Sport Franchises Industry Report
Mason Oberhau
October 29th, 2023
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Table of Contents
Industry Landscape.....................................................................................................................2
Products and Services.............................................................................................................2
General Performance.............................................................................................................. 2
Relevant Trends........................................................................................................................... 3
New Products or Services....................................................................................................... 3
Target Market(s)........................................................................................................................... 3
Demographics..........................................................................................................................4
Buying Habits...........................................................................................................................4
Competitive Landscape.............................................................................................................. 4
Key Players..............................................................................................................................4
References.............................................................................................................................. 5
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In this research document, you will find a summarization of the sports franchise industry. The
following information shows that this industry is steadily growing and bouncing back from the
effects of COVID-19. This document will highlight the successes of the industry's landscape,
relevant trends, target markets, and competitive landscape in which I recommend we invest in.
Industry Landscape
Products and Services
Sport franchises in the US have many service classifications. As figure 1 shows, industry revenue
in 2023 was broken down into six different key product and service categories. In revenue
generation, Broadcasting and other media rights was the highest at 42.3% followed by ticket
sales at 33.2% and advertising at 17.6% (Dalal, 2023). Advertising is a rising service industry
throughout the years as the use of digital advertising allows more engaged mediums to the fans
(Dalal, 2023). Sport franchises also currently have the largest market around the globe, worth
$16.8 billion and continuing to expand. Based on this data, sport franchises in the United States
have a large and sustainable network of services that I believe are beneficial to invest in hence
the variety of options in the offered services.
Figure 1: Service Classifications (Dalal, 2023)
General Performance
Although performance plummeted during COVID-19, it has been steadily increasing over the
years. The number of employees has risen 5.8% since 2020 and the amount of business 6.3%. If
you look at figure 2, we can see that from 2020-2023 revenue has increased about 29% and it is
expected to rise steadily (Sports Franchises in the US - Market Size, Industry Analysis, Trends
and Forecasts (2023-2028), 2023). Currently the industry is worth around $39.6 billion dollars
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and is expected to rise to $40.1 billion in 2024 (Sports Franchises in the US - Market Size,
Industry Analysis, Trends and Forecasts (2023-2028), 2023). Based on this data, sports
franchises in the US are showing significant growth following COVID-19 which shows that this
industry is bouncing back immensely and shows a trend that can support confidence in an
investment.
Figure 2: Revenue Streamline (Sports Franchises in the US- Market Size, Industry Analysis, Trends
and Forecasts (2023-2028), 2023)
Relevant Trends
New Products or Services
The introduction of digital technology has increased ticket sale accuracy and viewership.
According to a recent industry report, only 34% of business owners believe that they are
obtaining the correct data and analytics (Yilmaz et al, 2023). New technologies are being put in
place to correct this such as Subscription based ticket packages such as The Experience Pass
which offers single tickets at a monthly subscription cost, randomly assigning the seat based on
availability before the game. Ovunc Yilmaz, professor at University of Colorado Boulder,
theorizes that this technology, “offers many potential applications and creates a unique
opportunity for growing demographics—specifically for younger generation fans,” (Yilmaz et al,
2023). Another issue for the accuracy of ticket sales were bots, as there were over 5 million
attempts for the 2019 NBA Finals. Congress has recently placed a Better Online Ticket Sale
(BOTS) Act which will deem them illegal and provide more engagement to authentic fans and
increase revenue (Yilmaz et al, 2023). Based on this data, sport franchises are developing ways
to further protect and accurize revenue and ticket sales which offers more security through the
technology field which I believe is very beneficial as technology is constantly evolving.
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Target Market(s)
Demographics
The Sports Franchise industry is widening its availability to all age markets. As figure 3 shows,
consumers of the age 30-49 make up the largest piece of the revenue market at 36.6%. The
development and use of streaming services and digital media has caused a massive growth in
younger viewers of the age 18-29 (Dalal, 2023). S&P Global estimates that streaming revenue
will total to around $25.57 billion dollars at the end of 2023 and that it is quickly becoming the
number one way to access sports (Robson, 2023). Based on this data, the sport franchise
industry is making changes in marketing to attract consumers of all ages leading to a larger
network and increased activity which is something every investor likes to see.
Buying Habits
Advertisements and endorsements are one of the leading spending habits of United States
sport franchises. Of the major service classifications, advertising currently makes up around 17%
of sports franchise revenue. Analyst Michael Dalal states the importance of advertising with this
quote, “Advertising has become a vital source of income for sports teams, from stadium naming
rights to arena banners, corporations pay hefty endorsement sums for the opportunity to insert
their brand names into densely populated, widely viewed events,” (Dulal, 2023). Studies have
shown that advertising and marketing need somewhat of a trust between the brand and
customer satisfaction. One was conducted by Professors Sahand Eghbali, Ehsan Mozafari,
Eghbal jolfaii, and Mahnaz Moghadam using SPSS-16, which is a statistical analysis program on
181 random individuals to evaluate the impact of certain variables between the trust of the
consumer and sport advertising, with the most important being trust in technology (Eghbali et
al, 2023). Based on this data and study, it shows that advertising and endorsements are one of
the leading buying habits for franchises and consumer happiness and make up a significant
amount of their revenue, showing this industry is always putting their image to the public.
Competitive Landscape
Key Players
There are no key players in this industry due to revenue sharing policies. Competition is low in
many leagues such as the NFL, MLB and NBA in order to even the playing field between bigger
and smaller market teams. This especially came after COVID-19 with much of the revenue
relying on broadcasting. In 2019, the NFL’s broadcasting revenue amounted to around $4.4
billion regionally and $120 million overseas which was spread throughout the teams
(Bergantinos, 2023). The Major League Baseball Association is a league with no salary cap, but
revenue sharing is now the only thing able to devalue these teams in lucrative cities such as the
New York Yankees who have fallen to a net worth of $832 million from a estimated $850 the
year prior (Camarillo, 2020).
This document has reviewed the industry landscape, relevant trends, target market(s), and
competitive landscape of sports industries in the United States. These previous stats support my
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recommendation of investing in this industry, due to consistent positive trends in growth. If you
have any further questions, please contact me at [email protected].
References
Bergantiños, G., & Moreno‐Ternero, J. D. (2023). Broadcasting revenue sharing after cancelling
sports competitions. Annals of Operations Research, 328(2), 1213–1238.
https://doi.org/10.1007/s10479-023-05246-0
Camarillo, C. (n.d.). Yankees are most valuable franchise: NEW YORK -- - ProQuest.
Www.proquest.com. Retrieved November 2, 2023, from
https://www.proquest.com/docview/2598311658/F00BAF9D3F2E4A6EPQ/1?accountid=
8360
Dalal, M. (2023). Sports Franchises in the US. Ibisworld .
https://my-ibisworld-com.ezproxy3.library.arizona.edu/us/en/industry/71121a/at-a-glance
Eghbali, S., Mozafari, E., Jolfaii, E., & Moghadam, M. (2023). Exploring the Relationship
between Sports Fan Loyalty and the Personality and Brand of Favorite Teams.
Https://Papers.ssrn.com/Sol3/Papers.cfm?Abstract_id=4376682, 1–2. SSRN.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4376682
Robson, S. (2023, April 7). From the Stadium to the Screen: Examining the Impact of Streaming
on Sports Media and Consumption. Www.spglobal.com.
https://www.spglobal.com/marketintelligence/en/news-insights/blog/from-the-stadium-to-
the-screen-examining-the-impact-of-streaming-on-sports-media-and-consumption
Sports Franchises in the US - Market Size, Industry Analysis, Trends and Forecasts (2023-2028)|
IBISWorld. (2023, September). Www.ibisworld.com.
https://www.ibisworld.com/united-states/market-research-reports/sports-franchises-indust
ry/#IndustryStatisticsAndTrends
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Yılmaz, Ö., Easley, R., & Ferguson, M. (2023). The future of sports ticketing: Technologies,
data, and new strategies. Journal of Revenue and Pricing Management.
https://doi.org/10.1057/s41272-023-00427-9
