Patrick Moloney, Thomas Trier Hansen, Gustav Plantin
26 March 2024
From field to finance: Maximising revenue through sustainable strategies in sports
In the ever-evolving landscape of sports, sustainability is playing a more prominent position. Sustainability in sports is not just about reducing environmental impact, it is about embracing a fundamental shift towards responsible stewardship that resonates with fans, sponsors, and stakeholders alike.
From reducing operational costs to attracting eco-conscious partnerships, the sports industry is increasingly recognising sustainability as not just a choice but a strategic necessity for long-term success.
In this article, we explore how sports organisations can harness the power of sustainable strategies to maximise revenue while upholding their commitment to the planet and future generations.
In an era defined by growing environmental consciousness and social responsibility, sustainability has emerged as a critical imperative for the sports industry. Beyond its ethical implications, sustainability offers compelling business advantages that resonate with stakeholders across the board. From reducing operational costs to attracting lucrative sponsorship deals and enhancing brand value, the adoption of sustainable practices presents a clear and compelling business case for sports organisations.
Forest Green Rovers, Seattle Krakens and Bristol City represent just some of the clubs that have seen their commercial sponsorship revenue bolster in recent years as brands seek to align with their sustainability ethos. Similarly, stadiums such as Allianz Arena in Munich and Wembley in London have achieved notable reductions in operational costs by implementing energy-efficient measures, herein contributing positively to their overall financial performance.
In the competitive landscape of sports, revenue generation stands as a constant priority for organisations striving for financial success and stability. Embracing sustainable strategies not only provides a pathway for driving immediate revenue growth, but also enables organisations to position themselves for long-term success in a rapidly changing world prone to new risks. For instance, Zurich Insurance recently estimated that out of 92 stadiums in the top English leagues, 39 face a high risk from three or more climate hazards by 2050.
The vulnerability to such hazards has fuelled a rising trend of suspensions or cancellations of sporting events in recent years, directly impacting the revenue streams of many organisations.
Below, we delve into how adopting sustainable strategies can unlock new revenue streams, enhance brand value, and create long-term financial sustainability for sport organisations.
Operational efficiency is essential for the financial success and sustainability of sports organisations, facilitating the maximisation of resource utilisation and the minimisation of waste. By reducing their environmental footprint, organisations can streamline operations, lower costs, and enhance competitiveness effectively.
One key aspect of this puzzle is energy management, given that sports facilities are significant consumers of energy for lighting, heating, cooling, and equipment operation. Reports from entities like Sport England or the sports organisations’ own sustainability statements correspondingly tend to underscore that energy costs rank among their most substantial operational expenses.
By investing in energy-efficient technologies, sports organisations can reduce their energy consumption and lower their utility bills. A relevant example Allianz Arena in Germany, which achieved a 60% decrease in energy consumption through the implementation of LED lights and the adoption of geothermal energy solutions.
Water and waste management are other crucial components of operational efficiency for sports organisations. By adopting water-saving technologies like water recycling systems and rainwater harvesting, coupled with efficient waste management systems that include composting organic waste and recycling materials such as plastics, paper, and metals, as well as enhancing procurement practices and packaging choices, sports organisations can effectively reduce their environmental footprint.
Accordingly, by improving operational efficiencies, sports organisations can enhance their financial performance and redirect savings toward core business activities, such as athlete development, fan engagement and facility enhancements.
Sustainability action plays a crucial role in enhancing the resilience and long-term viability of sports organisations, enabling them to effectively navigate uncertainties and build enduring value in several critical areas.
Firstly, sustainability action enables sports organisations to develop climate resilience plans, essential for mitigating risks associated with climate change and extreme weather events. Through comprehensive climate risk assessments and the implementation of adaptation strategies, organisations can reinforce their infrastructure. This proactive approach safeguards against disruptions, ensuring uninterrupted operations amid evolving environmental conditions.
Secondly, diversifying revenue streams beyond conventional sources like ticket sales and broadcasting rights is facilitated by sustainability efforts. By forging partnerships with sustainability-focused entities and exploring initiatives beyond sport, organisations can tap into new markets while aligning with sustainability objectives. This not only enhances financial stability but also cultivates resilience to market fluctuations.
Thirdly, supply chain resilience is critical for sports organisations to maintain uninterrupted operations amidst disruptions. Prioritising sustainability in supply chain management, including ethical sourcing and supplier diversity, bolsters flexibility and responsiveness to market dynamics. By mitigating risks and safeguarding against supply chain disruptions, organisations can ensure the continuity of operations even in challenging times.
Lastly, maintaining a robust brand reputation and earning stakeholder trust are vital components of organisational resilience. Sustainability action enhances brand reputation by showcasing a commitment to responsible practices. Transparent communication and stakeholder engagement foster trust, loyalty, and goodwill, equipping organisations to navigate crises and uphold resilience in the face of adversity and regulatory changes.
With mounting legislative scrutiny and regulatory pressures confronting sports organisations, prioritising sustainability initiatives is imperative for ensuring regulatory compliance – which can carry substantial financial implications. The CSRD will, for example, place a significant regulatory burden upon the sports industry across multiple ESG topics.
"Furthermore, social sustainability, including respect for human rights, represents an increasingly significant expectation to sports organisations' sustainability efforts and regulatory compliance."
By implementing sustainability due diligence practices across various operational areas, sports organisations can proactively address regulatory requirements and mitigate the risk of non-compliance, which can result in legal liabilities, costly fines, penalties and reputational damage.
For instance, optimising resource management through energy-efficient technologies, water-saving measures, and waste reduction programs not only reduces environmental impact but also ensures compliance with regulations governing resource conservation and pollution prevention. By adhering to environmental regulations and obtaining permits for activities that may affect the environment, sports organisations avoid the financial burden of legal proceedings and litigation, safeguarding their financial stability and reputation.
Furthermore, social sustainability, including respect for human rights, represents an increasingly significant expectation to sports organisations' sustainability efforts and regulatory compliance. This encompasses various areas such as diversity and inclusion programs, fair labour practices and responsible sourcing policies, where sports organisations are expected to live up to national legislation, but also requirements from sponsors to act responsibly. For instance, during the last couple of years some football clubs have faced investigations into poor working environments by national authorities.
Organisations that rely on recruiting talents, often through a network of agents, from other countries may also want to consider the risks of modern slavery in their value chain and report on their efforts to combat and manage modern slavery risks as in the case of the UK Modern Slavery Act.
By investing in sustainable practices across their operations, sports organisations can herein ensure regulatory compliance while simultaneously enhancing environmental and social stewardship and financial sustainability.
Engaging fans in sustainability initiatives is not only an opportunity for sports organisations to make a positive impact but also a strategy for driving revenue growth and building brand loyalty. By providing sustainable merchandise options and organising eco-friendly events, sports organisations can create meaningful experiences that resonate with sustainability conscious fans.
In a Capgemini Research Institute’s fan survey (2023), 67% of the fans across countries and age groups felt disappointed that the teams/players they follow are insufficiently prioritising environmental sustainability. Here, sustainable merchandise presents a unique opportunity for sports organisations to align their sustainability goals with fan preferences.
By offering products made from sustainable materials such as organic cotton and recycled plastics, sports organisations can appeal to environmentally conscious consumers and differentiate themselves in the market. Moreover, incorporating sustainable design principles into product packaging and labeling can further enhance the appeal of sustainable merchandise and communicate the organisation's commitment to sustainability.
Sports organisations can significantly enhance the fan experience at events by incorporating sustainability initiatives alongside their merchandise offerings. Green events, which prioritise waste reduction, energy efficiency and sustainable practices, not only stand a better chance of garnering support from local communities, but also effectively demonstrate commitments that resonate with fans.
By integrating sustainability into event planning and operations, sports organisations accordingly have the chance of enhancing fan experience, demonstrating their commitment to environmental responsibility, while also securing support for future events.
Engaging fans in sustainability initiatives is a strategic opportunity for sports organisations to drive revenue growth, build brand loyalty as well as make a positive impact on the planet. Sport fans are highly attentive and likely receptive to sport organisations’ communication. Not surprisingly, “Advocate for climate action through communication” is one of five principles in UN’s ‘Sports for Climate Actions’ initiative that both major unions, specific tournaments, and top-flight sports teams have signed.
Community engagement is another cornerstone of sustainable operations for sports organisations, as their activities often have significant social, economic, and environmental impacts on local communities. By actively involving community stakeholders in decision-making processes and fostering meaningful dialogue, sports organisations can maximise the benefits of their operations while minimising disruptions and negative externalities (which can significantly impact an organisation’s bottom line).
One key aspect of community engagement is building strong relationships with local residents, businesses and local government. By listening to community concerns, addressing their needs and incorporating their feedback into decision-making processes, sports organisations can build trust, goodwill and long-term support.
This may involve hosting community meetings, conducting surveys and establishing advisory committees to ensure that community voices are heard and respected. By proactively engaging with the community, sports organisations can identify opportunities for collaboration, address potential conflicts and correspondingly build partnerships that benefit both the organisation and the community.
Sponsorship and partnerships play a vital role in the financial success and sustainability efforts of sports organisations. As companies increasingly prioritise sustainability in their corporate strategies, sports organisations have an opportunity to attract eco-conscious allies and forge mutually beneficial partnerships. Eco-conscious sponsors are companies that prioritise sustainability in their operations and seek to align themselves with organisations that share their values.
As consumers increasingly demand transparency and accountability from the brands they support, companies are looking for partners that share their values. By demonstrating a commitment to environmental and social responsibility, sports organisations can differentiate themselves in the marketplace, position themselves as attractive partners and attract premium sponsorships deals, thereby unlocking new revenue streams and enhancing their brand image.
Eco-conscious sponsors are not only interested in traditional advertising opportunities but also in collaborating on sustainability initiatives and co-branding opportunities that showcase their commitment to responsible business practises. Partnerships with sustainability-focused organisations can thus provide sports organisations with valuable expertise, resources, and networks to advance their sustainability efforts. By collaborating with these organisations, sports organisations can access best practices, innovative solutions and industry insights that can help them enhance their sustainability performance and drive positive change.
Sustainability action is now a key driver for attracting investment across all industries, including sports. This strategic shift towards sustainability not only aligns with growing societal expectations but also presents compelling financial opportunities for investors seeking sustainably responsible ventures.
One way in which sustainability action attracts investment into sports organisations is by enhancing their brand reputation and market positioning. Investors are increasingly drawn to organisations that demonstrate a commitment to environmental stewardship and social responsibility, viewing them as forward-thinking and resilient in the face of evolving market trends and regulatory pressures. By integrating sustainability into their ethos and operations, sports organisations can differentiate themselves in the marketplace, appealing to socially conscious investors who prioritise ESG factors in their investment decisions – and also tangible financial results.
It is now demonstratable that companies with high ESG performance outperform medium performers in total shareholder return, in some instances outperformance can be as high as threefold. There is no indication that sports organisations would not experience a similar gap between high and medium ESG performance.
By strategically leveraging sustainability, whether through credible partnerships, sustainable merchandise, or green sponsorship packages, sports organisations can tap into new revenue streams and attract investment from impact investors, private equity firms and sustainability-focused funds. Simultaneously, they enhance their appeal to environmentally conscious consumers and sponsors, further enhancing their market position and financial sustainability.
In conclusion, the sports industry has a unique opportunity to harness sustainability as a catalyst for revenue growth and business innovation. This goes beyond mere adoption of eco-friendly practices - it requires a comprehensive approach ingrained in every aspect of the industry. Operational efficiencies, for example, not only drive cost savings but also demonstrate a genuine commitment to environmental responsibility, resonating with fans and sponsors.
Consequently, this positions sports organisations to attract premium sponsorship deals and partnerships, while simultaneously enhancing the fan experience and driving revenue growth through innovative offerings and engagement opportunities. By embracing sustainable strategies across venue operations, sponsorship & partnerships and fan engagement, sports organisations can maximise financial performance while also making a positive impact on the planet and society.
As sustainability continues to gain prominence in the sports industry and beyond, organisations prioritising environmental and social responsibility will not only secure their competitive advantage but also contribute to a more sustainable and prosperous future for all.
Stay tuned for our next article where we will focus upon the new sustainability regulatory landscape and what this means for the sports industry – especially the CSRD.
Want to know more?
Patrick Moloney
Director, Strategic Sustainability Consulting
+45 51 61 66 46
Thomas Trier Hansen
Chief Advisor
+45 51 61 23 59
Gustav Plantin
Analyst, Ramboll Management Consulting
+45 60 36 17 71