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The sports industry is poised for a higher influx of investment opportunities from newer sectors in 2022. This time, however, the focus will switch from regular sports to the widespread adoption of technological innovations in the industry and tackling societal problems.
We have witnessed the peak of growth in the industry’s history for now, but there’s more to come. Since 2014, the average growth rate has been 4.3%, putting the industry at a USD 488.5 billion valuation in 2018. But that figure has since hit more than USD 500 billion in 2020.
Granted, the numbers alone don’t convey the underlying influences driving the boon. We are none the wiser about the inflow and outflow of capital in the industry. But that doesn’t mean their revenue and capital streams are unfounded. On the contrary, the system is more nuanced, with several components playing different roles in influencing the industry.
Key Influences in the Sports Industry
The sports industry has an estimated value of half a trillion US dollars, with under half of that revenue coming from fans and viewers. The numbers are split between sectors like ticketing, merchandise, fitness, subscriptions, TV distribution, advertising, etcetera. Other significant contributors are sponsorships, franchises, production, and media rights.
We can’t leave out sports betting, which still benefits the sporting industry, although technically under iGaming. Teams and leagues receive more popularity the more people stake them. But sometimes, the gain goes beyond free advertising. Sports betting platforms could also sponsor sports leagues or clubs, forming a relationship that benefits both parties.
Some even offer live-streamed games or real-time game reports for users to stake on live events as they unfold. This case is handy for less popular teams and leagues, which benefit from the increased viewership, increasing their investment potential for interested parties.
The Appeal of Sports Investing
Whether professional sports or collegiate-level programs, sports have always had a special bond with their fandoms. This is why sports brands, teams, and athletes get unique brand loyalties and fans, unlike other businesses or industries. For instance, Cristiano Ronaldo has the most followers on Instagram, with 417 million people keen to know the goings-on in his life. That’s more than the population of entire countries. But, of course, some of his followers aren’t even big sports fans. This sort of customer loyalty makes the sports industry a lucrative investment hub for businesses and individuals.
Another primary allure is the lack of competition. When it comes to professional sports, it’s pretty much a clear-cut hierarchy, with no competition locally. The barriers to entry are so overwhelming the industry has an anti-competition rule. Think about it: is there a rival football league to the English Premier League in the UK? Not at all. Matter-of-factly, every other league under the EPL is considered a lower division, with teams aspiring to qualify for the top league. In the United States, Major League Baseball has no rival baseball leagues.
There’s also the subject of repeat business. The sports industry has one of the highest customer retainment and loyalty numbers. Fans are more than willing to buy a shirt with a team’s crest every other year, even when changes are sometimes too minuscule to notice.
