This document discusses using a niche portfolio strategy to expand international sport markets. It analyzes Formula One's expansion into different country niches based on various resources. The study finds that participant resources like events, teams and championships; spectator resources like population size; and sponsorship resources like corporate spending best predict advertising rates in a country. However, media resources do not significantly impact rates. The failure of F1 in Turkey is discussed as an example where lack of these key resources led to the sport's abandonment. In contrast, Russia shows promise for F1 due to stronger participant, spectator and sponsorship resources.

1. Global Growth in
International Sport:
A Niche Portfolio
Strategy
Joe Cobbs, Jonathan A. Jensen, & Mark Groza

2. INTRODUCTION
Organizational ecology niche perspective
Niche: multi-dimensional resource space (Hutchinson 1957)
• Not exclusive to small market segments
Resource perspective in organizational ecology
• Niche broad or narrow, based on the variance of the resources (Milne et
al., 1996)
Niche portfolio strategy diversifies market risk
• Success relies heavily on amount and quality of resources within
targeted niches (Milne et al., 1996)

3. Niche marketing strategy
INTRODUCTION
Particular market niche (Porter, 1980)
• geographic boundaries
• type of customer
• segment of product line
• combination of these three elements
Niche marketing (Kotler 2003)
• collection of customers of sufficient size
• willing to pay a premium
• unlikely to attract similar competitors
• represent profit and growth potential
Where niches defined geographically, building diversified portfolio
involves international market expansion

4. INTRODUCTION
Application of Niche Strategy to Formula One
• Very high spectator consumption (588m), yet drastic variation by region
(Sylt and Reid 2011)
• Model the importance of native resources to success of international
expansion strategy
• Build on theoretical foundation of Milne et al. (1996), who applied niche
marketing strategy to sport industry

5. Examination of Niche-based Resources
HYPOTHESES
• Resource categorization: participants, spectators, sponsors,
media
• H1. Participant-based resources: number of (a) events, (b) teams, and
(c) championships
• H2. Spectator-based resources: (a) population size and (b) gross
national income [GNI]
• H3. Sponsorship-based resources: (a) current corporate sponsor
support and (b) corporate support potential (In-country market cap)
• H4. Media-based resources: (a) traditional and (b) new media

6. Demand DV: TV advertising rates
METHOD
Standard commercial time—rate card—for broadcast of every F1 grand prix
over 4-year period in 19 countries, across five continents
• sourced from UK-based media agency
• Call for utilization of broadcast-related metrics to measure demand (Fort
2006; Tainsky 2010)
• Broadcast rights fees dominant revenue source in sport industry (McCarthy
2013; Ourand 2013)
• Actual attendance figures closely guarded
• media reports often gross estimates or wholly inaccurate

7. METHOD
Table 1
F1 Broadcast Network by Sample Country
Country Network Country (cont.) Network (cont.)
Australia Ten Greece Alpha
Austria ORF-1 ANT1
ORF-2 Hungary RTL Klub
RTL Italy Rai Due
Bahrain Bahrain TV Rai Uno
Belgium Canvas (North) Japan Fuji
Eén (North) Malaysia ESPN Asia
La Deux (South) NTV7
La Une (South) Star Sports
RTBF ASTRO
Brazil Rede Globo Netherlands RTL7
Canada RDS Spain Canal 9
TSN IB3
TSN2 La Sexta
China CCTV-5 TPA Television Principado de Asturias
Guangdong TV Sports TV3
Guangzhou TV Competition Telecinco
Shanghai Documentary U.K. BBC One
Shanghai Great Sports BBC Two
Denmark TV3 Puls U.S. FOX
TV2/TV2 Zulu FOX Deportes
France TF1 Speed
Germany RTL
Premiere

8. METHOD
Table 2
Means, Standard Deviations and Correlations Among Study Variables
Variables Mean S.D. 1 2 3 4 5 6 7 8 9
1. AdRate (Thousands USD) 424.60 500.30
2. Events .74 .53 .40**
3. Teams .56 .87 .55** .14
4. Championships 2.64 3.60 .59** .19 .52**
5. Population (Millions) 132.00 301.40 .17 .12 -.14 -.11
6. GNI (Thousands USD) 33.50 15.90 -.04 -.14** .23 .11 -.45**
7. SponsorSpend (Millions USD) 132.00 212.20 .41** -.04 .49** .14 .02 .27*
8. MarketCap (Trillions USD) 2.06 3.72 .01 -.08 -.02 .04 .37** .13 .39**
9. News 211.38 111.83 .10 -.32** .46** .00 -.33** .58** .65** -.01
10. Internet 63.74 17.80 -.04 .30* .20 .12 -.52** .85** .35** .07 .64**
* p < .05; ** p < .01

9. RESULTS
Table 3
Regression Results for Participant, Spectator, Sponsor and Media Resources effect on Ad Rates
Independent Variables Model 1 Model 2 Model 3 Model 4 Model 5
2008 -.04 (0.27) -.03 (0.25) -.03 (0.26) -.07 (0.81) -.08 (0.90)
2009 -.05 (0.37) -.01 (0.08) -.01 (0.08) -.05 (0.49) -.04 (0.42)
2010 .05 (0.37) .06 (0.59) .05 (0.54) .06 (0.71) .08 (0.86)
Participant Resources
Events (H1a) .30** (3.36) .29** (3.04) .30** (3.50) .29** (3.17)
Teams (H1b) .32** (3.14) .33** (3.27) .08 (0.78) .08 (0.68)
Championships (H1c) .37** (3.63) .38** (3.90) .47** (5.24) .46** (4.80)
Spectator Resources
Population (H2a) .25** (2.67) .32** (3.38) .28** (2.78)
GNI (H2b) .07 (0.71) .09 (0.85) .27 (1.71)
Sponsor Resources
SponsorSpend (H3a) .40** (4.08) .52** (4.04)
MarketCap (H3b) -.28** (2.93) -.32** (3.16)
Media Resources
News (H4a) -.13 (0.81)
Internet (H4b) -.19 (1.09)
F-statistics .21 11.71 10.43 12.34 11.50
R2 .01 .52 0.57 .67 .69
ΔR2 .51** .05* .10** .02
Note: Standardized coefficents reported β; (t-value in Parentheses) * p < .05; ** p < .01

10. H1, H2, & H3 supported
RESULTS
Participant-based resource variables are significant
• (H1a) Events (β = .30, p < .01), (H1b) Teams (β = .32, p < .01) and (H1c)
Championships (β = .37, p < .01) each yield significant coefficients
Spectator-based resource supported by change in R2 (p < .05)
• (H2a) Population (β = .25, p < .01), but (H2b) Income not supported (β = .07,
p > .05)
Sponsor-based resource supported by change in R2 (p < .05)
• (H3a) Sponsor Spend (β = .40, p < .01), but (H3b) Market Cap negative
effect (β = -.28, p < .01), based on low demand for F1 in US and China
Media-based resource (H4) not supported

11. DISCUSSION
Application Example: Failure of F1 in Turkey
First race in 2005; abandoned by 2012 (Cary, 2012)
Media blamed poor attendance (BBC Sport, 2011)
• Symptom of lack of demand for the sport in geographic niche
Turkey as geographic niche
• No participant resources (driver, team or event)
• Marginal spectator resources (only 73 million consumers)
• Minimal sponsor resources: 1 current corporate sponsor (Ofisi, who had spent
$350,000 with Honda)

12. Russia niche shows promise
DISCUSSION
• First race in Russian Federation in 2014 (BBC Sport, 2010)
• Participant resource: Russia has boasted drivers (Vitaly Petrov, Daniil Kvyat) and
team (Marussia Virgin Racing team)
• Spectator resource: Population of 141 million above mean of study
• Strong sponsor involvement
• Race slated for Sochi, site of 2014 Winter Olympics and 2018 FIFA World Cup

13. Questions?
Joe Cobbs (cobbsj1@nku.edu)
Jonathan A. Jensen (jensen.205@osu.edu)
Mark Groza (mgroza@niu.edu)