Stop us if you’ve heard this fact before: there’s loads of money in professional sports. Hold on, hold on, it’s true — turns out that the few people who are genetically equipped to do things better than literally everyone else on the planet wind up being well-rewarded for their own abilities, and beyond that, there’s whole networks and organizations that facilitate the display of those talents to everyone else. Wild stuff, huh?
OK, so, the fact that sports are a big deal in North America isn’t that shattering, but the actual estimations are: PwC’s Sports Outlook for 2014, which was published earlier this week and can be found here (in PDF format), has guesstimated that, all together, the USA’s sports universe is going to break $60 billion in revenue over 2014. That’d be the first time that’s happened, although the trend has been noticeable for a while — from 2009’s $48.7 billion to 2013’s $56.8, the upward trend is hard to ignore. This is part of the reason the cost involved with purchasing a sports team has escalated so dramatically over the last decade.
But where’s the money going to come from? If we follow the PwC model, it’s coming from four areas: gate revenue (aka live ticket sales), media rights, sponsorships, and merchandise. Makes sense, but how does each category contribute, specially speaking? In the recent past, gate revenue has been the primary source of income for pro sports leagues around the country, and that looks to be true for 2014 as well, but there seems to be a change in the air, and all indications point toward the biggest shift sliding toward media rights (in a related bit of news, the NBA just leveraged their media rights for $24 billion against TNT and ESPN, or Turner and Disney, depending on how you look at it).
Right now, sports in the USA are earning the most from tickets at the door — to the tune of $17 billion — while media rights, merch, and sponsorships are each roughly worth about the same ($14.8 billion, $14.6 billion, and $13.3 billion, respectively), but that’s not to say that these divisions are going to stay the same in the near future. As the lucrative NBA television deal, the recent news about the FCC’s blackout posturing, and the absolute explosion of high grade consumer entertainment systems might have hinted, media rights are poised to explode in value, as going to the games becomes less and less desirable in the face of HD TV and NFL Red Zone.
The PwC also go into detail about how new stadiums and arenas are key to the continued successes of live ticket sales, as “the new build cycle of the past 20 years modernized sports venues in North America, improving the in-seat experience and spectator access to wider concourses with better concession, retail, and restroom facilities.” This is the Candlestick Park to Levi Stadium phenomenon, as the report highlights premium seating and in-venue Internet connectivity as two of the ways that teams are evaluating ways to keep fans present in real time.
For more information about the methods behind these estimates, as well as the research that powered them, you can find the entire report here.