by Nathan Auty
The global sports market is forecast to grow from $388.28 billion in 2020 to $440.77 billion by the end of 2021 at a compound annual growth rate (CAGR) of 13.5% because of the impact of the Covid-19 pandemic as companies realign their operations to recover from closed commercial activities and the associated financial challenges.
A recent report published on Research and Markets looked into where the largest and fastest growing market is for the sport; how the market relates to the overall economy, demography and other similar markets; and what forces could shape the sports business market going forward.
The report found that the market is expected to benefit from a steady economic growth forecasted for many developed and developing countries. The International Monetary Fund have predicted GDP growth to come at around 3.6% from 2021 to 2023. Recovering commodity prices, after a decline in 2014 and 2015, are further expected to be a significant factor driving economic growth.
New emerging markets and platforms to the sports business both worldwide and online – including top Bitcoin sportsbooks where bettors can make their selections using fast-developing cryptocurrencies – are also expected to continue their growth on a quicker scale than the more developed markets. This continued economic growth is expected to drive the demand for sports.
Despite the impact of the Covid pandemic on sports business, in the form of lockdown restrictions affecting business operations, it is expected that the sports market will recover strontly from the shock across the forecast period because this is not related to any ongoing or fundamental weaknesses in the market itself, nor in the global economy in the sports industry.
As business and sport safely come out of the pandemic and return to some semblance of normality, there is expected to be an increase in the sales of sports services and related goods by organizations, sole traders and partnerships that not only provide live sporting events for paying audiences in person and worldwide via televisual rights and streaming services, but also sports businesses that operate participation opportunities such as golf courses and country clubs, skiing facilities, marinas, fitness and recreational sports centers, and bowling centers.
Last year, North America accounted for 35% of the global sports market – making it the largest region ahead of Asia Pacific which totalled 30% of the global sports market, whilst Africa was the smallest region in the market perhaps due to its broader difficulties in dealing with and operating from the pandemic.
The introduction of Virtual Reality and Augmented Reality in the sports business means organizers are implementing the technology to improve the experience of in-person and at-home audiences for sporting events. Virtual reality generates images, sounds and other sensations that simulate a physical presence in an imaginary environment and the power of this technology is being harnessed by clubs and teams experimenting with simulated and 360-degree environments to enhance the match-viewing experience of the spectators by allowing them to have a virtual walkthrough of the stadium or the race track and view the match at different angles. There have already been NBA and NASCAR events broadcast in virtual reality to provide an immersive experience to their audiences.
Finance industry auditing experts Deloitte have provided an outlook into the near future of the sports business industry, highlighted three key points for the industry to move out of the pandemic and continue its growth:
1. Reshaping and expanding revenue generation models
With many traditional revenue streams disappearing virtually overnight due to the pandemic, sports organizations are grappling with how to fill the void. Forward-looking organizations should consider a broad range of potential solutions, including monetization of data pertaining to fans, player and team performance, and sports betting; novel real estate plays; and unique partnerships with technology companies to help elevate the fan experience.
2. Rethinking the role of sports in society.
Although the struggle for social justice transcends sports, leagues and athletes possess powerful platforms that can fuel significant change for society as a whole. US sports organizations should consider making social justice a core component of their mission, culture, and brand.
3. Redefining relationships with fans
The hollow echo of empty or partially filled stadiums highlights the critical need to establish year-round, two-way relationships with fans. With the pandemic likely to remain a major challenge throughout 2021, it is important for sports organizations to invest in multichannel digital solutions (everything from streaming platforms and augmented or virtual reality to artificial intelligence and “virtual fans”) that can influence fan behavior and boost their level of year-round engagement. It’s likely no longer sufficient simply to host a stand-alone app, website, or social media account; they’re all important, and they should be tightly integrated across channels.
As the industry begins to move forward taking all of these points on board, as well as suggestions from top sports business experts to expand and develop revenue streams in an ever-changing technological and social world, here lies an opportunity to re-evaluate its business models and build a new future. By continually reinventing how they think and operate within the digital capabilities needed to open further revenue generation, as well as all-important increased levels of engagement and interaction with fans, sports organizations will be looking to other business industries as a model for success.
