Why Ongoing Growth in the Sports Industry Could Be Disastrous for Its Credit Card Reconciliation Process

The Rookie Mistake Financial Professionals Can Easily Make in the Industry

By 2019, the North American sports industry is expected to reach $73.5 Billion in revenue[1], and similar growth is also being seen in several other geographies. With an over 20% increase in revenue from 2013 to 2018, this is an unprecedented increase the likes of which have not been seen since the industry took a sizeable hit during the 2009 global recession. Even in the UK, this sector supports an estimated 450,000 jobs and £20bn in revenue.[2]

While this acceleration is partially due to a booming economy, the growth in the sports industry can also be attributed to efforts to enhance the experience of going to a game for fans. By responding to the needs of their customers and adopting modern technology, the sports industry has been able to differentiate itself in today’s world of constant information and disruption.

The industry’s continued success in setting itself apart and driving traffic to its venues has led to an increase in the number of payment transactions, specifically credit card transactions as 75% of consumers prefer electronic payment card for their purchases[3], that the industry processes.

Despite a willingness from the industry overall to adopt modern technologies that enhance the consumer experience, there’s only been a slow evolution of improvements for the credit card reconciliation process in their office of finance. Unfortunately, when the amount of transactions inevitably surpasses the accounting team’s ability to handle them accurately, companies across the sports industry are quickly faced with financial exposure, such as write-offs and even misstatements, that quickly eat away at their increased earnings.

Below is an overview of the challenges the sports industry faces as it works to continue to increase revenue, and how embracing the solutions to those challenges will have notable implications for the credit card reconciliation process.

Removing Purchase Barriers for Concessions

One of the most significant hurdles stadium operators face when trying to increase food sales is the long lines that can easily deter fans from making purchases. No one enjoys waiting in lines and removing that barrier to entry is a clear opportunity to increase food sales.  Because of this, a number of forward-thinking sports stadiums have decided to implement mobile payments and even create mobile apps that allow fans to place orders from their seat. While most solutions to this industry issue are still in the initial stages, adopting this technology promises to solve one of the fans’ most significant dilemmas – whether or not that beer is worth potentially missing a moment of action. By removing a significant barrier to purchase, not only does revenue increase, but so do the number of credit transactions that need to be reconciled as the preferred method of payment continues to move even further away from cash because of the use of the mobile applications.

Competing with the Home Viewing Experience

When you look at the difference in price points between watching the game at home and going to a stadium, there’s really no contest. And, if the expense of attending a game (or match) in person is a concern, there are many options available today that allow fans to immerse themselves in the action from the comfort of their own home.

While ultimately it may be impossible for stadiums to beat the price point that streaming services can offer, many stadiums have evolved their pricing model to help score additional sales. For example, several organizations are opting into subscription-based passes, a sort of “miniature season pass” that allows fans to attend a set amount of games at a discount as a sort of middle ground. The option allows fans to avoid the commitment of paying for every game as part of a complete season pass that requires a significant commitment of time and financial resources.

While paying for some and not all might not be a revolutionary idea, it does have the potential to increase sales to a subset of customers that would otherwise opt for watching the game at home. Again, this increase in revenue will naturally increase the number of credit card transactions that need to be reconciled, and even create a more complex matching process.

Improving Stadium Security and Experience

To ensure a safe experience for their fans, especially in light of recent acts of violence that have occurred at stadiums, sports venues are continuously and actively looking for ways to improve their security protocols. By implementing technologically-advanced systems like biometric recognition, radio-frequency identification (RFID) tags and electronic fingerprinting, they are able to not only ensure that their fans are as safe as humanly possible, but also resolve a seemingly unrelated issue of wait times in the entry lines to the stadium. Through the implementation of this advanced technology, stadiums can deploy a “trusted fan program” that provides an expedited entry for pre-approved customers. [4]

The willingness to adopt technology previously unused in the industry has allowed them to provide a safer experience while decreasing the length of the line to enter the stadium – effectively benching both safety concerns and longer entry wait times as a reason to not see a game live. Though this may not create the most significant increase in revenue, it may have some implications for tickets sales as fans, potentially subconsciously, notice an improvement in their overall experience and the time needed to attend a game. After all, it’s not always easy or desirable to push work, family and other commitments aside to be able to wait in line early enough to enter a stadium in time to see the very beginning of the event.

The Ball’s in their Court

The sports industry has made it a priority to do everything possible to keep their head in the game and remain open to innovation despite several obstacles, especially when it comes to improving the fan’s experience at their stadiums. And to their credit, their keen focus on customers’ needs and preferences has already started to produce the growth they need to continue to be successful as they compete for their desired share of their customer’s wallet. By all indications, the changes they are making will continue to fuel future growth.

However, with this growth comes a potentially a massive increase in credit card transactions that cannot be reliably handled with the traditional reconciling process. Manually verifying transactions between spreadsheets is time-consuming and can leave their organization exposed to the costly complications caused by human error.

Because almost 90% of spreadsheets contain critical errors, this hindrance is less of an if, and more of a when.[5] While the industry has made impressive strides in evolving the stadium experience, the same level of changes needs to take place in their office of finance to make sure they continue to see the results of their efforts accurately reflected in their balance sheet.

Discover how to improve the reliability of your credit card reconciliations today!

Written by: Caleb Walter

[1] Heitner, D. (2016, March 28). Sports Industry To Reach $73.5 Billion By 2019. Retrieved June 5, 2018, from https://www.forbes.com/sites/darrenheitner/2015/10/19/sports-industry-to-reach-73-5-billion-by-2019/#42649bd21b4b
[2] Critchlow, A. (2015, May 03). Britain’s sport industry hitting top form. Retrieved June 5, 2018, from https://www.telegraph.co.uk/finance/11580773/Britains-sport-industry-hitting-top-form.html
[3] Steele, J. (n.d.). Payment method statistics. Retrieved June 5, 2018, from https://www.creditcards.com/credit-card-news/payment-method-statistics-1276.php
[4] Mayhew, S. (2017, October 23). IDEMIA to equip Levi’s Stadium with biometrics-based technology, deploy trusted fan program. Retrieved June 5, 2018, from http://www.biometricupdate.com/201710/idemia-to-equip-levis-stadium-with-biometrics-based-technology-deploy-trusted-fan-program
[5] Leung, S. (2014, September 15). SalesforceVoice: Sorry, Your Spreadsheet Has Errors (Almost 90% Do). Retrieved June 5, 2018, from https://www.forbes.com/sites/salesforce/2014/09/13/sorry-spreadsheet-errors/#3c4713f756ab

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