New stadiums and higher incomes will boost attendance numbers for sporting events
Los Angeles, CA (PRWEB) September 06, 2013
The Sports Franchises industry provides entertainment to millions of Americans every year. While many sports fans dream of owning and operating major sports franchises, this 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 cultivating a winning team. However, winning is not everything to the teams; 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. Personal disposable income levels fell, creating a significant drop in discretionary spending and attendance at sporting events. At the same time, average ticket prices gradually increased, making it difficult to attract customers. Following strong performance in previous years, the industry's revenue growth slowed in 2009. However, revenue has since rebounded as a result of stabilized ticket prices and increased disposable income. Moreover, franchises 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, industry revenue is expected to grow.
The Sports Franchises industry has a low level of concentration. 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. According to IBISWorld industry analyst James Crompton, “Because of these guidelines, the level of concentration during the past five years has remained fairly constant.” Additionally, the major players in this industry include the Dallas Cowboys, New York Yankees, New England Patriots, and Washington Redskins.
“The economic recovery is expected to benefit the industry in the next five years,” says Crompton. Industry organizations continued to invest in the future with steady spending increases during the recession, and franchises will look to cash in when attendance numbers return to pre-recession levels. Additional corporate sponsorships and broadcasting contracts, which involve selling the rights to team merchandising and television access, will 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, which will commence in 2014 and last for 25 years.
For more information, visit IBISWorld’s Sports Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
The Sports Franchises 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 staging 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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