With The Spotlight On The Economy And The Super Bowl, Business Information
Analysts At IBISWorld Look At The Good, The Bad, And The Ugly Issues That
Challenge The NFL And Owners Of All Franchised Sports Teams
LOS ANGELES, Jan. 28 /PRNewswire/ -- As the premier event for the most
successful sports league in the U.S., this Sunday's Super Bowl XLII offers
a brief respite from the recent steady stream of negative economic and
financial news. Looking ahead, IBISWorld, Inc. (http://www.ibisworld.com), one of
the nation's most respected independent publishers of business intelligence
research, examines the challenges that franchised sporting leagues face as
they balance the interests of their fans, the media, sponsors, and the
players.
"The past 15 years have been good to the franchised sports industry,
and technology has reinvigorated spectator sports in many ways," said
George Van Horn, senior analyst at IBISWorld. "With expanded broadcast
channels, the Internet, innovative mobile broadcast rights, new
state-of-the-art stadiums, and more disciplined financial management,
franchised sports have enhanced the game for fans and sponsors alike."
While revenues have been highly favorable, confirming the success of
these initiatives, the proliferation of media exposure also provides
additional opportunities and challenges to sports franchise operators. At
the same time that changes have boosted armchair support and buoyed
overseas interest, the prevalence of TV coverage and dedicated sports
channels has helped smaller sports attract interest from a wider range of
demographic and geographic audiences.
Moreover, expanding media coverage may also influence the unshakable
level of brand loyalty historically associated with sports teams. Between
inflated salaries, over-sized egos to match, on-field and off-field player
antics, some changes can alienate segments of the traditional fan base.
Historically, the franchise sports industry has been somewhat immune
from short-term economic swings. While changes in disposable income has a
broad influence on discretionary consumer spending, most spectators will
weather a short-term economic downturn without giving up their season
tickets.
"For major league sports, demand for tickets often far outstrips
supply, keeping the fans pouring through the gates, and the sponsors
happy," said Mr. Van Horn. "And despite the current economic climate, over
the longer term, we expect disposable income to keep growing, along with
leisure time availability."
While ticket holder behavior is one source of economic sensitivity,
sports marketers are an equal, if not more important, source of industry
income. Marketers are looking for a measurable and consistent ROI from
their sponsorship spending, which means they won't be taking any chances in
leaner times," said Mr. Van Horn. "At the same time, we expect the
concentration of advertising revenue among the most popular leagues will
hold fast, with NFL potentially increasing its hold on the advertising
dollar even further."
The significance of the sports advertisers and sponsors extends beyond
media associated revenues. With NBA, MLB, and NFL players increasingly
finding themselves on the wrong side of the law due to dalliances with dog-
fighting, drugs convictions, murder and rape accusations, as well as gang
connections, rogue athletes are threatening the clean sporting image sought
by major sponsors, and merchandise-buying parents.
"No major sport is untouched," said Mr. Van Horn, citing how the NFL
has had its fair share of negative press with a number of players arrested
or suspended for their antics on and off the field. Most recently, Michael
Vick, the star Atlanta Falcons quarterback, is now out of the game and
serving a prison sentence for his role in operating an illegal dog fighting
operation that dominated the headlines for months."
"NHL players have been charged with assault for violent attacks during
games, MLB is fighting steroid and human growth hormone scandals, and the
NBA had its infamous wild brawl in Detroit last year with players and fans
at each other's throats," said Mr. Van Horn. "These issues may pose a more
long-term threat to franchised sports than a rough spot in the economy."
"Advertisers are all too aware of the downside of poor player
performance on and off the field, and for the sports themselves, there's an
awful lot at stake, said Mr. Van Horn. "For instance, advertising rates
jumped 15 percent for the television broadcast of this year's Super Bowl,
with the most expensive 30-second spots selling for $3 million. At some
point, major league sports will need to do a better job of self-policing or
face outside regulation on a scale currently unfolding with the MLB steroid
scandal playing out in Congress."
Since 2002, the franchise sports industry's revenue has increased by an
average annualized rate of 3.3 percent to $26.52 billion. The industry as a
whole employs approximately 146,000 people, with an average wage of
$84,100, a figure which reflects the relatively skilled nature of those
working in the franchise sport field, particularly in the major franchised
leagues. IBISWorld forecasts industry revenue will hit $30.06 billion by
2012. A significant proportion of that growth will come from the country's
largest sporting league, the NFL. Over the past 12 years, the NFL's average
team value has gone from $160 million to around $960 million, eclipsing the
other major leagues and creating a new generation of multi-million dollar
sports dynasties.
While the industry in aggregate is doing quite well, the wealth is not
evenly distributed by sport (nor across the individual teams that make up a
league). Franchised football teams currently earn around 25 percent of the
franchise sports industry revenue with an average game attendance of 67,738
people, led by the Washington Redskins (87,631), New York Giants (76,613),
and Kansas City Chiefs (77,909). Annually, a staggering 150 million people
worldwide tune in to the Super Bowl on TV, 90 percent of NFL games are sell
outs, and U.S. networks pay more than $3 billion a year to broadcast games.
The combined revenue for the 32 NFL teams for the 2006 season was $6.54
billion.
Baseball makes up around 20 percent of the franchise sports industry,
which is comprised of icons such as the New York Yankees, the team that
typically achieves the highest average game attendance in MLB with 51,848
spectators. The New York Yankees are closely followed by the Los Angeles
Dodgers (46,400) and the New York Mets (42,327). The 30 Major League
Baseball teams earned $5.11 billion in revenue in 2006.
"An aging fan base could pose future challenges for baseball, with more
than half of the sports' TV audience over the age of 50," said Mr. Van
Horn. "While 35 percent of the NBA's fan base are under the age of 50, a
fact which bodes well for future development of NBA attendance and
merchandise sales."
Basketball teams make up 13 percent of franchised sports in the U.S.,
and an average of 17,558 spectators regularly attending basketball games in
the NBA, with the Chicago Bulls (22,103), Detroit Pistons (22,076) and
Cleveland Cavaliers (20,499) topping the popularity stakes, respectfully.
The combined revenues from the 30 NBA teams are approximately $3.37 billion
and rising.
Horse racing and auto racetrack operations each makes up 11 percent of
the sports industry, with hockey clubs contributing 10 percent. In the case
of the NHL, after losing a season to a labor dispute in 2005, attendance
figures for League teams have returned to solid ground; but the League's TV
audience has not because of ESPN's decision to drop the sport from its
schedule.
The NHL League's current agreement with NBC gives the sport a share of
revenue from each game's advertising sales, rather than the usual lump sum
paid up front for game rights. The NHL is estimated to earn annual revenue
of around $2.27 billion.
"And though soccer has often been touted as the sport of the future, it
has yet to make its mark in the U.S., despite the hype surrounding the
"Beckham phenomenon," said Mr. Van Horn. "Even the cities with a franchised
soccer team are struggling to fill stadiums, and their balance sheets look
bleak." He added, "While basketball's popularity among kids holds it in
good stead for the future, the soccer craze with children doesn't seem to
translate into a financially viable franchised sport, at least not in this
country, and not for the foreseeable future."
Looking to the future, with less robust economic conditions likely to
prevail in 2008 and beyond, corporate sponsors will be looking for
consistent and measurable results from their sporting investment. As a
result, management will have to exert greater control over their players'
sometimes scandalous off-field behavior to hold onto lucrative sponsorship
and advertising dollars or risk losing them to better behaved rivals.
And yet, IBISWorld believes the NFL, and other major leagues, will
continue to deliver the best results for corporate marketers, which is less
than positive news for smaller and "up and coming" sports. "It seems they
may have to wait in line, adds Mr. Van Horn. "And it looks like a long
one."
About IBISWorld
Founded in 1972, IBISWorld provides a unique and extensive online
portfolio of business research and analysis products designed to serve a
range of business, professional service and government organizations.
Delivered through enterprise subscriptions, the company publishes in-depth
reports on more than 700 industries and offers profiles on more than 8,000
U.S. companies. In addition, the company provides databases of economic
analysis, demographic data, and risk assessment reports relevant to
virtually every business sector. IBISWorld's materials are valued for the
breadth and depth f the research and analysis covering the entire U.S.
economy, incorporating both financial and non-financial information
impacting tracked industries and companies. IBISWorld Business Information
is well known for its accuracy, consistency and timeliness. This is why
almost all online information aggregators seek us out to include our
reports as part of their global databases. Current IBISWorld partners
include Hoovers, Valuation Resources, Superfactory and American Small
Business Development Centers. With U.S. headquarters located in Los
Angeles, IBISWorld has offices in New York, Melbourne, and Sydney. For more
information, visit http://www.ibisworld.com or call 1-800-330-3772.
| |
SOURCE IBISWorld
 back to top
Related links:
http://www.ibisworld.com
CONTACT:
Harvey Jones, Senior Vice President of
IBISWorld, +1-310-866-5029, fax, +1-310-496-1596,
harveyj@ibisworld.com; or Todd E. Appleman, President of The
Appleman Group, +1-323-850-7664, fax, +1-323-850-7663, cell,
+1-213-447-7662, tappleman@tag-pr.com, for IBISWorld
| |
|
