A new study by consulting firm AT Kearney reveals that Europe, Middle East, Africa and North America still dominate the sports industry, but Asia-Pacific presents a compelling prospect as sporting properties relocate to the region.
Revenue triggered by sports events in Asia-Pacific grew to $9.7 billion and accounts for 13 percent of the worldwide market in 2013. Europe, Middle East and Africa generated $32.8 billion and made up 43 percent of overall revenue, followed by North America, which grew business to $29 billion.
On a sport-by-sport basis, growth occurred nearly across the board, but football (soccer) remains the runaway leader. In Asia, football revenue stood at $3.6 billion, accounting for almost 40 percent of total revenue in the region. U.S. sports such as the National Football League, Major League Basketball, National Hockey League, Nascar and college sports also appear to be popular in the region and drew $1.7 billion in revenue. Formula One is estimated to be worth $1.7 billion in APAC, driven in part by its growing presence in the region as the property increasingly relocates races to the region. A growing appetite for tennis in Singapore and China boosted revenue to $600 million, while golf events brought in $400 million.
AT Kearney’s Nicolas Sultan, principal for Middle East, believes overall growth in Asia is a big driver for attracting sports in the region. He strongly recommends "country branding" and positioning cities as sports destinations. "Sporting events are big part of assessing value and appeal of cities," he said, noting that the London Olympics contributed a great deal to the city. "It presents the city with the opportunity to create live content and raise the standard of the city."
In Asia, sponsorships and ticketing accounted for 35 percent of revenue each, while media rights contributed 30 percent. For comparison, globally sponsorships and media accounted for 35 percent of sports event revenues in 2013, and media rights accounted for 35 percent. Ticketing was only 27 percent of revenues. Popular sports in the region reflect this contradiction. Cricket, popular in India and Australia, gets two-thirds of its business from ticket sales, while football makes 40 percent of its revenue from media rights.
Global trends
Taking into account revenues from sporting goods and licensed products, health and fitness clubs, and other non-event activities as well as events, the sports market generates $600 billion to $700 billion, or roughly 1 percent of global GDP, according to the report. The market for sporting goods and licensed products, which includes sports apparel, equipment, and footwear, is worth $310 billion; the market for sports clubs, including fitness clubs, yoga classes, personal training, and the like, is worth $105 billion. Other sports revenues, which include infrastructure construction, food and beverage, and grayer areas such as betting, are worth between $100 billion and $200 billion.
The sports sponsorship market is worth an estimated $50 billion per year. The brands that succeed in this arena are those that select the right partner clubs, leagues, and athletes, and choose the right types of partnerships based on their objectives, the report said.
AT Kearney singles out Samsung for successfully pushing this concept over the past several years with a portfolio that covers more than 30 sports. In particular, its soccer strategy includes official partnership with a national team, team naming, shirt sponsorship with Chelsea, and stadium banners. In 2010, Samsung became the best-known European football sponsor among telecommunications suppliers, after going unranked just five years earlier.
"Once a partnership deal is closed, the main differentiating factor is activation," the report stated. "Not just through traditional means, but also digital and social media."
For example, McDonald's 2014 FIFA 'Gol!' theme featured on french-fry boxes, allowed customers to play via a mobile phone app and was supported by a website and Twitter account, making it one of the most prominent brands at the world's most popular sporting event.
This article first appeared on campaignasia.com.
