Global sports market speeds up - despite digital race
A PricewaterhouseCoopers LLP (PwC) report (Back on Track - the Outlook for the global sports market) estimates that global sports spending will rise from US$114 billion (about R872 billion) in 2009 to US$133 billion (about R1017.45 billion) in 2013, representing a compound annual growth rate of 3.8% over the four years - boosted particularly by the FIFA World Cup and Olympics.
Growth is predicted across all territories from the larger and more mature markets of North America (3.6%), and Europe, Middle East and Africa (4.1%), to the smaller markets of Asia Pacific (3.9%), and Latin America (4.3%) over the four years.
Julie Clark, UK head of sport, PricewaterhouseCoopers LLP, said: "Stripping out the effects of major one-off events, an underlying trend of steadily rising spending is emerging. Long term contracts will to some degree insulate media rights from the downturn, and as a result media is the only category where spending for ongoing events increased in 2009. However, weak conditions in the advertising market have been limiting renewal increases since then."
More from the gate
Total gate revenues will expand from US$43.2 billion (about R330 billion) in 2009 to US$49 billion (about R375 billion) in 2013 and remain the largest component of the market. However income from gate revenues varies greatly from country to country often reflecting factors such as local economy and peoples' disposable income. Attending live sports is an integral part of certain cultures but in the emerging market tickets are less often affordable.
She explained: "Recessionary conditions have driven some innovations: in the US for example, a number of sports teams are using dynamic ticket pricing, similar to the yield management models used by airlines and hotels."
Sponsorship will be the fastest-growing component (US$29.4 billion (about R225 billion) in 2009 to US$35.2 billion (about R269 billion) in 2013) and despite the economic downturn the largest sports brands with global reach and pulling-power have continued to attract the massive sponsorship deals.
But the mid-level brands or smaller sports brands targeting a local market have been hit badly and, unsurprisingly, some of those businesses (such as banks) that were actively investing in sponsorship deals during 2009 shifted their spending priorities elsewhere.
Another industry investing increasing amounts in sponsorship is online sports betting where football shirt sponsorships is a key focus.
Monetising content remains a challenge
Broadcast media rights revenues will experience growth from US$23.1 billion (about R177 billion) in 2009 to US$26.7 billion (about R204 billion) four years later. However, the one overarching challenge for all players in the media rights market is how to protect and monetise rights in a multi-platform world of pervasive (and often freely-available) digital content, an issue both the music and film industries have grappled with.
Clark concluded: "Sport companies, businesses and the way the marketplace operates confirm that it is now a truly global industry where technology has contributed to the globalisation of both the industry and specific sports.
"However, great sports have deep and enduring local roots which in turn help to shape their global commercial potential and reach. To win in the 21st century sports environment it's vital to think globally and act locally."
Market definitions
For the purpose of this report, the sports market consists of:
- Gate revenues for live sporting events
- Media rights fees paid to show sports on broadcast and cable television networks, television stations, terrestrial radio, satellite radio, the internet and on mobile devices.
- Sponsorships, which include payments to have a product associated with a team, league or event sponsorships, as well as naming rights.
- Merchandising, which includes the selling of licensed products with team or league logos, player likenesses, or other intellectual property. Food concession revenues are not included.
- For clarity Association Football (soccer) is referred to in this report as football, whilst American Football is played in the NFL is referred to by its full name.
