Global Sports Market continues to thrive
[10 December 2011]
PwC today has released its second outlook for the global sports market “Changing the game: the Outlook for the Global Sports Market to 2015” which reveals despite the ongoing troubling economic climate, the sports industry has continued to thrive with many major sporting events proving to be more popular than ever, yet boundary blurs between balancing competitive sport with mass-entertainment.
PwC’s Markets Managing Partner Bruce Baillie says “here, in New Zealand, you don’t have to think back far to find an example of a major sporting event that proved a success on and off the field. We truly were a stadium of four million as World Cup fever gripped our nation earlier this year and showed our appetite for major sporting events is as strong as ever.”
It’s a situation reflected around the world as major sporting events experience the closer convergence between the sport and entertainment industries.
“It’s the old technology chestnut, on-going enhancements in broadcasting and digital technologies are shaping how we spend our leisure time and limited resources. This is impacting on our expectations when it comes to major sporting events. If supporters leave the comfort of their couch to watch a rugby game or cricket match, for example, then they want an added-value entertainment experience,” adds Mr Baillie.
Sport faces a delicate balancing-act – the need to maintain value for money in light of increased ticket prices and rising expectations among the paying public.
Mr Baillie warns “get it wrong and supporters will vote with their feet and their wallets by simply not turning up. Then following not far behind will be the sponsors”.
Like for the broadcast industry, the use and impact of technology is proving a challenge in the sporting arena as consumers expect to access sport generally for free on their TV or internet.
“While live streaming and social media in our increasingly digital world is a winner for sports fans it’s a major challenge for rights holders as they try to retain control over how, where and by whom sports content is consumed,” says Mr Baillie.
Besides providing revenue forecasts, PwC’s “Changing the game: the Outlook for the Global Sports Market to 2015” also drills down into key segments with projections for gate revenues, sponsorship, media rights and merchandising:
- Over the next five years to 2015, global sports revenues will grow to US$145.3 billion at an annual compound growth rate (CAGR) of 3.7 per cent due to an improved economy, a rebound in TV advertising, the on-going migration of sports to pay TV and the resurgence of financial services and automobile companies to sponsorship.
- Gate Revenues will remain the biggest component of the global sports market accounting for 32.6 per cent of the total sports market (US$44.7 billion in 2015).
- Sponsorship accounts for 28.8 per cent of the total sports markets, sponsorship will see an average growth rate of 5.3 per cent to 2015 generating global revenues of $US 45.3 billion.
- Media rights is the third largest category of revenue and accounts for 24.1 per cent of the total market and is the second fastest growing sector at 3.8 per cent CAGR. Revenues from media rights will see fairly healthy growth from $US29.2 billion in 2010 to $US35.2 billion in 2015.
- Merchandising remains the smallest category of revenue accounting for 14.5 per cent of total global revenue. The global economic downturn has had a dramatic reduction in sports merchandising spend as consumers have tightened their discretionary spending. Sports clubs are also seeing a larger proportion of their merchandise transactions moving online which allows them to engage and interact with fans who can’t attend matches, including those living in other countries.
Notes to editors: Market Definition
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 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, while American Football, as played in the NFL, is referred to by its full name.