According to Sport England, the sports industry contributes approximately £39bn to the UK economy. Statistics stated that the revenue from the industry amounted to nearly $355bn in 2021, and the global sports industry is set to be worth over $700bn by 2026. It is, therefore, no mystery that we are seeing an increasing number of investments and merger and acquisition (M&A) activity within the sector.
There were approximately 220 M&A transactions completed within the industry in 2022. This shows a shift in mindset away from the concept that investment in sports and sporting franchises are simply for the super-fans whose investments are not contingent on the financial returns possible.
The industry’s resilience to the Covid-19 pandemic has given investors confidence that they will see a return on their investment. However, there are also an increasingly large number of opportunities opening up within the sports industry – making investment not only more attractive but also necessary for the continued development of the sector.
Perhaps the biggest development in the sporting industry is the expansion of women’s sport. Women’s sport has been gaining prominence over recent years and will continue to grow with the support of media coverage and investment.
Unlike the men’s categories, women’s sport is a comparatively untapped market. It allows access to a wider demographic and therefore more flexible opportunities for investors who are looking to shape commercial structures and competition formats in a way that is not possible in the already well-established men’s sports.
Therefore, this development has not only provided more openings for investors wanting to contribute to the sports industry, but has also made it more attractive to do so.
One of the largest elements of the sports industry is media rights. The sports industry is heavily reliant on media rights, this being one of the reasons for the growing success of women’s sports. Big tech firms and streaming services with mammoth amounts of resources are increasingly competing with traditional broadcasters for media rights. This shift will inevitably force traditional broadcasters to adapt in order to stay competitive and relevant, requiring investment and an increase in capital in order to do so.
While large franchise sales dominate headlines, it is important to note that the sports industry is becoming increasingly diverse. Sub-industries such as clothing, equipment manufacturing, ticketing and nutrition have emerged out of the sports industry. The latter, given the trend for health and wellbeing, appears to be resilient even during period of economic difficulty.
Sports organisations, like the public, are also having to consider environmental and economic issues such as energy use in venues, travel and waste management. This growing focus on their environmental, social and governance agendas – which is becoming increasingly popular with the public – will require more capital in order to bring to fruition, a concept that for many will require significant investment.
Technology within the sports industry is an area prime for external investment, and is crucial for development in the sports industry. One example is the idea of the smart stadia, which uses technology to boost the event experience.
For many sports organisations who do not have the internal capability to implement and manage such change, this will require external resourcing.