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 $33
billion in revenue during a
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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 $33
billion in revenue during a typical year, but that’s just the tip of the
iceberg. On a very broad basis, including
related services, a reasonable estimate of the total U.S. sports market would
be $539.7 billion yearly (and $1.3 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 2018 found that there were 10,800
professional American athletes plus 236,970 coaches and scouts, along with 19,090
umpires, referees and officials. Meanwhile,
the data showed that 635,300 Americans work in fitness centers, 50,300 in snow
skiing facilities, 75,200 in bowling centers and 368,400 at country clubs or
golf courses. In total, approximately 1.36
million Americans work directly in amusement, sports and recreation
sectors. Another 56,800 work in the
wholesale trade of sporting goods, and 275,300 in retail sporting goods
stores. Sports, recreation and related
supplies and services have been among the greatest new job engines over the
past several years.
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. In fact,
the personality and popularity of a top athlete can have a tremendous impact on
the current popularity of a particular sport—NBA basketball 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. Lance Armstrong, at the peak of
his popularity as a Tour de France winner, had an immense impact on the sport
of cycling.
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, boot camps and yoga also has been growing.
The Physical Activity Council is a consortium
of sports industry groups. Its 2019-edition
report tracked participation in 118 activities during the past year. The group’s extensive survey showed that only
35.7% of Americans are physically active at a “healthy” level, while 27.3% of Americans
age six and up are not active.
Obviously, there is significant room for recreation and fitness market
expansion.
Meanwhile, many enigmas remain obvious in
sports and recreation. For example, 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 $151 billion in annual, global
revenues for 2019, 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, so much so that live electronic game competition now draws large
crowds willing to buy tickets to watch top pros compete in person. This type of organized electronic game play
is now referred to as eSports. Related
leagues, tournaments and sponsors are growing quickly. Earnings can be very substantial for top
players. On an amateur level, eSports are
beginning to be recognized as legitimate sports activities at some
schools. Dedicated eSports stadiums can
be found in Germany, China and the U.S.
One of the strongest, long-term growth trends
in the recreation business is in fitness-related activities. In the U.S. alone, health clubs enjoy 62.5
million members. 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 roughly 70 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.)
Globally, IHRSA estimated that 210,000 health
clubs served 183 million members as of 2018.
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 from
their smartphones and other devices. 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, such as TiVo, are enabling fans to watch events according to their own
schedules.
In 2018, the U.S. Supreme Court ruled that the
50 U.S. states may determine on a per-state basis whether or not off-site
betting on sports events is allowed.
This is expected to accelerate betting in many parts of the U.S. on
nearly all types of sports activities.
Advanced technologies could boost this trend. For example, fans could place bets online
using their smartphones while they watch a game on TV or at a stadium. Leagues may be big beneficiaries, because
betting could boost audiences and viewer engagement. Sophisticated betting systems might allow
fans to bet on the results of sub-segments of games—for example, the number of
“outs” a baseball pitcher throws in a given inning or game. A very wide range of betting options may be
possible.
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; eSports, spectator
sports ticket packages that represent good value; exercise/fitness services that
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.