How to Profit From a Passion for Sports
The world stops spinning for the MLB playoffs. The World Cup is your Holy Grail. The Super Bowl is marked on your calendar as a national holiday. Face it - you're a die hard sports fanatic. If the saying that you should do what you love rings true, you may be interested in creating a business based on your favorite sport.
As is true of all ventures, attempting such a feat is much more easily said than done. Sports and entertainment is a popular market that is all but flooded with entrepreneurs attempting to stake their claim in some aspect of the business. The initial key to creating a successful business model is to carve out a niche that fulfills an unexploited void, says Joe Reynolds, founder of the Chicago-based Red Frog Events, a recreational sporting events company. "Find your niche, be passionate about what you're doing, and work hard," says Reynolds. In addition staking your claim in the sports world, there are a number of other considerations to bear in mind when entering this field.
Due to its innate physicality, risk management and liability issues are of the utmost importance when clients engage in physical contact under your watch. In addition, choosing the appropriate venue or medium on which your sport will be executed is also a huge consideration.
On the bright side, start-up costs for sports-based businesses vary greatly and may err on the lower end of the scale because said businesses may not require a traditional staffing structure or brick and mortar office. This guide will show you a number of ways to build a business based on your personal passion for sports, whether you're an athlete with a dream of livening up your pastime or a developer with a great idea for the next sport-based app.
How to Profit From a Passion for Sports: Expand the Concept of an Existing Sport
Former athletes and fitness aficionados may have the greatest interest in building a business that is centered around the activity to which they hold dear. In fact, their reason for desiring to start a business may be to spruce up the stodgy traditional elements of the sport itself.
That was true in the case of Reynolds, a former cross-country athlete and marathon runner, and is what led to the creation of Great Urban Race in 2007. Great Urban Race is a test of physical and mental skill, whereby teams race to solve puzzles and tackle obstacle courses that are spread out all over their city. "I saw a void in the marketplace where there were a lot of 5K races, 10Ks, and marathons where it was just running on pavement and, frankly, pretty boring," he says.
An entrepreneur from a young age, Reynolds founded a house painting company, Everest Painters, while attending Illinois State University. After graduating in 2003, he continued to run the company until he came upon the idea of Great Urban Race. Using $5,000 in savings, he launched a test run of the race in Chicago that year. By the fall of 2007, he realized that he had a winner on his hands after the successful execution of the eight installment of the race.
"After I realized that the idea was going to work as a business model, I then went and sold off all of my house paining assets and jumped in full-speed ahead starting in 2008 with the nationwide Great Urban Race tour," says Reynolds. Reynolds later formed Red Frog Events LLC to encompass Great Urban Race and Warrior Dash, founded in 2009.
"Warrior Dash is an extreme 5K run where the participants jump over fire, crawl through mud, climb cargo net, and go over about 12 obstacles over the course of a three-mile race," explains Reynolds. Beach Palozza, an event similar to Warrior Dash, was launched in 2010 under the Red Frog Events banner. According to Reynolds, the company grossed $50,000 at the end of its first year, and is on pace to hit the $50 million mark by the end of 2011.
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How to Profit From a Passion for Sports: Create a New Sport
Bob Fox was perusing the late night TV offerings back in 1990 when he came across an interesting bit on the Tonight Show with Johnny Carson. In one segment, a group of kids were showing Carson and the audience how to play an urban game called sport stacking. This piqued the interest of Fox, an elementary school teacher and seasoned circus juggler.
"My initial attraction was [thinking] this is cool. This is upside down juggling," says Fox of his immediate draw to the sport. It was in 1995, after Fox became a physical education teacher, that he introduced sport stacking to his students in an effort to aid them with dexterity and hand eye coordination. The game became a hit at his school, and Fox was soon instructing the other PE teachers on how to teach the sport to their students.
Bolstered by the success of sport stacking at his school, Fox and his wife Jill used $100,000 of their personal savings to create a legitimate business out of the ad hoc activity. With the initial seed money, the Fox's produced an instructional video, purchased a mold in which to manufacture custom plastic cups, and created a teaching curriculum for what would become their brand name and trademark -- Speed Stacks.
The Fox's initially marketed Speed Stacks by demonstrating it at teaching conferences around the country. In 2001, the Fox's created the World Sports Stacking Association, or WSSA, the governing body for sport stacking worldwide. In 2006 and 2007, Speed Stacks was the subject of a one-hour special on ESPN. Today, the company, which is based in the Denver area, does sales at about $4 million annually. "We've always been in the black," says Fox.
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How to Profit From a Passion for Sports: Carve Out Your Niche and Create Auxiliary Services
Finding your niche is one of the key elements to creating a business within an industry as pervasive as athletics. This is also true for businesses that focus on sports without including the physical element.
Score Media is a $70 million Toronto-based media company that is home to two multi-sport apps, ScoreMobile, launched in 2007, and the recently acquired SportsTap, a former competitor. Both apps taut news, stats, and standings for a variety of popular sports, ranging from NFL football to international soccer.
"In the case of ScoreMobile, we deliver video content and live blogs," says mobile director Dale Fallon. Since the founding of ScoreMobile, many sports-based apps have hit the scene. However, according to a March 2011 report by comScore's MobiLens, the combined user base of both apps under the Score Media umbrella would rank #3 behind ESPN and Yahoo.
For entrepreneurs looking to enter the sports app arena, Fallon suggests building an app based on the freemium model, and enhancing the free offerings with paid features that users are eager and willing to purchase. He believes that this model is more lucrative than attempting to build a mobile business on potential advertising revenue. "I think that to have an advertising supported business, one needs very large audiences. Tens of thousands of users, possibly even millions of users. We've got about three million right now, and we believe that we need to grow a lot more to sustain a long-term advertising business."
In order to entice users to pay for premium content, Fallon suggests offering digital functionality that focuses on bets and wagers with respect to sporting events, and targeting users that gravitate to such activities. "I would say, in particular, fantasy sports fans, people that are playing in pools where they're choosing their players and updating their rosters," he says.
Although sport stacking existed before the founding of Speed Stacks, Fox has improved upon the sport by inventing auxiliary components that not only enhance the Speed Stacks brand, but have also become integral to sport stacking in general. "We invented a timing device called StackMat Competition Timer. We've created miniature cups. We've created jumbo cups called Battle Stack and so on," says Fox.
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How to Profit From a Passion for Sports: Take Safety Precautions
When the Red Frog Events team hosts any of their flagship events, they always work with the local authorities to ensure that medical response teams are onsite. Though always important, safety becomes imperative when children are involved.
SkyHawks, a nationwide sports camp headquartered in Spokane, Washington, offers sports options ranging from baseball to lacrosse for roughly 70,000 children annually in the 3- to 12-year-old age range. They company has created a comprehensive listing of risk management procedures, overseen by a dedicated risk management department.
"We evaluate everything we do in terms of safety," says president Chris Stiles. "It comes to the quality and training of your staff. That's absolutely critical. Anybody who works for us as a coach, they have to go though an application process." This extensive application process includes an in-person interview, a tryout, criminal background check, first aid certification, CPR certification, classroom training, and field training. "They do all of that before they ever work with our kids," says Stiles.
In terms of liability, you need to make sure that your insurance covers any potential accidents and injuries. Both Reynolds and Stiles advise business owners to have up-to-date general liability insurance for their business. In addition, your employees should be covered by worker's compensation insurance, the terms of which vary by state. Stiles advises sports entrepreneurs to make hiring an insurance broker one of their top priorities. "A good insurance broker can get you competitive rates," he says.
Although the potential remains for a waiver to be contested in the event of an accident, Red Frog Events and SkyHawks actively use them as a precautionary measure. "The enforceability of a waiver and a release of liability is treated differently in every state, but for good measure, you always have that included in the registration process," says Stiles.
If you plan on working with young people as part of your interactive sports business, the National Association for Sport and Physical Education and the American Alliance for Health, Physical Education, Recreation, and Dance are organizations that you can contact with specific concerns about health, safety, and accreditation issues.
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