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The New Negotiation

Each year we craft a trends article for a large national publication. The article is a compilation of what we are seeing across the country in the sports tourism industry, and the implications for the year to come. Obviously this year’s edition is heavily focused on the impacts of COVID-19 and how the industry will likely be impacted in 2021 and beyond. While we can’t give up the secret sauce of this year’s trends article since it has yet to be published, we can share with you one of the key topics – Event rights holders and host destinations will be negotiating deals differently in the future.

The way our industry has operated from a funding perspective has to be revisited entirely from both sides of the event partnership table. Many of the traditional financial tools that destinations had access to in the past (such as bid fee funds) have been compromised by declining bed tax collections. Similarly, the budgets of rights holders that depend on event fees and memberships for a large chunk of their revenues are in peril. Destinations and event owners will have to work within an entirely new paradigm and seek financial win-win partnerships in the future.

Basically, within the “new normal” there will have to be a “new negotiation” as well.

We believe there are a few things that each side can do to help navigate the financial reality our industry faces today.

Accept an altered universe

Both event owners and destinations have to recognize that the way we have “always done things” isn’t possible in the near future. The sooner we accept that the model is broken, both sides can work on a new business relationship that can allow for events to be successful, for the athletes and families and also financially for the host entities.

Think equilibrium

The old economic theory of equilibrium is based on constant change, where everything trends toward the center point of supply and demand (the point of equilibrium). We all have to do that in today’s sports tourism industry. Rights holders have to ask for less support as the destinations won’t have the funding in place to back the old business model. Destinations in turn, have to allow for event owners to change the benchmarks by which their past success was measured. Teams may not travel as much, or as far, as they did in the past, so it's likely that some events will see decreasing participation numbers. Both sides have to move towards equilibrium, the middle, to make our industry work in the immediate future.

Break the mold

This is a topic we have written about quite a bit over the years. The current upheaval provided by the pandemic is an opportunity to revisit EVERYTHING. Throw out all the things we know about the business model that was, and look at sports tourism from a totally new perspective. What once may have been impossible may now prove to be an opportunity. Every side of our industry is likely more willing today to talk about things that they wouldn’t consider in the past. Maybe that big college match-up you wanted to put together is viable now? Maybe testing new event concepts (like a time trial type marathon) could help deal with COVID-19 while also proving a new road map for event rights holders.

The art of the deal, if you will, is going to include a lot of new elements. Accept what is. Find ways to meet in the middle. Break the mold and drive forward with fresh minded, new negotiations.

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