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A Look at the Economics of Sports

Professional sports is big business — here and across the world. Globally, professional athletics accounted for $91 billion in revenue, and sports-related merchandise generated $14.2 billion in sales in 2017, according to the online statistics resource Statista. That number is significantly higher than the $46.5 billion generated by professional sports in 2005. The majority of that economic activity is from the U.S. sports industry, according to Forbes. The 2015 article predicts that the U.S. sports market will reach $73.5 billion by 2019, largely from media rights.

"Sports media rights are projected to go from $14.6 billion in 2014 to $20.6 billion by 2019, accounting for a compound annual rate increase of 7.2 percent," the article said. "Over 35% of current local television rights deals with the National Basketball Association, National Hockey League and Major League Baseball are set to expire by 2019, which will contribute to the overall growth in the sector based on assumed lucrative new deals, but national rights deals truly drive the growth in this area."

Americans tune in to sports games by the millions. The most viewed sporting event of 2017 was Super Bowl 51, which had over 111 million viewers. Football continues to be the most popular U.S. sport, with 37 percent of adults listing it as their favorite, according to Gallup, followed by basketball (11 percent) and baseball (9 percent).

The World and U.S. Sports Sector in Numbers

Forbes offers a breakdown of revenue within the sports industry: In 2019, media rights are predicted to be the largest portion of earnings at $20.6 billion, followed by gate revenues ($20.1 billion), sponsorship ($18.3 billion) and merchandising ($14.5 billion).

Not surprisingly, athletes account for a large portion of any professional sports team's budget. According to a recent Forbes article, the 100 highest-paid athletes across the world earned a collective $3.8 billion over the past 12 months.

"That is up 23 percent from last year," the article said. "Credit the huge paydays for the Mayweather-McGregor [boxing] bout and exploding salaries in the NBA. The cutoff rose $1.5 million, with Charlotte Hornets wing player Nicolas Batum ranked No. 100 at $22.9 million."

Within the United States, the article said, players in the NBA account for the largest portion of top earners, followed by the NFL, MLB, MLS, PGA, boxing and tennis.

Coaches are also high earners within professional sports. Last year, University of Alabama head coach Nick Saban became the highest-paid coach in the United States with a 2017 salary of just over $11 million. His current contract, signed in 2014 and good through 2025, totals $65 million.

Business Trends Within the Sporting World

Stadiums and televisions continue to compete for spectators' attention, according to the 2015 Forbes article. Citing data from the accounting firm PricewaterhouseCoopers (PwC), the article said that media rights will surpass gate revenues in the "near future." Stadiums are taking measures to boost attendance, which include new seating styles, upgraded suites and enhanced concessions.

Merchandise may see a boost in returns, the article noted, due to a predicted expansion in the female retail market. PwC, according to the article, anticipates that "licensed merchandise sales will go from an estimated $13.5 billion in 2014 to $14.5 billion in 2019."

Sponsorship revenue will continue to see steady growth, the article said, from "approximately $14.7 billion in 2014 to $15.3 billion in 2015 and $18.3 billion by 2019."

New facilities offer opportunities for naming rights, the article added. Outside of professional sports, the kids' sports industry reached $15.3 billion last year, according to a 2017 article in Time. The market for youth sports has doubled in value over the last decade, with the rising cost suggesting less participation from low-income families.

Be a Business Leader in the World of Professional Sports

As the U.S. sports market approaches the $100 billion mark, there are growing opportunities for sports administrators to launch or advance their careers within the industry. Sports administrators perform a wide range of tasks for professional teams, ranging from communications and marketing to management and risk assessment.

St. Thomas University's online Master of Business Administration with a concentration in Sports Administration prepares graduates for a rewarding career in sports administration. Whether working as an athletics director, ticket sales manager or compliance officer, you'll have the tools to understand important facets of the sports industry. The online degree program, taught by STU faculty, can be completed in as few as 10 months, and covers topics such as managerial accounting, strategic marketing, sports media and facility management.

The program's curriculum covers a wide range of business- and sports-related elements to ensure that, whether negotiating contracts or contracting to purchase a new stadium, you will have the skills to succeed in the growing field of sports administration.

Learn more about the STU online MBA with a concentration in Sports Administration.


Sources:

Statista: Worldwide Sports Market Revenue

Forbes: Sports Industry to Reach $73.5 Billion by 2019

Forbes: The World's 100 Highest-Paid Athletes 2018: Behind the Numbers

Time: The Astronomical Cost of Kids' Sports

Gallup: Football Still Americans' Favorite Sport to Watch


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