The Callum Murray Interview - Sir Martin Sorrell
The chief executive of WPP warned sports leaders last year they must adapt or die. He tells Sportcal Insight what progress he's seen and why WPP's extensive interests in sport are still 'not enough'. Author
1st June 2017, 13:53

The last time I saw Sir Martin Sorrell he was dishing out a warning about what he called a "tsunami of daily non-stop scandals" to international federations and sports leaders, as the keynote speaker at last year’s SportAccord convention in Lausanne.

The chief executive of WPP, one of the world’s ‘Big Four’ advertising and marketing groups, told them: “Sponsors are questioning their investment, and they remain unconvinced that sports legislators and federations are taking matters as seriously as they should. There are few new sponsors, existing sponsors are exiting and fans are taking notice. The implications are catastrophic; not potentially catastrophic, but catastrophic."

Dapper and self-assured, Sorrell asked a room full of perhaps a thousand industry chiefs more used to being feted and fawned over, including IOC members and federation presidents: “So has sport gone bad, or has the world changed and sport failed to keep up?"

Then came the punchline: "In any case, you need to get your house in order, and start leading by example. Corporates worldwide have lived in this fish bowl for decades; now sport has to adapt or die. There is nothing to stop you being replaced.”

‘Sport gone bad…’, ‘adapt or die…’, ‘nothing to stop you being replaced…?’ Phew!

 

WPP is one of the world's 'Big Four' advertising and marketing groups

A year later, in an exclusive interview at WPP's modest headquarters, tucked away in a mews in London's Mayfair, I ask Sorrell, what has changed? Has anything changed? “With all these situations the first step is to acknowledge the issue,” Sorrell replies. That issue he had defined in his speech a year ago as, “a breakdown in confidence in sports leadership. Doping, match-fixing, the engagement of the FBI and the US justice system, arrests and imprisonments in world sport…”

“Sporting institutions and bosses are acknowledging it and they’re starting to address it,” Sorrell continues. “Have they gone far enough? Probably no. They’re moving in the right direction; some are moving fast enough, some not. The IOC has made tremendous progress. Fifa has also made some progress.”

Sorrell is a paid adviser to the IOC, so it’s hardly to be expected that he would openly criticise progress there. With Fifa, it’s clear that he still has major misgivings over the reform programme it has adopted after the corruption scandal that hit the governance of soccer in 2015, albeit he’s unwilling to go on the record with a detailed critique.

I point out that so far there’s little sign of the IOC’s own Agenda 2020 reform programme having an impact on perhaps the most pressing problem it faces: a shortage of able and willing cities to bid to host future editions of the Olympics. However, Sorrell claims: “It was ever thus. We’re living in an age of globalisation and the benefits [of hosting the games] are under question. What you have to do is some sort of a ‘light’ offer. Los Angeles offers a good opportunity in relation to 2024 and 2028 because you don’t have to make a large incremental investment, so you’re probably going to get more involvement.”

Los Angeles and Paris are vying to host the 2024 Olympics, with one of the two perhaps in line to be offered the 2028 edition without a formal bid process (we’ll know more after a meeting of the IOC’s executive board in a week’s time). Sorrell is, he says, in favour of this solution (I ask if he’s told the IOC; “They haven’t asked me,” he replies).


If there’s the opportunity to do it [award the 2024 and 2028 Olympics] together, and if that’s what the IOC decides, it’s a good solution for the Olympic movement and for sponsors

“You have two very competitive bids,” he continues. “It’s a pity that Rome and Budapest dropped out because they were two very strong bids as well. But if there’s the opportunity to do it together, and if that’s what the IOC decides, it’s a good solution for the Olympic movement and for sponsors: Paris with its 100th anniversary [since the French capital last hosted the Olympics in 1924] and Los Angeles with its history and positioning in the entertainment industry and Silicone Valley. It would potentially be good to say, ‘one old world, one new world’.”

But surely awarding two editions together would offer only a temporary fix, and does nothing to resolve the IOC’s long-term problem of attracting more cities to bid for the games? “It gives the IOC a good platform, and time to think about some of the issues,” Sorrell responds. “It’s a good solution. Early on, when it was suggested, it was anathema to some, but now people are seeing the wisdom. I hope the IOC agrees. Having a US host would be good as well, because they’re also bidding for the [Fifa] World Cup in 2026.”

USA is much on Sorrell’s mind as a market which sports need to conquer to cash in. With its GDP of $19 trillion, the country dwarfs even the much-vaunted China’s $11 trillion and the UK’s relatively meagre $3 trillion, he points out.

Sorrell was a non-executive director and shareholder of motor racing’s Formula 1 world championship until it was acquired from its former promoter Bernie Ecclestone in an $8-billion deal by Liberty Media, the US media group, in January (he is still “academically involved, with a few shares,” he says). Citing Liberty Media president and chief executive Greg Maffei’s now-famous description of the fee paid by NBC to broadcast Formula 1 in USA as a “popcorn fart,” Sorrell insists that there is huge unrealised potential in USA for Formula 1 beyond the single race staged there each year in Austin, Texas.

Sorrell believes there's room for more than one Formula 1 grand prix in USA

He says: “Formula 1 is a great business, with $1.7 billion of revenue, and ‘chapeau’ to that, as the French say. If you compare it to Fifa and the IOC on the basis that it’s annual, and multiply that by four, it’s a bigger business than either the World Cup or the Olympics. But one of the things that’s controversial is America. [The US Grand Prix in Austin] is successful and is a wonderful circuit. Liberty clearly believes there’s more to be done on TV rights and you could have more races, in better locations. If the US race is in mid-America, you have to think there could be one on the east coast and one on the west coast. There’s also new media. Bernie didn’t unbundle, and Liberty is in a position to do that.”

It’s not always easy to follow Sorrell’s train of thought. Accustomed to standing back and looking at the big picture, in the context of the global economy (he’s famous for his remark that the advertising recession in the early part of the last decade was “bath-shaped”), he sees apparently unrelated topics interlocking. In particular, he has a habit of switching seamlessly from talking about the Olympics to the World Cup and from the World Cup to Formula 1 as if they were simply alternating facets of the same precious stone – which to him, I suppose, they are.

For example, he says: “I was reading an article in the Economist that pointed out that multi-national corporations are not growing as rapidly [as they used to]. Local companies are becoming more and more prominent, for example Alibaba [the Chinese e-commerce giant that recently became a top-tier ‘TOP’ Olympic sponsor]. Just like in Formula 1, the growth is not in mature markets. The US should in theory have more than one race. But in a world where globalisation is declining and populism is on the rise, is it worth investing, especially with rising costs?...

“I was speaking to one ambassador who still saw events like the Olympics and the World Cup as a vehicle for rebranding a nation or city. Think for a minute: the Olympics, the World Cup and maybe Formula 1 are the only ways to get mass global audiences. The IOC gets it and moved quite quickly [to implement reforms].”

That’s introducing a lot of far-reaching concepts in an answer to a single question (the one about whether sport is heeding his warning of a year ago).


Make sure all your events are available in all ways. Articles all say that TV audiences for sport are down, but screen audiences are probably up. It’s just that people don’t sit in front of the TV

So, with that warning in mind, what can sports do to make themselves more attractive to brands and sponsors? “Avoid scandal, become more professional,” he says, without hesitation. “Sports are one of the ways our clients can connect [with consumers]. They’re unique. Everyone says linear TV is under pressure and things are moving to OTT. An understanding of media consumption is really important. Make sure all your events are available in all ways. Articles all say that TV audiences for sport are down, but screen audiences are probably up. It’s just that people don’t sit in front of the TV. 

“I watched the Olympic 10,000 metres final live on my mobile phone rather than on a TV set in the living room. It’s not that young people don’t like TV or don’t like news, it’s about how it’s presented. We invested in Vice.com [the online news channel and website aimed at young people] because we thought young people were interested in news. There’s just as much enjoyment in the way young people consume [content], but there are still very few live audiences that can equal those three events [the Olympics, World Cup and Formula 1]

“The people running federations or businesses often are mature, with attitudes conditioned by what they’re used to, not what new generations are influenced by. The influence of social media like Snapchat, Google and Twitter is very significant. You have to understand where the consumers are, and they’re in Asia, Latin America, Africa and the Middle East [as well as in ‘mature’ western markets]. Ecclestone was criticised for pursuing markets like Mexico and Singapore, but those are the markets that our clients see consumers coming from.”

I point out that many rights-holders are still grappling with the question of how to derive revenues (and not simply incur costs) from social and digital media coverage of their events. “Join the club,” Sorrell shoots back. “It’s what newspaper owners have discovered: despite the success of digital media, the ability to monetise [is the problem]. But you can do it through ticket sales, and through media rights. If you look at major events, the traditional media companies have gone long to keep online companies out. They want control over the rights.

“The pool is changing, so you’ve got to fish in a different pool. Hats off to Bernie: he foresaw what was happening and started taking races to other parts of the world. It’s very expensive to build a track and reposition a country or city. You are starting to see people monetise social media by unbundling. You can exploit the tension between old companies trying to maintain their position and new media companies. Amazon Prime will spend $10 million an episode [for drama], whereas traditional media may be only willing to spend $3 million an episode. There are new pools of revenues and sponsorship.

“It may appear to be difficult to monetise, but if you segment, and create different packages, either by geography or category, you may find the sum of the parts is greater than the whole. So Twitter buys rights for NFL games. You have to get out of your head the mature market phenomenon. Who would have thought Alibaba would be a sponsor of the Olympics?"

Sorrell himself is an adviser not just to the IOC but to the Olympic Channel, the OTT channel that is regarded as the brainchild of IOC president Thomas Bach and which was launched last autumn. I put to him a criticism I have heard from several senior executives in the sports media industry: that with limited live rights for sport and none at all for the Olympics themselves, much of the content being broadcast by the channel risks looking trivial. I’ve also heard that audiences remain small, although the channel has yet to reveal any viewing figures.

The Olympic Channel: 'It's not trivial. It's a massive opportunity'

Sorrell bristles at this, albeit politely. “It is very important that the IOC develops an OTT channel of that nature to reach fans and consumers directly,” he says. “The trouble with the Olympics is it reaches people only every two or four years [depending on whether a consumer is interested in both the winter and summer editions]. Formula 1 has the advantage of being continuous… It’s [the Olympic Channel] at the beginning. If it’s trivial, it has to be improved; if audiences are small, it has to be improved. It’s a difficult environment. The state of the sponsorship and advertising market is very focused on cost. Advertisers and sponsors don’t want to spend money, willy-nilly. You can’t aim it just at millennials or just at mature people.”

Sorrell has the slightly disconcerting habit of redirecting questions back at the interviewer (“Well, what do you think?”) and at this point he stops and asks for an example of an Olympic Channel programme that is perceived as trivial. Put on the spot, I cite ‘The Z Team’, the self-produced series in which a failing amateur team is paired with a world-class athlete to see if his or her coaching can improve the team’s results. “I disagree,” Sorrell says. “It’s the power of the coach. That programme idea is saying, ‘if you put Mourinho in charge of Manchester United, does it make a difference?’ It’s not trivial. It’s a massive opportunity. I think, if I may say so, that’s rather a stuffy attitude.”

Then, as I digest what I take to be a reprimand, delivered to me as an emissary of the channel’s critics, Sorrell makes another of those linkages, saying: “Going back to the Olympic Channel, I see an opportunity for a Formula 1 channel. We’re going to see all of that, as it becomes more organised, with more resources. Chase [Carey, Formula 1’s new chairman and chief executive] talked about making it into a week-long event, with live pop concerts around an event. I’m not sure about a week, but certainly a long weekend. If you can make every one of those events into a Monaco, or a Singapore or a Barcelona, and if it’s properly merchandised, marketed and promoted, then yes…”

Sorrell leaves the sentence unfinished but what he means is that, despite his admiration for all that Ecclestone achieved, he believes there’s a lot more to come from Formula 1.

Sorrell’s professional interest in sport is longstanding (as for his personal interest, he still skis and plays cricket at age 72, but “too little,” he says). Early in his career he worked briefly for IMG (he tells an anecdote of how Mark McCormack, IMG’s legendary founder, would never pay more for a set of rights than a client or sponsor), and WPP owns or has stakes in a wide range of sports agencies and companies, including ESP, Imagina (owner of Mediapro, the Spanish sports rights and production agency), CSM Sport & Entertainment, Bruin Sports Capital and Deltatre (which Bruin recently acquired) and TSE Consulting.

I begin to ask him about his rationale for acquiring so many companies in sport, but he breaks in to say that, actually, however many they are, it’s “not enough! If I look at all the various events mentioned - the Olympics, World Cup, Formula 1, NFL, NBA - whichever sport we’re talking about, the sponsor opportunities, advertising opportunities, merchandising opportunities, activation, data, media opportunities are phenomenal. Their audiences are very much those that our clients wish to engage with. In a world where health and wellness are becoming increasingly important, if you’re looking for a purpose, sports offer a healthier mind and body [WPP is also known for its large healthcare division].”


What we’re trying to do is find things that emotionally motivate people. There’s nothing wrong or immoral about differentiating a product

So, as the chief of an advertising agency, what does sport mean to him? Does he regard the consumer as being armour-plated against advertising, and sport as a chink in that armour? Sorrell looks at me for a moment. “That’s very cynical,” he says. “What we’re trying to do is find things that emotionally motivate people. There’s nothing wrong or immoral about differentiating a product.”

He then tells a perhaps surprising anecdote about the recent terrorist bombing in Manchester, which appears to contradict the rhetoric of ‘A City United’ that emerged from the tragedy, in reference to the city’s two famous soccer teams, but conversely illustrates the power of sporting allegiances. Sorrell had watched a film, he said, in which, in the immediate aftermath of the explosion, a bystander told a victim, ‘Are you red or blue? Because if you’re red I’ll help you, but if you’re blue I won’t’.

“Even in that moment, with a life-threatening injury, that discussion shows how deep those loyalties are,” Sorrell says. “Manchester United’s performance in Stockholm [days after the attack the club won the Uefa Europa League final in the Swedish city] is a good example. The attack motivated the players.

“Establishing that connection with the consumer: the phenomenon is very powerful. People are enjoying themselves, they’re relaxed, they’re in receiving mode, they’re prepared to receive messages and make connections. It enables you to build sometimes a physical and sometimes an emotional relationship. It makes you feel good. Someone once said, ‘Doing good is good business’.”

In his SportAccord speech Sorrell advised sports leaders to “examine your purpose.” So what does he think is sport’s purpose? “To make people emotionally feel better, to enjoy themselves,” he says. “At the end of the day that’s what it is. If you’re working hard during the week and your team wins at the weekend you feel better about it. If Manchester United had lost in Stockholm, it would have been a downer.”

Then, perhaps sensing that this description risks sounding, well, trivial, he adds: “It’s a way of emotionally connecting to people and players who are highly motivated to win. It’s about emotion. It’s about motivation and connection to people who are not just enjoying themselves but through sport living a better life. Look at most of our companies and health and wellness and social responsibility are becoming very important.”

Sportcal