Sports and Business

What the Business World Can Learn from the Sports World Going Dark

The pandemic triggered enormous changes, making it difficult for small businesses to survive. As the sports world went temporarily dark, it brought attention to the fact that sports and small businesses owners have a lot in common. — By Vincent Pane

In 2020, strange things happened. Millions of people went home to work remotely. Restaurants limited food delivery to pick-up or drive through. The sports world went quiet. No baseball. No basketball. No soccer. No Olympics.

People learned how important sports were in their lives as far as opportunities to share enthusiasm with others at an arena or share time with family and friends watching an event at home. Sports gave people a reprieve from distressful times and demonstrated the importance of teamwork to win.

At the same time, small businesses began to shut down as the inability to serve customers, logistics logjams, and supply chain disruptions took a toll on revenues and drove costs up. There is also a huge segment of small businesses tied to the sports industry, from printers to food vendors to ticket takers.

Though two very different sets of businesses, sports and small businesses can learn from each other as they look to set a path for long-term sustainability and a better ability to respond to such a massive disruption as the one experienced.

Singing the Blues
A line from the song American Pie says, “I met a girl who sang the blues, And I asked her for some happy news, But she just smiled and turned away.” That is how it felt when sporting events were shut down, some right at the point when they were ready for playoffs.

Though the sports world shutting down hurt the fans and players, the economic impact was catastrophic in terms of the hundreds of thousands of jobs lost and the small businesses hurt financially. What is seen on the court or field is the culmination of the effort of a lot of people, from players to event planners and fans to coaches.

It was not just the professional sports that were shut down. High school seniors were denied their ability to enjoy final football games, softball tournaments, and track-and-field events they had trained so hard for. There was a seldom addressed economic impact, especially on local small businesses, to school sports going quiet. Small businesses printing T-shirts and signs, local vendors selling hot dogs, and service stations selling gas to the bus drivers and parents attending sporting events suddenly saw their revenues drastically decline.

The connection between professional and amateur sports and small businesses is tight, becoming most apparent during “bad news times.” Patrick Rishe with Washington University in St. Louis was asked by ESPN to estimate the economic impact of shutdowns of major professional leagues, the NCAA and youth sports. The economic estimate took into consideration different types of expenses – ticket prices, hot dogs purchased at events, money spent on the road taking kids to tournaments, wages for ticket takers and stadium employees, TV revenue losses, and tourism related to youth sports. The $12 billion estimated loss did not even include sports like tennis, golf, NASCAR, and outdoor recreational activities. So $12 billion is an under-estimate, and the real economic loss is much more.

Sports and Business Intersect via Technology
The sports industry had to find a way to survive. The economy could no longer depend on the “substitution effect” in which fans will just find something else to do for fun if they can no longer attend sporting events. The pandemic made it clear that this time things are different and going to stay different in many ways over the coming years.

The economic impact of small businesses closing temporarily or permanently is astronomical – difficult to measure due to the depth of the impact. There are 30 million small business jobs vulnerable to loss. These jobs normally account for 50 percent of all private-sector jobs, but they make up 54 percent of the jobs most vulnerable due to the pandemic. Unable to rely on business-as-usual, business owners had to find a way to survive.

This is where the strategies in the sports world and the business world intersect.

In the sports world, utilizing technology was a top strategy. For example, many games are held now with few or no fans in the stadium, but they are available to watch on a variety of technologies – mobile technology, streaming on sites like YouTube, and conventional TV. Some of the innovations reflected the passion of sports enthusiasts and the athletes they adore. For example, Formula E driver Jean-Eric Vergne, who had raced on the F1 circuit, and F1 driver Lando Norris organized an online championship called the “not the … Aus GP” when the Australian Grand Prix was canceled. Norris became the most-watched streamer on Twitch on the virtual race day.

The sporting industry also used technology to enhance what had been a mostly manual process of recruitment or scouting. College athletes are wearing positional data wearables, baseball players are tech monitored, and training centers collect biomechanical data.

Small businesses have also had to adapt to consumers who turned to technology for their options. Suddenly, people who never used a food delivery service or ordered items sold by small businesses online are now comfortable with this process. Some people say they will never go back to stadiums after buying a 65-inch TV to watch sports from the comfort of their house, and some consumers say they see no need to drive to a mall and shop when they can shop online.

What will the hot dog vendors and T-shirt printers do? They will have to find new revenue channels, form new partnerships and find new markets. Food truck owners in Carroll County, Maryland, did just that when the local sports teams were shut down. They started doing food truck nights for fire halls, selling grab-and-go meals for weekend meals, set up at breweries, and expanded their coverage areas. Food trucks, the equivalent of arena vendors but on wheels, now market online to let people know their location and to advertise their unique recipes.

All businesses must anticipate that some pandemic-driven changes are permanent, so they need new strategies for the ongoing engagement of customers.
Separating Permanent and Temporary
All businesses must anticipate that some pandemic-driven changes are permanent, so they need new strategies for the ongoing engagement of customers. The difficulty is separating what is temporary and what is permanent. Even the smallest businesses should continue to adapt with new offerings and new supply sources, adjusting work responsibilities to cover necessary changes in production, developing new networking strategies, and anticipating changing consumer needs.

Small businesses are the backbone of the U.S. economy, usually humming along and getting little notice among the large corporations. Now their influence and importance is appreciated, and the mega-corporations can help by partnering and collaborating with small businesses through streamlined contracting processes and community-focused purchase orders. It is one opportunity for them to work toward fulfilling their promises to expand diversity in their supply chains and to help communities.

In the new normal, sourcing professionals need to “think smaller” at times to help small businesses, and small businesses need to “think bigger.”