In March 2020, just before the pandemic temporarily shut down soccer, Drogheda United and club chairman Conor Hoey were flying high.
Drogheda had just thumped UCD 5-1 in the League of Ireland’s second tier. Hoey allowed himself to dream of scenes of Premier league promotion jubilation among the club’s faithful following at United Park. The pandemic had other ideas, however.
“It was great; we were on the crest of a wave then,” he said. “We were probably top of the league, the First Division at the time. The buzz was fantastic around the place. The expectation that we had as well was that we could win the league.
“We did win the league, in the end, up in Cabinteely [in October 2020], with maybe 100 of us there. It was great, but it wasn’t the same.
“I remember the previous year Shelbourne won the First Division at our place in Drogheda with a packed house. Three thousand fans, the place was going mad, rivalries all the rest of it. Even though we lost, it was still a brilliant night, and it’s what football is all about.”
Contrast those wild scenes in 2019 to the games now where Hoey is among just a handful of officials present at matches, and you get a sense of what sport is missing.
Without the fans, Drogheda United, like other clubs across Ireland, has had to change its business model to keep up with the pandemic. Revenue generators from innovative sponsorship arrangements, new streaming services and social media activations have helped keep the floodlights on.
Hoey believes Drogheda’s ability to engage with fans and come up with new sponsorship arrangements has been crucial to keeping the club in their thoughts and survive.
“Could you imagine if we had this pandemic 15 years ago and we didn’t have the social media engagement?,” he asked. “People would’ve forgotten us – every club would’ve been forgotten. Social media, YouTube, whatever it may be, has kept clubs alive, I’d argue, in difficult times when so many of our fans are stuck at home.”
Drogheda United Chairman Conor Hoey celebrates his side's opening against Cabinteely. Photo: Stephen McCarthy/Sportsfile
However, even with the growth of these new forms of business, without Government and FAI support, Hoey is under no illusion as to the disaster Irish sport faced.
“The FAI and Government have kept us alive, to be honest with you,” he said.
Fans are an essential revenue stream for clubs helping keep the business model afloat.
The sports market here is by no means small. According to sports sponsorship consultant Onside, six in 10 adults in Ireland are ‘sports consumers’.
These consumers’ opportunities to attend live sports – and the resultant loss of matchday revenues across ticketing, merchandise, and sponsorship fee adjustments – have been hit hard. Onside estimates the impact for many sports globally and locally to be around 20 to 50pc of revenues.
Ireland’s most prominent sports are feeling the pain.
The GAA recorded a deficit of €34.1m in 2020. Over the 2019/2020 season, the Irish Rugby Football Union (IRFU) reported a record €36m deficit in its accounts, blamed on the ongoing ban on supporters attending matches. The practically empty Aviva Stadium over the course of this season’s Six Nations won’t help its efforts to eat into that loss.
The last year may have hurt, but it hasn’t all been doom and gloom for rugby.
Earlier last month, private equity firm CVC Capital Partners agreed to buy a stake of Six Nations Rugby in a five-year deal reportedly worth over £365m – the IRFU could net around €56m as a result.
With Covid continuing to bite and no fans passing through gates, how bad has business been for clubs and organisations and what new forms of business will be around for good?
Rob Hartnett, chief executive of Sport for Business, a publishing, networking and events business that is focused on connecting business and sport, said Covid had a significant impact.
“You can’t stop the main reason for your activity without that having a dramatic impact on every aspect of the activity,” he said. “There has been an impact on costs that will be detrimental for sport [across] everything, ranging from the elite level all the way down to your local [club].”
All sports won’t be affected equally, said Hartnett. He believed the most significant impact would be felt at the highest levels of sport in Ireland, such as professional rugby. Fixed costs at this level are harder to remove when revenue streams, such as fan attendance, are switched off.
“Primarily, the loss of being able to sell 50,000 tickets to the Aviva Stadium for however many games a year is huge,” he said. “This weekend alone, you’d be looking at games with Leinster and Munster, home matches in the Heineken Cup. Those would be red-letter days in terms of financial income.”
John Trainor, founder and chief executive of sponsorship consultancy Onside, recognised the role sponsors had played bringing money into clubs and organisations. He said most of his sponsor clients had decided to stay with their partners and make short-term adjustments to commercial agreements. “Our clients also know that partners that are visible now are likely to be remembered," he said.
Many properties we are looking at are agreeing to sponsorship deals at rates 50pc less than what they would have garnered pre-Covid.
Onside’s research estimates 2020 knocked €54m off the sponsorship market in Ireland, dropping in overall value to €170m, down 24pc year on year. 2021 is expected to show a return to growth of around 7pc.
Trainor added Covid had a near-term impact on the value of sponsorship rights, with more businesses also shooting for a harder sales-based outcome from their investments in sport.
“Under intense pressure to bring in revenue absent as a result of the inability to sell tickets, many properties we are looking at nationally and internationally – particularly those below the top-tier national pro sports level – are agreeing to sponsorship deals at rates 50pc less than what they would have garnered pre-Covid,” he said.
“Although those conditions will ease with the expected return of fans over the next 12 months, previous experience with price elasticity in sponsorship indicates fees will not immediately bounce back to pre-2020 levels.”
Trevor Twamley, a co-founder of agency Sport Endorse, admitted it had been a “really tough” time for clubs due to the dual hits to sponsorship and attendance.
Issues had been across the board, according to Twamley, who said when sport stopped the first time around, his business dropped by 30pc.
Despite the pandemic, Twamley feels good deals are there for both clubs and those businesses in the sponsorship market. He believes innovation from clubs, like new streaming services, new brand social media activations and podcasts, can help.
“I would suggest [clubs] think outside the box during these tough times,” he said. “See how you can build activations with your sponsors. Make them stay with you; stay the distance until the gates open back up again.
“Bring those people [club players] to the audiences. If that is in an interview or a podcast, let’s do more of it,” he added.
One business helping clubs get matches to locked down fans is Nemeton TV. Chief executive Irial Mac Murchú pivoted part of his business toward streaming games from the GAA, when it returned. He believes streaming has a bright future in Ireland.
“It still amazes me to this day the position we are in, but it also makes me proud that Nemeton has enabled fans of the GAA to tune in and watch streamed games,” he said.
“For our camera operators, it is a world apart from what they previously experienced; with our new [Amazon Web Services] cloud-based streaming service, we only need to send one operator to a game as opposed to two or more.”
On streaming, he added: “This genie is never again going back in the bottle.”
When clubs can open up to fans again, Mac Murchú believes streaming online will generate additional club revenue. Clubs will welcome their regular supporter base back into their grounds with other supporters tuning in online.
With streaming services growing and helping clubs survive the pandemic, other online-only sports channels could come in and hoover up sports rights this year.
Eir has decided its sports offering wouldn’t participate in the latest rounds of sport TV auctions, while TV rights for the GAA are set to come up for negotiation.
Could the likes of Amazon Prime, which already broadcasts English Premier League games, enter the market and snap Irish sport TV rights? Well, GAA commercial director Peter McKenna referred to this possibility recently.
Other trends are also emerging, according to Onside’s Trainor. He believes we will see new, expanded revenue generation models behind sports and sponsorship and new payment methods for how sponsors pay rights holders.
He also anticipates a marked rise in private equity investment in sports, such as the one agreed between CVC and the Six Nations.
Many of these emerging trends – and the potential for fans re-entering stadiums once vaccinated – have helped foster a sense of optimism among sports clubs and organisations.
Hartnett runs a quarterly confidence survey through Sport for Business covering those that have an interest in sports.
His most recent survey found respondents were not ready to blow the whistle just yet and were confident things would bounce back in the medium-to-longer term.
“There’s a degree of optimism that sport has such an important part to play in society, in our own personal lives, within media and sponsorship that it will bounce back,” said Hartnett.
