¹ Video Tip
For our brief video introduction to the Sports industry, see www.plunkettresearch.com/video/sports.
The sports business means many different things to different people.
This is a truly global industry, and sports stir up deep passion within spectators and players alike in countries around the world.
To one person, sports are a venue for gambling; to another, they are a mode of personal recreation and fitness, be it skiing, cycling, running or playing tennis.
To business people, sports provide a lucrative and continually growing marketplace worthy of immense investment.
To athletes, sports may lead to high levels of personal achievement, and to professionals, sports can bring fame and fortune.
To facilities developers and local governments, sports are a way to build revenue from tourists and local fans.
Sports are deeply ingrained in education, from elementary through university levels.
Perhaps we cannot state with confidence that sports enrich the lives of all of us, but they certainly entertain a huge swath of the world’s population.
In addition to economic impact, the largest single effect that sports create is that of gripping entertainment: hundreds of millions of fans around the globe follow sports daily, whether via radio, television, printed publications, online or in person, as spectators or participants.
Sports are big business.
Combined, the “Big 4” leagues in America, the National Football League (NFL), National Basketball Association (NBA), the National Hockey
The sports business means many different things to different people. This is a truly global industry, and sports stir up deep passion within spectators and players alike in countries around the world. To one person, sports are a venue for gambling; to another, they are a mode of personal recreation and fitness, be it skiing, cycling, running or playing tennis. To business people, sports provide a lucrative and continually growing marketplace worthy of immense investment. To athletes, sports may lead to high levels of personal achievement, and to professionals, sports can bring fame and fortune. To facilities developers and local governments, sports are a way to build revenue from tourists and local fans. Sports are deeply ingrained in education, from elementary through university levels. Perhaps we cannot state with confidence that sports enrich the lives of all of us, but they certainly entertain a huge swath of the world’s population. In addition to economic impact, the largest single effect that sports create is that of gripping entertainment: hundreds of millions of fans around the globe follow sports daily, whether via radio, television, printed publications, online or in person, as spectators or participants.
Sports are big business. Combined, the “Big 4” leagues in America, the National Football League (NFL), National Basketball Association (NBA), the National Hockey League (NHL) and Major League Baseball (MLB), bring in about $23 billion in revenue during a typical year, but that’s just the tip of the iceberg. U.S. sporting equipment sales at retail sporting goods stores are $44.1 billion yearly, according to U.S. government figures. A reasonable estimate of the total U.S. sports market would be $485 billion yearly (and $1.5 trillion for the entire world). However, the sports industry is so complex, including ticket sales, licensed products, sports video games, collectibles, sporting goods, sports-related advertising, endorsement income, stadium naming fees and facilities income, that it’s difficult to put an all-encompassing figure on annual revenue. When researching numbers in the sports industry, be prepared for apparent contradictions. For example, the NFL receives vastly more money each year for TV and cable broadcast rights than MLB, despite the fact that MLB teams play about 10 times more games each year than NFL teams.
When the astonishing variety of sports-related sectors is considered, a significant portion of the workforce in developed nations such as the U.S., UK, Australia and Japan rely on the sports industry for their livelihoods. Official U.S. Bureau of Labor Statistics figures as of 2013 found that there were 13,880 professional American athletes plus 206,808 coaches and scouts, along with 16,140 umpires, referees and officials. Meanwhile, the data showed that 523,400 Americans work in fitness centers, 40,700 in snow skiing facilities, 68,300 in bowling centers and 349,900 at country clubs or golf courses. In total, approximately 1.3 million Americans work directly in amusement and recreation sectors. Another 49,800 work in the wholesale trade of sporting goods, and 270,000 in retail sporting goods stores. Sports, recreation and related supplies and services have been among the greatest new job engines over the past two years, and virtually all of these sectors are up substantially in job count since 2011.
While it may not seem like it to the casual observer, the sports sector is constantly evolving in terms of personal tastes, popular games and technologies. For example, the decades-old Indy 500 has been eclipsed by NASCAR in many ways. In fact, the personality and popularity of a top athlete can have a tremendous impact on the current popularity of a particular sport—NBA megastar LeBron James, who was recruited for the league directly out of high school, being a superb example with his extremely positive impact on basketball both at home and abroad.
Research from the National Sporting Goods Association (NSGA) indicates that tastes in individual sports, exercise and recreation are continually evolving in America. NSGA’s 2013 edition of its sports participation study showed that roughly two-thirds of the 47 sports activities that it tracks had increased participation over the previous year. Among the biggest gains was the playing of indoor games, which increased by 11%, while snow sports were among the biggest losers, decreasing by 11%. Fitness activities increased about 5%, and participation by women was widespread among 40 of the 47 activities.
In fact, physical fitness activities have been showing substantial growth in popularity in recent years. There has been significant growth in elliptical motion trainers, running/jogging, and stationary cycling done in groups (“spinning”). Participation in fitness classes like Zumba and yoga also has been growing. In December 2012, Inc. magazine named Zumba its company of the year.
It is worth noting that there are significant differences between NSGA’s annual study and the other major study conducted in the U.S. each year by the Sports & Fitness Industry Association (SFIA), formerly the Sporting Goods Manufacturers Association (SGMA). NSGA requires that a consumer participate in an activity at least once during the year in order to be counted. SFIA requires that the consumer reports engaging in the activity at least twice. Also, NSGA counts younger consumers than does SFIA.
The Physical Activity Council is a consortium of sports industry groups. Its 2013 edition report tracks 120 activities. It noted increased spending on team sports at K-12 schools, and a 2% increase in fitness sports activities by Americans of all ages. The group also reported that 80.2 million Americans age six and up are physically inactive (28% of that population segment). Obviously, there is significant room for recreation and fitness market expansion.
Another consideration in sports and recreation is the problem of gasoline prices. Clearly, expensive gasoline significantly dampens the popularity of motor boats, RVs and anything else that has a large engine. As of 2014, boat sales were running at a one-third slower pace than before the 2008 financial bust.
Meanwhile, the number of people playing golf in America has been dropping over the long term, although audiences for televised golf events remain very large. Then there’s the fact that big audiences have been watching high-stakes poker tournaments on television recently. Does that qualify as sports broadcasting? It’s certainly a game. Moreover, thanks to the Internet, fantasy sports teams and online betting on sports events are soaring. Meanwhile, electronic games have become one of the world’s leading industries, at more than $100 billion in annual revenues for 2014, including software, game consoles, mobile games and game subscriptions. In the minds of many people, competing against other electronic games players is a sporting activity.
Amateur participation in the team sports of lacrosse, volleyball and rugby has been extremely high. SFIA reported 29% growth in core participants in lacrosse during 2011 alone.
One of the strongest, long-term growth trends in all of the recreation business is in fitness-related activities. In the U.S. alone, health clubs boasted 50.2 million members in 2012, up from only 41.3 million in 2005, according to the International Health, Racquet & Sportsclub Association (IHRSA). America’s 30,500 health clubs enjoyed revenues of $21.8 billion in 2012. Members visit their clubs an average of about 100 days each year.
Another 30 million Americans use exercise machines in their homes, according to Plunkett Research estimates. America’s 75 million surviving baby boomers, with time and money on their hands plus a growing concern about their quality of life, will boost the health club and home exercise sectors further. (Sports and leisure revenues from the Baby Boomer segment will grow quickly. For example, “pickleball,” a racquet and ball game played on a court about one-quarter the size of a tennis court, is soaring in popularity with senior citizens.)
Internationally, IHRSA research found there were 43.5 million health club members in the European market during 2011. This represented a decrease of 900,000, not surprising in light of the economic downturn in Europe.
Globally, IHRSA estimated that 133,000 health clubs served 129 million members as of 2011. It also reported that Brazil, a very body-conscious nation and home of Rio de Janeiro’s famous beach culture, is second only to the U.S. in the total number of health clubs. IHRSA stated that India and China are expansion markets with very high potential.
Evolving technologies and fashions have an immense impact on sales of sporting goods within specific sectors. Sporting goods makers are constantly trying to create reasons for consumers to buy new equipment. Golf club makers adopt new technologies with great success. Snow ski and board makers use new technologies as soon as they become available. Additionally, ski gear manufacturers introduce new fashions, new colors and new styles yearly in an effort to get consumers to buy new or buy up, regardless of whether significant new technologies are involved. Nanotechnology, with the ability to provide components with tremendous strength at very low weight, is being featured in new equipment to a growing degree, including tennis rackets. Likewise, carbon fibers are increasingly seen in the construction of upper-end equipment, including fine bicycles.
The types of electronic technology applied to sporting apparel and sporting goods is becoming much more advanced, as sensors are being embedded that wirelessly gather information through sophisticated accelerometers. Nike’s Nike+ brand is a major success in this arena, enabling users to set goals, see real-time exercise results and upload exercise histories to www.nikeplus.com. Eventually, the sports industry will see widespread use of remote wireless sensors in virtually all types of sporting equipment, from tennis rackets to bicycles to golf clubs and even apparel such as swimsuits. Sports participants are going to want to be as totally connected to personal electronics during their recreational activities are they are in all other aspects of their lives.
Meanwhile, the media used to deliver sports and sports related information is evolving quickly. Sports coverage is one of the most widely viewed categories online. At the same time, digital TV recording devices (DVRs), such as TiVo, are enabling fans to watch events according to their own schedules.
The biggest opportunities in the sports industry today lie in providing exciting, high-value opportunities for sports fans, such as high-tech recreational gear at reasonable prices; spectator sports ticket packages that represent good value; exercise/fitness services and programs that will appeal to aging baby boomers; subscriptions that enable online and mobile viewing of events; and equipment and apparel that provide high value and exciting design. Globally, the industry has tremendous upside potential in rapidly developing consumer markets such as China, India and Mexico.