In the upcoming weeks Ive been asked to speak to an international study tour group as part of their visit to the Deakin University Sport Management Program. The topic is around the Melbourne sport market with a focus on consumption of professional or corporate sport. Easy enough, and an opening look at preparation for the topic reinforced the uniqueness and nature of the market in Melbourne.
As part of the process of crystallising the upcoming presentation, here are some opening thoughts about what gives Melbourne a case for being the World’s Sporting Capital and a look into its future.
UK based Sport Business Group (previously ArkSports), have awarded Melbourne the biennial Ultimate Sports City award three consecutive times. The award is based on venues and infrastructure, hosting experience, sporting culture and government support, security, climate and event legacy. At the forefront of Melbourne’s success is a calendar of major events built around a strategic approach to winning and retaining events, headed by state government policy and support including that of the Victorian Major Events Commission.
Among the leading drawcards are the Australian Open Tennis, Formula One Grand Prix and Melbourne Cup Horse Race. While cities such as the post-Olympics Barcelona and some of the emergent West Asian sporting regions (i.e. Doha, Abu Dhabi) are lauded for a specific strategy of capturing major events, these are predominately one off events, particularly in a sporting sense. Each of Melbourne’s capstone events are – importantly – annual events that capture the world’s attention and generate substantial economic and branding impact.
Linked to the events and volume of sport consumed by the city are the range of modern venues and facilities. Venues like Rod Laver Arena and the MCG are highly recognisable globally, adding to the branding of the city. Of particular note is the proximity of venues, with major sites no more than a few kilometres from the city centre. This is very different from cities as good as Milan and New York, where a visit to some of the best major football stadiums are a lengthy train and walk or a visit into another state respectively.
Facility development is an salient part of attracting major events and team licences. In this case of Melbourne’s elite venues, there is a public, shared nature in their ownership and operation which - while having obvious limitations for teams at times - combine for a utilitarian outcome of a modern, well funded collective of sporting icons.
Government & organisations
In addition to the government support noted above, Melbourne is home to a great number of influential national sporting organisations, among them the head offices of the AFL, Cricket, Tennis, Athletics and Netball. Add to this the concentration of professionals working for sporting teams and other sport focussed organisations, and the city itself encompasses and leverages a strong professional sport network.
Without doubt the most unique of the pillars is Melburne’s vast array of professional teams. At the centrepiece are the cities 11 professional Australian Football League (AFL) teams, who play in Australia’s most popular sport among adults. Add to this professional rugby league and rugby union teams as well as two football (soccer) teams and two T20 cricket teams and the market at its higher end becomes considerably crowded.
Arguments that the city can support this year round volume of sport are culturally and economically strong. Based on population trends, proven interest levels in these sports and the nature and design of the competitions they play in, each of these major teams are theoretically viable given public and private resources. Despite Sydney being home to the majority of top ASX listed companies, corporate support across the pool of teams in Melbourne is strong. Likewise the public support at a local level and broadcast demand (more a national or sport specific issue) is increasingly a strength.
In a comparison to other major cities (particularly those on the Ultimate Sporting Cities list and more realistic challengers such as London, New York and LA) it is unlikely that a more diverse and deep pool of viable professional sporting teams would be found, particularly in a market of this size (counting US collegiate sports may change this). Admittedly though, we are not talking levels of economic or commerciality we see in the US or Europe. Two clear points illustrate this:
1) industry turnover and athlete salaries are not at high levels comparatively
2) similarly, the market capitalisation or valuation of teams would not be at what we would call economically high compared to other markets
The second argument around finanical or revenue impact here is worth a thought (For example, the revenues and market cap of fewer major teams in a multi-sport city like for example Toronto (see MLSE) would surpass the economic impact of a great number of Melbourne’s major teams. What then is the greater sporting city – one supporting a greater number or more diverse teams or one with a more discrete focus to but generating greater ‘business’ measureables)
Summary and a look at projected growth
While international awards and recognition are more commonly focussed on rewarding cities based on internatinal events and impact, a wider view of the major pillars discussed demonstrate the city has an assured and vibrant sporting culture, enviable infrastructure and ample (or at least developing) consumer support of its mass of offerings.
Future estimations of the cities growth would likely support the continuation of this. Australia’s 2011 estimated resident population (ERP) of 22.7m people are in line with estimations predicting a 120% national increase by the year 2050. The major cities will obviously take the bulk of this expansion, with Melbourne targeted to take its population to over 8.5 million people at the upper estimate. Factors such as the nature of this growth (organic vs migrant led) and the ability of traditional sports to continue to be relevant are likely to impact future trends and demand (Other posts in 2012 will pick up on this). However in a purely numbers sense, the Melbourne sport consumer base, again with ties to broadcast and private money presents a climate for longevity for both its professional teams, as well as its ability to support major events as key pillars of its sporting reputation.
 Having 11 of a total of 18 AFL teams in one city represents one of the more unique aspects of a sporting league internationally. As a reference, the EPL has had as many as six of 20 teams with a London origin in any season.
 We can add netball, basketball and baseball teams etc as well – albeit with lower levels of commercial impact.
 AFL clubs average weekly crowds over 35000 average over 38,000 in season ticket numbers per team. Other rugby and football teams are newer, but have growing market share.
 Less than 1% of athletes in these sports are gaining $1m salaries
 Non ownership of venues and lack of globalisation of brands, ownership models and enforced revenue sharing dictate this – but that is another topic…