Boom In Sports Crowdfunding: Life Support Or Community Engagement?

    Every fifth team in Finnish professional ice hockey league has launched a crowdfunding campaign.

    There’s two more months to go before we find out who will win the Finnish ice hockey Liiga, but the clear winners of the season have been fans who saw the third team in the league announcing this week an equity crowdfunding campaign.

    Two hockey teams Vaasan Sport and HPK, and HIFK football club, have all raised hundreds of thousands of euros on Finnish Invesdor platform.

    “HIFK and Sport each received investments from about 800 individual investors, with HIFK raising a bit more at 345,000 euros,” tells Mikko Savolainen, account manager at Invesdor and adds that more sports related campaigns are planned to be launched in the near future. The latest addition to this group was campaign of hockey team Espoon Blues launched this week.

    Globally sports crowdfunding campaigns have seen a boom over the last years, but most of the campaigns have been for one cause. Largest sports campaign on Indiegogo has been to support motor sports team Brabham, which has raised 295,000 pounds.

    At the same time fans ownership of sports teams is relatively common around the world, with supporters owning for example 2008 FA Cup Winner FC Portsmouth in England and 2010 Super Bowl Champion Green Bay Packers. Top Spanish football clubs FC Barcelona and Real Madrid are also owned by fans through membership of the club, not through equity.

    “In sports cases, many investors put in the minimum investment as a sign of support and because they want to be part of it. Others invest more, chasing owners’ club perks which sports campaigns often incorporate into their campaigns. Additionally, the geographical spread of investments in sports cases is usually limited, which is quite logical considering that sports teams tend to have limited clout outside their home towns and surrounding areas,” describes Savolainen the nature of sports crowdfunding.

    He also points out that it’s very common for sports crowdfunding campaigns to gather lower average investments with higher volume of investors compared to more business-oriented cases. One example of that is the Espoon Blues campaign, that has gathered already over €170 000 from 50 investors on the first day of which part was pre-made provisional subscriptions.

    Would you support your favourite team in other ways than buying tickets to the games? Photo: Shutterstock

    As marketing is one of the most crucial things behind a successful crowdfunding campaign – the sports teams seem to master the fundamentals of appealing storytelling. Sports teams know their fans, and they know how to build emotionally engaging stories to their target group.

    “More often than not, marketing is what makes or breaks a crowdfunding round. So also from a resource point of view, sports teams are often quite well positioned for crowdfunding success as they are generally savvy marketers with in-house marketing teams or long-term relationships with marketing agencies,” ponders Savolainen. He emphasizes that in sports crowdfunding the pitch materials tend to be even more story-driven and emotionally loaded than those of the average equity crowdfunding round.

    “Sports teams’ business models usually aren’t very complex and for the main target group, which is the fans, much of the business details might even be barely relevant. While such details of course need to be included so that potential investors can make informed decisions, the general angle of the pitch tends to lean more towards such themes as fellowship, community, and being part of building a story.”

    “I would say that anyone looking to raise crowdfunding should spend some time benchmarking sports campaigns. It’s all about engaging communities, and these people know how to do it.”

    Committed is a description that defines the passionate sports fans when talking about their relationships with the favourite teams. This loyalty, combined with ownership, can take the commitment to a whole new level, says Savolainen. The process may lead to fan becoming a crucial brand ambassador that creates increasing amount of buzz through word-of-mouth in his or her network.

    “Such brand ambassadors are a highly valuable marketing resource for any organization,” he adds.

    Invesdor Blues

    Espoon Blues seems to be the next sports crowdfunding story – but they’ve also been the most followed Liiga-team this season because of economic difficulties. The company behind the team is at the moment on the process of debt restructuring, which is also mentioned at the crowdfunding campaign – so the risk of the campaign aiming to reach 500,000–1,000,000 euros funding is defined to high.

    As the process of debt restructuring is still ongoing, the crowdfunding campaign is crucial for the team to survive and keep its place in the closed league, which could throw out highly indebted teams.

    Espoon Blues has ten more games to struggle through this season Photo: Espoon Blues

    According to Blues board of directors – which is now lead by chairman Tage Johansson – the funding gathered through share issue will be used for balancing the economic situation and enabling success in the season 2016-2017. At the moment, the team has only a handful of players left from the lineup that started the season and most of the players have been sold – junior players are taking the stand for the rest of the season 2015-2016.

    “The new management of Espoon Blues has started renewing the organization determinately, and welcomes all identity builders of city of Espoo to join to carry out this novel hockey story,” Johansson said in a statement.

    While the campaign is branded to be uniting Espoo community – it also brings out the future of regional hockey juniors. “What happens to the young and talented hockey juniors if Espoon Blues will not be part of Liiga?” asks the company in their crowdfunding profile – and that is a heartbreaking statement in the country where the dream of every hockey junior is to represent their own home team in the top league.

    The coin has a flip-side too – if the team gets enough money to hire top guns from abroad, the juniors would have to play in the lower leagues.

    The crowdfunding results among Finnish hockey teams show that the community is willing to support their teams, no matter if they’re ranked last in the league like in Blues and HPK’s case – but actually with Blues, the fans activated first to save the team by creating an online petition already in November that over 7000 people have signed to save the team.

    But now the team needs funds too.