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Need for Carbon Offsets Could Spur Green Partnership Growth

Editor’s Note: Adam Grossman is at the controls this morning. You will find his latest Revenue Above Replacement x JohnWallStreet column below. I’ll be back Monday morning.

Need for Carbon Offsets Could Spur Green Partnership Growth

Customers, employees, investors, and the media are increasingly placing companies’ environmental impact under focus. Concerns exist that at least some are having a substantial deleterious impact on global warming via carbon emissions.

Carbon markets were established to help companies offset those activities. These trading platforms enable companies to purchase carbon credits that, in essence, balance out their greenhouse gas emissions.

For example, a lumber company might agree to pay another entity to plant a tree for each one it chops down.

Unfortunately, the global carbon markets have not been working effectively—if at all. A recent New Yorker story highlighted the challenges faced using the frame of a $100 million project in Zimbabwe. The carbon credits paid were supposed to go towards preventing deforestation. Instead, little has been done to preserve local soil/trees and much of the money has found its way to bad actors.

These kinds of failures are common with carbon offset initiatives and present a problem for companies that have made promises to stakeholders. Many now need alternative avenues, with demonstrable track records for pollution offsets, to invest in.

This dynamic has created an opportunity for sports organizations who have embarked on large-scale green initiatives to incrementally grow partnership revenues.


WMT Provides Custom Solution for Snapdragon Stadium

Snapdragon Stadium’s custom mobile app solved the challenges created by multiple, diverse tenants hosting events within the same venue. Four distinct TicketMaster integrations were required to support the variety of events, in addition to a need for a public ticket purchase integration.

Leveraging cross-promotion: For fans using the app within the stadium, a real-time upcoming event schedule integration serves as an active promotional tool. Additionally, various spaces within the stadium are promoted for private rental opportunities, driving unique and additional revenue

The mobile app also includes additional features that drive utility for those patrons at any event:

  • Gameday Mode

  • In-Seat Ordering

  • Closed captioning (English & Spanish)

  • AI Chat functionality

  • Wayfinding

  • Selfie Scavenger Hunt

Several organizations, including the Seattle Kraken and FC Augsburg, play in or are moving towards carbon neutral venues.

In fact, the Seattle based NHL club plays its home games in Climate Pledge Arena (the venue is also zero waste and powered by 100% renewable energy). Amazon is using the naming rights pact to emphasize its dedication to climate action. “The Climate Pledge” is a commitment from companies globally to be net carbon zero by 2040.

The Atlanta Hawks are in the process of making their building, State Farm Arena, carbon neutral too. The world’s first TRUE (total resource use and efficiency) zero-waste platinum certified venue is diverting over 90 percent of its waste away from landfills.

Offset-focused partnership opportunities are not exclusive to carbon. The Hawks recently announced a partnership with Georgia Natural Gas that will help the club to offset 100% of the natural gas usage at the ~17,000-seat venue.

“Our recent partnership with Georgia Natural Gas is an organic example of the type of collaboration that can make a lasting impact,” Sofi Emma Armenakian (head of sustainability, Atlanta Hawks and State Farm Arena) said. “It’s good for the environment and it’s something our fans are becoming more conscious of.”

While venues are the most visible demonstration of how sports teams are working to reduce pollution, they are not the only avenue for an organization looking to clean up climate emissions to pursue.

The NBL’s New Zealand Breakers recently became the first pro sports franchise to obtain the Integrity 2 ESG certification from K2 Integrity. The team received this recognition, in part, because it uses renewable energy to power its practice facilities and examines the food sources eaten by staff and players for their carbon impact on supply chains.

“We are proud to obtain a formal ESG compliant certification from a recognized third-party and are committed to continue to work to use best practices,” Matt Walsh (majority owner and CEO, New Zealand Breakers) said. “With massive funds and corporate businesses going through similar evaluations, you’ll see sports teams across the world [follow suit].”

The team’s efforts to reduce carbon emissions have already started to pay off, at least from a revenue perspective. Supplement and skincare partner, Manuka Doctor, indicated the ESG certification was a catalyst in the company increasing its deal with the club.

As Walsh noted, sports focused investment funds are leaning into sustainability as a pathway to enterprise value accretion too. Arctos Partners recently became a strategic partner of the GOAL sustainability program.

“GOAL’s analytics platform and perspective on best practices stood out as an effective way for teams, venues, and ownership groups to track [ESG] performance across key categories, including carbon outputs,” Jordan Solomon (partner, Arctos Partners) said. “If franchises approach sustainability correctly, they can better position themselves to connect with their communities, forge partnerships with like-minded brands and sponsors, and ultimately increase their value.”

To clarify, sports partnership investments would not specifically replace the official offsets that can be purchased on the carbon markets. Carbon offsets also require the purchaser to directly reduce their own carbon emissions in equal amount to the carbon reductions in planned projects or activities.

Sports properties investing in carbon neutrality or other ESG-related initiatives would be wise to look beyond any financial upside that may exist. There’s no guarantee companies will seek out carbon offsets, never mind alternatives to them, in the future.

There should, however, be plenty of capital available for green-focused companies to partner with sports properties in the years ahead. There were $2.5 trillion dollars tied up in global environmental social and governance (ESG) funds at the start of ‘23.

Many sports properties have made visible commitments to reducing their carbon footprints and aligning with those organizations can serve brand positioning goals. Savvy rights owners would be wise to pursue this new, potentially lucrative partner vertical.

Correction: A prior version of this story incorrectly associated GOAL’s sustainability program with the Green Sports Alliance. GOAL was founded by Oak View Group (OVG), the Atlanta Hawks & State Farm Arena, Fenway Sports Group, and green building expert Jason F. McLennan.

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About The Author: Adam Grossman is the Vice President of Business Insights & Analytics at Excel Sports Management. He works with companies, sports properties, media rights holders, athletes, agencies, and events to determine the value of their most important assets. Grossman is also a professor at Northwestern University Master’s In Sports Administration program and the co-author of The Sports Strategist: Developing Leaders for a High-Performance Industry. You can find him at [email protected].