Sport 2 Sport founders John Feehan and Derek McGrath talk with Ian Kehoe on The Currency
"John Feehan and Derek McGrath are two of the most influential sport administrators in the country, with a particular passion for rugby.
Feehan and McGrath speak about the impact of the crisis on the sports industry – from governing associations to media rights’ holders to sponsors. They also explain the rationale for their new business and outline who their target customers are. Both men also talk about their own backgrounds in sports administration, and what it was like to run some of the world’s biggest rugby tournaments. Looking to the future, they explain how Covid-19 will change sport going forward, and why sporting bodies need to increase their interactions with fans."
IK: Hello, you’re listening to The Currency podcast. I’m Ian Kehoe and in this episode I’m talking to two of the country’s most respected and influential sports administrators. John Feehan is the former chief executive of Six Nations Rugby and the British and Irish Lions. He’s also the chairman of Irish Rugby Tours and Prime Active of Capital. Derek McGrath meanwhile, is the former CEO of the European Rugby Cup and the Curragh Racecourse.
Now however, they are business partners. Just weeks ago, they launched Sport2Sport, a consultancy that helps sports organisations, event owners and brands navigate recovery of the sports industry post Covid-19 crisis.
John, I’ll start with you and we’ll come into your background in a little while. But where did the genesis of Sport2Sport come from?
JF: I suppose it’s one of those things. Obviously, post-Covid, both myself and Derek just ended up, as it happens, finishing our sporting careers in relation to being chief executives. We were looking around for a couple of different things to do personally. I had a number of other interests and I still do, and a number of other companies. But basically, I felt that, between the pair of us, we just had so much level of experience and expertise that it would be a shame not to use them.
And we feel that we have pretty well un-rivalled expertise between the pair of us in relation to sport and particularly in Ireland. So I suppose it’s just one of those occasions when it just worked for both of us.
IK: Derek, I’ll just bring you in at this point. You’ve come together, you’ve launched, you’re out there. You’re talking to various sporting bodies and potential customers. What is the offer that Sport2Sport is providing?
DMG: Morning Ian. Look, we’re delighted to be up and running now. And I suppose, as John said, the genesis of this came from literally the impact of Covid. So what we’re offering to organisations is, the first point as John said, the experience that we have, that we have walked in their shoes. We have participated in almost all the disruption and chaos and progress that sporting bodies have undertaken as they developed. So, we’re offering that at a time when there is an impact, there’s change coming and there’s a need to perhaps look at things differently.
And we’re looking to offer our experience in a number of different ways. They could be across sponsorship, they could be across governance, they could be across infrastructure or more structural elements of their organisations.
IK: And who are the target customers? What is the target market? Obviously, you can say the sporting bodies themselves. They’re all seeing depleted revenues. But I assume it’s a wider offer than just a small number of governing associations.
DMG: I think sport is developing in this country. And you even look at it from an employment point of view now. The employment in sport, or associated, is of 40,000 to 50,000 now of people who are directly or indirectly involved. And we’re looking to talk to rights holders, to people who are looking to be involved as sponsors or brands associated with sports. To clubs, teams, federations, and then in the wider community then, you’re talking about the media, talking about other suppliers at levels such as data, travel, logistics. And then there’s another important element to all this, the big stakeholder in sport which is the government side. We’re looking to sort of offer connections and using our relationships and our experience to perhaps offer different ways of looking at what’s happened in the past.
IK: Some matches are taking place, lots aren’t. Even the matches that are taking place now, or the events that are taking place, they’re taking place without anyone in the crowds. It’s very eerie watching Semple Stadium completely empty or Croke Park completely empty, although judging by Wexford’s performance, my own county at the weekend, it was probably good it was empty. But it has an eerie feel to it.
But it’s also had a massive financial impact across all sports.
JF: You’re entirely right. It has had a really amazing effect on sport and not in a good way. The reality is, it is also showing up that most sports live hand to mouth, money in, money out, so there really isn’t any backup or reserve there to tide them over in a more difficult time. So from that perspective, I think a lot of sports are suffering at the moment. Having said all of that, in a way and in a funny sort of way, the fact that we all are missing our sport so much and we’re missing the whole environment and everything else to go with it, I think there’s huge scope for the future to develop that and I think sport in the longer term, medium to long term, is probably in a good place. But it’s really a case of how you mitigate where you are today. And I think there will be lessons learned, long term lessons learned through this process about how to properly manage and strategise and plan and build for a sport in the future.
IK: I think that’s a really interesting point that you made.
I just want to deal with the stakeholder, the associations piece, because, as you said, it does seem that there has been a hand-to-mouth. The money is coming in, as you put it, and the money is going out. I think it’s possibly time for a reset where people can look and say, God, well, we’re going to have a bad year. Should we have had more money in the kitty? Is that our plate? Should we have been thinking about events like this?
When you’re going to be engaging with those associations and stakeholders, what’s the message that you’re going to be trying to get across to them?
“The reality is, it is also showing up that most sports live hand to mouth, money in, money out, so there really isn’t any backup or reserve there to tide them over in a more difficult time.”
JF: Yeah, I think it’s really about financial stability, sustainability and planning for the future. I mean ultimately, every business should do that. I mean that’s not unique or different in sport. But sport, to a large extent, has always, I suppose a lot of it’s come from the fact that it’s come from an amateur background where the costs haven’t traditionally been too high relative to the output of the actual product, if you like.
But that is no longer the case, particularly with professional sport and particularly with the infrastructure that’s required around sport. So ultimately yes, we really do have to plan for the future in a way that wasn’t done in the past. And I think a certain level of financial hardy-ness or sustainability needs to be built into the planning going forward. So, it’s not easy, it will require a certain level of change and a certain level of new thinking in sports that probably wasn’t there before.
So yeah, it’s a difficult one, but it can be done.
IK: Derek, obviously, when you were running the European Rugby Cup, one of the big things, and it was a constant clash, but it was one of the biggest television rights deal in rugby. You were licensing not just in Ireland, you were licensing in England, Scotland, Wales, France. So it was trying to bring all that together. I mean, an awful lot of media organisations around the world are looking on and saying, we’re committing to all this, we’ve committed to paying all of this, we’re not getting our events. It’s almost fracturing that relationship between the media rights holder and the associations.
DMG: Yeah, I think that’s correct on the surface, isn’t it? But when you look at the effort that’s being made to stage games and, as John has mentioned, the value and the premium that’s been attached to sport now and as you mentioned, to the absence of the fan. In many ways, the value of the sport is perhaps going to be higher once we get back to the ability to get fans back into stadia. And the argument therefore, could be that media values, while they might take an initial reduction, will begin to build, but it might be in a slightly different way, maybe using different distribution platforms as we’ve begun to see now.
IK: Yeah, and that’s a really interesting point. I know GAAGO, which is a collaboration between RTÉ and the GAA, did a League of Ireland streaming service. I know lots of county boards and lots of other smaller clubs are operating their own streaming service where you can get instead of, buy a season ticket, you can buy a season ticket to watch the matches online. So, there’s an awful lot of innovative thinking going on out there.
DMG: There is and the same across, soccer, you see many of the clubs just offer it on a free basis. They’ve taken the cost because they can see the importance of connecting with the sponsor, connecting with their fans and their wider community.
“You can go direct to the consumer now in a way that you never could before. And that’s really an important part of how particularly smaller sports can actually make a play and make it very strongly.”
JF: I think it’s going to have the effect as well of speeding up a lot of the changes that were going to happen in sport anyway. Similar to business where people are using Team Viewer and Zoom and other aspects and other ways to do business and have meetings and interact and make things happen. The same thing is happening in sport in that, obviously they’re using all those things I’ve just mentioned, but also the whole area of how they get the product across to the consumer.
You can go direct to the consumer now in a way that you never could before. And that’s really an important part of how particularly smaller sports can actually make a play and make it very strongly.
IK: We had Stephanie Meadow, the Irish golfer on this podcast earlier in the summer, she wasn’t playing much golf at the time, completely locked down. And I asked her what she was doing during the lockdown and she said, most of her time was working with her sponsors and her commercial team and doing events for those to try and keep that linkage going forward. I think that’s something that’s generated, we haven’t seen many sponsors in Ireland or Britain or wherever else, pull out of their deals as of now.
JF: It’s a very interesting point you make because, I think a lot of sponsors have been extremely good with their rights holders. And I think it’s a testament to a lot of the relationships that have been built up over a period of time. And I think that’s an important part of any long-term relationship, I think sponsors as well, most of them anyway, are in it for the long haul and they don’t see it as a short term problem.
Many of the issues that are around now may end up causing longer-term issues. But nonetheless, we would hope anyway that this will be over within the next year to two years.
I think, as I said, if you can stay with people through these types of difficulties, you can really work very well when things actually improve dramatically.
DMG: Maybe just to add to that Ian, when we talk to rights holders, it’ll be an interesting conversation, how this relevance of the fan, the relevance of the sponsor and the wider community has probably moved up the ranking maybe around board tables and how they are servicing that and how they’re looking at the basics of getting trust again. That people will come back and enjoy, and then on the other side of that, how they’re going to deal with perhaps, as John mentioned, their hand-to-mouth issues.
Do they have the ability, if this was ever to happen again, to build some sort of reserve or some sort of structure that’s going to help sustain something like this?
“Sport is an incredibly powerful communication platform as well as participation. And all of the good mental health aspects that it brings, it can be extremely powerful. But it’s structure can sometimes be very, very fragile.”
IK: Yeah and again, I just want to touch upon that hand-to-mouth thing, if I may, because, I was looking at the numbers coming out from the IRFU, their revenue has been decimated, the GAA likewise. The FAI, they had issues beforehand, so it seems to be in a different place. And then all of the other smaller sporting organisations have been hit.
Are you confident overall that most of them will be able to come through this? It is an existential threat, but do you think all of these bodies will get through?
DMG: I’ll take that first Ian, I would have no issue on it, and I think John would absolutely agree that sport, if you look at it, it’s infrastructure, and we’ve seen it I suppose from the boardroom side, the structures can be extremely fragile when you piece them down one by one. But actually together, sport is an incredibly powerful communication platform as well as participation. And all of the good mental health aspects that it brings, it can be extremely powerful. But it’s structure can sometimes be very, very fragile.
And that’s not going to change. But there is no doubt in my mind that the desire to put sport back into that important element, and hopefully even at government level, people will see the importance of getting people back participating in order to help the general health, mental well-being after such an impact and trauma in many ways that this has caused.
IK: In relation, and it’s a fair point. I mean, one of the numbers I think you mentioned at the start that there’s 40,000 or 50,000 people working within the wider sporting ecosystem.
And an awful lot of that is if you look at Ireland, there’s an awful lot of logistics companies. In that wider space, we’ve a burgeoning sports tech cluster in Ireland, we’ve various travel companies, one of which John, you’re involved with. It’s not just the sports themselves I suppose, there’s a wider economic impact here that transcends just soccer or rugby or golf or whatever.
JF: There’s no doubt about it. Sport is one of those things, as you said, it’s overarching in terms of how we look at our life. It is really one of the most important aspects of life. At the end of the day, it will come again. There’s no doubt about that in my mind. But the issue really is how you navigate the next two to three years basically, because there will be an issue.
After a cure is found in this pandemic or some accommodation has been made with it, you will still have a lag where you have to build up what you’ve lost before as well. So it’s going to be a two to three year run back into being successful again. And that’s going to be difficult, I think, for everybody.
But yeah, I’ve no doubt at all that sport is going to be and will remain an extremely important part of Irish life, life everywhere for that matter, both for mental and physical reasons.
IK: You mentioned at the start the role of government. I think the government have, whatever about the wage subsidy schemes which have been availed of by pretty much every sporting organisation. But they’ve also, if you look at the recent budget, they have actually tried to commit a significant sum of money to the various sporting organisations. I think at this point, government is acknowledging it. Do you think it needs to do more?
DMG: I think it can do more. I think you just said it, it’s made a great start. I think that governments and look, we would say this I suppose, across the landscape of, maybe European landscape, I think there’s a real opportunity for government to help because, I suppose if you break down the importance of sport to a community, that I suppose gives the reason why government needs to see sport and its value in helping us through this. So, the justification is there to start with.
And I do believe sport is doing more, but it can do so much more to help, organisations to survive, to help those I suppose that I mentioned, that wider group that you’ve touched on, the event community, the hospitality community, the travel community, all those who’ve I suppose got sports to where it is. In Ireland, sport has really begun to develop itself as a very important industry. So government will benefit from that, but also therefore has a responsibility and a task to do to help it get back on its feet and prosper.
JF: I also believe that within government as well, government can do things that nobody else can do in terms of tax reform and infrastructural planning. There’s a whole heap of areas where the private entrepreneur, the private business can’t actually influence it. I think government can go a long way to making sure that they ease the path for sport to get out of this quicker than it might otherwise get out of it.
IK: So you had a, I don’t want to say a soft launch. But you launched primarily on LinkedIn a couple of weeks ago. What’s been the response to date?
Now obviously, and I’ll touch upon your backgrounds in a moment again, but you’re coming with an absolute wealth of experience. What’s the response, the feedback been so far, do you think this business that’s come out of the lockdown is going to be inundated with business?
JF: I’ll let you start that one Derek.
DMG: Well look, we very much hope so, that we will be busy. We are already thankfully, and we’ve been very pleased I suppose, with the fact that our message seems to make sense to people, that’s the first thing. We’ve had some good feedback in terms of our combination, a recognition of the value that we can bring to the marketplace. So at this stage, I think we’d say that’s a very very good start. And we are delighted to say, we have a couple of clients that we’re beginning to talk to, nothing to announce yet. But we’re very pleased that we are getting into these conversations from people who do see the value that we can bring. So we think we can add something to the marketplace and we certainly hope so. But we’re very excited about it.
JF: And we’re also very excited about the quality of the communications that we’re getting there. At the end of the day, we’re not trying to spread a message to the great fans and the great public out there. It’s really about the quality message to people who are responsible for sports and who are the real stakeholder decision makers within sport. And I think from that perspective, we’ve been quite successful in the last while.
IK: I just want to touch upon your past, Derek I’ll start with you, because you were the inaugural chief executive, the very first chief executive of the European Rugby Cup, now the Champions Cup. When you took over, did you ever think it will become that sort of commercial juggernaut that it is today?
DMG: It really has exceeded expectations, there’s no doubt about it. But I suppose the answer has to be yes because that’s our role, to provide the vision. As I mentioned at the start, sport and it’s organisation can be quite fragile and you almost have to create a vision that people can buy into, that sits above everybody else’s day to day interest and to which people can see a connection and from which people can see a benefit. Once you can keep those things going, keep as many people with you, or maybe more with you than against you let’s say, at any given time you have a chance to grow and develop something.
There was a great opportunity with European rugby, but as myself and John I supposed worked in parallel in that John was doing a great job with the Six Nations and the Lions, and that we were creeping into a new space in Europe, which was a European club competition, which sat between international rugby and the domestic club scene. And you were trying to push your way in there, if you will. But it took its time.
But once it captured, and I know you’ve great sponsors attached to The Currency, great partners in Investec. But we had some great partners and really people like Heineken, like Sky and laterally then, people like FedEx and Adidas, they helped us to communicate our message. And really when we talk to people in the same way, picking your partners and building on your relationships is the most critical thing you can do in developing.
And that was something we concentrated on. And doing that, it makes good sense, because the more your partners understand what you’re trying to do and where you’re trying to go to, the more they’re going to take your message into their communities. And that really helped us to grow a huge part of our growth.
IK: John, obviously you were a similar organisation, but you took over an organisation that had been established for 100 years or whatever, it certainly had a rich pedigree and a rich history. But you expanded it nonetheless and rolled it out, and under your tenure, the Six Nations, the Lions became bigger and bigger. What was it like taking over something that was so well established and then driving it on?
JF: Well yeah, it was very interesting at the time. You say well established, but I took over in 2002 and, the game had only just gone professional over a couple of years at that stage. There was still a lot of flux in the marketplace and a lot of the unions and a lot of the people who were involved in the various competitions around the world, there was no certainty that the Six Nations would survive insofar as certain people would have seen it as something that perhaps could have been superseded by a global competition involving the Southern Hemisphere unions and so on and so forth.
So again, going back to what Derek said a little earlier on, you have to have a vision and sometimes people forget just how important certain things are. I mean, the Six Nations is in fact, a kind of breadbasket for rugby and has been for a century, but more particularly in the professional era, it is so important. I mean, it turns over, over a four year cycle it would turn over almost three times what a World Cup would.
So in real terms, it’s so important. I suppose a lot of it was just getting people to recognise that and then obviously to sell it, get coordination, once you get that buy in and that vision agreed, then it’s really a case of getting your ducks in a row and making sure all the elements that need to go in to make that happen are put in place. So I suppose it’s a step by step approach.
“There were certainly calls within certain aspects of the game to sort of say call it a halt, and say that was it. But again, it was about building the vision and making sure people understood how important this is across the game. We got there eventually.”
And yes you’re right. I mean, we went from being televised around the world in about 90 countries to almost 200 countries, and the revenues went through the roof. The fan engagement went through the roof. The branding was very strong, that’s one thing I did do, I changed the branding to the existing branding now. So yeah, again, with the Lions, a similar story. I mean, there was no guarantee when the game went professional and after 2002 that the Lions were going to actually survive.
There were certainly calls within certain aspects of the game to sort of say call it a halt, and say that was it. But again, it was about building the vision and making sure people understood how important this is across the game. We got there eventually. It took a bit of time. But I don’t think, the last tour to New Zealand, I suppose in many respects, was the most successful ever in terms of not just, the rugby was fantastic, but it was also commercially and numbers going. Nearly all the metrics were through the roof.
So from that perspective, it took a bit of time. But I would go back to what Derek said a little earlier on, which is really, it’s about setting out a real vision and laying down proper priorities. And once you’ve done that, laying down the plan that will actually be delivered on a year by year basis. And don’t worry too much about a given year, it’s really about over a period of time, you can actually reshape people’s thinking. I did that as well, you may or may not have mentioned it earlier, but I was also chief executive of what was then The Magner’s League, which became The Pro12, is now The Pro14. I was there for five years as well and I reshaped that. So again, it’s about setting out a vision and making sure that everybody buys into that. Invariably, there’ll be a few people who don’t, but if you can get the majority with you, you’re doing well.
IK: So just finally, with that wealth of experience. How do you think Covid-19 and you mentioned before that it’s going to accelerate some change, but how do you think it’s going to change sport going forward? Derek, I’ll start with yourself.
DMG: Well I suppose there’s what I think and what I hope, I suppose is mixed in there as well. I think as John, we’ve touched on some of this before. I think sports are going to have to look at their sustainability. So that’s the work and that can start now. I think they’re going to have to think about diversity, about reaching much more into their communities, understanding how they connect and in what way they connect with their various communities.
“We know that private equity is arriving into sport and perhaps that’s going to have a bigger role in, certainly in the, let’s say, the higher level sports.”
Because some of these things, like the fan, the importance of the fans, sometimes gets lost around a rights-holder boardroom, because each constituent is represented and generally they’re coming to the boardroom thinking of how they’re going to protect or develop their own interests. And very often the most important person can get forgotten. So I’m hoping that boards would look at that and think about how they bring those important elements, the sponsor we talked about, the fan, bring them in. And I think perhaps sport can see that will be really valued by the general industry. Be it primarily by fans who are purchasing and by sponsors who want to support. So I think that will be very important.
We’ve touched on the media value, the general value of sport. And I know you’ve questioned about hand-to-mouth. I think generally speaking unfortunately, the stars are the ones who attract. The Premier League is a global player reserve for a very good reason. So it attracts attention from all over the world. And every other sport looks to copy that in some respects. So that’s probably not going to change. If you want to attract attention, you’ve got to have the stars, you’re going to have to pay them. So that balance is going to be one to manage.
But perhaps some of the financial structures are going to change. We know that private equity is arriving into sport and perhaps that’s going to have a bigger role in, certainly in the, let’s say, the higher level sports. We would certainly see that having a wider impact. But then, as we mentioned, maybe further down a participation level, you’d be looking for the government and other bodies to maybe help to structure, to support and develop.
IK: Very good and John, I just might bring you in for some closing words in that, in terms of what you think is going to happen over the next couple of years?
JF: I think everything Derek said, but also in addition, I would say that the relationship with the fan is going to have to become a more direct relationship. It’s going to have to be a far more understanding relationship. It’s going to have to be a broader relationship. So in other words, it’s not just about what they do on say, matchday or whatever else. It’s about how they interact with that fan on an ongoing basis. What’s the level of the communication? What is the level of the interaction with that fan? How much do they know about the fan? How much do they care about the fan? What do they do with the fan to make it a better experience for them? So I think that’s a really important part of it. And that’s everything from media to how they’re treated digitally to the message that you want to get across to them. There’s a whole range of things that you have to look at.
I think the other area that is quite important in the future is, the best sports are the ones that speak as one body and really start to talk together.
In many sports, there tends to be factions and there tends to be different elements of the sport pulling against each other. And I think that’s a really important part, the really successful sports in the long term, work as one and have one vision and know where they’re going together. And I think all sports are going to have to consider how that’s going to work better in the future, because certainly some of the models I think at the moment, I wouldn’t say necessarily they’re broken, but they’re certainly not working optimum. And I think that’s one of the areas that will have to be looked at to improve as sport goes forward.
IK: John Feehan and Derek McGrath, thank you very much for joining me here today. And we wish your new business, Sport2Sport, the very best of success going into the future. Thank you very much.
JF: Thank you Ian.
DMG: Thank you