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Media rights underpin sports growth

News, 13 October 2016

NEW YORK: The North American sports market is expected to grow from $63.9bn in 2015 to $75.7bn by 2020, largely because of rising media rights and sponsorship, according to a new forecast.

The Sports Outlook 2016 report from PwC, the professional services firm, expects media rights and sponsorship to record compound annual growth rates (CAPR) of 5.5% and 3.9% respectively over the period.

That means the media rights segment is forecast to be worth $21.29bn by 2020, by when sports sponsorship is expected to be valued at $18.74bn.

Over the same period, gate revenue is expected to grow annually at 2.7% to reach $20.8bn by 2020, while merchandising is expected to rise 1.4% to $14.82bn.

The overall sports market in North America is projected to grow at a CAPR of 3.5% across all four segments analysed in the report, which expects the industry to experience more stable conditions beyond 2016 compared with the previous five years.

Encouragingly, it expects consumer and advertiser engagement with game broadcasts and other sports media content to remain strong in the years ahead.

Although, the report adds, the composition of the media rights segment is likely to continue to diversify as more content is monetised through direct carriage fees of league networks and the rise of digital ventures.

With the rise of new digital distribution channels and an evolving advertising landscape, the report expects the preservation of broadcast rights to be a key issue for the industry in the years ahead.

"Broadcast rights preservation is likely to remain industry priority through at least the next deal cycle, which will lead most properties to avoid major disruption of existing distribution and potential further dilution of rights fees," the report said.

"As a result, direct to consumer offerings featuring live game content will likely continue to be positioned to incremental audiences and/or focus on consumer experiences complimentary [sic] to traditional game viewing."

Media rights overtook sponsorship in terms of revenue in 2015, but PwC still expects the latter to remain the second-highest growth segment over the next four years.

However, although deals involving new inventory from digital platforms, uniform rights, in-venue signage and naming rights are expected to increase over the cycle, growth is forecast to be less than previously estimated.

Data sourced from PwC; additional content by Warc staff