Ellison Backed SailGP Leans on Lessons Learned from Other Pro Sports Leagues

SailGP

Start-up sports leagues often run out of funding before they have time to develop a fan base or a profitable business model (see: AAF), but SailGP – an annual, global sailing league founded in 2018 – won’t have that issue; Oracle founder Larry Ellison has made a commitment to underwrite its first 5 seasons. CEO Sir Russell Coutts said that SailGP closely studied leagues across the world before getting started – applying lessons from several to hone in on a business model that could be successful. Decisions on how to deliver content (heavy emphasis on digital/OTT), the length of the races (fleet races are just 16 minutes, match races are 10 minutes), when and where to hold events and the types of boats to be used were all guided by mistakes others made. Coutts added that being properly financed has allowed leadership to operate in the best long-term interests of the league as opposed to foregoing crucial initiatives due to costs.

Howie Long-Short: SailGP’s is “pretty traditional” for a pro sports league, generating revenues through ticketing, media and sponsorships (they hope to be able to charge hosting fees to cities who wish to draw the event in the future). Coutts said that longer term the plan is to sell additional franchises. While Ellison is backstopping the founding six teams at a cost of $7 million per team per season, the league intends on adding four more teams over the next four years (one/season). In addition to paying an expansion fee, those teams will be expected to join as “fully funded entities, bringing their own commercial partners; they’ll effectively just lease a boat from the league for five seasons.

Ellison, a passionate sailor, is giving the sport something it’s never had before – a global nation vs. nation league that operates on a tour model with the same stops and brands year after year. Coutts believes that consistency is a “fundamental requirement for any sports business. If fans don’t know when and where the next event is and they don’t know what teams are competing or where they can find the broadcast, it’s difficult to develop a viable business.

The league also made smart decisions with regards to scheduling, its television product and the implementation of cost controls. A six-race season means that the stakes for each are high (they will be adding one race/season over the next five seasons) and a 90-minute broadcast window is ideal for sports fans with declining attention spans. Establishing central technical and maintenance facilities that service all six teams enables the league to avoid cost duplication.

Putting on compelling races – “meaning the outcome is not a foregone conclusion” – is another key tenet of Ellison’s business plan. Coutts said “to ensure races remain competitive, each team competes with the exact same boat specifications; the exact same technology.” That seems like a logical idea. Drama drives interest and a common complaint within motorsports is that oftentimes there are only a few cars fast enough to win the race.

Cause-based marketing resonates with the millennial and Gen-Z demographic, so playing up the sport’s sustainability mission is good business, but Coutts insists SailGP’s motives are genuine. “It’s something the league wants to do, versus something that it has to do. Just about every sailor feels a responsibility to lend their voice towards protecting the ocean.

Fan Marino: Oracle’s involvement in SailGP (founding partner) has enabled the league to produce such high-quality broadcasts – in a cost-effective manner – that far more established leagues have come away impressed. Coutts said  “each boat is outfitted with 1,200 data sensors that collect 400 data points every tenth of a second. Oracle technology then almost instantaneously relays that data to the fans who can enjoy a custom viewing experience while watching the live race feed. The technology also allows us to produce events in both Chinese and Japanese with native commentary and graphics – with almost no delay. Formula One called the day after our first event aired wanting to know how we put on a remote production of that quality.

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Author: John Wall Street

At the intersection of sports & finance.

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