws to a close, it’s time for our final BackPage Weekly of 2023.
Thanks to all who have read, supported and contributed over the past 12 months. It’s been a memorable year for sport. And it’s a been a pretty ground-breaking year for us too: you can watch our highlights reel from 2023 below. A massive thanks also to all those who we’ve had the pleasure of working alongside and collaborating with this year. We’ve never been prouder to work with those businesses, talent and entrepreneurs shaping the future of the industry.
If you are looking for some festive reading, you can find our 35 Backpage Weeklys here, but to round off a memorable year, however, we decided to get the Sheridans | Sport team in a room and pick our predictions for 2024. It was a fun and engaging debate and, rightly or wrongly, here’s our Sheridans | Sport trends to watch out for in 2024.
Have a wonderful festive break – and see you in 2024.
SHERIDANS | SPORT Team.
A new era for professional women’s football & untapped commercial potential
Professional women’s football will enter a new era with the launch of ‘Newco’ for the 2024/25 season – after the Women’s Super League and Championship clubs agreed for the top two divisions of the game to be governed by a new independent league entity.
One of the big opportunities – but also points of tension – with the new structure will be getting the commercial model right. How revenue will be shared amongst member clubs, and the centralisation of commercial deals, are all up for negotiation (there has been talk of a proposed 75:25 split between WSL and WC clubs re: broadcasting revenues). It will be fascinating to see how the interests of the elite clubs are reconciled with those of smaller clubs (especially with regard to revenue share).
More broadly within women’s football through a commercial lens, 2023 has perhaps been the year when many of world’s biggest players have become true global brands. In 2024, we expect to see more and more brands moving into the space and targeting players as brand ambassadors, including those up-and-coming stars.
Lastly, we expect to see greater ‘unbundling’ of commercial rights for men’s and women’s teams. That process is already well underway, as highlighted in Deloitte’s recent report on women’s elite sport, but we predict even further separation of sponsorship assets as we move into 2024.
The media rights conundrum
After months of speculation, the most expensive rights sale ever for a domestic football league reached its conclusion as Sky Sports and TNT sports were chosen as the exclusive domestic broadcasters from the 2025-26 PL season in a record £6.7bn rights deal. This represented a 4% increase in live rights value compared to the previous tender process.
The repercussions will continue to be felt both across football and the wider sports industry into 2024 and beyond. In an era of financial uncertainty, the PL broadcast deal provides some important financial security at the very top of the football pyramid. Yet this is far from a universal picture – and we could see traditional broadcast partnerships (akin to the PL/Sky/TNT deal) becoming the exception rather than the norm.
As we’ve discussed in previous BackPage pieces, the PL, like any other rights holder, is acutely aware of the changing viewing habits of its fanbase. In addition, rival football leagues to the PL are seeing rights deals becoming increasingly disjointed and volatile. As rights value (and financial uncertainty) continues to grow, the general media rights landscape is opening up to ‘new’ entrants – the likes of Amazon, Disney and Viacom to name but a few. We expect this fragmentation to continue in 2024. In particular, with the current NBA rights deal expiring after the 2024-25 season, it will be interesting to see whether legacy broadcast models will remain, or if the NBA taking a different direction will signal a tide change at the top of sports broadcasting.
The value of sports data to reach new heights
Sports data, and the commercialisation of sports data, has perhaps never been more in the spotlight than during the past 12 months. The Sheridans | Sport team recently advised on the landmark data deal between Tennis Data Innovations and Sportradar which has at its heart the commercial growth for the sport of tennis and enhancing fan engagement opportunities through the development of new betting and media products.
We mention this in the context of our 2024 predictions because it is probably fair to say that media, and the value of media rights, has underpinned large sections the sports sector for almost two decades. Sports data is, however, very much the new gold, whether in the context of live in play betting, fan engagement and pure content purposes, and the use of data for performance analytics. The reach, importance and therefore value of sports data will only continue to grow through 2024.
One specific area to watch is the interface between data privacy law and intellectual property (IP) law. This is particularly relevant to so called biometric or special category data which is increasingly valuable commercially. The IP is owned by those who invest in collecting and collating that data, and generally that is not the athletes, but the leagues, federations and clubs. However, data privacy law does give athletes some power and control over their personal data, even if not in the form of monetizable IP. That tension, for want of a better phrase, between data privacy and IP will in our view be a hot topic for 2024.
Athletes raising the bar when it comes to cultivating their own off-field brands
We’ve seen an increasing shift in 2023 towards athletes being purpose-led in their off-field activities and seeking to ensure the brands they partner with align with their core values and beliefs. Similarly, athletes appear to be more focused on leaving a legacy, and activating brands in a more authentic way in sectors which they are genuinely passionate about (e.g. gaming, fashion, sustainability etc.).
We think this will continue. We also expect to see the athlete investor model being adopted more consistently, particularly with high-growth start-up and disruptor brands who traditionally haven’t been able to access top level talent. The offer of an equity stake gives the athlete ‘skin in the game’ and incentivises them to deliver value and financial return for the brand.
We anticipate more brands wanting to partner with female athletes, who can help reach an entirely different audience. Within football, for example, the big brands such as Nike and Adidas are, for the first time, starting to offer ‘boot deals’ within the women’s game. However, it is important for the female players to weigh up the opportunity cost of doing a 360° boot deal vs maintaining the ability to do deals within the fashion and lifestyle sectors.
AI to find its feet and its real impact on sport
2024 will provide a real opportunity for athletes, teams, and rights holders to properly capitalise on the untapped potential which AI offers to the sports industry.
As understanding among decision-makers increases, sports will begin to more routinely work with AI companies to ensure innovations are specifically tailored to address their particular needs and challenges. In so doing, AI can be used to create sport and athlete-focused solutions – as opposed to utilising generic AI software within a sporting context. The levels of accuracy that can be developed through AI data models can help to improve efficiencies and provide the tools by which to address the fine margins that are so critical in sports performance. Existing examples of wearable technology are only the tip of the iceberg in terms of opportunities within the space.
On a more commercial level, AI will be increasingly used to provide a deeper and richer analysis of fanbases and fan behaviour by accessing and processing rich data sets available to rights holders. In doing so, existing commercial offerings can be better delivered, and new opportunities can be identified that would otherwise have been ignored. We have seen successes used already within ticketing and fan engagement and so while we don’t expect existing models to be entirely replaced in the short-term, AI will continue to fuel the change towards an increasingly data-driven industry.
The FIFA Football Agent Regs – what happens next?
2023 was a landmark year for football agents, as FIFA sought to implement the controversial new FIFA Football Agent Regulations (FFAR) worldwide. The FFAR include, amongst other things, a cap on agents’ commission equal to 6% of a player’s salary (3% for player services and 3% for club services), plus a restriction mandating all commission payments to be made quarterly.
FFAR has, however, been successfully challenged in various European jurisdictions, including most recently in the UK. Leading agencies CAA Base, Wasserman, Stellar and ARETÉ teamed up in arbitration proceedings to oppose the implementation by the FA of the National Football Agent Regulations (NFAR) relating to domestic transfers in England; and in late November the FA Rule K Tribunal sided with the agencies and declared that both the commission cap and the quarterly payments restriction were contrary to UK competition law. The Tribunal’s full written decision can be found here.
Interim injunctions have also been granted in Germany and Spain, whilst in France the lower commission cap has been rejected. So, as we head into 2024, the future of FFAR remains highly uncertain. It will be fascinating to see how FIFA and the FA react to this latest setback, as it becomes ever-more difficult to see how FFAR (in its current state) can be successfully implemented on a worldwide basis in this increasingly fragmented landscape.
The way sport is regulated will continue to change - starting with a new Independent Regulator.
In 2023, the UK’s non-interventionist regulatory model which has left sports largely free to self-regulate has been challenged. As we discussed in this BackPage, following the Crouch Review, the government announced its intention to establish the Independent Regulator for Football. It was charged with focusing on financial resources, suitable owners, fan interests and approved competitions.
The new Regulator will need to take shape in the first half of 2024 if the government’s commitment to have it in place by the beginning of the 2024-25 season is to be kept. To achieve this, the government will need to bring forward legislation in early 2024 and the prospect of a general election may interrupt the current timetable. Another unknown is the extent of the Regulator’s remit and the interplay between it and the established football regulatory institutions: the FA; the Premier League; and English Football League. The proceedings brought by the Premier League against Manchester City, Chelsea and Everton in relation to financial misconduct may be viewed as an attempt by the Premier League to demonstrate its financial control credentials and to ward off extensive oversight in this sphere from the new Regulator.
What does seem very likely is that the new Regulator will be a limb of the state and its decisions will therefore be susceptible to judicial review on a scale not previously seen in UK sport regulation and administration.
Separately, as a result of the financial precarity of many elite rugby union clubs and the notable recent failures of Worcester, Wasps and London Irish, 2024 may see an overhaul of financial regulation in rugby. The government is currently working with the RFU and PRL to improve the economic footing of the game but if light touch intervention is deemed insufficient, the calls for independent, external regulation could increase in volume.
Esports to become a smaller but more viable industry – which is no bad thing
Esports is no longer the new kid on the block, however, it’s fair to say that the industry is at a really interesting stage of its development.
Between 2015 and 2019 there was a huge amount of activity, as the industry benefitted from significant investment and, in many ways, matured rapidly. That period of fast growth has slowed, partly down to Covid-19, as well as the economic climate. But there were other factors. Many hugely popular participation game titles did not convert easily into esports and did not attract the eyeballs, in terms of viewership and content consumption, that many anticipated. Further, some of the models, particularly those franchise models that envisaged ‘traditional sports’ style home and away league structures did not take off as hoped.
But the reality is that the speed at which the industry was moving meant that a slowdown was simply inevitable. 2024 will, we think, see greater consolidation, which will initially lead to smaller, but ultimately more viable industry. Our view is that this should also allow esports to re-look at some of its models and structures, and perhaps do so without the glare of attention that it has received in the last 7-8 years, which could be no bad thing. One thing is clear, however, from our unique vantage point as the leading esports firm in Europe we are already starting to see the shoots of a very exciting phase for esports and competitive gaming. So, watch this space.
Football club sanctions – City, Everton & Chelsea to learn their fate
As touched upon in Trend 7, the financial manoeuvres of football’s elite clubs are often the subject of regulatory investigation and 2024 looks set to be a prominent year for disputes between the Premier League and at least three of its member clubs. As we highlighted in this BackPage article, the EPL Commission’s decision to sanction Everton with a 10-point deduction has given all clubs pause for thought regarding their obligations under the Profitability and Sustainability Rules (PSR). However, Everton, who have appealed their sanction, along with Manchester City and Chelsea are all likely to be in front of Premier League Commissions this year contesting charges of financial impropriety.
In Manchester City’s case, they are charged with over 100 alleged breaches spanning 2009 to 2018. Notably, City is accused of misleading regulators in relation to income from sponsors, operating costs, and irregularities in payments to playing and coaching staff, which had a bearing on their Profitability and Sustainability position from 2015 to 2018. The club did however succeed in overturning similar charges levied by UEFA at the Court of Arbitration for Sport (CAS) in 2020. Interestingly, despite the CAS decision, the EPL has asserted that its investigation indicates that City may have broken UEFA’s Financial Fair Play (FFP) rules between 2015 and 2018, therefore, the Commission shall also consider those allegations. The Commission’s decision will be final, with neither party able to appeal to CAS in the manner that City did previously.
Chelsea is under investigation from the EPL and the FA for alleged secret payments made by companies belonging to previous owner Roman Abramovich which allegedly were used to circumvent the PSR. The main allegations are that certain third-party transactions which aided transfer activity were not recorded in the club’s accounts. It will be interesting to see whether the fact that it is the previous regime’s actions which are under scrutiny will have any bearing on sanction if the allegations against Chelsea are made out. This may be a point of comparison with the outcome of the City process where there has been consistency of ownership throughout.