Plunkett Research^®, Ltd.

Plunkett Research highlights 10 major trends happening within the sports industry today. Sports are truly global industry that stirs up a deep passion within spectators and players alike in countries worldwide.

"Sports are big business, says Jack Plunkett," CEO and Editor of Plunkett Research. "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) leagues bring in about $17 billion in annual revenue, but that’s just the tip of the iceberg. U.S. sporting equipment sales at retail sporting goods stores are roughly $41 billion yearly, according to U.S. government figures."

Plunkett’s 10 Major Trends in the Sports Industry:

1) NFL: The Biggest Money in U.S. Sports – By far, the NFL commands the greatest revenue, plays in the largest and most expensive stadiums and amasses more viewers in the United States than any other sport. This is all the more remarkable in light of the fact that the NFL plays far fewer games per season than does MLB (Major League Baseball) or the NBA (National Basketball Association). NFL owners agreed to increase the salary cap from $116 million per franchise in 2008 to $128 million in 2009 and the minimum NFL team salary in 2009 was $107.7 million. Currently, the NFL is actively seeking new revenue through several ventures. One is NFL On Location, a unit which offers fans the chance to purchase travel packages to major games such as the Super Bowl and the Pro Bowl. Another potential revenue generator is the NFL’s attempt to drum up interest in foreign markets. In China, for example, the league began introducing flag football programs for children in five cities in 2003. In 2007, Chinese state TV channels began airing weekly NFL games.

2) Revenue Sharing Boosts Major League Baseball - Gross revenue for MLB in 2008 reached $6.5 billion, up from 2007’s $6 billion, according to MLB.com. Despite these figures, MLB, along with other professional sports, is facing daunting challenges in 2009 due to the global economic recession. One of the solutions has been revenue sharing, which is an attempt to even the playing field between franchises. Otherwise, wealthy teams with the capital to pay big salaries (such as the Yankees and the Red Sox) could easily dominate the league, winning year after year by forming very expensive dynasties. Otherwise, wealthy teams with the capital to pay big salaries (such as the Yankees and the Red Sox) could easily dominate the league, winning year after year by forming very expensive dynasties. The idea is that with shared revenue, less wealthy teams have the wherewithal to attract (and pay top salaries to) leading players. The goal is to achieve parity, making almost any team capable of winning the World Series and therefore bringing more excitement to the game.

3) NHL Ticket Sales Slow - The average NHL team as of late 2008 was worth $219.5 million, up from $200 million in 2007. Operating incomes averaged $4.72 million in 2008, compared to $3.2 million in 2007. Revenue sharing in the NHL is active, with predominantly Canadian teams ponying up the lion’s share. Six teams (Vancouver Canucks, Edmonton Oilers, Calgary Flames, Toronto Maple Leafs, Ottawa Senators and Montreal Canadians) contributed $41 million to lesser teams, most of which are in the southern U.S. This is a typical pattern in the NHL, and, not surprisingly, the Canadian NHL owners are frustrated with the system, and also with an increasing salary cap that forces teams to carry a minimum payroll of $40.7 million. The outlook for the 2009-2010 season is flat at best. Teams are looking for ways to cut their budgets, 50% of which come from ticket revenue, which is expected to slow.

4) NASCAR Revenues Face Challenges/Best Teams Require Massive Investment - The global economic crisis of 2008-2009 is taking its effect on NASCAR (the National Association for Stock Car Auto Racing) team sponsorships and keeping fans at home when they used to buy race tickets. Four of the 24 NASCAR Sprint Cup Series teams suspended operations in 2008, and to date, six team owners have been forced to raise cash by selling team stakes to investors. Costs of running a team are staggering. It takes as much as $10 million to hire a winning driver for one year and $25 million to keep a car on the track. Major sponsors such as Domino’s Pizza, Coors Light and Eastman Kodak have withdrawn from NASCAR, sending owners scrambling for funding. Additionally, NASCAR is facing soaring costs. Team budgets have grown by double-digits since the 1990s and 20% of the most valuable teams lost money in 2008; and average attendance in 2008 fell for the third year in a row to 118,000, down from 2007’s 130,000.

5) World Soccer Faces Trouble Due to Lack of Parity/MLS Holds Its Own - Unlike strictly-governed U.S. sports leagues such as MLB and the NBA, there is no revenue sharing in soccer. There is a wide gulf between the haves and have-nots, and it appears to be widening each year. While European soccer (in Europe the game is referred to as “football”) generates approximately $12 billion annually in revenue, roughly 400 first division teams throughout the region are fighting for a piece of it. Only those elite qualifiers for the two main championship tournaments at the end of the season, the UEFA Champions League and the UEFA Cup, have the opportunity to score when it comes to revenue and profits. In the U.S., Major League Soccer (MLS), although it has nowhere near the financial eminence and prestige of world soccer, is enjoying a modest success. Investors have pumped more than $1 billion into MLS since 2004. Energy drink maker Red Bull spent $100 million to buy New York’s MetroStars and promptly changed the team name eponymously to the Red Bulls. In 2005, Adidas-Salomon announced plans to invest $150 in the league through 2015.

6) Golf Tournaments Face Sponsorship Challenge - The Professional Golfers’ Association (PGA) conducts more than 50 tournaments each year, which, up until the global economic crisis of 2008-2009, easily attracted corporate sponsors anxious to reach the highly prized demographics of typical PGA Tour fans. Generally males between the ages of 40 and 65, ticket holders to these events have above-average incomes and are prime targets for corporate marketing departments. However, major tournament sponsors in the past have often been automotive manufacturers, banks and other financial institutions that have drastically cut advertising and sponsorships. A title sponsorship, that is, the highest level of sponsorship that affords the sponsor’s name on the tournament (e.g., Shell Houston Open, Travelers Championship, Buick Open) goes for about $6 million. Hefty sponsor fees are split between prize money and a host of expenses including signage, tournament apparel and hospitality. A number of tournaments across the U.S. have already lost their major sponsors, or will do so when current commitments expire.

7) Fantasy Sports Post Growth, Creating $500 Million in Revenue Online- Leagues of fantasy sports in which players off the field choose professional players to be on pretend (“fantasy”) teams have taken off in a big way. Players contribute to a winning pot and then follow their chosen player’s on-field statistics throughout the season. At the end of the season, the fantasy team with the best statistics wins the pot. According to studies, annual global revenues have reached approximately $500 million. Today, of course, fantasy teams are conducted over the Internet. Players early on paid a fee to fantasy “operators,” but many leagues now allow play free of charge. Revenues come from the sale of draft guides, expert analysis and advertising. Operators typically pay licensing fees of 5% to 10% of revenues for the rights to professional players’ names and statistics. The largest of the operating companies pay as much as $1.5 million per year for these rights.

8) Lacrosse May Be the Fastest-Growing Team Sport in America - US Lacrosse, with more than 300,000 members as of early 2009, is the governing body of American amateurs in this sport (www.lacrosse.org). The organization reports that lacrosse participation in the U.S. rose 9.1% in 2008 from the previous year, with 524,230 players who were members of organized teams, including youth levels through professionals. Youth participation saw the largest rise, up 9.8% to 265,214 players; while high school players rose in number by 8.3% to 218,823. Post-collegiate play also rose by 9.3%. On the professional level, Major League Lacrosse (www.majorleaguelacrosse.com) had six teams as of mid-2009, in areas including Denver, Boston, Long Island, Toronto, Chicago and Washington. Also, the National Lacrosse League (www.nll.com) is a 12-team league with expansion plans. Lacrosse offers exciting potential for corporate sponsors and expansion team owners, as well as equipment and apparel makers.

9) Aging Baby Boomers Will Cause Significant Changes in the Leisure Sector, Including Sports and Activity-Based Travel- In 2011, millions will begin turning traditional retirement age (65), resulting in extremely rapid growth in the senior portion of the population. The baby boom segment will have distinct requirements that should be considered by businesses that want to succeed in evolving markets. A major consideration will be the fact that many boomers will attempt to reap the health benefits of exercise for the first time in years, if not for the first time in their lives. Firms that design and make equipment for high-impact or repetitive-motion sports will be striving to create equipment that is easier on older joints and muscles. Travel and tours centered on sports and recreation activities will continue to do well, especially where at least some venues are tailored to appeal to older participants. The exploding number of affluent, retired consumers will be looking for healthy activities and recreation on their travels. Tours that combine cycling, hiking, walking and other activities of moderate intensity make sense in this market, and demand will grow sharply.

10) Exercise Apparel Sales Fall Slightly- While most apparel sales are suffering percentage drops in the double digits for 2008 from 2007 figures, sales of exercise apparel, especially apparel for women, appear to be weathering the economic crisis much better. Wholesale sports apparel sales fell by just 2.2% in 2008 to $28.9 billion from 2007’s record $29.5 billion. Designers and manufacturers such as Stella McCartney, Juicy Couture and Norma Kamali are promoting sports apparel, and big sports names such as Nike and Adidas are courting sales with an ever-increasing variety of styles that go from gym to nightclub. Exercise apparel is one of the fastest-growing product categories in the apparel and shoe sector with more than 40 million Americans have some sort of gym membership, and they need appropriate clothing to wear while they workout.

Additional information is available in "Plunkett's Sports Industry Almanac 2010," as well as on our web site, www.PlunkettResearch.com.

ISBN: 978-1-59392-145-3

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