New stadiums and higher incomes will boost attendance numbers for sporting events
Los Angeles, CA (PRWEB) April 07, 2013
While many avid sports fans dream of owning and operating major sports franchises, the venture is reserved for an exclusive group of extremely wealthy individuals. Depending on the sport, the value of a professional franchise can range from $200.0 million to $2.0 billion in total assets. Team owners are responsible for generating revenue through ticket sales, media deals and endorsements, while maintaining the team's facilities and producing a winning team. Among major companies in the Sports Franchises industry, profit may not necessarily be the name of the game; rather, generating robust, diversified streams of revenue to keep the business growing is crucial for success. “In light of these complex operating conditions, the recession made 2009 even more difficult for most professional sports franchises,” says IBISWorld industry analyst Eben Jose. Personal disposable income levels fell, creating a significant drop in discretionary spending and attendance at sporting events. At the same time, average ticket prices crept up, placing team owners in a difficult situation in terms of attracting customers. Following strong performance in previous years, the industry's revenue growth slowed to 0.4% in 2009. Revenue has since rebounded, however, thanks to stabilized ticket prices and increased disposable income. Firms continue to open new stadiums and install state-of-the-art technology, which has attracted more consumers to professional sporting events. Over the five years to 2013, revenue is expected to grow at an average annual rate of 2.1% to $23.9 billion, including a 1.8% increase in 2013 alone.
The economic recovery is expected to benefit the industry in the next five years. While revenue growth was weak during the recession, industry organizations continued to invest in the future with steady spending increases. As ticket prices rise, franchises will look to cash in when attendance numbers return to prerecession levels. According to Jose, additional corporate sponsorships and broadcasting contracts, which involve selling the rights to team merchandising and television access, will also aid industry growth moving forward. For example, according to the New York Times, the Los Angeles Dodgers signed a new regional television deal worth up to $8.0 billion with Time Warner Cable that starts in 2014 and lasts for 25 years. Revenue is expected to continue growing, backed by greater fan attendance and more lucrative sponsorship and television contracts.
IBISWorld determines industry concentration by the proportion of revenue earned by the four largest players. The Sports Franchises industry has a low level of concentration, with the top four firms accounting for less than 10.0% of total revenue. Among the big four professional leagues (e.g. NFL, NBA, MLB and NHL), US sports franchises are generally fragmented due to revenue-sharing rules. This means that a certain percentage of a team's admissions receipts and media revenue are paid to their respective league, whereby the league evenly distributes this money back to each of the franchises. Because of these guidelines, the level of concentration during the past five years has remained fairly constant. For more information, visit IBISWorld’s Sports Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises sports teams or clubs that participate in live professional or semiprofessional sporting events (e.g. baseball, basketball, football, hockey, soccer and other team sports) before a paying audience. The sports franchises included in this industry may or may not operate their own facilities for presenting games or other spectator sports events.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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