“40 Basketball Teams for 40 Villages” Project – Kırıkkale/Turkey

UNSUNG HEROES OF EUROPEAN BASKETBALL – ISSUE 1

Kırıkkale is a province located in the Central Anatolia region of Turkey, about 80 km east of the Turkish capital, Ankara. With its approx. 200.000 inhabitants, it belongs to the group of smaller cities in Turkey, especially compared to the truly large cities of the country, such as Istanbul, Ankara or Izmir where millions of people live. Also, on the basketball map in Turkey, it cannot be argued that Kırıkkale has a spot which would be known to many people in the Turkish basketball community. Its most successful team, Kırıkkalegücü Spor Kulübü is currently competing at the local level (5th division in the Turkish basketball system).

However, the reason why we are very excited about calling out this city in our very first issue of “Unsung Heroes of European Basketball” is a project called “40 Basketball Teams for 40 Villages”. Directly supported by the governorship of the city, this project aims at reaching out to a total of 40 villages located within the city borders to meet with kids and youngsters and engage them in playing basketball.

This great initiative has been launched by Mr. Güven Gündüz, the president and head coach of Kırıkkalegücü Spor Kulübü. The 53-year old coach and basketball enthusiast is a very well known and respected figure in the city. His passion for the sport of basketball, solely for altruistic reasons, has led to several different social responsibility projects in the past, with one single goal: Using the power of basketball to have a positive touch on the lives of hundreds of kids and youngsters.

Within the scope of the “40 Basketball Teams for 40 Villages” project, kids and youngsters attending schools in villages had the opportunity to ‘meet’ basketball for the first time in their lives. The project has been initiated in 8 different districts and the children were taught theoretical and practical skills via different drills focusing on ball-handling, passing, dribbling and shooting.

A basketball tournament is planned among the districts at a later stage and a basketball festival will be organized in May this year, in order to celebrate the progress of the kids in learning basketball but more importantly for spreading the passion of basketball to the new generations in the City of Kırıkkale. Mr. Güven Gündüz, project coordinator and coach, who provided basketball training to kids and youngsters in 36 different villages within a month, said that he had faced such a situation for the first time in his 35-year coaching career.

We congratulate and salute Mr. Gündüz and all individuals who are playing a role in this fantastic project and wish them further success for all their future endeavors, especially for the ones that are related to basketball 😊

CK

Sources: http://www.kirikkale.gov.tr/-40-koy-40-basketbol-takimi- // Photos courtesy of Mr. Güven Gündüz

10 Suggestions for the Managers of Domestic Leagues and Teams in European Basketball

2019 is coming to an end. And it is likely that it will be remembered for some key milestones in Euroepan basketball which have a direct impact on national leagues and a vast majority of the clubs that are not competing at the highest level in Europe. For the first time in the history of European basketball, participation to the continent’s top-tier competition was detached from the sporting performance in any of the domestic leagues in Europe. Number of participants in that competition was increased to 18 (from 16 last year) which added additional pressure to the overall competition calendar in an Olympic season. And also for the first time, a major team like Olympiacos is playing only in Euroleague after being relegated to the second division in Greece. All these developments are deemed to have (intentionally or not) an adverse impact on the local leagues and teams that are not a Euroleague-participant.

While this might hold true in certain aspects, the main reaction to these developments should not only be criticism and doing nothing else. In the contrary, domestic leagues and teams should act strategically and start developing a playbook which should be aiming at finding alternative ways of sustainable growth and increasing popularity in local competitions.

Below are ten suggestions for the managers of local leagues and teams to achieve that goal:

1) Believe in the growth potential of basketball

Basketball is the second most popular sport globally and in many of the European countries. And it is growing with huge potential for further growth in the upcoming years. Whatever decision you take, this fact should be the overarching guide to you and your organizations. You can take the right strategic steps, only if this fact is realized by you and your teams.

2) Change your mindset

No sponsor, no company, no federation, no government institution etc. have the obligation to support you. They just don’t. You need to focus on the value that your organization will be generating for each stakeholder rather than taking a passive role and just waiting for “donations” to your organizations from “sugar daddies” or government bodies which may not have the same goals as your team does. Your main duty is to define, produce, present and sell a product in the best way you can to the best-matching audience that you can attract. The main product that you should focus on is the home-games that your team plays. And at the beginning not even all home-games should be targeted, rather some key games which must be “sold out” to the right “fans”. And never forget, as in any other business, the tickets do not sell themselves. Selling is an important activity which requires systematic efforts.

3) Integrate your sporting goals into your “business” goals

You should always know the business context of any sporting goals that you might set for your organization or any decision you make. The main guiding principle should always be: You can only spend as much money as you are capable of earning. Your budget should have a direct impact (as an important constraint) on defining your season goals from a sporting perspective. And vice versa… This requires deploying certain tools and techniques such as scenario planning and different budgeting methods. It also requires for instance having some key capabilities such as an effective scouting system and network as well as a solid youth development program (pls see below for more details). But again, the overall rule is your sporting goals should always be in full synch with your business goals.

4) Know your “fans”

Changing your mindset as discussed above also includes a shift in the way you see your fans. While it is important to always appreciate the “devotion” and “passion” as well as the “loyalty” of your supporters, it is extremely important to see them also as “customers”. This should definitely not mean that you should always prioritize the commercial side of basketball. However, completely ignoring your fans’ expectations and preferences will not definitely help you sell tickets. For that purpose, it is a must that you have a clear idea about the profile of your fans. Don’t forget, you would not be doing such a profile analysis for your internal purposes. Instead, it has to be done as an evidence of the value that your organization can create for some key stakeholders such as sponsors. Therefore, do not listen to those managers who argue that they would already know their audience very well and there would not be a need for performing an in-depth analysis of your fan base. The point that they are missing is: Unless you put it on paper in a convincing way, it has no value for gaining potential partners and sponsors.

5) Redefine your (sponsoring) strategy

After you start believing more in the growth potential of basketball and changing your mindset as discussed above, the next logical step that you should take will be redefining your sponsoring strategy. In European basketball sponsoring revenues still represent (by far) the most significant revenue source. You should never forget that, unlike donations, sponsoring is not an arrangement without any return on investment. As the company budgets get tighter, it is becoming more evident that you should focus on the value that you will be providing to the sponsors in exchange of their sponsoring engagement. This value can take many forms. You should focus on potential sponsors’ values and business priorities and try to target such companies which might have a (natural) interest in sports marketing. Another aspect to consider should be creating a broad base of sponsors like in the form of a pyramid, rather than having only a few sponsors with a high degree of (financial) dependency. Also, in turbulent times where economic challenges become tougher, it might get more difficult to find sponsors with “deep pockets”. Therefore, it might be more effective to focus on alternative concepts such as “micro sponsoring” and “membership”.

6) Invest more in youth development programs

Player salaries represent the most significant expense item in clubs’ budgets. In general, it can be argued that developing own players will lead to a “cheaper” scenario rather than transferring players from other teams, provided that your team is capable of protecting its contractual rights and thus can get paid in case of transfer of its players to other teams. Another advantage of developing own players is the fact that the influence of players’ managers can be minimized in that scenario which can lead to saving of agent fees. Furthermore, establishing basketball schools and camps can add additional income to club budgets while increasing the probability of detecting a talent for the future. Player development is one of the key activities of many domestic teams and it represents the backbone of increasing the popularity of basketball in local markets.

7) Ensure an effective financial management

The main rule as mentioned above should always be “do not spend more than you earn”. It sounds easy but it requires a systematic effort and use of expertise in financial management. Do not forget that budget should be a living document to be reviewed and if necessary revised on a regular basis. Another function of finance is to develop the right strategy for the overall club management including the provision of support in finding new revenue sources and assessing their profitability as well as future growth potential. Financial management should not be reduced to “bookkeeping” and “creation of a budget at the beginning of the season”. It should rather be positioned as a strategic partner to the club and league management.

8) Invest more in people

You need to stop believing that every addition to your headcount is a burden to your budget. While it is true that hiring (full time) employees does represent a commitment for your organization, if planned properly, every additional headcount especially in sales and sponsoring will generate more income than expense. Key here is to have a reasonable plan in place which will lead to generation of additional income through additional headcount being hired. In addition to hiring full time employees, there are many other options for creating additional resources.

9) Be creative, leverage social media and embrace digitization

Start thinking out of the box about any problem that you might be facing. If it is lack of resources, consider finding more volunteers which have a certain qualification level. Develop cooperation programs with colleges or other institutions to enable young talents gain experience while helping you in achieving your goals. Develop new ways of generating income, from micro sponsoring, crowd funding, special events, organizations to better and more effective use of social media. Realize the fact that social media is more and more becoming a game changer for the industry. It enables a more cost-efficient methods for reaching out to your target audiences and develop a more direct way of communicating with them. Digitization is also a key game changer. You will need to deal with it sooner or later. Start developing a strategy for it. The sooner the better.

10) Never forget your mission

National leagues and teams are the locomotives of European basketball. They are the key players that have the mission to fascinate kids and youth and attract them to basketball in terms of giving them the opportunity of actively participating rather than just watching the games. They also have a key mission in developing next generation talents of European basketball. More importantly, without the local teams and domestic leagues, European basketball cannot grow any further. Please always remember the importance of your mission and what kind of an important role you are playing for basketball in Europe. Despite all the challenges and difficulties you might be facing, regardless of whether at the lowest or highest competition level. Be positive and go back to point 1) above. Basketball has a great potential to grow 😊

CK

The Economic Reality of European Basketball & Three Critical Success Factors to Ensure Sustainability (and Survival) in the Future

A comparison of Euroleague with the NBA in economic terms is quite striking. NBA’s total annual revenues amounted to $6.3 billion in the 2017/18 season, with an average club revenue of approx. $209 million, whereas Euroleague’s total revenues (incl. all team revenues) are estimated at $511 million for the current season (both according to Forbes), i.e. less than one tenth of NBA’s revenues. Unlike the NBA, in general, the European Basketball is (still) not managed as a “business” with profit maximization as being its ultimate goal. Instead, it is heavily dependent on cross-funding by football operations of leading clubs and/or sponsoring revenues which are often (mis)perceived as “donations” to the clubs without any attached obligation in terms of delivering added value in exchange. As such, the current economic model of European Basketball creates significant doubt about its sustainability and future competitiveness.

Overall, the (global) popularity of basketball is on the rise, mainly driven by NBA’s (long-term) strategic initiatives in China, India and Africa, including establishing local NBA academies for identifying and growing talent and creating an African league in cooperation with FIBA. These are all very exciting developments that seem to be supported by some specific strategic plans and concrete feasibility assessments. In the case of Europe, however, NBA’s interest (in terms of taking similar steps as mentioned above) has been different and somehow relatively limited. Except for some pre-season games and a couple of regular season games taking place in London (and soon also in Paris), NBA rather seems to prioritize the further development of its marketing and media rights strategies in the EMEA region, with a special focus on six key countries in Europe. There have always been rumors (at least wishful thinking by some) about Euroleague merging at some point with the NBA and creating the “European” NBA conference. While it can be argued that Euroleague and NBA have in general a pretty good and constructive relationship, and with IMG’s strategic joint venture investment in Euroleague, the mindset and (commercial) goals are definitely converging, a more strategic alliance between the two organizations does not seem to be possible in the short- or mid-term. And this is driven mainly by the economic reality of the European basketball.

The main challenge in Europe is the fact that basketball is not particularly popular in its (economically) leading countries. Four of the G7 countries (i.e. seven largest and advanced economies in the world), namely Germany, France, Italy and the UK are located in Europe. However, basketball hardly makes to the Top 10 list of most popular sports in these countries, in the case of the UK, it may not even be among the Top 10. Accordingly, the commercial value of basketball (compared to some other leading nations, especially to the USA) seems to be somehow limited. For many years, it has also been Euroleague’s one of the key objectives to penetrate into these markets and grow basketball’s, particularly Euroleague’s popularity. Their (still ongoing) search for investors to create a Euroleague-only franchise based in London (without participating the domestic competition) can definitely be seen as part of this strategy. In the case of Germany and France, besides the significant economic power, there seems to be another reason as to Euroleague’s high interest in these markets, which is the relative high quality and effectiveness of club management including a more prudent and sustainable financial management. The latter is deemed to be as a result of quite restrictive and consequent club licensing system and financial fair play criteria that the clubs need to meet which were introduced way before Euroleague did the same. It is credited to this same system that German and French clubs seem to be the closest to a “break-even” financial operating model in entire Europe. From a purely economic point of view, this seems to be sustainable, however, the sportive results of German and French clubs are suboptimal, raising some concerns and question marks about the sustainability of this model from a sportive success point of view.

In this context, the recent developments at Brose Baskets Bamberg are of interest and worth analyzing more closely. Over the last decade, Brose Baskets has been the most dominant team in Germany, while their success in the Euroleague was somehow limited. They were not able to qualify for the play-offs in any of the seasons that they competed in the Euroleague. Very often this lack of success is attributed to the fact that Brose Baskets, especially compared to the leading powerhouses of European basketball, has a rather moderate budget, which leads to the assumption that they would not be able to compete with other leading teams. Interesting fact about Brose Baskets though is that, in the season of 2016/17, they had both Nicola Melli and Fabien Causeur, namely the two best players of the 2018 Final Four final game between Fenerbahce and Real Madrid in Belgrade, on their roster. Another player, Brad Wannamaker, who was an elite Euroleague player, and currently on Boston Celtics’ roster, was also playing for Brose a couple of years earlier. It might be the combination of these two factors, namely (i) the budget gap between Brose Baskets and other leading basketball teams and (ii) the (presumably huge) frustration of not being successful with elite basketball players who played earlier for Brose Baskets, which led them to cut their budget further. After missing the German BBL championship last season, they are currently competing in FIBA Basketball Champions League. Despite all the great efforts by FIBA to elevate this league, it still seems like a relegation to a lower league. Once, Brose Baskets was being pointed out as one of the leading examples of effective club management (despite the lack of sportive success). With these recent developments, the future of this very much praised (rightfully, so) operating model does not look very rosy.

And where basketball is popular, i.e. in countries like Spain, Greece, Turkey and Russia, the clubs are having major budget deficits that are either cross-funded by the football operations of these clubs such as FC Barcelona, Real Madrid and Fenerbahce etc. or are being sponsored by some influential and wealthy businessmen whose ultimate intentions may not always be long-term in nature and in line with the interests of European Basketball. Either scenario is far away from being sustainable and cannot ensure a long-term competitiveness and growth of European Basketball.

While there is no quick “fix” for these fundamental, structural issues, and no realistic solution to grow basketball in Europe in the short-term, there have already been some important steps, primarily taken by the Euroleague organization, in an effort to enable a more sustainable and professional operating model for the leading clubs in Europe, such as regulations regarding the organizational structures of the clubs, arena capacity and minimum attendance requirements, establishing an in-house consulting unit, BOCS, to support clubs as well as financial fair play criteria, to name a few. Each of these are extremely important attempts to establish more professionalism and the right mindset in European basketball. However, despite all the good intentions linked to these measures, they cannot close the gap in the short- to mid-term, and without any alignment with the rest of the key stakeholders, beyond the leading basketball clubs that are members of the Euroleague.

Additionally, without addressing the below mentioned three critical success factors, a sustainable solution will not be possible.

  • Effective Sponsoring

In terms of revenue mix, while TV broadcasting, ticketing and merchandising represent the three most significant revenue sources for the NBA, European basketball clubs heavily rely on sponsoring income. In the long run, Euroleague (and European Basketball in general) should find better ways of increasing revenues in TV/Digital broadcasting, gate receipts as well as merchandising. However, the growth potential in these revenue types is pretty limited in the short- or mid-term. As such, sponsoring is expected to remain as the main revenue source for another while. In general, it has to be stated that the value of sponsoring is directly influenced, or even determined by, the publicity that a sponsored organization is able to generate. In other words, sponsors would, for sure, prefer investing in such objects that are able to attract public attention (in the form of potential consumers/customers). As such, it cannot be denied that there is typically a direct link between the game attendance/TV ratings and the interest of sponsors. However, new technologies in digital/social media offer some great opportunities beyond the traditional ways of communicating with fans and target audiences. Therefore, it should not be seen as a contradiction that sponsoring revenues could be increased without a similar increase in TV broadcasting revenues.

And quite frankly, there is remarkable potential for further improvement in this area. This is revealed by a survey that EBAG had conducted in November/December 2018 among the most significant eleven sponsors in Turkish basketball. Obtaining data from Turkish sponsors is deemed interesting and directly relevant, due to the fact that Turkish companies and sponsors have been playing a very significant role in financing the highest level competition in Europe. Besides having positive future expectations as to the growth of basketball in Europe (despite all economic challenges), the vast majority of the participants indicated that they would seriously consider even increasing their sponsoring budget, in case the clubs (i) use social media and other digital channels in a more effective manner, (ii) support them in measuring the effectiveness of their sponsoring engagements and (iii) hire higher-skilled personnel who have a better understanding about the objectives and principles of sponsoring as well as the expectations of sponsors.

Another key aspect is to minimize the (financial) dependence on one single (or a few number of) sponsors whose departure would represent an existential risk to the clubs. The history of European basketball is full of such cases where the clubs had to declare bankruptcy while the main sponsor decided to cease their basketball investments.

  • Monetization of Transfer Rights

European relevance in NBA drafts has never been immaterial. During the time period from 2002 to 2018, a total of 223 players who have a connection to Europe have been drafted, i.e. 22% of all draft picks. Although some of the picks turned out to be a huge disappointment for the respective clubs, players like Tony Parker, Pau Gasol, Dirk Nowitzki managed to become true legends. The new generation of players like Giannis Antetokounmpo, Luka Doncic, Kristaps Porzingis, Nikola Jokic, Bogdan Bogdanovic etc. definitely have the potential to continue with this trend and achieve similar success.

In the case of NCAA, principally there is a positive business case for running an athletics program, since (i) the success of such programs has a positive impact on student applications (which is the core “business” of colleges) and (ii) the revenues from sponsoring and game attendance can reach significant levels, and help fund the athletics programs with a surplus at the bottom line. All participants, with the exception of players, benefit from this system and as such, colleges are able to fund their player development programs on a sustainable basis.

However, the situation in Europe is totally different. It is primarily the clubs’ responsibility to identify and develop talent. And all these efforts need to be budgeted for as part of the respective club’s overall operating budget. Additionally, junior national teams are deemed to represent a quite important milestone in player careers. For instance, in the period from 2000 through 2018, there have been 38 European players who were selected at least one of the following: MVP, Finals MVP, All-Star, All-NBA Team, All-Defensive Team, Defensive Player, Most Improved Player, Rookie of the Month, Rookie of the Year or All -Rookie Team. Of these 38, 34 players participated at least one Junior European Championship in the age categories U16, U18 or U20.

It is understandable that players do want to go the NBA, because without any doubt it is by far the best basketball league in the world. However, in majority of the cases, the European clubs do not obtain any (major) benefits in case any of their players get transferred to/drafted by an NBA team. It would not be wrong to argue that Giannis Antetokounmpo has a significant impact on Milwaukee Bucks’ (or NBA’s overall) revenues, as well as other similar players. From a macro perspective, the club(s) that played a key role in development of the respective player(s) and the domestic federations should be awarded/compensated (by the NBA) for their efforts and investments in youth development. This would also encourage and (financially) enable them to continue their investments in talent development in the future, which will be in the interest of the NBA too.

  • Investing in Grassroots and 3×3 Basketball

Increasing the overall popularity of a sport is a long-term effort and strategically it requires continuous investment in the system infrastructure and grassroots. While these efforts are typically headed by the local federations and FIBA, it should also be the responsibility of all participants, including leading clubs, to contribute to this goal.

3×3 Basketball has enormous potential for further growing the popularity and recognition of basketball at a global scale since it is relatively easy to organize and it will gain higher attraction after the next Olympic Games as being the newest Olympic sport.

Off to a good start…

It’s been almost a year since we launched our initiative with a quite ambitious goal, namely generating new ideas for European Basketball that are based on scientific, objective and fact-based methods while, at the same time, represent practical solutions that can be applied in the “real” world of European Basketball.

We are very glad to share with you today that it’s been a pretty successful start and very productive eleven months, both in terms of generating several interesting, detailed and insightful analysis reports about the current issues and challenges as well as building up and expanding our network in European Basketball. We prepared a total of twelve reports and studies which we have shared with key stakeholders, predominantly league organizations and federations. The feedback and the initial reactions we’ve obtained so far have been very positive and encouraging. The initial focus has been on three key areas, (i) Governance, (ii) Financial Stability / Club Licensing and (iii) Youth Development programs. Read more

A new initiative with an ambitious vision

A new initiative with an ambitious vision…

First of all, sincere thanks for visiting our website and checking out the blog section. If you have been supported by Google in finding this page, it is highly probable that the main reason as to how you ended up at this blog has something to do with your passion for (European) basketball combined with your interest (or even desire) to find sustainable solutions to its structural and institutional challenges. Exactly that combination has driven us to embark upon this journey! Read more