Monday, May 9, 2011

HIO: A Sports Industry Puzzler

The sports industry is all around us and we often do not realize how much we touch and depend on it. For instance, what does attending a high school lacrosse game, buying a pair of Puma running shoes, and working out at the gym all have in common? You got it, they are all associated with the sports industry.

We all know sports, namely at the professional level, are big business. League revenue-sharing, player salaries, and media rights deals are quickly shifting from being lucrative to outlandish. Just look at the PAC-12's recent 12-year, $3 billion tv deal between with ESPN and and FOX, as an example. This is only the most recent deal, BCS and NCAA March Madness television deals have blown this deal out of the water in recent years.

While we often associate professional sports as main contributors to the lucrative size of the sports industry, it is actually dwarfed by sporting goods manufacturers. According to Plunkett Research done on the industry, "Big 4" professional sports leagues only account for about $21 billion of the $414 total size of the sports industry in the U.S. alone. Sporting goods and equipment accounts for about $39 billion of revenue per year.

This leads to the ultimate question, why do sporting goods manufacturers bring in more revenue than the top professional sports leagues? The answer lies in fundamental marketing principles.

It comes down to product consumption and perception. More individuals touch sporting goods clothing, than professional sports. Look in your closet and your drawers, those disheveled gym shorts and old sneakers are all considered sporting goods. Now, lets take a step back for a moment and take into account others besides ourselves. There is naturally a large group of people in this country who just do not have an interest in professional sports and do not "touch" the product. However, lets make the assumption that they do have at least a pair of gym shorts and sneakers.

Another possible reason could lie in the influence of media on self-image. Today, the media portrays the ideal male and female body type. That message has been engrained into our minds from a very early age. To make ourselves that ideal, many of us have decided to begin a workout plan and engage in increased physical recreation and activity - one of the most overlooked areas of the sports industry. Due to this desire to workout, companies like Nike and Adidas salivate as their sales increase. More people are purchasing workout clothes and equipment. More people are touching the products offered by sporting goods manufacturers.

While there may be other reasons the top professional sports leagues are less lucrative than sporting goods, the long and short of it is that more people weigh their own self-image and exercise over watching professional sports.

Feel free to agree or disagree in the comments section below. I'm interested to hear your thoughts.
In addition to serving as President of the Sport Management Student Union (SMTSU), Kevin Giordano is a sophomore Sport Management major at Drexel University with industry experience working in men's and women's professional soccer and collegiate athletics. To contact or connect with Kevin, you can follow him on Twitter (@KevinGiordano) or connect with him here on LinkedIn.

No comments:

Post a Comment