Why Investors Are Watching SailGP’s Explosive Audience Growth

SailGP: A Deep Dive into the League’s Growth and Strategy

Key Concepts:

• SailGP: A global racing league featuring hydrofoiling, 50-foot catamarans, representing national teams.
• Hydrofoiling: A sailing technique where boats lift out of the water on underwater wings, achieving high speeds.
• F50: The class of catamaran used in SailGP, known for its speed and technological complexity.
• Cumulative Viewership: The total number of viewers across all broadcasts and platforms.
• Dedicated Viewership: Viewers specifically tuning in to watch SailGP events.
• Linear Broadcast: Traditional television broadcasting.

I. League Overview and Growth Trajectory

SailGP, launched in 2019 with support from Larry Ellison (Oracle CEO), has experienced significant growth in a short period. The league has expanded from six teams in Season 1 to twelve teams in Season 5, with a planned expansion to thirteen teams in Season 6. Venues have also increased dramatically, from five in Season 1 to twelve in Season 5, with further expansion planned. This growth is underpinned by a focus on audience engagement and broadcast reach.

Specifically, SailGP now boasts over 200 million cumulative dedicated viewership, averaging over 18 million viewers per event. A recent event achieved a record 23 million dedicated viewers, surpassing the previous high of 21.5 million in Sydney. Domestic viewership in the US is also rising, with 3.4 million live viewers for the last program on CBS – a new record for sailing, exceeding the previous record of 3.2 million in 1992. International viewership is also strong, with 2 million live viewers on ZDF in Germany for a recent event.

II. The Business Model and Financial Performance

SailGP operates as a league where national teams compete using identical F50 catamarans. This standardization emphasizes athlete skill and strategic decision-making. The league’s revenue model is currently heavily reliant on sponsorship, with a strong lineup of premium brands including Rolex (title sponsor), Bubarda, Oracle, Emirates, DP World, KPMG, Accore, and Apex.

The league is experiencing substantial revenue growth, currently exceeding $200 million annually, and is projected to reach $300 million. Team valuations have also increased significantly, from an initial operating cost of around $10 million to approximately $70 million for the most recent team sold. SailGP is considered a rare success story in new sports leagues, with only three new sports leagues in the last 25 years exceeding £100 million in revenue. Broadcast revenue is expected to become a more significant contributor as audience growth continues. Teams receive a share of broadcast revenue, incentivizing their participation in audience development.

III. From Olympic Athlete to League CEO: Russell Coots’ Perspective

Sir Russell Coots, CEO of SailGP and Olympic gold medalist, attributes the league’s success to a combination of athletic discipline and strategic business acumen. He emphasizes the importance of a strong work ethic, persistence, and a relentless pursuit of improvement – qualities honed during his athletic career. He credits Larry Ellison with instilling the importance of perseverance, noting that most new companies fail within three years.

Coots highlights the value of his athletic background, particularly the drive to constantly improve, but acknowledges the need to learn new skills specific to business leadership. He emphasizes the crucial role of mentorship, specifically his long-standing relationship with Larry Ellison, in guiding the league’s development. The league began with a small team of eight people in a shared office space in London and has grown substantially since.

IV. Audience Demographics and Engagement

SailGP is successfully attracting a broader audience than traditional sailing, appealing to racing fans and general sports enthusiasts. Audience surveys reveal that engagement levels are comparable between avid sailing fans and racing fans, indicating the league’s success in transcending the niche sailing market.

The league is skewing younger, with 36% of the audience under 36 years old, compared to 25% for typical sailing properties. Gender balance is also improving, with events like the New York event achieving a 50/50 male-female split.

A key element of audience engagement is the visually appealing broadcast, enhanced by real-time data visualization. Fans can even use a mobile app to point their phones at a boat during a race and access data such as speed, crew information, and boat positioning. This data-driven approach, facilitated by Oracle’s technology, makes the sport more accessible and engaging for modern fans.

V. The Sport Itself: Speed, Technology, and Accessibility

SailGP’s F50 catamarans are capable of reaching speeds of up to 104 km/h (over 62 mph), or approximately 250-300 km/h equivalent on land. The boats utilize hydrofoiling technology, lifting them out of the water for increased speed and efficiency. The standardized equipment ensures that competition is based on athlete skill and teamwork.

Maneuvering an F50 requires precise coordination, with 32 actions from the six crew members needing to be perfectly timed. The league’s centralized data management system allows for dynamic graphics and real-time data display, enhancing the viewing experience.

VI. Future Outlook and Strategic Priorities

SailGP’s primary focus for the future is continued audience growth, particularly in key markets like China, South America, Italy, and Germany. The league aims to expand to 20 teams and increase the number of events accordingly. While sponsorship revenue currently dominates, the league anticipates that broadcast revenue will become a more significant contributor as audience numbers rise.

Coots emphasizes the importance of continuous improvement and avoiding complacency, drawing parallels to the competitive nature of Olympic sports. He believes that a relentless focus on enhancing the product and delivering a compelling fan experience is crucial for long-term success.

Notable Quote:

• Sir Russell Coots: “Most new companies don't survive beyond 3 years… the fact that we've persevered and done something that nobody else has managed to do in sailing before where we're reaching, I think, a much broader audience than just the avid sailing fan… that’s something to be proud of.”

Technical Terms:

• Hydrofoiling: A sailing technique where underwater wings (foils) lift the hull of the boat out of the water, reducing drag and increasing speed.
• F50: The specific class of 50-foot catamaran used in SailGP, known for its advanced technology and high performance.
• Cumulative Viewership: The total number of viewers across all broadcasts and platforms over a period of time.
• Dedicated Viewership: Viewers who specifically tune in to watch SailGP events, as opposed to casual viewers.

Conclusion:

SailGP represents a successful disruption of the traditional sailing world, attracting a broader audience through high-speed racing, innovative technology, and a compelling broadcast experience. Driven by the vision of Russell Coots and Larry Ellison, the league is experiencing rapid growth and is poised to become a major player in the global sports landscape. Its focus on audience engagement, data-driven insights, and continuous improvement positions it for continued success in the years to come.