OpenSponsorship CEO Says Lifting Paywall Was “A Massive Risk”

OpenSponsorship is a two-sided marketplace for sports deals that traditionally has required the brands and athletes that use it to pay a monthly subscription for access. But in February, as the impact of the coronavirus pandemic began to take its economic toll, company Founder & CEO Ishveen Anand made a bold decision to lift the service’s paywall, fundamentally changing the company’s economic model. She explained to THE DAILY, “It was a combination of two things, for sure. One was, we saw brand marketing dollars reducing. And then partly it was, did we feel right always having a barrier to entry when our mission is being accessible?” Anand said OpenSponsorship’s subscription-based model was “very profitable” for the company, but reflected on the recent change, “What’s happening is, because we’re not charging them, more brands are coming in and they’re offering these opportunities to more athletes. We’re actually seeing more deals happen.” Still, Anand admitted that many of the deals being made now are smaller, and some feature no monetary compensation at all. She cited fashion brand Perry Ellis as an example of one such deal: “What they’re offering athletes is five hundred dollars’ worth of product, which is great for the athlete. We make no money on that. But point being is: If that’s the only thing they have right now, we’d rather be helping them do that deal.”

RISKY BUSINESS: Anand spoke candidly about the financial results thus far, calling the shift “a massive risk” for OpenSponsorship. “We’ve definitely taken a hit,” she said, but added, “I’m glad to say that we run a pretty tight, profitable ship here. Nothing crazy, but we always break even or are usually in the green.” Anand: “We’ve been able to continue that. It helps that our expenses are much lower. We still continue to be profitable. Probably, it’s around a 25% drop in revenue compared to what we were hoping for.” On the company’s future once the crisis is mitigated, Anand indicated she is considering mixing the two forms to optimize the business model: “I would like to find a way to leave the ability to come in for free, but I think the need to upgrade will be triggered through that.” She listed limiting the number of deals brands and athletes could do for free as one method she is mulling. Anand said moving forward, “It’s just such a fine balance for us. Who do we want to be? The business model basically looks like who you want to be.”