Troubles Mounting With Youth Sports Bubble
While residents in Philadelphia were awaiting the Eagles NFC Championship game, thousands descended on the City for the annual United Soccer Coaches Convention. Coaches from around the world attended the conference to learn, network and evaluate the trends in the sport. In total, 2200 coaches attended from youth academy coaches to Champions League participants and everywhere in between.
In soccer they describe their field as “the pitch”, at this convention, there was a completely different type of “pitch”. It was the sales efforts of the over 400 companies that chose to exhibit their products and services for a chance glance by some of the coaches in attendance. Companies from all over the world spent thousands of their marketing budget to collect leads and stroke current customers.
The range of companies was fascinating, from Ipad accessories, trophies, technology partners, soccer balls, apparel, soccer machines …but there were three categories of vendors that stood out — travel companies, platforms and facilities.
It’s been almost a year ago since Time Magazine’s Sean Gregory wrote about the 15 billion dollar youth sports industry. HBO’s Real Sports followed up with their own segment. The pursuit of competition knows no boundary. Under this mantra, an entire industry of sports travel has been birthed.
I have long knew about college teams touring in the preseason but this market is now much more.
At the United Soccer Convention there were close to forty sports tour options for the coaches in the building. A coach could bring his team to a destination and play in an event such as the Norway Cup, or the Scott Gallagher Tournament in St. Louis. Several European companies are offering tour variations that include playing friendlies, practice time at some of the world’s most prestigious soccer clubs and even training from professional soccer clubs. One could go to Spain, Germany, England or Costa Rica to name a few of the destinations.
An interesting angle was combining education with travel. Companies dove into the higher education market offering the opportunity to go overseas to University and play soccer. That could be for undergraduate or graduate studies. Similar to the growth in NCAA D3 athletics with schools adding sports to lure prospective paying student athletes. Now there is an international layer.
We knew that the travel business would need to pivot from it’s historic model of bundled flights and hotels, with world-wide competition driving down the price and profit margins. Sports tours is their new arena.
There was Accelerator school in North Carolina promoting junior high and high school education sandwiched in between soccer training. The partners are planning on franchising Accelerator School nationwide. The concept ties into sports advancement but the principals are not looking to take on IMG Academy, they want to own the stay home, live at home and get this academy type experience.
What does every soccer club need? They need an easy to use management tool that could provide an entire back-end to the business so that coaches can coach. While there were several independent entities in this space, the recent trend is an all-in-one suite of services. Three big players exhibited here their platforms. Dick’s Sporting Goods has diversified from it’s retail business by acquiring Affinity and Blue Sombrero. Now a coach can have every element of the soccer business taking care of under one roof. Registration, insurance, equipment…just a few of the offerings. Sports Engine, which was SportsNgin before NBC purchased it and then acquired the biggest competitor in the space, SI MyPlay. Now a market of some 20,000 teams/clubs are on the Sports Engine platform choosing a variety of services for their business. Lastly, Blue Star Sports, Jerry Jones’ company which acquired 20+ companies in a 24 month span to be the destination for coaches on all levels is bundling registration, video editing and all types of features for coaches, clubs and teams. Sports Engine, Blue Star Sports and Dick’s want to be what IBM and Microsoft are to corporate America for the club sports business.
The destination facility started as a great idea in the 1990’s. With a lack of facilities and an excess of demand, sport facilities appeared in regions. Now it has gotten out of hand. Everyone is building a facility and it’s a problem.
In Philadelphia at the Soccer Convention, there were 20 sport destination facilities exhibiting at the conference. Each facility represents millions of dollars of investment. We are talking about from all regions, the West Coast was represented by a facility that was 20 minutes outside of Seattle, the South had many facilities from South River Virginia, Foley, Alabama to Bradenton, Florida, in the North East there was facilities from Lake George, NY, Delaware outside Dover and Valley Forge Pennsylvania, the Midwest in Ohio, Indiana…those are a few that stood out. There were also public facilities such as in Greensboro, North Carolina.
Most facilities had from 8 to 20 fields. The facilities are in competition with each other to attract events and teams. Many of the facilities run their own events. To put some perspective on the cost of these facilities, many have lights, turf or Bermuda grass, whatever that is. One of these fields could cost $250,000.
The sports facility is just one part of the equation, most of these developments are multi-use. Sports Finance 101, people making these types of investments are not making them for the local residents. The multiplier effect they are after lies in out-of-town visitors. It’s the spend on hotels, food and the local economy from those who would not be in the area if it was not for the event that provides the true economic impact.
What happens to these towns, cities and areas that are counting on the sports facilities to bring in thousands of people — when they don’t?
There was a time as CEO of Five-Star Camp that I wouldn’t go a month without a call from a facility in desperate need of help with a flawed business model.
There was Aim High in Lansing, Michigan, The Basketball Academy in Louisville, Kentucky, Hoops in Louisville…
In fact the city of Louisville, population of 600,000 or so people had three multi-court basketball facilities with another one right across the river in Indiana. There even was a church in Louisville that had 7 courts. Not surprisingly, Hoops and the Basketball Academy no longer exist.
In the greater Dallas area, financially insolvent Duncanville Fieldhouse formerly the Bob Knight Fieldhouse has been taken over by the City and is run using tax payer money. Mansfield has a facility, so does Frisco and now Jermaine O’Neal built the Drive Nation facility right by DFW airport. These facilities are usually a few thousand square feet up to 10,000 square feet. Even with 6.5 million people in DFW, it’s unlikely that all these facilities can co-exist.
When we talk about these destination facilities that have dozens of fields, we are talking about a dozens and dozens of acres. The Grand Park facility in Indianapolis has 400 acres.
We are reaching a dangerous point of saturation with these facilities. When one of these facilities fails it will devastate and bankrupt the local market, private business and real estate values. It’s worse than a factory closing, there is no replacement for a 90 acre business going belly-up.
There has been incredible increase in valuation within the business of Sport in the last 30 years but troubling times lay ahead as team sport participation declines and the competition for the entertainment dollar is at an unprecedented level. Why do you think leagues such as the NBA are diversifying into gambling and e-sports?
Cities and municipalities must resist the temptation to follow the market with building yet another facility to try and draw people into their region and look to invest elsewhere for the future benefit of the population. We just need to look at the old Olympic host cities such as Sarajevo, Rio and Athens for reminders of what happens when sports facilities go under.
