A META-ORGANIZATIONAL APPROACH TO FACILITATING INNOVATIONS IN PROFESSIONAL SPORTS ORGANIZATIONS

1. INTRODUCTION

In today’s Russia, the commercialization of professional sports is at a low level: there is no competitive market for sports TV broadcasts [Solntsev, 2020], sponsorship deals are concluded on quasi-market conditions [Osokin, 2017], consumption of goods and services on match days is at a low level [Solntsev, 2020]. In Russian professional sports, mechanisms have not been formed to stimulate the development and implementation of innovative products and business processes that could form new and develop current competitive advantages. A number of researchers associate this with the dominance of budgetary sources in financing the activities of Russian professional sports organizations [Porot’kin, 2017]. This trend leads to instability in the activities of sports organizations in Russia, which can be aggravated during crises. One of the recent examples is the dissolution of the main professional clubs in the region, the HC Admiral (hockey club) and the FC LuchEnergiya (football club), by the decision of the Primorsky Krai government. Due to the need to support the health care system during the coronavirus pandemic, budget funding for the club was terminated, soon after which it was announced that the organizations representing the region in the leading sports competitions in Russia were liquidated.

Over the past few years, one can observe a reorientation of state priorities in the field of development of sports in Russia: mass sports are gaining more and more importance and support. From 2018 to 2020, the volume of budgetary allocations from the federal budget and the consolidated budgets of the constituent entities of the Russian Federation for the development of mass sports doubled: in 2020 they amounted to 166.1 billion rubles.¹ The gradual decline in the share of state participation in financing professional sports in Russia poses significant challenges to the industry. One of the potential solutions to the problem of reduction the dependence of professional sports on state and quasi-state funding may be to stimulate innovation activities.

In this article, the author will make an attempt to analyze what approach to stimulation and implementation of innovations in professional sports organizations can maximize the efficiency and effectiveness of innovation activities.

2. CHARACTERISTIC FEATURES OF INNOVATION ACTIVITIES OF PROFESSIONAL SPORTS ORGANIZATIONS

The innovation activities of sports organizations began to be a subject of scientific works quite recently. Among the first works in this field are the articles [Shah, 2000; Desbordes 2001; Hillariet et al., 2009], written in the beginning of the 21st century. However, these articles dealt with the features of the formation of product and service innovations in companies producing sport equipment and outfit. As noted in the work [Fulconis et al., 2018], the strategy for the sales of sports equipment will not fundamentally differ from the approaches to the sales of goods and services in other - nonsports and food markets. This is due to the fact that in these markets, economic entities are not directly related to the economic characteristics of sports.

One of the key features of sport, which can affect the innovation activities of organizations, is the need to maintain the so-called competitive balance. In scientific works on the subject of sports economics, this thesis is cited in the context of the result uncertainty hypothesis, which was formulated in the article by S. Rottenberg [Rottenberg, 1956]. The result uncertainty hypothesis states that the less predictable the sports result of a face-to-face tournament confrontation, the higher the audience's interest in it. In 1964, another American economist, W. Neale [Neale, 1964], cited a similar economic phenomenon of sports - the Louis-Schmeling paradox, which indicates that in professional sports it is beneficial to have strong competitors and it is economically inefficient to monopolize the market. Intense competition maximizes spectator interest and, as a result, maximizes the financial result of sports organizations. Within the framework of this study, it is proposed to consider sports organizations the organizations, the activities of which are directly associated with the uncertainty of sports results.

In the work [Osokin, 2021], two key features of innovative sports organizations are highlighted:

• the dichotomous nature of the goals of implementation of innovations (balance between sports and economic goals);
• innovation activities can be a source of conflicts between sports organizations and their so-called metaorganizations.

The first mention of the theory of meta-organizations in the context of sports was made in the work [Solntsev, Osokin, 2018], where the authors proposed to consider sports leagues and federations as sports meta-organizations (SMO). The term “meta-organization” itself was first introduced by Swedish scientists Ahrne and Brunsson [Ahrne, Brunsson, 2005]. Meta-organizations are a strategic alliance of several organizations with the aim of developing common solutions for problems at the level of markets, industries, geographic areas, etc. In the case of SMOs, a managerial dilemma may arise in terms of the allocation of funds for development. On the one hand, it is advisable to provide resources to those organizations that are able to use them effectively. On the other hand, SMOs cannot ignore the needs of member organizations (for example, regional federations) that operate in less attractive markets or do not have the necessary organizational experience.

The article [Timofeeva, 2012] studies the domestic market of sports and health services in the context of the theory of competitive cooperation. The author noted that it is advisable for organizations providing sports and health services to form strategic partnerships with the aim of:

• creation of industry associations to collectively promote interests and consolidate efforts in the realization of highly demanding projects;
• creation of industry documents regulating the actions of market participants within the framework of competitive struggle;
• formation of joint products taking into account the current infrastructure capabilities of market participants.

It should be noted that the measures proposed in [Timofeeva, 2012] may also be relevant for professional sports organizations. A striking example in this context is the case of the top football division in Spain. Until 2016, the rights to broadcast matches with the participation of Spanish football teams were realized by the clubs themselves. Since the 2016/17 season, the Spanish league has switched to a collective model of realization of rights, when broadcasters receive, in one deal, access to matches with the participation of all teams in a competition [Carreras, Garcia, 2018] (Image 1).

The Spanish league has received the greatest resistance from the leading clubs: Barcelona and Real Madrid. With the previous mechanism, the champion of the 2013/14 season in Spain - Atletico Madrid received 42 million euros under its own individual TV contract, while the aforementioned Barcelona and Real Madrid, who finished the same season with the second and third places, respectively, together received € 280 million from their own TV contracts (over 50% of all TV revenues of all Spanish clubs). The report presented by the league in 2019 showed that the relative share of Real Madrid and Barcelona football clubs in the total TV revenue of the league decreased due to the introduction of the system of collective TV rights, while in absolute terms all clubs saw an increase in revenue². According to the report of the Union of European Football Associations UEFA, the use of a collective model for the realization of TV rights allows to level the uneven resource provision of clubs and maintain competitive environment. The only European league that does not use this model is the Portuguese Premier League, where the difference in revenue between the top and median clubs in terms of financial result is more than 10 times, while the European average is 2.3 (Image 2).

A high competitive balance is a competitive advantage of the SMO that needs to be developed. However, it is in this situation that a conflict of interests arises, for instance between clubs and the league. The clubs are interested in pursuing their own individual goals, while the league must defend collective interests, which can often contradict the tasks of individual clubs/athletes.

Taking into account the above-mentioned facts, it is proposed to formulate the research question of this study: "Which approach is more effective in the context of innovative activities of professional sports organizations: individual or meta-organization one?"

3. METHOD

Within the framework of the research question raised in this study, it is proposed to use a qualitative approach to analysis - the case method, since it is one of the most popular qualitative approaches to the carrying out of managerial research [Baškarada, 2014] and also allows one to take into account various characteristics of the industry or other context that affect the object under study [Kaarbo, Beasley, 1999]. As noted in [Trachuk, 2014], the case method is a convenient approach for analyzing complex processes, allowing “to take into account the dynamics in various functional areas of the organization, as well as the relationship and cross-sectional nature of changes in the activities of organizations”. The case method also allows to combine the use of qualitative assessments and quantitative (primary and/or secondary) data. The authors [Järvensivu, Törnroos, 2010] point out that the case method is especially relevant in the context of the analysis of interorganizational relationships and interorganizational networks.

It is suggested to consider the features of the implementation of a meta-organizational approach to innovation activities in professional sports through the example of the implementation of SAP products in the Continental Hockey League (hereinafter referred to as the SAP case and KHL) for the formation of the "United Fan Base" of clubs and league. Based on the approach described in [Rashid et al., 2019], we suggest to structure the realization of the case method as follows:

1) conceptual basis;

2) pre-field stage;

3) field stage;

4) report stage.

The conceptual basis of the case involves defining the ontological and epistemological boundaries of analysis. From the standpoint of ontology, a relativistic approach to analysis was adopted, which is especially relevant when conducting research in practical areas where there is no significant research groundwork.

The epistemological basis of the case method is the constructivist paradigm. The use of the logic of constructivism allows us to take into account the level of subjectivity of human judgments, without denying the presence of objective understanding of the phenomenon due to the collective formation of knowledge [Van Den Belt, 2003]. Among the advantages of this approach, there is a close interaction between the researcher and the research participants, which makes it possible to more accurately assess the actions of the subjects of analysis.

The pre-field stage requires a description of the main research question, the method of data collection, the formation of the interpretation process and the assessment criteria. The main research question of the study has already been formulated within the framework of the previous section of this article. The author will use the exploratory case method [Baxter, 2008]. The main object of the analysis was the KHL case of the implementation of digital solutions to improve the marketing processes of clubs and the league as a whole, united in the integrated project “Unified Fan Base”. As a method, semi-structured interviews were used as one of the most common methods of data collection in managerial research [Van den Berg, Struwig, 2017].

The key data source for the case is semi-structured interviews conducted with the representatives of professional hockey clubs that are part of the KHL: FC Spartak Moscow, AK Bars Kazan and Salavat Yulaev Ufa³. This choice of clubs for the analysis was determined taking into account the specificity of the realization of the case: the clubs that participated in the pilot stage of the project and the club that refused to participate in it. To clarify the results of the interviews, open sources were analyzed, as well as analytical materials provided by the respondents after the interview, in particular, presentation materials describing the digital solutions used in Salavat Yulaev Ufa and materials used in the presentation of the project for the KHL clubs. A unified list of questions was prepared for the representatives of the clubs, which could be corrected during the interview process depending on the answers of the respondents. Based on the results of the interviews and the analysis of auxiliary materials, the author has carried out manual coding of the main elements of the text. The assessment of the reliability of the interview results was carried out by comparing the answers of respondents to similar questions in relation to the case.

The field stage consisted of three semi-structured interviews. The list of questions was sent to the respondents in advance for approval. Each interview was scheduled at least three days after the questions were sent for approval. All interviews were conducted using Zoom video conferencing platform. For further transcription, all interviews were recorded, and all respondents were notified of this before the start of each interview. Auxiliary presentation materials were provided by respondents in electronic form.

Interviews were transcribed by the author manually, after which the text documents were sent to the respondents for approval. If necessary, the wording was corrected after additional discussion with the respondents. The agreed text transcripts were coded by the author for further generalization and case description. Presentation materials were additionally used to analyze quantitative data and detail the respondents' answers.

4. CASE DESCRIPTION

The core of the project was that the KHL planned to form a “Unified Fan Base” of all clubs within a single cloud system that could be used by both the league and the clubs (Image 3). Thus, the KHL clubs received a better tool for developing relationships with fans (CRM), and the league - access to fans of all clubs. The possibility of direct contact of the league with the fans is extremely important. Most consumers of the product are fans of a particular club, but not fans of the league itself, or neutral fans of a particular sport. Thus, the KHL is unable to assess the consumer behavior of the fans. In the context of domestic professional sports organizations, this aspect is especially important given the need to maximize revenue from the sale of rights to broadcast matches on television or on digital platforms [Osokin, Riit, 2019]. Differentiation of financial flows is an important aspect of ensuring the sustainability of professional leagues, especially during periods of economic crises [Altukhov, 2015]. The presence of a single fan base will allow the KHL to systematically promote the television product of its own competitions, since the league uses a widespread collective approach to the realization of TV rights.

The realization of the case can be divided into five phases (Image 4). The first contact of the KHL with potential clubs for a pilot implementation was made in March 2018. Three hockey clubs were selected for pilot implementation: FC Spartak Moscow, AK Bars Kazan and Metallurg Magnitogorsk. The principle of selection of pilot clubs was based primarily on the willingness of the clubs themselves to use the SAP solution and independently compensate for a number of costs for system integration.

As part of the second phase, which began in fall 2018, the KHL informed the clubs that the project with SAP would take place and that the implementation work itself was scheduledfor spring 2019. In spring 2019, we started working with SAP consultants and conducted methodological seminars for the representatives of pilot clubs. The fourth stage involved testing SAP products within the framework of a full-fledged competitive season and making appropriate adjustments. The final stage presupposes replicating the technology based on the results of the pilot implementation for all clubs in the league. At the time of the study, this phase was still in the active stage of realization. Representatives of the clubs noted that the league chose the most comfortable period for the third phase, which required the involvement of human and financial resources to implement the innovation. The study of the main business processes by the end of the 2018/19 season made it possible to form an acceptable timeframe for preparing the technology for full use during the 2019/20 competitive season.

The League did not directly use regulations or other tools to establish requirements for mandatory implementation of SAP solutions. At the same time, such measures have already been realized in real life, including in Russian leagues. For example, in the regulations of the VTB United League (Russian Basketball Cup) for the 2019/20 season⁴ a commitment was registered that every “club must use a CRM (Customer Relationship Management System)” system, which, inter alia, allows maintaining a customer database, integrating with ticketing and merchandising processes, and includes history of consumer behavior. At the same time, it cannot be said that the KHL does not at all use regulations to stimulate the innovative activities of clubs. Since 2017, the league has a club rating⁵, which also provides an assessment of the activities of clubs for the commercialization of their products.

At the time of implementation (third phase), the clubs were at different levels of digital maturity. A number of clubs were already using some software products for customer relationship management, online ticket sales and branded merchandise. The League annually monitors the organizational maturity of clubs based on a questionnaire. As part of the questionnaire, the clubs are asked for information about the technologies used, including as part of the marketing function. The cost structure during the implementation period was different for all clubs. First of all, it was predetermined by the above-mentioned level of digital maturity. At the time of implementation, AK Bars Kazan already had its own CRM solution, while its functionality was significantly lower than that of SAP products. FC Spartak Moscow did not use any of its own digital products, moreover, for two years the club has been independently elaborating a project to implement the appropriate solution. The clubs noted the following positive aspects of the SAP implementation case:

• the proposed product was extremely relevant for solving current problems in the field of development of marketing processes and commercialization of activities;
• on their own, the clubs would not have enough resources to solve the problem with the aid of such an advanced product as SAP Marketing Cloud;
• due to the actions of the KHL, it was possible to accelerate the improvement of the marketing tools and competencies of the clubs.

5. CASE IMPLEMENTATION BARRIERS

All respondents noted that resource limitations are a key intra-organizational barrier to innovation activities. To minimize the impact of this barrier, the KHL decided to establish a system of financial motivation for clubs that will use SAP products, and it was decided to extend these incentives to both pilot clubs and clubs that would be integrated into the project during the fifth phase. The size of the financial incentives was based on the costs incurred by the pilot clubs during the technology start-up phase.

During the realization of the third and fourth phases of the project, the pilot clubs regularly contacted both the KHL and other clubs. The League annually conducts educational seminars on various functional directions. As part of marketing seminars, the pilot clubs shared their experience and the first results of use of SAP products in their activities with other representatives of the KHL. The league was primarily interested in this initiative in order to minimize the potential skepticism of other clubs prior to the replication phase.

One of the clubs that refused to use SAP products in the pilot phase was Salavat Yulaev Ufa. This decision was primarily driven by the club's earlier efforts to implement innovations in the field of relationship management and customer loyalty. When introducing SAP products, the KHL also provided access to its own fan base, which was formed by the league. At the time of the SAP implementation proposal, the CRM solution base of Salavat Yulaev Ufa contained almost 100 thousand active fans (Image 5), while the KHL database had about 5 thousand club fans. The functional aspects of the SAP digital solution largely duplicated the solution used by the Salavat Yulaev Ufa, - Manzano. The club decided to abandon the integration of SAP and Manzano systems, since in 2020 (at the time of negotiations with the KHL) it did not have sufficient resources to implement it. At that time, the KHL had not yet notified the clubs about the formation of a system of financial incentives for the implementation of SAP products.

Thus, the implementation of SAP solutions divided the KHL clubs into three groups: "beginners", "progressive" and "independent innovators"⁶ (Table 6). In this case, independent innovators are the group that is not inclined to use meta-organizational innovation, but is ready to accept the creative role of the Schumpeterian entrepreneur, while beginners and progressive ones are ready to take the role of the Kirzner entrepreneur, who is more likely to search for successful potentially relevant innovations and passively uses them. It is noted in [Yudanov, 2012] that the introduction of innovations based on the principle of borrowing is more typical for low-tech industries, which include professional sports. At the same time, the author points out that the roles of Schumpeterian and Kirzner entrepreneurs should not be mutually exclusive, but, on the contrary, complementary. Thus, taking into account the specificity of the analyzed case, the approach of independent innovators cannot be called justified for professional sports organizations.

Another reason why Salavat Yulaev Ufa refused to use SAP solutions was the uncertainty regarding the model of interaction with contractors and intellectual property in the long run. The agreement between the KHL and SAP is valid until 2024, while within the framework of the contractual relationship, the clubs do not receive an individual license to use software products, as well as the rights for the fan database. These risks were unjustified for such clubs as Salavat Yulaev Ufa, which already at the time of the implementation of SAP in the league had their own database and a set of software products for its monetization. At the same time, representatives of the pilot clubs noted that these risks were initially identified at the pre-project phase. All clubs have the opportunity to obtain archival copies of all databases accumulated during the operation of SAP technologies. Moreover, a number of clubs have established internal processes to regularly update fan database backups.

The key success factors for this case include:

• methodological support: on a monthly basis, consultations are held with the clubs on working with software products;
• phased implementation: during the first season, the business processes for the implementation of SAP Marketing software products on the basis of three clubs were elaborated, during the next season the KHL moved to full-fledged implementation for all clubs;
• encouraging clubs to embrace innovation: The KHL decided to compensate the clubs' costs associated with the implementation of SAP products (staff training, hiring new employees), and to reward them for connecting additional software modules (ticket sales, online store, etc.).

6. RECOMMENDATIONS AND CONCLUSIONS

Using the example of the SAP software implementation case, KHL demonstrated the possibility of implementing a meta-organizational approach to motivation and implementation of innovations. Taking into account the results of the study, in order to increase the efficiency and effectiveness of activities in the field of motivation and implementation of innovations for the benefit of their participants, it is recommended that meta-organizations:

• regularly assess the needs of the participants;
• analyze the relevance of the proposed innovation, taking into account the technological and process maturity of the participants;
• develop incentives for participants in order to level resource barriers related to innovations;
• elaborate risk maps of innovation implementation for participants and approaches to minimizing the likelihood and scale of these risks.

In the context of the research question formulated in the article, the considered case makes it possible to partially confirm that the meta-organizational approach is a more effective way of implementation of innovations for professional sports organizations. At the same time, additional verification of the results of this study will be required through the study of similar cases in other domestic and foreign sports organizations, as well as the use of quantitative research methods to study the scale of effects from the implementation of the meta-organizational approach. The study of the meta-organizational approach to incentives of innovations outside the framework of sports organizations is of particular interest.