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The Business of Sport

Podcasts | 26 April 2022

Nick Wailes

Professor, Dean of Lifelong Learning and AGSM Director

Felix Tan

Associate Dean International

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In this episode, we investigate the opportunities and challenges for sports to succeed on and off the field in Australia, where professional teams face a battle for the hearts and minds of fans

Australia has a mega-reputation as a sporting nation. Globally, we punch above our weight, on the field, in the pool and on the court. How does that global success play out locally?

Over the past two years, major sporting events were disrupted by COVID-19. Crowd numbers were decimated jeopardising sponsorships and broadcast deals. Sport – like every other business in Australia – has had to continuously adapt and pivot to survive and thrive.

In this episode, The Business of Sport, we discuss how a data-driven approach to sports marketing and operations is impacting how clubs operate.

Professor Nick Wailes, Senior Deputy Dean and Director at AGSM, speaks to Danny Townsend, CEO of Sydney FC, on how he adapted and grew from the pandemic and found opportunity amidst challenge. Danny also speaks about the steps that need to be taken to increase gender equity in the sporting industry.

We also hear from Associate Professor Felix Tan, School of Information Systems and Technology Management at the UNSW Business School, on the use of data analytics to record and analyse the performance and attitudes of both athletes and fans.

Speakers:

Professor Nick Wailes, Senior Deputy Dean and Director AGSM
Danny Townsend, (UNSW Bachelor of Sports Science, International Marketing 1997), CEO of Sydney FC
Associate Professor Felix Tan, School of Information Systems and Technology Management at the UNSW Business School

Transcript:

Narration: Australia has a mega-reputation as a sporting nation. Globally, we punch above our weight, on the field, in the pool and on court. How does that global success play out locally?

Over the past two years, major sporting events were disrupted by COVID-19. Crowd numbers were decimated jeopardising sponsorships and broadcast deals. The widescale emergence of multiple streaming services has also created a highly competitive environment for broadcast rights and competition to capture audience’s attention.

Sport – like every other business in Australia – has had to continuously adapt and pivot to survive and thrive.

Welcome to The Business of Sport, the latest ‘Business of Leadership’ podcast brought to you by the Australian Graduate School of Management at the UNSW Business School.

In this episode, we investigate the opportunities and challenges for sports to succeed on and off the field in Australia, where professional teams face a battle for the hearts and minds – of fans.

Danny Townsend, the CEO of Sydney FC, speaks to Professor Nick Wailes about new business models and the future of football in Australia. How is a data-driven approach to sports marketing and operations impacting how clubs operate? And how will interest in elite women’s football create new market opportunities for the code?

We also hear from Dr Felix Tan, Associate Professor of Information Systems, and the Director of Unova research labs at the UNSW Business School. He explains how sports organisations from around the world are using data analytics – to enhance both the fan experience and the performance of the athletes.

First up, Professor Nick Wailes and Danny Townsend.

Nick Wailes: Hi, my name’s Nick Wailes. I’m the Director of AGSM. Welcome to the latest episode of the AGSM Business of Leadership Podcast. I’m delighted to welcome Danny Townsend, who’s the CEO of Sydney FC. Danny, great to have you here.

Danny Townsend: Thanks for having me on, Nick.

Nick Wailes: Danny, we’re going to talk about the football club and the business model. But I’m really interested to know what does the career of a CEO of a football club look like? Talk us through your career and how you ended up in this position?

Danny Townsend: I think it’s been a bit of a windy road really. I started off as a professional footballer myself and had my average career cut short pretty early, probably for good reason due to injury, which I think it was a bit of a blessing disguise really because it was early enough in my career to ensure I focused on my studies, which was a lot of my teammates weren’t focused on education. They were focused on football and knowing that I was having a short runway for my career, I was focused on ensuring that I was looking after myself, after football and happened to do a post-grad at Uni New South Wales as well.

I was obviously a person who was predisposed to sport, really didn’t see myself working in any other industry and was lucky enough to land a role in the Australian Jockey Club at the time in a commercial role. Then not long after that, set up a sports consulting agency that led me to a 14-year career overseas, living in Singapore, London, and New York, and had some success there, fortunately. We sold that agency back in 2016. Having had a couple of kids along the way and an Australian wife, there was a real keenness to bring the family home. when we were able to do that, the opportunity to get back into football in Australia presented itself with Sydney FC and the rest is history I suppose.

Nick Wailes: I think it might be quite useful for our listeners to just understand the economics of a football club. So where does the revenue come from? Where are your major expenses? How does that play out over the course of a year?

Danny Townsend: Yeah, it’s an interesting one. You don’t get asked that a lot as a CEO of a football club because most of your stakeholders really are focused on outcomes and the outcomes that are visible to the majority of those stakeholders is trophies. But at the end of the day, you can only really put yourself in a position to win trophies if you’ve got a sound business that underpins that. I often say at the end of any given season, I don’t get to do a lap of honour with the balance sheet. It’s the captain with the trophies that people care about. But ultimately our business at Sydney FC was one that for many years, didn’t make any money. It relied on the ownership group to continually pour money in to keep it going.

I think it was a bit of a foreign concept to me to actually have a business that was losing money but considered successful. So that was something I felt my role as a CEO was about yes, facilitating the ongoing success on the field, but ensuring off the field, we could be a sound business. that really starts with driving revenues. The key revenues for a football club are obviously the media grant that are received from the centre of the league, its sponsorship revenues, its membership, its critical match day ticket sales, merchandise, our community and grassroots work is also a critical part of the business. But largely, they’re the revenue streams that the club relies on to fund the investment we make in football.

So it’s a skinny business. It often appears the outside as probably a bigger business than it really is, but yeah having run traditional businesses and now run a sporting club, they’re very similar. Your people are critical. Our people are critical, whether they’re kicking the ball or whether they’re supporting those kicking the ball or whether they’re running the commercial side of the club, successful clubs rely on great people. All businesses I think have that same philosophy.

Nick Wailes: Danny, just give me a sense, how many employees or how many people are you talking about?

Danny Townsend: Yeah. If you break it out, typically how the business operates is the football side of the business and the administration side of the business. The administration side of the business is about 40 people. Then in the football side, if you count the playing group, all of the high-performance men, women, you’re upwards of around a hundred. Then we have a really wide group of casual staff that will either be working on match day running our community programmes, coaching in our coaching clinics. We got upwards of 200 casual staff that we pay any given month. So all in all, we are paying out about 350 odd people each month. They’re varying degrees of full-time to part-time status.

Nick Wailes: So, you come back to Australia, come into what’s been an incredibly successful club on the fields. But having to ensure that the business running effectively and then doesn’t take very long and then COVID hits. So, give me a sense about what that experience was like? What was the approach that you took to that?

Danny Townsend: Yeah. I think the first thing I would say is it was scary, scary for everyone when COVID first hit. We never really quite knew what it was and how long it would be here for, and what magnitude of disruption it would provide. I think I’m the one that really looks at corporate values as being important. I think they’re often overplayed and people will talk about culture and values. They’ll post them all over their boardroom walls. But they really get tested when times are tough. One thing that we pride ourselves on at this club, apart from winning things, is we’re a family. Like good families, when times are tough, they stick together.

This is going to test whether or not we stick together as a group and come out the other side of whatever is in front of us. We don’t know what it is and how long it’s going to be here for. But my goal was to come out the other side with the same people that we went into it with. That philosophy stood us in good stead because the ownership supported that philosophy, our staff collectively took pain together. Everyone took pay cuts, everyone, including players. Everyone was committed to working together to come out the other side. We came out that first COVID period without losing a staff member. We finished that season and won the championship, which was an enormous, I suppose, relief that we’d been through that. But then we were rewarded for it with the ultimate trophy, which was the championship. Then we started another season thinking it was all behind us.

Lo and behold, it reared its head again and caused us some angst. But I think this season that we are in currently has probably been the biggest challenge. Having had two seasons of COVID interruption, really going into this one, we didn’t expect any more interruption. COVID was sort of behind us. Then Omicron came from nowhere just after the start of our season and really hit us during our peak period, which is January, which is school holidays, traditionally our period where we get a lot of attention.

Our fans, which are largely young families, are on holiday. They’re attending in big numbers. They couldn’t attend. That really, really hurt everyone, both economically, but just in terms of momentum. It just took the wind out of everyone’s sails. But again, we’ve survived, we’re in good shape. The club’s values, as I said, have really, stood us in good stead and here we are.

Nick Wailes: There’s two things that really occur to me that firstly, you’ve got to have a lot of resilience in that environment. Right? Everyone has to be able to deal with multiple setbacks. Then the second thing is you’ve got to have this incredible agility to be able to respond on to what’s going on often on a week-by-week basis or a day-by-day basis. Do you think it’s leaving your organisation stronger for the future?

Danny Townsend: Resilience and the ability to move quickly is something we really learned over these last couple of years. We, as a league, across our men and women’s competitions have rescheduled 88 fixtures. When you talk about rescheduling a fixture, someone on the outside might think, “Oh, just pick it up, and you move the date and the time and you kick off at a different time.” But with that comes having to book a new stadium, having to book all of the staff of the stadium, you’ve got to move the production company, the cameras, the crew, the rigging. It’s an enormous thing to move one game. When I look back five years ago, when I first came in, if someone had asked us to move a game, we’d have gone, “You’re kidding me. We can’t move a game. We’ve got 13 home games, and we know where they are for the next nine months, and we play them on the days that we’re told.”

Now we’re moving games with three days’ notice. It does mean that some of the preciousness and some of the things you took for granted pre COVID, now you look back at that and go, “Wow. We’re pretty high maintenance.” The players and the coaching staff who said, “I can’t. I’m preparing for a game in two weeks’ time. You can’t ask me to move it a day.” Now, we’re saying to Steve Corica, the head coach last week, he was going to Melbourne on Saturday. On Thursday we said, “No, no, you’re not. You’re going to Perth.”

They picked up that day, ran to the airport, got in a plane and went to Perth, played and won. That would’ve been unheard of two years ago. So, it does teach you resilience. I think it brings your group closer together. I think those things now are set. The toothpaste’s out of the tube. You can’t push it back in. That behaviour is now set in people’s ways. I think that’s one of the good things that will come out of this.

Nick Wailes: Okay. What does your sort of community engagement look like? Because it seems that football’s deliberately tried to make itself part of the community. That’s a key part of its strategy. But what does that look like? How do you run and organise that?

Danny Townsend: Yeah, it’s a really good point. It’s one that when I came back to Australia, I looked at what are the strengths. Like any business, you look at what are your strengths. What are the things that you can bank on that your competitors can’t? Participation was ours. As more people turn up, pay up, week in, week out to play football in this country than the sum of Rugby League, Rugby Union, AFL combined. Right? So why isn’t our professional game in a similar level of dominance? It’s because we didn’t have that connection. Over the years, the game our professional league’s 16 years old. It’s arguably almost a generation old. We’re competing against leagues like the AFL and NRL, which are over a hundred years old, five generations old. So we can’t rely on that, “My grandfather was a supporter of X, and my father was a supporter of X. So I’m a supporter of X.”

We don’t have that. So we’ve got to work hard now at not at converting a 40 to 50-year-old mum or dad. I want to convert the 5, 10, 15-year-old young Australian footballer, who wants to drag their mum and dad to a football game, and that starts at community. So I looked at Sydney FC’s community programme, and it was pretty negligible. We have seven local associations in our catchment area. One of the first things I did was reached out to their CEOs and introduced myself and said, “I want to come and see you.” The response I got from each of them was why. What do you mean why? I said, “Because you own my customers. I want to connect with your people because they should be our customers and our fans.” I went round to Sydney, and we talked football, and we talked about the opportunity.

The one thing they were all challenged with was resource. They had resource issues because they’re typically not for profit. What I have as a commercial organisation is resource and said, “Well, you run all these community programmes. I’ve got resource to run them. Why don’t we build joint venture businesses together? Where we’ll come in, we’ll commercialise, them, we’ll do all the hard work. We’ll share the money.” And they were like, “Where do I sign?” That was really the genesis of it. We’ve now, what, five years on. We’ve got seven joint venture businesses with associations at grassroots covering 255 clubs. That is the single biggest driver of growth in our membership. It’s no surprise why.

Nick Wailes: Yeah. It’s a great story and really interesting. Danny, you recently took on the role as the CEO of Australia Premier League as well as your day job. I’d like to explore this direct-to-consumer relationship you want to create and the role of digital in that. What will that look like? What are you hoping that that creates?

Danny Townsend: Yeah. Look, I’ve been sort of in that role in a hybrid capacity for about 18 months. So, as we unbundled from the FA, we had to stand up a business very quickly, a start-up operation. We had no staff, so a bunch of us in different clubs lent our time to the cause. But key to our strategy at APL was all about building a direct-to-consumer relationship with football fans in this country. We set about building a broadcast relationship with Channel 10 and Paramount Plus, which is the streaming service. But at the same time, building digital infrastructure and data infrastructure that would prepare us for the future.

Our view is if we can better understand our fans and our customers and our participants, and we serve them a digital solution that delivers them genuine utility, they’ll use it every day. They’ll engage more often. They’re much more likely to connect to our professional leagues. with that comes, the more traditional revenues of coming members, buying merchandise, turning up to games and supporting our clubs. So, it was very much a what we call we conversion strategy, is converting what we see as survey data records that say there’s millions of people that love our game and converting them into one-to-one data records. We get to know them. We get to understand what they want out of their football experience, and then personalise that experience to ensure they keep coming back, and they’re engaged.

Nick Wailes: So that potentially leads to a rich stream of data and you having access to quite fine grain analytics. What change will you need in your organisation and the rest of the league to be able to effectively respond to that and effectively use that data?

Danny Townsend: Yeah. I say to our team and our people and culture department who had been building the team with me for the last 14 months is that we got to think ourselves as a digital entertainment company with a tech backend because when our sport ... Football is what we do on the pitch. But the way we think about our business is that we are a digital entertainment business because that’s the way our consumers consume things these days. They do it all on web or app. Particularly when you look at the strengths of our game, we are the number one sport in the country for under 35s.

They’re digital native. They’re not reading newspapers. They’re not watching free to air television necessarily. But they’re all on their mobiles a lot. They’re all on their tablets. They’re on their computers. So having a digital first proposition is going to build a foundation for our future relationships with our customers.

Nick Wailes: But it also suggests you’re going to need different people in the organisations. Right? Because that understanding of customers and consumers and the ability to respond to analytics is going to play a much bigger role.

Danny Townsend: Yeah, absolutely. I think when you look at the way people consume sport these days as well and the time, they take to consume it, 90 minutes of football, if you think about what a league and a club would traditionally do, it would say, “I’m going to sell all my media rights, and I’m just going to focus on playing football.” That’s not enough anymore. The football is one thing, that’s your core product. But it is what you deliver your fans around the 90 minutes that really engages them. It’s the short form content, the behind the scenes. We’ve stood up a full production capability. We’ve got digital producers. We’ve got editorial. We’ve had to become a media company overnight because that’s what our fans want. The time it takes to sit down and watch 90 minutes of football, particularly for a 12-year-old, it’s really hard. But they’ll consume football in many, many different ways, largely on their phone. So yeah, that was our clear strategy. I think it’s the right strategy.

Nick Wailes: But how do you monetise that? You can monetise the 90 minutes by selling a cable package or entry into a gate, but some of the other stuff’s quite hard to monetise. Right?

Danny Townsend: Yeah. I think you go back to commercial connection. What sponsorship traditionally was whack my logo on the shirt or around the pitch and have the people sitting on the couch see my brand and potentially connect with it. We ‘re moving out of the real estate business and into the customer acquisition business for our sponsors. So, if we build a rich cohort of consumers who might be in a certain demographic who are in the market to buy health insurance, then I can segment those out and deliver those customers to my health insurance sponsor and have them pay a premium for that.

Because the cost of acquisition for health insurance company’s really high. If I can deliver those customers direct to them digitally because I know who they are, I know what their preferences are, and I know they’re in market to buy health insurance, that’s a far more valuable proposition than a logo on a shirt. So as the consumption of sport changes and the way in which brands orientate with that changing environment becomes opportunity. That’s where the revenues reliance on media companies and traditional sponsorship is changing.

Nick Wailes: So, I want to turn attention now to what to me looks like one of the most exciting developments in sport, which is the growth of the women’s game in football, in particular, but growing in lots of different leagues. Can you talk to me about how Sydney FC approached that and how that is going and what the future of the women’s game looks like?

Danny Townsend: Yes. Look, it has come a long way in a short space of time, I will say. How do I better put it? From a commitment perspective, I think it’s been there, the A-League women or the W League, as was previously known, has been around for about 12 seasons now, one of the longest running elite female sport competitions in the country. But again, when I came in, it was treated very differently to the male part of the club, which I was intrigued by, particularly as a father of two girls that played football. There was just so much that wasn’t right in terms of where attention was provided. It was almost like you’ve got all these fans and members that love the men’s team, but don’t care about the women’s team. I’d ask people like, “Are you a Sydney FC fan or are you a Sydney FC men’s team fan?” You go, “Oh, I’m a Sydney FC fan.” Well, why don’t you go to watch the women’s team?

So, there was this real disconnect between how the two genders were treated. I think we’ve made huge amount of ground, but we’ve got a long, long way to go. Our sport is one of the few that is genuinely gender agnostic. Females and males can play it at the same level, and the grassroots growth of the female game is enormous. So, it’d be crazy for a sport like ours not to take advantage of that and deliver a product that is commensurate with the amount of people playing the game. I think where we are challenged, and all female sports is challenged in, is the commercial side of things.

That’s improving with Women’s World Cup coming in 23, and that’s opened up a bit of interest in it. But the metrics that you typically judge commercial outcomes on are a long, long way off, things like attendance, audiences, they’re just not there. I put it down to just behaviour.

I think as that continues to change, the commercial metrics around female sports will change particularly football. You’ll continue to see investment. But our perspective as a league and as a club is you’ve got to invest in it now to get the benefit longer term. We are fortunate that the male game drives a lot of commercial outcomes that we reinvest in the female game to enable it to get to a point where it can generate its own commercial outcomes.

Nick Wailes: Okay. So, you see it as an investment prospect. I wonder, you talked a little bit there about attendance of games being a big revenue driver. I’m wondering if you’re seeing a difference in sponsors’ attitudes to the women’s game. So, are there new types of sponsors? Is there an interest in sponsoring that activity that you haven’t seen before?

Danny Townsend: There definitely is. I think Women’s World Cup coming to Australia and New Zealand has helped. I think the success of the Matilda’s particularly has helped. But it’s interesting, when you stare into the belly of a corporate opportunity that started with the female game, and the interest in that is genuine. But when they look at the metrics, it’s like, “Oh, I’m not sure I can really justify spending that sort of money. So can I also have some assets on the male side of the game to bolster the metrics to justify the investment?” Which is fine because that’s part of that maturation process commercially that we are fortunate that we can use both genders to drive a collective outcome that one day I’m sure will be more balanced, let’s say.

Nick Wailes: Danny, I wanted to talk, lots of industries characterised by disruption. The one that I think affects you the most is the disruption in the media and the traditional broadcast model, those type of things. Can you talk to me about that change? How that’s impacting you and the way that you are thinking about the future of that?

Danny Townsend: Yeah. It’s definitely a global, I suppose, trend, as consumption of media has evolved over the years. Largely professional sports of all kinds of have really survived on the back of media rights fees that have been paid by largely originally terrestrial broadcasters. Then there was the emergence of cable and satellite TV. Those models are very high margin models, which enables those type of companies to spend significant amounts of money on rights. As consumption has shifted to a digital first proposition and streaming has become a more prominent player in the distribution of rights, just that the business model doesn’t sustain the margins that those traditional broadcast models did, which means it’s not affecting the major tier one sports like the premier league or the NBA or the NFL, or those type of things. But all the others are being compromised because the traditional broadcast models are not as profitable as they used to be.

The substitution in streaming is a lot much lower margin. Therefore, their willingness to spend rights is diminished. However, that opens up a much bigger opportunity for sports to build direct to consumer relationships with its customers. That’s where our focus is around football. We have that eight million people that identify with football in this country. We only know that through survey data. So what we’re about is building the most sophisticated data and digital infrastructure around a code that will enable us to have a one to one data relationship with every fan of football in this country, and then serve them an experience that is tailored to their own personal preferences. If we can do that, and when we do that, because we’re in the process of doing that, we’ll have a far richer relationship with our fans that will ultimately bear more commercial outcomes down the track.

Nick Wailes: Does that mean you are potentially dis-intermediating the broadcasters that is Sydney FC going to, for example, start broadcasting its own games and packaging its own content or is the relationship slightly different?

Danny Townsend: It’s a league-driven outcome, so you’re not going to be doing that on a club-by-club basis. But at the APL, if I put my APL hat on, that’s absolutely our strategy. It’s not to disaffiliate with traditional media. I think there’s always a role to play for all those with got a fantastic relationship with Channel 10 and Viacom CBS, Paramount Plus. But if you just look at the way the media is structured in Australia, you’ve got Fairfax at nine, you’ve got News Corp, Foxtel, you’ve got seven, you’ve got 10. Everyone sort of backs their horses and then sort of really promotes their horses hard, but sort of forgets about the others.

The adjacency that we had in sport historically is being diminished. So, you’ve really got to own your own relationship with your customer. Fortunately, with the evolution and sophistication of digital and data infrastructure these days, sports can do that. Sports can hold the keys to their future. Where in the past, the sports were heavily reliant on others to fund those relationships with their customers.

Nick Wailes: Okay. So, you’re sort of having to really think about new business models and new ways of doing things. I’ve heard you talk about it being a global game to what extent are you looking at what’s happening with a China club or a Spanish based club and drawing their business lessons there or where do you look for inspiration about running the business and its next stage of development?

Danny Townsend: Yeah. I think I was fortunate in my previous stage of my career where I was consulting to some of the biggest football clubs, baseball clubs, basketball franchises, Formula One teams. So, I saw a lot of best practice, but it’s all got to be looked at through the lens of the domestic market that we’re in. One thing that I know and why so many Australians are successful in global sports marketing is that we are a highly competitive marketplace for sport. If you are not doing and delivering best practise, it’s really hard. I look at having lived in New York, there are more professional sports teams in Sydney than there are in the tri-state area of New York, New Jersey and Connecticut. You think about the population size there, it’s tenfold of what’s in Sydney.

So, we are in a very competitive sports marketing landscape. We’ve got to think differently. I think some of the best innovations come out of this market for that reason. But you’ve also got to look abroad, you got to constantly change. The market is moving. You think about things like Web 3 and tokenisation, and all this. That this wave of crypto that’s washing over the broader economy, but that’s also really prevalent in sports and how we navigate our way through that. There’s always new things around the corner and getting ahead of that and executing appropriately is really important.

Nick Wailes: Danny, you talked about your career and injuries along your career, and I’m interested in how you as a CEO, think about player management and player wellbeing? What’s changed in the time since you played?

Danny Townsend: I think when you look at the change in sophistication around high performance, back to when I was playing, there was very little load management. There was very little analytics. There certainly wasn’t the GPS data and all the other wellbeing data that we get today. There’s probably no surprise that the injuries that were happening back in those days are far greater than they are today. We invest a huge amount of money at Sydney FC on the wellbeing of our players from under 12s, all the way through to our first teams for men and women. Because if they’re healthy off the field, their ability to perform on the field is better that’s really key to our strategy.

Nick Wailes: Danny, how do you deal with the trade off between the short-term pressures to succeed on the paddock and then the long-term career goals of players or the long-term aspirations, surely that you have to balance those two things.

Danny Townsend: Definitely. Look, I’m a real advocate for educating players and work closely with the PFA from when I was playing as a PFA delegate now to my role. It’s really hard to get into a 19-year-old professional athlete that they should think about life after football. Because by nature of being a professional athlete, you’re usually so focused and partly been in a sycophantic environment where your parents, your friends, your relatives since the age of six have told you what a wonderful footballer you are. Therefore, you’re never going to be anything else other than a professional footballer. Then you become one. Then you’re like, “Well, of course. I was always going to be one. I don’t need to think about what happens in 12 years’ time when I’m 32 and no longer able to play.”

I saw a lot of teammates of mine who didn’t have the opportunity I had to get an education while I was playing, who finished their much better careers than I had and finished, and effectively were uneducated, had no work experience at all and are laying roof tiles. It’s not that they’re incapable of doing anything, but they just never took the time to do it because they didn’t think they needed it. There’s only so many coaching jobs, only so many jobs in the media. Once you exhaust those, you’re back into the workforce with very little to lean on.

And I spent a lot of time with our team and actually within Uni New South Wales and the work we do with the uni around really encouraging our players in our academies, before they even become professional, to focus on their schooling, get through to the high school certificate, educate themselves, where possible go to university, whilst they’re playing. Players have a lot of downtime. They train for four or five hours a day, and they’ve got another four or five hours where they’re sitting around just playing video games or doing things that 19-year-olds or 20-year-olds do.

I really impress upon them, “Go to university. Get a degree.” If it takes you six, seven years, just do it because there’ll be a time inevitably in your career where you’re going to need it. I think that’s starting to change it is hard sometimes as I said, because yeah, young confident players don’t often want to think about what life after football means, but inevitably they end up there, and we got to prepare them best for it.

Nick Wailes: Danny, it’s been a fascinating conversation. I hope you go great on the field, but fantastic to learn a little bit more about the organisation and running the business. So thanks for joining me.

Danny Townsend: No, thanks for having me on, Nick. Appreciate it.

Narration: According to Danny, relationships between sporting clubs and their customers are changing at a rapid pace. With new digital technology and access to data, sports clubs are in a unique position to connect and grow alongside their fans.

So, what does the future hold? And what impact can these data driven decisions have on the economic value of the sporting industry?

From unique user journeys to using AI in gymnastics judging, there is plenty of possibilities. Let’s hear from Dr Felix Tan.

Felix Tan: I’m Felix Tan and I’m an Associate Professor of Information Systems and a Director of UNSW Unova research labs at UNSW Business School. My research interests are in Digital Transformation for good, Digital Platforms, E-Commerce, Sports Analytics and Enterprise Systems. So at UNSW Unova research labs, I lead multidisciplinary research teams and we collaborate with businesses to co-create solutions, capability, practises to support their Digital Transformation journey.

So, for example, over the last few years, we have been working with SAP, a software partner studying the role of data analytics in enabling organisations in the sporting industry. The case studies that we’ve written about is of Bayern Munich Football Club, Red Bull Munich Ice Hockey Team, RL handball team in Manheim, Gymnastics Federation in Europe. And we study how these sporting organisations achieve business performance and sporting excellence through data analytics.

Overseas professional bodies are already using data analytics to enhance the sporting experience for fans and also for sporting performance of athletes. Particularly spectator sports, like the NBA, NFL, National Baseball League in America, professional football in Europe. So, from our research we uncovered rare insights to the applications of data analytics to player and team performance during and after game day, event management on game day and customer fan engagement.

We review through our research, how data analytics enable these organisations to achieve transformation of its business ecosystem. We also uncover new practises and formative strategies that drive industry and culture change in the industry and build a network of core specialisation amongst its stakeholders because generally technology and digital innovation and the use of data have the means to improve how fans engage with the sport and also how athletes playing the sport can engage with fans.

One of the projects that we did with SAP was to seek a better understanding of how professional sporting organisations like Bayern Munich Football Club use data and analytical solutions to achieve leadership, not just from a sporting performance perspective, but also from a business perspective as a highly successful running organisation.

So, what we did was put together a case study of Bayern Munich’s digital four point or transformation journey. And what we learned was some of the very interesting things that they did with data analytics, particularly around game day performance by the athletes, event day management and around fan engagement. So, the research review insights on how the data can be used to benefit businesses and their customers and their journeys.

So, data analytics gives management of sporting organisations, the power and the opportunity to identify new opportunities and find new solutions to known problems. In football, data driven decisions can have huge economic and social impact on the organisations across recruitment of talent, performance, event day management and marketing.

So, for example, user journeys of fans are very different. So, from our research with Bayern Munich, we revealed that no two fans are the same. And in the case of Bayern Munich, 81 user personas were found to be associated with the club. So, 81 different user journeys and potential use of data. So, for example, a 20-year-old fan from Shanghai and how he engages with the club will be very different from an 80-year-old fan in Bavaria, will be very different. So, the opportunities for sports analytics and data analytics to create opportunities to create and target product service systems of the different personas you can imagine is huge.

Narration: So we’ve heard about how data can improve the user experience for fans, now let’s hear more from Felix about the role analytics can play in the evaluation of sporting success.

Felix Tan: The impact and the value of sports analytics for the business of sports in Australia and ASEAN is huge. Australia is a big sporting nation and like many countries in AsiaPac, has a huge fan base for professional clubs in Americas and Europe, especially in spectator sports such as Football, Rugby League, Rugby Union, AFL. Football, for example, has a huge fan base across the AsiaPac, including Australia, where countries often invite top teams from the top leagues in Europe to Australia and the AsiaPac and these events are usually very well received.

So, we can see the appetite for sports data is high and hence analytics demand would also be very high. A case in point in football and the value that it brings, it is a multi-billion-dollar industry and refereeing and officiating or judging in the sport of Football is a vital aspect of the sport and has huge ramifications for the business.

But it’s also prone to errors arising from the inherent limitations to human cognitive functions and usually the speed of sports. So, technology has the potential to assist in decision making, but also to change policy as we have seen in video assisted referring technology, where the technology can help officials better enforce the laws of the game in the spirit that the game should be played and delivering the appropriate sanctions and disciplinary actions to the offending players.

So, the application of the technology can also be used in other sports. In another work with colleagues in Belgium and Japan, we studied the tensions and paradoxes that are related to artificial intelligent powered evaluation of artistic gymnastics.

Given the complexity of scoring and the speed of athletics performance, technology can help alleviate some of the problems of judging and sports analytics has a very big role to play in delivering value for that sport.

Narration: Thank you for joining us for The Business of Sport.

To find out more about the AGSM Business of Leadership podcast series, search for AGSM’s the-business-of-podcast online or find us on your favourite podcast platform.

Please share, rate and review and subscribe to AGSM’s business podcast and look out for future episodes.

In the meantime, you can follow AGSM at UNSW Business School on LinkedIn and Facebook for more industry insights for an accelerating world or find us at agsm.edu.au.

Until next time, thank you for listening.

Read BusinessThink's Sydney FC’s Danny Townsend: kicking goals for the business of sport for more information.

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<h1>The Business of Sport</h1>

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 Australia has a mega-reputation as a sporting nation. Globally, we punch above our weight, on the field, in the pool and on the court. How does that global success play out locally? 
Over the past two years, major sporting events were disrupted by COVID-19. Crowd numbers were decimated jeopardising sponsorships and broadcast deals. Sport – like every other business in Australia – has had to continuously adapt and pivot to survive and thrive. 
In this episode, <a href="https://www.unsw.edu.au/business/our-schools/agsm/about-us/the-business-of-podcast/the-business-of-sport" data-new-window="true" target="_blank" rel="noopener noreferrer">The Business of Sport</a>, we discuss how a data-driven approach to sports marketing and operations is impacting how clubs operate.
<a href="https://www.unsw.edu.au/staff/nick-wailes" data-new-window="true" target="_blank" rel="noopener noreferrer">Professor Nick Wailes</a>, Senior Deputy Dean and Director at AGSM, speaks to Danny Townsend, CEO of Sydney FC, on how he adapted and grew from the pandemic and found opportunity amidst challenge. Danny also speaks about the steps that need to be taken to increase gender equity in the sporting industry.
We also hear from <a href="https://www.unsw.edu.au/staff/felix-tan" data-new-window="true" target="_blank" rel="noopener noreferrer">Associate Professor Felix Tan</a>, School of Information Systems and Technology Management at the UNSW Business School, on the use of data analytics to record and analyse the performance and attitudes of both athletes and fans.
Speakers:
<ul>
 <li>Professor Nick Wailes, Senior Deputy Dean and Director AGSM</li>
 <li>Danny Townsend, (UNSW Bachelor of Sports Science, International Marketing 1997), CEO of Sydney FC</li>
 <li>Associate Professor Felix Tan, School of Information Systems and Technology Management at the UNSW Business School</li>
</ul>
Transcript:
Narration: Australia has a mega-reputation as a sporting nation. Globally, we punch above our weight, on the field, in the pool and on court. How does that global success play out locally?
Over the past two years, major sporting events were disrupted by COVID-19. Crowd numbers were decimated jeopardising sponsorships and broadcast deals. The widescale emergence of multiple streaming services has also created a highly competitive environment for broadcast rights and competition to capture audience’s attention.
Sport – like every other business in Australia – has had to continuously adapt and pivot to survive and thrive.
Welcome to The Business of Sport, the latest ‘Business of Leadership’ podcast brought to you by the Australian Graduate School of Management at the UNSW Business School.
In this episode, we investigate the opportunities and challenges for sports to succeed on and off the field in Australia, where professional teams face a battle for the hearts and minds – of fans.
Danny Townsend, the CEO of Sydney FC, speaks to Professor Nick Wailes about new business models and the future of football in Australia. How is a data-driven approach to sports marketing and operations impacting how clubs operate? And how will interest in elite women’s football create new market opportunities for the code?
We also hear from Dr Felix Tan, Associate Professor of Information Systems, and the Director of Unova research labs at the UNSW Business School. He explains how sports organisations from around the world are using data analytics – to enhance both the fan experience and the performance of the athletes.
First up, Professor Nick Wailes and Danny Townsend.
Nick Wailes: Hi, my name’s Nick Wailes. I’m the Director of AGSM. Welcome to the latest episode of the AGSM Business of Leadership Podcast. I’m delighted to welcome Danny Townsend, who’s the CEO of Sydney FC. Danny, great to have you here.
Danny Townsend: Thanks for having me on, Nick.
Nick Wailes: Danny, we’re going to talk about the football club and the business model. But I’m really interested to know what does the career of a CEO of a football club look like? Talk us through your career and how you ended up in this position?
Danny Townsend: I think it’s been a bit of a windy road really. I started off as a professional footballer myself and had my average career cut short pretty early, probably for good reason due to injury, which I think it was a bit of a blessing disguise really because it was early enough in my career to ensure I focused on my studies, which was a lot of my teammates weren’t focused on education. They were focused on football and knowing that I was having a short runway for my career, I was focused on ensuring that I was looking after myself, after football and happened to do a post-grad at Uni New South Wales as well.
I was obviously a person who was predisposed to sport, really didn’t see myself working in any other industry and was lucky enough to land a role in the Australian Jockey Club at the time in a commercial role. Then not long after that, set up a sports consulting agency that led me to a 14-year career overseas, living in Singapore, London, and New York, and had some success there, fortunately. We sold that agency back in 2016. Having had a couple of kids along the way and an Australian wife, there was a real keenness to bring the family home. when we were able to do that, the opportunity to get back into football in Australia presented itself with Sydney FC and the rest is history I suppose.
Nick Wailes: I think it might be quite useful for our listeners to just understand the economics of a football club. So where does the revenue come from? Where are your major expenses? How does that play out over the course of a year?
Danny Townsend: Yeah, it’s an interesting one. You don’t get asked that a lot as a CEO of a football club because most of your stakeholders really are focused on outcomes and the outcomes that are visible to the majority of those stakeholders is trophies. But at the end of the day, you can only really put yourself in a position to win trophies if you’ve got a sound business that underpins that. I often say at the end of any given season, I don’t get to do a lap of honour with the balance sheet. It’s the captain with the trophies that people care about. But ultimately our business at Sydney FC was one that for many years, didn’t make any money. It relied on the ownership group to continually pour money in to keep it going.
I think it was a bit of a foreign concept to me to actually have a business that was losing money but considered successful. So that was something I felt my role as a CEO was about yes, facilitating the ongoing success on the field, but ensuring off the field, we could be a sound business. that really starts with driving revenues. The key revenues for a football club are obviously the media grant that are received from the centre of the league, its sponsorship revenues, its membership, its critical match day ticket sales, merchandise, our community and grassroots work is also a critical part of the business. But largely, they’re the revenue streams that the club relies on to fund the investment we make in football.
So it’s a skinny business. It often appears the outside as probably a bigger business than it really is, but yeah having run traditional businesses and now run a sporting club, they’re very similar. Your people are critical. Our people are critical, whether they’re kicking the ball or whether they’re supporting those kicking the ball or whether they’re running the commercial side of the club, successful clubs rely on great people. All businesses I think have that same philosophy.
Nick Wailes: Danny, just give me a sense, how many employees or how many people are you talking about?
Danny Townsend: Yeah. If you break it out, typically how the business operates is the football side of the business and the administration side of the business. The administration side of the business is about 40 people. Then in the football side, if you count the playing group, all of the high-performance men, women, you’re upwards of around a hundred. Then we have a really wide group of casual staff that will either be working on match day running our community programmes, coaching in our coaching clinics. We got upwards of 200 casual staff that we pay any given month. So all in all, we are paying out about 350 odd people each month. They’re varying degrees of full-time to part-time status.
Nick Wailes: So, you come back to Australia, come into what’s been an incredibly successful club on the fields. But having to ensure that the business running effectively and then doesn’t take very long and then COVID hits. So, give me a sense about what that experience was like? What was the approach that you took to that?
Danny Townsend: Yeah. I think the first thing I would say is it was scary, scary for everyone when COVID first hit. We never really quite knew what it was and how long it would be here for, and what magnitude of disruption it would provide. I think I’m the one that really looks at corporate values as being important. I think they’re often overplayed and people will talk about culture and values. They’ll post them all over their boardroom walls. But they really get tested when times are tough. One thing that we pride ourselves on at this club, apart from winning things, is we’re a family. Like good families, when times are tough, they stick together.
This is going to test whether or not we stick together as a group and come out the other side of whatever is in front of us. We don’t know what it is and how long it’s going to be here for. But my goal was to come out the other side with the same people that we went into it with. That philosophy stood us in good stead because the ownership supported that philosophy, our staff collectively took pain together. Everyone took pay cuts, everyone, including players. Everyone was committed to working together to come out the other side. We came out that first COVID period without losing a staff member. We finished that season and won the championship, which was an enormous, I suppose, relief that we’d been through that. But then we were rewarded for it with the ultimate trophy, which was the championship. Then we started another season thinking it was all behind us.
Lo and behold, it reared its head again and caused us some angst. But I think this season that we are in currently has probably been the biggest challenge. Having had two seasons of COVID interruption, really going into this one, we didn’t expect any more interruption. COVID was sort of behind us. Then Omicron came from nowhere just after the start of our season and really hit us during our peak period, which is January, which is school holidays, traditionally our period where we get a lot of attention.
Our fans, which are largely young families, are on holiday. They’re attending in big numbers. They couldn’t attend. That really, really hurt everyone, both economically, but just in terms of momentum. It just took the wind out of everyone’s sails. But again, we’ve survived, we’re in good shape. The club’s values, as I said, have really, stood us in good stead and here we are.
Nick Wailes: There’s two things that really occur to me that firstly, you’ve got to have a lot of resilience in that environment. Right? Everyone has to be able to deal with multiple setbacks. Then the second thing is you’ve got to have this incredible agility to be able to respond on to what’s going on often on a week-by-week basis or a day-by-day basis. Do you think it’s leaving your organisation stronger for the future?
Danny Townsend: Resilience and the ability to move quickly is something we really learned over these last couple of years. We, as a league, across our men and women’s competitions have rescheduled 88 fixtures. When you talk about rescheduling a fixture, someone on the outside might think, “Oh, just pick it up, and you move the date and the time and you kick off at a different time.” But with that comes having to book a new stadium, having to book all of the staff of the stadium, you’ve got to move the production company, the cameras, the crew, the rigging. It’s an enormous thing to move one game. When I look back five years ago, when I first came in, if someone had asked us to move a game, we’d have gone, “You’re kidding me. We can’t move a game. We’ve got 13 home games, and we know where they are for the next nine months, and we play them on the days that we’re told.”
Now we’re moving games with three days’ notice. It does mean that some of the preciousness and some of the things you took for granted pre COVID, now you look back at that and go, “Wow. We’re pretty high maintenance.” The players and the coaching staff who said, “I can’t. I’m preparing for a game in two weeks’ time. You can’t ask me to move it a day.” Now, we’re saying to Steve Corica, the head coach last week, he was going to Melbourne on Saturday. On Thursday we said, “No, no, you’re not. You’re going to Perth.”
They picked up that day, ran to the airport, got in a plane and went to Perth, played and won. That would’ve been unheard of two years ago. So, it does teach you resilience. I think it brings your group closer together. I think those things now are set. The toothpaste’s out of the tube. You can’t push it back in. That behaviour is now set in people’s ways. I think that’s one of the good things that will come out of this.
Nick Wailes: Okay. What does your sort of community engagement look like? Because it seems that football’s deliberately tried to make itself part of the community. That’s a key part of its strategy. But what does that look like? How do you run and organise that?
Danny Townsend: Yeah, it’s a really good point. It’s one that when I came back to Australia, I looked at what are the strengths. Like any business, you look at what are your strengths. What are the things that you can bank on that your competitors can’t? Participation was ours. As more people turn up, pay up, week in, week out to play football in this country than the sum of Rugby League, Rugby Union, AFL combined. Right? So why isn’t our professional game in a similar level of dominance? It’s because we didn’t have that connection. Over the years, the game our professional league’s 16 years old. It’s arguably almost a generation old. We’re competing against leagues like the AFL and NRL, which are over a hundred years old, five generations old. So we can’t rely on that, “My grandfather was a supporter of X, and my father was a supporter of X. So I’m a supporter of X.”
We don’t have that. So we’ve got to work hard now at not at converting a 40 to 50-year-old mum or dad. I want to convert the 5, 10, 15-year-old young Australian footballer, who wants to drag their mum and dad to a football game, and that starts at community. So I looked at Sydney FC’s community programme, and it was pretty negligible. We have seven local associations in our catchment area. One of the first things I did was reached out to their CEOs and introduced myself and said, “I want to come and see you.” The response I got from each of them was why. What do you mean why? I said, “Because you own my customers. I want to connect with your people because they should be our customers and our fans.” I went round to Sydney, and we talked football, and we talked about the opportunity.
The one thing they were all challenged with was resource. They had resource issues because they’re typically not for profit. What I have as a commercial organisation is resource and said, “Well, you run all these community programmes. I’ve got resource to run them. Why don’t we build joint venture businesses together? Where we’ll come in, we’ll commercialise, them, we’ll do all the hard work. We’ll share the money.” And they were like, “Where do I sign?” That was really the genesis of it. We’ve now, what, five years on. We’ve got seven joint venture businesses with associations at grassroots covering 255 clubs. That is the single biggest driver of growth in our membership. It’s no surprise why.
Nick Wailes: Yeah. It’s a great story and really interesting. Danny, you recently took on the role as the CEO of Australia Premier League as well as your day job. I’d like to explore this direct-to-consumer relationship you want to create and the role of digital in that. What will that look like? What are you hoping that that creates?
Danny Townsend: Yeah. Look, I’ve been sort of in that role in a hybrid capacity for about 18 months. So, as we unbundled from the FA, we had to stand up a business very quickly, a start-up operation. We had no staff, so a bunch of us in different clubs lent our time to the cause. But key to our strategy at APL was all about building a direct-to-consumer relationship with football fans in this country. We set about building a broadcast relationship with Channel 10 and Paramount Plus, which is the streaming service. But at the same time, building digital infrastructure and data infrastructure that would prepare us for the future.
Our view is if we can better understand our fans and our customers and our participants, and we serve them a digital solution that delivers them genuine utility, they’ll use it every day. They’ll engage more often. They’re much more likely to connect to our professional leagues. with that comes, the more traditional revenues of coming members, buying merchandise, turning up to games and supporting our clubs. So, it was very much a what we call we conversion strategy, is converting what we see as survey data records that say there’s millions of people that love our game and converting them into one-to-one data records. We get to know them. We get to understand what they want out of their football experience, and then personalise that experience to ensure they keep coming back, and they’re engaged.
Nick Wailes: So that potentially leads to a rich stream of data and you having access to quite fine grain analytics. What change will you need in your organisation and the rest of the league to be able to effectively respond to that and effectively use that data?
Danny Townsend: Yeah. I say to our team and our people and culture department who had been building the team with me for the last 14 months is that we got to think ourselves as a digital entertainment company with a tech backend because when our sport ... Football is what we do on the pitch. But the way we think about our business is that we are a digital entertainment business because that’s the way our consumers consume things these days. They do it all on web or app. Particularly when you look at the strengths of our game, we are the number one sport in the country for under 35s.
They’re digital native. They’re not reading newspapers. They’re not watching free to air television necessarily. But they’re all on their mobiles a lot. They’re all on their tablets. They’re on their computers. So having a digital first proposition is going to build a foundation for our future relationships with our customers.
Nick Wailes: But it also suggests you’re going to need different people in the organisations. Right? Because that understanding of customers and consumers and the ability to respond to analytics is going to play a much bigger role.
Danny Townsend: Yeah, absolutely. I think when you look at the way people consume sport these days as well and the time, they take to consume it, 90 minutes of football, if you think about what a league and a club would traditionally do, it would say, “I’m going to sell all my media rights, and I’m just going to focus on playing football.” That’s not enough anymore. The football is one thing, that’s your core product. But it is what you deliver your fans around the 90 minutes that really engages them. It’s the short form content, the behind the scenes. We’ve stood up a full production capability. We’ve got digital producers. We’ve got editorial. We’ve had to become a media company overnight because that’s what our fans want. The time it takes to sit down and watch 90 minutes of football, particularly for a 12-year-old, it’s really hard. But they’ll consume football in many, many different ways, largely on their phone. So yeah, that was our clear strategy. I think it’s the right strategy.
Nick Wailes: But how do you monetise that? You can monetise the 90 minutes by selling a cable package or entry into a gate, but some of the other stuff’s quite hard to monetise. Right?
Danny Townsend: Yeah. I think you go back to commercial connection. What sponsorship traditionally was whack my logo on the shirt or around the pitch and have the people sitting on the couch see my brand and potentially connect with it. We ‘re moving out of the real estate business and into the customer acquisition business for our sponsors. So, if we build a rich cohort of consumers who might be in a certain demographic who are in the market to buy health insurance, then I can segment those out and deliver those customers to my health insurance sponsor and have them pay a premium for that.
Because the cost of acquisition for health insurance company’s really high. If I can deliver those customers direct to them digitally because I know who they are, I know what their preferences are, and I know they’re in market to buy health insurance, that’s a far more valuable proposition than a logo on a shirt. So as the consumption of sport changes and the way in which brands orientate with that changing environment becomes opportunity. That’s where the revenues reliance on media companies and traditional sponsorship is changing.
Nick Wailes: So, I want to turn attention now to what to me looks like one of the most exciting developments in sport, which is the growth of the women’s game in football, in particular, but growing in lots of different leagues. Can you talk to me about how Sydney FC approached that and how that is going and what the future of the women’s game looks like?
Danny Townsend: Yes. Look, it has come a long way in a short space of time, I will say. How do I better put it? From a commitment perspective, I think it’s been there, the A-League women or the W League, as was previously known, has been around for about 12 seasons now, one of the longest running elite female sport competitions in the country. But again, when I came in, it was treated very differently to the male part of the club, which I was intrigued by, particularly as a father of two girls that played football. There was just so much that wasn’t right in terms of where attention was provided. It was almost like you’ve got all these fans and members that love the men’s team, but don’t care about the women’s team. I’d ask people like, “Are you a Sydney FC fan or are you a Sydney FC men’s team fan?” You go, “Oh, I’m a Sydney FC fan.” Well, why don’t you go to watch the women’s team?
So, there was this real disconnect between how the two genders were treated. I think we’ve made huge amount of ground, but we’ve got a long, long way to go. Our sport is one of the few that is genuinely gender agnostic. Females and males can play it at the same level, and the grassroots growth of the female game is enormous. So, it’d be crazy for a sport like ours not to take advantage of that and deliver a product that is commensurate with the amount of people playing the game. I think where we are challenged, and all female sports is challenged in, is the commercial side of things.
That’s improving with Women’s World Cup coming in 23, and that’s opened up a bit of interest in it. But the metrics that you typically judge commercial outcomes on are a long, long way off, things like attendance, audiences, they’re just not there. I put it down to just behaviour.
 I think as that continues to change, the commercial metrics around female sports will change particularly football. You’ll continue to see investment. But our perspective as a league and as a club is you’ve got to invest in it now to get the benefit longer term. We are fortunate that the male game drives a lot of commercial outcomes that we reinvest in the female game to enable it to get to a point where it can generate its own commercial outcomes.
Nick Wailes: Okay. So, you see it as an investment prospect. I wonder, you talked a little bit there about attendance of games being a big revenue driver. I’m wondering if you’re seeing a difference in sponsors’ attitudes to the women’s game. So, are there new types of sponsors? Is there an interest in sponsoring that activity that you haven’t seen before?
Danny Townsend: There definitely is. I think Women’s World Cup coming to Australia and New Zealand has helped. I think the success of the Matilda’s particularly has helped. But it’s interesting, when you stare into the belly of a corporate opportunity that started with the female game, and the interest in that is genuine. But when they look at the metrics, it’s like, “Oh, I’m not sure I can really justify spending that sort of money. So can I also have some assets on the male side of the game to bolster the metrics to justify the investment?” Which is fine because that’s part of that maturation process commercially that we are fortunate that we can use both genders to drive a collective outcome that one day I’m sure will be more balanced, let’s say.
Nick Wailes: Danny, I wanted to talk, lots of industries characterised by disruption. The one that I think affects you the most is the disruption in the media and the traditional broadcast model, those type of things. Can you talk to me about that change? How that’s impacting you and the way that you are thinking about the future of that?
Danny Townsend: Yeah. It’s definitely a global, I suppose, trend, as consumption of media has evolved over the years. Largely professional sports of all kinds of have really survived on the back of media rights fees that have been paid by largely originally terrestrial broadcasters. Then there was the emergence of cable and satellite TV. Those models are very high margin models, which enables those type of companies to spend significant amounts of money on rights. As consumption has shifted to a digital first proposition and streaming has become a more prominent player in the distribution of rights, just that the business model doesn’t sustain the margins that those traditional broadcast models did, which means it’s not affecting the major tier one sports like the premier league or the NBA or the NFL, or those type of things. But all the others are being compromised because the traditional broadcast models are not as profitable as they used to be.
The substitution in streaming is a lot much lower margin. Therefore, their willingness to spend rights is diminished. However, that opens up a much bigger opportunity for sports to build direct to consumer relationships with its customers. That’s where our focus is around football. We have that eight million people that identify with football in this country. We only know that through survey data. So what we’re about is building the most sophisticated data and digital infrastructure around a code that will enable us to have a one to one data relationship with every fan of football in this country, and then serve them an experience that is tailored to their own personal preferences. If we can do that, and when we do that, because we’re in the process of doing that, we’ll have a far richer relationship with our fans that will ultimately bear more commercial outcomes down the track.
Nick Wailes: Does that mean you are potentially dis-intermediating the broadcasters that is Sydney FC going to, for example, start broadcasting its own games and packaging its own content or is the relationship slightly different?
Danny Townsend: It’s a league-driven outcome, so you’re not going to be doing that on a club-by-club basis. But at the APL, if I put my APL hat on, that’s absolutely our strategy. It’s not to disaffiliate with traditional media. I think there’s always a role to play for all those with got a fantastic relationship with Channel 10 and Viacom CBS, Paramount Plus. But if you just look at the way the media is structured in Australia, you’ve got Fairfax at nine, you’ve got News Corp, Foxtel, you’ve got seven, you’ve got 10. Everyone sort of backs their horses and then sort of really promotes their horses hard, but sort of forgets about the others.
The adjacency that we had in sport historically is being diminished. So, you’ve really got to own your own relationship with your customer. Fortunately, with the evolution and sophistication of digital and data infrastructure these days, sports can do that. Sports can hold the keys to their future. Where in the past, the sports were heavily reliant on others to fund those relationships with their customers.
Nick Wailes: Okay. So, you’re sort of having to really think about new business models and new ways of doing things. I’ve heard you talk about it being a global game to what extent are you looking at what’s happening with a China club or a Spanish based club and drawing their business lessons there or where do you look for inspiration about running the business and its next stage of development?
Danny Townsend: Yeah. I think I was fortunate in my previous stage of my career where I was consulting to some of the biggest football clubs, baseball clubs, basketball franchises, Formula One teams. So, I saw a lot of best practice, but it’s all got to be looked at through the lens of the domestic market that we’re in. One thing that I know and why so many Australians are successful in global sports marketing is that we are a highly competitive marketplace for sport. If you are not doing and delivering best practise, it’s really hard. I look at having lived in New York, there are more professional sports teams in Sydney than there are in the tri-state area of New York, New Jersey and Connecticut. You think about the population size there, it’s tenfold of what’s in Sydney.
So, we are in a very competitive sports marketing landscape. We’ve got to think differently. I think some of the best innovations come out of this market for that reason. But you’ve also got to look abroad, you got to constantly change. The market is moving. You think about things like Web 3 and tokenisation, and all this. That this wave of crypto that’s washing over the broader economy, but that’s also really prevalent in sports and how we navigate our way through that. There’s always new things around the corner and getting ahead of that and executing appropriately is really important.
Nick Wailes: Danny, you talked about your career and injuries along your career, and I’m interested in how you as a CEO, think about player management and player wellbeing? What’s changed in the time since you played?
Danny Townsend: I think when you look at the change in sophistication around high performance, back to when I was playing, there was very little load management. There was very little analytics. There certainly wasn’t the GPS data and all the other wellbeing data that we get today. There’s probably no surprise that the injuries that were happening back in those days are far greater than they are today. We invest a huge amount of money at Sydney FC on the wellbeing of our players from under 12s, all the way through to our first teams for men and women. Because if they’re healthy off the field, their ability to perform on the field is better that’s really key to our strategy.
Nick Wailes: Danny, how do you deal with the trade off between the short-term pressures to succeed on the paddock and then the long-term career goals of players or the long-term aspirations, surely that you have to balance those two things.
Danny Townsend: Definitely. Look, I’m a real advocate for educating players and work closely with the PFA from when I was playing as a PFA delegate now to my role. It’s really hard to get into a 19-year-old professional athlete that they should think about life after football. Because by nature of being a professional athlete, you’re usually so focused and partly been in a sycophantic environment where your parents, your friends, your relatives since the age of six have told you what a wonderful footballer you are. Therefore, you’re never going to be anything else other than a professional footballer. Then you become one. Then you’re like, “Well, of course. I was always going to be one. I don’t need to think about what happens in 12 years’ time when I’m 32 and no longer able to play.”
I saw a lot of teammates of mine who didn’t have the opportunity I had to get an education while I was playing, who finished their much better careers than I had and finished, and effectively were uneducated, had no work experience at all and are laying roof tiles. It’s not that they’re incapable of doing anything, but they just never took the time to do it because they didn’t think they needed it. There’s only so many coaching jobs, only so many jobs in the media. Once you exhaust those, you’re back into the workforce with very little to lean on.
And I spent a lot of time with our team and actually within Uni New South Wales and the work we do with the uni around really encouraging our players in our academies, before they even become professional, to focus on their schooling, get through to the high school certificate, educate themselves, where possible go to university, whilst they’re playing. Players have a lot of downtime. They train for four or five hours a day, and they’ve got another four or five hours where they’re sitting around just playing video games or doing things that 19-year-olds or 20-year-olds do.
I really impress upon them, “Go to university. Get a degree.” If it takes you six, seven years, just do it because there’ll be a time inevitably in your career where you’re going to need it. I think that’s starting to change it is hard sometimes as I said, because yeah, young confident players don’t often want to think about what life after football means, but inevitably they end up there, and we got to prepare them best for it.
Nick Wailes: Danny, it’s been a fascinating conversation. I hope you go great on the field, but fantastic to learn a little bit more about the organisation and running the business. So thanks for joining me.
Danny Townsend: No, thanks for having me on, Nick. Appreciate it.
Narration: According to Danny, relationships between sporting clubs and their customers are changing at a rapid pace. With new digital technology and access to data, sports clubs are in a unique position to connect and grow alongside their fans.
So, what does the future hold? And what impact can these data driven decisions have on the economic value of the sporting industry?
From unique user journeys to using AI in gymnastics judging, there is plenty of possibilities. Let’s hear from Dr Felix Tan.
Felix Tan: I’m Felix Tan and I’m an Associate Professor of Information Systems and a Director of UNSW Unova research labs at UNSW Business School. My research interests are in Digital Transformation for good, Digital Platforms, E-Commerce, Sports Analytics and Enterprise Systems. So at UNSW Unova research labs, I lead multidisciplinary research teams and we collaborate with businesses to co-create solutions, capability, practises to support their Digital Transformation journey.
So, for example, over the last few years, we have been working with SAP, a software partner studying the role of data analytics in enabling organisations in the sporting industry. The case studies that we’ve written about is of Bayern Munich Football Club, Red Bull Munich Ice Hockey Team, RL handball team in Manheim, Gymnastics Federation in Europe. And we study how these sporting organisations achieve business performance and sporting excellence through data analytics.
Overseas professional bodies are already using data analytics to enhance the sporting experience for fans and also for sporting performance of athletes. Particularly spectator sports, like the NBA, NFL, National Baseball League in America, professional football in Europe. So, from our research we uncovered rare insights to the applications of data analytics to player and team performance during and after game day, event management on game day and customer fan engagement.
We review through our research, how data analytics enable these organisations to achieve transformation of its business ecosystem. We also uncover new practises and formative strategies that drive industry and culture change in the industry and build a network of core specialisation amongst its stakeholders because generally technology and digital innovation and the use of data have the means to improve how fans engage with the sport and also how athletes playing the sport can engage with fans.
One of the projects that we did with SAP was to seek a better understanding of how professional sporting organisations like Bayern Munich Football Club use data and analytical solutions to achieve leadership, not just from a sporting performance perspective, but also from a business perspective as a highly successful running organisation.
So, what we did was put together a case study of Bayern Munich’s digital four point or transformation journey. And what we learned was some of the very interesting things that they did with data analytics, particularly around game day performance by the athletes, event day management and around fan engagement. So, the research review insights on how the data can be used to benefit businesses and their customers and their journeys.
So, data analytics gives management of sporting organisations, the power and the opportunity to identify new opportunities and find new solutions to known problems. In football, data driven decisions can have huge economic and social impact on the organisations across recruitment of talent, performance, event day management and marketing.
So, for example, user journeys of fans are very different. So, from our research with Bayern Munich, we revealed that no two fans are the same. And in the case of Bayern Munich, 81 user personas were found to be associated with the club. So, 81 different user journeys and potential use of data. So, for example, a 20-year-old fan from Shanghai and how he engages with the club will be very different from an 80-year-old fan in Bavaria, will be very different. So, the opportunities for sports analytics and data analytics to create opportunities to create and target product service systems of the different personas you can imagine is huge.
Narration: So we’ve heard about how data can improve the user experience for fans, now let’s hear more from Felix about the role analytics can play in the evaluation of sporting success.
Felix Tan: The impact and the value of sports analytics for the business of sports in Australia and ASEAN is huge. Australia is a big sporting nation and like many countries in AsiaPac, has a huge fan base for professional clubs in Americas and Europe, especially in spectator sports such as Football, Rugby League, Rugby Union, AFL. Football, for example, has a huge fan base across the AsiaPac, including Australia, where countries often invite top teams from the top leagues in Europe to Australia and the AsiaPac and these events are usually very well received.
So, we can see the appetite for sports data is high and hence analytics demand would also be very high. A case in point in football and the value that it brings, it is a multi-billion-dollar industry and refereeing and officiating or judging in the sport of Football is a vital aspect of the sport and has huge ramifications for the business.
But it’s also prone to errors arising from the inherent limitations to human cognitive functions and usually the speed of sports. So, technology has the potential to assist in decision making, but also to change policy as we have seen in video assisted referring technology, where the technology can help officials better enforce the laws of the game in the spirit that the game should be played and delivering the appropriate sanctions and disciplinary actions to the offending players.
So, the application of the technology can also be used in other sports. In another work with colleagues in Belgium and Japan, we studied the tensions and paradoxes that are related to artificial intelligent powered evaluation of artistic gymnastics.
Given the complexity of scoring and the speed of athletics performance, technology can help alleviate some of the problems of judging and sports analytics has a very big role to play in delivering value for that sport.
Narration: Thank you for joining us for The Business of Sport.
To find out more about the AGSM Business of Leadership podcast series, search for AGSM’s the-business-of-podcast online or find us on your favourite podcast platform.
Please share, rate and review and subscribe to AGSM’s business podcast and look out for future episodes.
In the meantime, you can follow AGSM at UNSW Business School on LinkedIn and Facebook for more industry insights for an accelerating world or find us at agsm.edu.au.
Until next time, thank you for listening.
Read BusinessThink's <a href="https://www.businessthink.unsw.edu.au/articles/sydney-fc-danny-townsend-business-of-sport" data-new-window="true" target="_blank" rel="noopener noreferrer">Sydney FC’s Danny Townsend: kicking goals for the business of sport</a> for more information.

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