The global sports market is extremely lucrative and is predicted to be worth $614 billion by the end of 2022. This figure is composed of revenue from two main markets: the participatory segment, which is composed of fitness centres and sports facilities; and the spectator segment, which includes teams and clubs.
The spectator segment is estimated to account for approximately half of the global sports market but with players like Cristiano Ronaldo and Lionel Messi commanding salaries surpassing $100 million, just how does this segment of the sports industry make money?
In this article, we take a brief look at how the spectator sports industry generates revenue, from rights to air and stream to endorsements and merchandise.
Membership, Tickets and Merchandise
Fan expenditure is the largest source of income in the sports industry, with membership, tickets, concessions and merchandise bringing in billions per year. In particular, ticket sales can be very lucrative for clubs, with many football fans in the UK paying over £1,000 for a season ticket.
Additionally, licensed sports merchandise is an ever growing market. From clothing to sporting goods, sports merchandise is estimated to be worth over $27 billion globally by 2026.
Rights to Air and Stream
It goes without saying that sporting events draw huge crowd, from reading about your favourite players and match highlights, to watching the live event. One such example is the Super Bowl, which is watched by an average of 112 million Americans every year, while the 2012 Olympics opening ceremony broke records with 900 million views worldwide.
With figures like these, broadcasting companies are prepared to bid high prices to secure the rights to air a variety of sporting events, both on television and online. For example, in 2021, Sky, BT and Amazon spent a combined £4.8 billion to secure streaming rights for the Premier League. This money is then filtered down to the clubs, with each Premier League team taking a share of approximately £80 million per season.
Brand Endorsements and Partnerships
With global viewing figures in the millions, it is unsurprising that sponsorships and brand endorsements offer another large form of revenue for the sports industry. Sponsorship deals can range from clubs to individual players, from Derrick Rose’s $260 million Adidas sponsorship to Maria Sharapova’s $70 million deal with Nike.
Data published by Statistica shows that endorsement deals are on the rise, with global sponsorship spending exceeding $65 billion in 2018.
The spectator sports market generates revenue via two main streams: fans and lucrative deals. While fans are happy to part with their money for tickets and merchandise, the sports industry makes a large chunk of its revenue from sponsorship deals, endorsements and rights to air.