RESEARCH
BACK ON TRACK?
The global sports market felt the impact of the recession with economic conditions cutting into gate revenues, sponsorships and merchandising in 2009. However, according to a new report by PricewaterhouseCoopers, the industry is now staging a gradual but robust recovery. Julie Clark reports
A
ccording to PricewaterhouseCooper’s (PwC) report: Back on track? The outlook for the global sports mar ket to 201
by a modest 3.8 per cent CAGR (Compound Annual
Growth Rate) this year, as it achieves a gradual but robust recov- ery from the impact of the 2008-2009 economic slowdown. The Latin America region will achieve the highest growth
rate (4.3 per cent CAGR), with the larger and more mature markets of North America (US and Canada) and Europe, the Middle East and Africa, as well as the smaller market of Asia Pacific, all continuing to see modest growth.
Sport and technology In addition to the growth that results from an improvement in economic conditions, the report also highlights a number of other positive drivers and considers what other challenges the industry may face going forward. One key driver will be major events that will boost media rights fees and sponsorship
Value of the global sports industry 2004 - 2013 Actual Actual Forecast Forecast - 3, it is forecasted that this market will grow
revenues along with supporting gate revenues and merchandis- ing. In the UK, the events that form part of the ‘golden decade of sport’, headlined by the London Olympics in 2012, will provide a great opportunity to the whole market. Signs of the increasing globalisation in the sports market are
also emerging. The National Football League (NFL) and Na- tional Basketball Association (NBA) now host regular games in London, the Brazilian national football team plays many of its matches in Europe, and Asia and the Middle East account for seven of the 19 races on the Formula 1 calendar, compared with two in Asia and none in the Middle East a decade ago. The way in which the sports business marketplace operates
confirms that technology has contributed to the globalisation of both the industry and specific sports. The digital revolution is here and ongoing innovation in
sponsorship models and broadcasting rights are blurring the once clear divisions between different revenue streams as sponsors and broadcasters seek more value in a multi-platform world and subscription television challenges traditional adver- tising-funded models. For example, Sky TV’s coverage of the English Premier League includes television (with high definition and 3D offerings), online and mobile content. New technologies are accelerating these shifts and amid this sweeping change, sports brands are facing new challenges in growing and monetising their supporter bases.
Revenue components Gate revenues will remain the biggest component of the global sports market by a significant margin throughout the forecast period, although its growth will be the slowest, with sponsor- ship being the fastest growing segment through to 2013. Each of the key revenue components of the market will
Ongoing Events Only Total Global Revenues
face different challenges in the four-year forecast period but the impact of the recession already appears to have driven a change in industry behaviours with a number of new ap- proaches being adopted to generate revenues. Sports teams in the US, for example, were the first to use dynamic ticket pricing, similar to the yield management models used by airlines and hotels. We are now seeing this, albeit slightly less formalised, in the UK, with football clubs significantly altering ticket prices according to the strength of the opposi- tion, the day of the week, the match time and whether the match is broadcast on television, in an attempt to boost attendance and secondary spend.
P (UK),Wilkofsky Gruen Associates 26 Read Sports Management online
sportsmanagement.co.uk/digital Issue 4 2010 © cybertrek 2010
Source: PricewaterhouseCoopers LLP(UK), Willkofsky Gruen Associates
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