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1) Introduction to the Sports
Industry.
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 investments. 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 can’t
state with confidence that sports enrich all of our lives,
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 NFL, NBA and MLB leagues
bring in about $9 billion in annual revenue, but that’s
just the tip of the iceberg. U.S. sporting equipment sales
at retail are roughly $40 billion yearly, sports apparel $40
billion and athletic footwear $17 billion. A reasonable estimate
of the total U.S. sports market might be $375 to $425 billion
yearly. To put that in perspective, the U.S. retail food industry,
including supermarkets, is only slightly bigger at $520 million.
Another comparison: automobiles and parts sales total about
$970 billion yearly in the U.S. However, the sports industry
is so complex, from ticket sales to licensed products, from
sports video games to collectibles, from sporting goods, sports-related
advertising, endorsement income, stadium naming fees and running
shoes to 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 more than six times as much
money each year for broadcast rights ($3.7 billion) as professional
baseball, despite the fact that pro baseball teams play about
10 times more games yearly than pro football teams.
When the astonishing variety of sports-related sectors are
considered, a significant portion of the workforce in developed
nations such as the U.S., U.K., Australia and Japan rely on
the sports industry for their livelihoods. Official U.S. Bureau
of Labor Statistics figures state that 120,000 people work
in U.S. spectator sports alone, while 485,000 work in fitness
centers, 32,700 work in snow skiing facilities and 316,500
work at country clubs or golf courses.
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. The Indy 500 is losing
ground to NASCAR. Lacrosse is rapidly growing in popularity
across the U.S. NBA-branded apparel is slipping a bit. Cycling,
rock climbing and kayaking are soaring. In fact, the personality
and popularity of a top athlete can have a tremendous impact
on the current popularity of a particular sport—multiple-time
Tour de France winner Lance Armstrong being a superb example.
Other growth sectors in recent years include snowboarding
and paintball. Tennis was a booming leisure activity in the
U.S. for many years, but its popularity has diminished greatly
in recent years, particularly among casual players. The number
of people playing golf is dropping. The Sporting Goods Manufacturers
Association (SGMA) reports that pickup team sports are down
overall, but participation in select organized team sports
is up. Sporting goods sales were up substantially in the U.S.
during 2004, but the success of various sectors of equipment
sales changes continually. Then there’s the fact that
large audiences have been watching high-stakes poker tournaments
on television recently. Does that qualify as sports broadcasting?
It’s certainly a game. Thanks to the Internet, fantasy
sports teams and online betting on sports events are soaring.
Finally, 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 ball and club makers
adopt new technologies with great success. Snow ski makers
use new technologies whenever they are found. 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. Watch for continued rapid change within the
sports industry, as consumers’ tastes and manufacturers’
product lines evolve.
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