Sports industry is a social phenomenon that make up numerous entities around the world. According to a research done by A.T. Kearney, the global sports market is worth somewhere between $480 billion to $620 billion with a CAGR of 5.9%. USA has the biggest market sector so far, amounting to $31.83 billion. From live sporting events to food stands, media sponsorships, and material goods, the sports industry is growing at rapid speeds with high competition and a promising future.
Key Facts
- Sports industry is the second fastest growing sector for brands, outpacing the GDP growth of most countries.
- The market for wearable technologies will double in sales by 2021.
- The sports industry in America will reach $75 billion in 2019.
- Nike and ESPN control the majority of brand market share.
- The sports analytics market was valued at $56 million in 2018 and has a CAGR of 30% until 2024.
- In 2018, sports sponsorship revenue in North America amounted to $17 billion.
- Tech giants will continue to challenge traditional sports media, thereby increasing competition for premium contents.
- International sports betting is estimated to have a market capitalization of $250 billion; 50% of US citizens have reportedly admitted to betting in sport events.
- Revenues for eSports have reached $1.1 billion in 2019.
Sport Events Market
Sporting event involves any athletic activity where competition from differing parties play under governing rules. According to Business Wire, the market for global sporting events is expected to grow at a CAGR of 4% for 2021.
Businesses are booming in the sports industry and they are expected to grow exponentially in the next few years. Various major leagues and sports team make up successful businesses around the world. For example, the National Football League (NFL) is by far the most successful American sports league in history while the English Premier League (EPL) is leading the European market. Bloomberg estimated that the NFL earned nearly $15 billion in 2018. And Statista revealed that more than 50% of the league’s revenue came from TV deals. Deloitte Sports Business Group found that the EPL revenue amounted to $6.1 billion for the 2017/2018 season, which is up 6% from its previous year.
Industry Trends
Several key trends have affected the sports industry in recent years. Especially with the advent of new technologies and innovation, athletes as well as fans have adopted alternate approaches to participating in sports activities. Below are some key trends to watch out for:
1. eSports — This particular sector has grown tremendously over the past couple of years. With an increase in viewership as well as its revenue, Newzoo estimates that the annual growth rate for eSports will approximately reach 14%. This essentially means that in 2019, an estimated 1.57 billion people will likely learn about this industry.
2. Sponsorships — In sports business, sponsorship is everything. It drives profits, provides funds, and allows for competitive events to run. According to BBC News, business spending on sports sponsorship is expected to grow by 4% and spend nearly $44 billion globally. In addition, PwC has reported that the sponsorship market will reach $49 billion by 2023. While sponsorship is important for many sports organizations, consumers have criticized that corporate presence takes away the purity in sports competition; thereby making sports all about profits.
3. Media Rights — Media rights are essentially the fees that customers have to pay to watch sports on TV, the internet, or any other media distribution channels. Most of the revenues that come from any sporting events come from this avenue. Media rights are reported to reach $23.8 billion in revenue by 2022 and represent nearly 30% of all sports revenues. The biggest players behind media rights come from tech giants like Apple and Amazon.
4. Sports Gambling — Sports betting has become one of the most popular sectors within the sports industry. Since there are strict regulations that differ by countries, the overall market size is difficult to estimate. However, the fastest growing market is most definitely the United States. In 2016, the sports betting market in the U.S. was valued at $40 billion. Research also shows that due to new technologies and digital connectivity, the market is expected to surge in the near future.
Investment Updates
As sports businesses continue to grow, venture investing is becoming more popular with institutional and retail investors. Since 2012, investments for startups related to sports have grown nearly 30% each year. In 2015 alone, investors spent nearly $1 billion into sport-tech startups. With the US reaching $75 billion by 2019, investors are actively looking for disruptive and innovative technologies to boost businesses in the sports industry. In terms of traditional sports stocks, the most popular one by far is Disney. Disney is the parent company of ESPN, which naturally means they have a strong presence with the media and advertising companies. Another popular stock is Under Armour. While not as big as Nike or Adidas, this firm has made some substantive changes within the past few years. This in turn has made the company attractive and profitable to many investors.
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