Humans are competitive creatures. We’re always trying to get one over on each other, whether it be by building a more successful business, buying a more expensive status symbol, or even just trying to get a higher score in a test.
Combined with our unwavering curiosity, this competitive streak has helped humans build the modern world we live in today. It’s also turned sport from being a fun way to exercise into one of the biggest and most high-profile industries on the planet.
How Big is the Sports Industry?
According to Kearney, the global sports industry is worth as much as $620 billion when you factor in the value of the teams, leagues, and governing bodies. Some of the most valuable sports teams include the Dallas Cowboys NFL team, which generates around $1 billion in revenue each year and is worth $5.5 billion; the New York Knicks NBA team, which makes about $421 million and is worth $4.6 billion; and the Spanish football side, Real Madrid, which earns nearly $900 million each year and has $4.2 billion on its balance sheet.
On top of that, some of the superstar athletes that play (or have played) for these legendary teams have also benefited financially from the growth of the sports industry. Big names like Michael Jordan, Tiger Woods, Arnold Palmer, Cristiano Ronaldo, and Michael Schumacher have all earned over $1 billion (when adjusting for inflation) over their careers. The richest of all is Jordan, who pocketed $2.62 billion since turning pro in 1984.
That’s still not all. There are even more businesses that feed into the sports industry, many of which have grown to be just as big. One of the most notable is sports betting which allows fans to add a new dimension to their consumption and enjoyment of sporting events. Brands like FanDuel Sportsbook offer betting markets for all major leagues both in the US and around the world and even run regular free bet promotions for new customers. Through this, these companies have been able to build a multi-billion dollar industry.
On individual competitions like March Madness, fans can often spend as much as $8.5 billion wagering on the outcome of games and tournaments.
How Did it Get This Big?
Sport hasn’t always been this way. There are many people alive today that will remember when professional players were paid very modest salaries, and some may have even held down other jobs to cover their living expenses.
Although there was some wealth in the biggest leagues, they were not at the level we see today. Club owners could only really generate income from ticket sales on match days and from a few small sponsorship deals in their stadiums.
Television is the catalyst that changed much of this. TV companies realized that they needed to find ways to attract viewers to their channels and very quickly found that live sports were a great tool for this.
Sports leagues soon picked up on this fact and began increasing the amount they asked networks to pay for the rights to broadcast their games. We can see this by comparing the first EPL rights deal signed in 1992 that cost £304 million ($406 million) for its first five seasons. But by 2016, a three-year deal netted the league a whopping £5.136 billion ($6.86 billion), a significant increase.
On top of that, more companies are willing to pay more to sponsor a sports team that is seen by millions of people on TV, helping clubs and leagues to increase their revenues even further.
This money has trickled down through the leagues, into the teams, and eventually the players. It has also helped to improve the standards and professionalism in sports, with clubs boasting pristine grass pitches rather than the uneven mud pits that were commonplace before these huge TV networks. Teams and players are often also contractually obliged to speak with the media and are more likely to behave in a respectful way.
Television is, therefore, almost entirely responsible for the professionalization of sport and its rise into a multi-billion dollar industry.