The market for sporting events is worth $80 billion in 2014—with impressive growth projected for the foreseeable future. For a content industry wracked with uncertainty, sports is a beacon of hope.
By the time the 2014 FIFA World Cup ended, 3 million people had gone through the turnstiles at 12 Brazilian stadiums, paying in some cases thousands of dollars per seat to see the world’s greatest footballers. On TVs around the world, more than 3 billion people watched at least a minute of the Cup, thanks to media rights worth as much as $1.7 billion total. And the TV networks were rewarded handsomely with record ratings: from the 30 million Chinese who watched the Germany-Argentina final despite a 3 a.m. local start time to the 90 percent of Dutch households that watched the Netherlands’ semifinal game against Argentina.
Yet, within the scope of the global sports events market, the World Cup is but a fraction of sports’ total economic impact. New research by A.T. Kearney finds that the market for sports events in 2014—revenues from tickets, media rights, and sponsorships—will be worth close to $80 billion, with impressive annual growth of 7 percent. When you add in sporting goods, apparel, equipment, and health and fitness spending, the sports industry generates as much as $700 billion yearly, or 1 percent of global GDP.
This report examines the data behind the rise of the sports events market and takes a look at its future. We also look at how the major players in sports—the leagues, clubs, media partners, and brands—can capitalize on this impressive growth.
The Sports Cycle
As any fan can tell you, sports is cyclical. There are the yearly events—the Super Bowl every winter, the final rounds of the Champions League in the spring, the Wimbledon tennis championships in the summer, and baseball’s World Series in the fall. Every four years are the summer and winter Olympics, the World Cup, and the UEFA European Championships, major events that generate massive global interest.
Whether looking at yearly figures or at four-year cycles, the sports market is booming. Let’s look at some of the major findings of our research.
The sports events market is growing impressively. Between 2009 and 2013—a typical sports cycle that included the Winter Olympics and World Cup in 2010 and the Summer Olympics and the UEFA European Championships in 2012—sports market revenues increased almost $18 billion (7 percent CAGR), with a peak of $78.2 billion in 2012, when London hosted the Olympics and Poland and Ukraine hosted the European Championships. The revenues for yearly events are growing steadily too, from $58.4 billion in 2009 to $76.1 billion in 2013 (see figure 1).
At a rate of 7 percent per year over that stretch, the sports market has grown faster than GDP in nearly every country—and many times more in some major markets such as the United States, Brazil, the UK, and France (see figure 2).
Football is still king. On a sport-by-sport basis, growth occurred nearly across the board, but football (soccer) remains the runaway leader. Football revenues increased from $25.1 billion in 2009 to $35.3 billion in 2013, a CAGR of 9 percent. (Only cricket, at 10 percent per year, had faster growth over that period.) The sport’s revenues in Europe, the Middle East, and Africa alone were $27.1 billion in 2013; by comparison, the six major U.S.-based sports (American football, baseball, hockey, basketball, stock-car racing, and college sports) combined for $26 billion in the United States (see figure 3). Overall, the top seven sports remain about the same (football, American football, baseball, Formula 1 racing, basketball, hockey, and tennis). Cricket and rugby are gaining ground, while NASCAR and golf have fallen.
Football will undoubtedly remain the leader in the years to come, demonstrated by the record level of interest in the 2014 World Cup and, at the more local level, the rising attendances for many of Europe’s top leagues (see figure 4).
Media rights and sponsorships drive revenues. Sponsorships accounted for 35 percent of sports event revenues in 2013, and media rights accounted for 35 percent. Ticketing was only 27 percent of revenues.
In football, media rights accounted for 40 percent of sports event revenues in 2013, as TV rights provided major revenues across the world. For American sports, those rights were worth 33 percent, and sponsorships were 36 percent. Formula 1, with its sponsored events and cars, gets 71 percent of its revenues from sponsorships.
The raw media rights numbers are impressive. TV rights and marketing deals for the 2014 World Cup brought roughly $4 billion in revenue for soccer regulator FIFA. In the United States, the NFL earns about $5 billion a year from its TV deals with four networks, a 12-fold increase since the mid-1980s (see figure 5). European football leagues have seen impressive TV rights growth, including a 172 percent increase for France’s Ligue 1 (see figure 6).
Even in sports where national ratings have sunk in recent years, TV networks are doling out record amounts of cash to secure what is considered to be “DVR-proof” content. For example, Major League Baseball, which is well off its ratings heights from the early 1980s, still makes about $800 million per year in its national TV contracts.
Beyond events, the overall sports market is massive. Taking into account revenues from sporting goods and licensed products, health and fitness clubs, and other non-event activities as well as events, the sports market generates $600 billion to $700 billion, or roughly 1 percent of global GDP. The market for sporting goods and licensed products, which includes sports apparel, equipment, and footwear, is worth $310 billion; the market for sports clubs, including fitness clubs, yoga classes, personal training, and the like, is worth $105 billion. Other sports revenues, which include infrastructure construction, food and beverage, and grayer areas such as betting, are worth between $100 billion and $200 billion.