Sport entrepreneurship: myth or reality?

The state is extremely interested in developing sports entrepreneurship, especially when it comes to mass sports.

Government and business: matching interests

The Russian Government has set very ambitious goals when it comes to engaging various categories of Russians in sports:

  • as part of the national goals, the engagement rate for various categories of citizens must reach 55% by 2024;
  • the engagement rate under the Physical Fitness and Sports Development Strategy until 2030 is 70%.

It is clear that the government bodies responsible for the development of public physical fitness and sports (at the federal and regional levels) will not be able to achieve these results acting alone. They will need to systematically involve private businesses across all Russian regions. Of course, even today there is certain progress in sports entrepreneurship. But long-term and system-wide support on behalf of the government is still lacking.

Some positive examples of entrepreneurship in sports include the fitness industry that has been developing for many years now, as well as numerous marathons and runs, private corporate leagues and private sports clubs and schools. These are all important results which are becoming regular and extensive. We could say that the interests of the state and businesses finally match. It is particularly good to see that they are reflected in the national goals and the Physical Fitness and Sports Development Strategy.

Entrepreneurship in Russia: Five development tracks

Track 1

Objectively, there are still very few examples of real private initiatives in the Russian sports industry. Professional clubs currently aim for the following targets:

  • gradual transition away from public funding;
  • wide use of marketing tools to make profit;
  • step-by-step transition to self-sufficiency models.

It is definite that the job will not be done overnight. But we could follow the example of foreign professional clubs that already know how to use marketing tools like experts and have smart strategies when it comes to major consumers of the sports industry — spectators, fans, businesses and media.

Track 2

The Russian fitness industry is currently one of the top industries for entrepreneurs. It is a comprehensive and independent segment of the sports industry with a developed infrastructure. Russia has almost 8,000 fitness clubs, fitness centers and studios. Under certain conditions, their activity can be investment-worthy even despite the fact that the coronavirus pandemic has taken a harsh toll on fitness clubs’ revenues. The gym industry is now the most actively developing and commercially attractive sector in sports. In the past 30 years, since 1990-1991, when the first fitness clubs appeared in Russia, the Russian fitness industry has achieved impressive results.

To be fair, the state did not notice the gym industry at the early stages of its development. The Russian Ministry of Sport said that fitness clubs were commercial businesses and had nothing to do with sports. The situation began gradually changing as the state agencies responsible for the development of physical fitness and sports were charged with promoting sports among Russian citizens. It became clear that the interests of the state and the entire fitness industry are the same.

The situation is different now, and the state agencies and the fitness industry are working together. In 2019, the historical amendments were introduced to the federal law on the development of physical fitness and sports of the Russian Federation that made fitness centers a full-fledged party in the sphere of physical fitness and sports. The Russian Ministry of Sport currently regulates the fitness industry. To learn more about the development of the fitness industry in Russia, one should look up the official statistics of the Russian Ministry of Sport.

The development of the fitness industry:

  2015 2016 2017 2018 2019 2020
The number of fitness clubs 5,355 6,069 6,308 7,065 7,593 7,812
The number of fitness club members, mln 3.413 3.992 5.230 5.399 6.268 6.674

While analyzing the fitness club structure, one must remember that they differ in the infrastructure, range of health/sport services and membership. There are many fitness chains, both federal and regional. But all of them share several important features:

  • All fitness clubs were initially created as businesses that aimed to earn profit;
  • The creation of each fitness club was backed by private investors who counted on themselves and their capacities, including financial ones. They never relied on the state’s assistance;
  • In order to make money from providing health and sports services, they needed to promptly and efficiently learn the entire range of various marketing tools to work with clients. One needs to keep in mind that when clients pay their own money for services, they are quite picky about the price-quality ratio.
  • Fitness clubs are competing for clients, which will definitely lead to improving quality of the health and sports services. Unscrupulous players will have to leave the market.

Therefore, even despite the pandemic, the Russian fitness industry has good prospects for the development given that the industry and the state have common goals, that is, the national goals to promote a healthy lifestyle and sports.

Track 3

There are many successful examples of business projects related to mass sports. A large number of various competitions, such as marathons and half marathons, bicycle rallies, triathlon events, ski races, and others, are held on a regular basis. Very often such competitions attract thousands of financially capable participants. These competitions have one thing in common: the vast majority of them is organized by those who take these efforts as a private business; we can argue that today we see increasing interest in doing business in mass sports.

The rising number of marathon running events in our country can serve as a positive example. In 2013, the first Moscow Marathon took place; mass consumers instantly developed an interest in the event. Several years later, organizers established the Moscow Marathon’s Running Community and now hold more than ten different events for their clients — such as the Fast Dog cross country running race, April Race, Night Race, Krylatsky Trail, Fox Mountain cross country race, and others — that is, a large number of competitions based on participants’ interests and depending on their physical shape. The organizers also opened a running club where people can train and prepare for these competitions on a regular basis.

Amidst the interest in running observed nationwide, National Running Movement was established in Russia in 2015, with its organizational and methodological efforts uniting over 200 marathon and half marathon events across Russia. The organizers aim to increase the target audience to 2 mio in 80% of Russia’s regions by 2022, definitely a very ambitious task.

Track 4

In recent years, we have observed an actual boom in private sports clubs, schools, academies, and centers. This applies to both team and individual sports, including football, ice hockey, boxing, mixed martial arts, e-sports, skateboarding, figure skating, diving, artistic gymnastics, and synchronized swimming. This only proves that clients are willing to engage in sports activities and ready to pay money for a quality service.

Many renowned athletes decided to try their luck as entrepreneurs using their popularity, stardom and recognition in the world of sports. This has resulted in creating personalized brands when establishing private clubs, schools and academies. Some examples include:

Nikita Kryukov’s Ski Academy (Olympic cross-country skiing champion).

Anton Golotsutskov’s Academy of Gymnastics (Olympic medalist in artistic gymnastics).

Yekaterina Lobysheva’s School of Champions (Olympic medalist in speed skating).

Gleb Galperin’s FlyDiving diving school (Olympic medalist in diving).

Nikita Nagorny’s Academy of Champions (Olympic champion in artistic gymnastics).

Track 5

For many years, we have observed development of various corporate sports leagues, which provide their clients with the opportunity to participate in competitions on a regular basis. Back then, it all started with football; today, there are also leagues other than team sports ones. Clients deem it important when the league leadership takes the initiative in solving numerous problems when organizing competitions, and they only have to pay registration fees and enjoy themselves.

All these trends show that the private sector has thoroughly studied customers’ potential preferences and is now ready to provide a quality and extensive range of products and services. Leaders in this regard include representatives of mass sports and the fitness industry, while representatives of professional sports, particularly professional clubs in football, ice hockey, basketball, volleyball and others, have acts to follow.

Also, we must remember that successful business projects in sports are implemented by real people — entrepreneurs and sports managers, and this requires professional competence gained through training and practice under various educational programs. The Faculty of Sports Industry of Synergy University for Industry and Finance, which offers training programs for both entrepreneurs and sports managers, is ready to help all those who are willing to engage in the sports industry.

By Vladimir Lednev, Ph. D. (Economics), Professor, Vice President of the Synergy University for Industry and Finance, Research Director of the Faculty of Sports Industry, Head of Sports Management.

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