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 $26 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 reap $43.8 billion yearly, according to U.S. government figures. A reasonable estimate of the total U.S. sports market would be $498.4 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 2014 found that there were 11,520 professional American athletes plus 211,760 coaches and scouts, along with 17,510 umpires, referees and officials. Meanwhile, the data showed that 547,500 Americans work in fitness centers, 41,200 in snow skiing facilities, 65,400 in bowling centers and 358,100 at country clubs or golf courses. In total, approximately 1.5 million Americans work directly in amusement, sports and recreation sectors. Another 51,100 work in the wholesale trade of sporting goods, and 279,500 in retail sporting goods stores. Sports, recreation and related supplies and services have been among the greatest new job engines over the past three years, and most 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 car race 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 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.
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.
The Physical Activity Council is a consortium of sports industry groups. Its 2015 edition report tracks participation in 120 activities during the past year. The group also reported that 80.2 million Americans age six and up are physically inactive (28.3% 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. However, lower gasoline prices, such as those enjoyed by U.S. consumers during 2015, encourage travel to participate in active sports, driving to spectator sports and the purchase of recreational equipment, including boats and motors.
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 $100 billion in annual revenues for 2015, 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.
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 enjoy 54 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 more than 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.)
Internationally, IHRSA research found there were 44 million health club members in the European market, attending 50,000 clubs. Globally, IHRSA estimated that 165,000 health clubs served 138.7 million members as of 2013. 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, such as TiVo, are enabling fans to watch events according to their own schedules. Time, Inc., owner of Sports Illustrated magazine, acquired three online media and information businesses in July alone, all related to sports.
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.
