Sports Sprint to $260b – Methodology and References

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Sports’ Sprint to $260b – Methodology And References

There are several ways that the size of the Sports Industry can be calculated to assess the value and income created by sports IP owners. Revenue, profit, asset value, or asset drivers such as consumption and demand are all suitable methods to assess the health of the sports industry. For the purposes of this exercise, the size of the sport industry has been calculated using annualised revenues derived from Sports IP. Revenue is the closest thing to a consistent accounting methodology that enables cross-sport, cross- region data over time, therefore making this cleanest non-clean method for making reliable comparisons across the industry.

Defining Annualized Revenues of Sports IP Owners

The calculation of $159B annualised revenues generated by sports IP owners in 2023 is based on available financial data for 2023. Where 2023 revenue data is not yet available, industry knowledge or an industry average CAGR has been applied to previously available figures. For Sports IP owners who hold major quadrennial or biannual events, the peak year recorded in their last cycle has been taken.

Annualized revenues include value generated for the exchange of rights that are monetised either direct to consumer (D2C) for tickets, experiences, subscriptions, or merchandise; or via businesses (B2B) through third parties purchasing media, sponsorship, licensing or betting rights. Revenues generated by IP owners who retain the proprietary rights to bookmaking e.g. Hong Kong Jockey Club have been included, but where these rights are sold to 3^rd parties such as Ladbrokes or Bet 365, these are not included. Additionally, revenues are not included where investment is made that is intended to increase the value of rights and grow the asset value of an IP owner.

The sports industry is mostly built up of confederated systems where revenues are shared across multiple organisations. The methodology for calculating sports industry annualized revenues ensures that revenue is only counted once in the ecosystem at the point at which revenue first reaches the value-generating IP owner, and not at the point value flows through the system via distributions or wages. For example, media rights revenues that are paid to leagues e.g. NFL, Premier League, Bundesliga, F1, etc., are not also included for the participating clubs/franchises/teams. Similarly, media rights revenues that come through the league and are paid to players/athletes in wages are not also counted under athlete revenues.

As the most globally established currency, all revenues are summarized in US dollars for comparison purposes. To convert all annualized revenues into US dollars, the 12-month average exchange rates from 2023, as listed on the IRS (USA Internal Revenue Service), have been applied.

The Universe of Sports IP Owners

• All regions around the world have been included to provide a figure for the total global sporting universe. Where Sports IP Owners operate in multiple regions, revenues are allocated according to the location of the headquarters.
• Sports IP refers to the proprietary owner of sports events, sports rights, or sports codes that are generating economic value.
• Owners refers to the ultimate owner of sports IP and therefore excludes organizations who hold rights for a period of time but are not the ultimate owners, e.g. broadcasters and betting houses.
• Sport generally refers to activities involving physical exertion and skill in which an individual or team competes against another or others for entertainment (Oxford Dictionary). The classification of what is considered “sports” has endured debate forever and is not resolved in this report. However, parameters have been defined to draw a line between where sport begins and ends. Team sports e.g. Soccer, Baseball, Cricket, and Basketball, as well as all recognised Olympic sports, e.g. Swimming, Cycling, Archery, and Gymnastics, have been included. Esports, sports-related video games, Darts, and Snooker have also been included. But sports excluded from this report and declared non-sports include Chess, Bridge, Irish Dancing, Ballet, Abseiling, and axe throwing. Please contact Two Circles if further clarification of inclusions and exclusions are required.
• Sports IP owners included within scope are international federations, national associations, leagues, teams/franchises, event operators, sports video game IP owners, esports IP owners, athletes.
  • International sports federations: Organizations affiliated with the IOC, Paralympics, and other international federated sports organizations. e.g. World Rugby, World Athletics, FIFA, FIS.
  • National sports associations: National sports associations or federations within the above International Federation criteria e.g. FTT, SARU, AFA, DFL.
  • Sports Leagues: Leagues operating competitions and tournaments within or across internationally and nationally recognized sports e.g. NFL, Premier League, IPL, NPB.
  • Sports Teams/franchises: Teams/franchises within the above listed leagues e.g. Kansas City Chiefs, Manchester United, Gujarat Titans, Yomiuri Giants, TSM (Team SoloMid).
  • Sports Event Organizers: Independent IP owners, not included in the above criteria, who operate sports events e.g. Wimbledon, Augusta National, The Grand National, Tour de France, FC Pro Open, or mass participation event organizers in sport e.g. London Marathon Events Ltd, New York Road Runners, Spartan Events.
  • Sports video games (console & mobile): sports-based video games that leverage sports IP from internationally recognized sports federations or leagues g. EA FC, NBA 2K, EA F1, and EA Madden.
  • Athletes: All off-field endorsement packages for athletes competing, participating, or performing in any of the above sports are included where the revenues are the first entry point into the ecosystem. This includes revenues generated through player-athlete unions or athletes representing themselves as individuals, e.g. brand deals. Most on-field athlete monetization typically happens upstream in the sports ecosystem and will be included once at the first entry point in the value exchange with third parties at a league, club, or association level. Athletes typically benefit via wages or prize money through the value already captured in the sports ecosystem. However, there are some sports structured where athletes are the first entry point into the ecosystem via a performance fee or participation fee in the event e.g. boxing. Therefore, revenues generated by boxers are included as the first point of sports IP into the ecosystem.

Top Entertainment Mediums by Annualized Revenues

A bottom-up analysis of annualized revenues realized by sports IP owners has been conducted using the above outlined methodology, and projected forward based on three core growth levers identified in this report.

To contextualise the projected 5% CAGR growth for sports IP over the next decade, comparisons have been drawn against the performance of sports IP vs other entertainment mediums. This demonstrates the strength of sports IP and illustrates its resilience in the face of changing consumption patterns across other entertainment mediums.

Sports IP acts as a value driver across all the listed mediums but this analysis is structured to ensure that there is zero duplication of revenues. For example, traditional television as a medium is a significant contributor to the overall value of sports IP. However, to ensure there is zero duplication across entertainment mediums, any subscription or advertising revenue realized by broadcasters is included within the annualized revenue for ‘Traditional television’ while broadcast rights fees are recognized against Sports IP.

To size and project annualized revenues for each of the listed mediums, a range of respected 3rd party sources have been used, whilst ensuring that there is no duplication in revenues through the definitions. The definitions and sources for each medium are listed below:

References and Footnotes

When referencing Two Circles analysis in footnotes, please refer to our methodology on this page above.

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1. The Breakdown of $159B Graph.
   – Two Circles, Annualized sports revenues 2023, Two Circles analysis.

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1. UK football attendances and UK box office vs GDP per Capita.
   – Two Circles, Two Circles attendance database 2023.
   – British yearly box office (no date) Box Office Mojo. Available at: https://www.boxofficemojo.com/year/?area=GB
   – Rizzo, M. (2023) UK real net domestic product per capita CVM SA, UK Real net domestic product per capita CVM SA – Office for National Statistics. Available at: https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/mwb6/ukea.

Page 7

1. Two Circles, GWI Audience Insights Platform, Two Circles analysis.
2. Catch it live: Sports viewing scores a programming goal (2022) Nielsen. Available at: https://www.nielsen.com/insights/2016/catch-it-live-sports-viewing-scores-a-programming-goal.
3. Franchise: Marvel cinematic universe (no date) Box Office Mojo. Available at: https://www.boxofficemojo.com/franchise/fr541495045/.
4. Netflix – financials – Annual reports & proxies. Available at: https://ir.netflix.net/financials/annual-reports-and-proxies/default.aspx.
5. Two Circles, Annualized sports revenues 2023, Two Circles analysis.

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1. Two Circles, Annualized sports revenues 2023, Two Circles analysis – Sports fans are defined as those who are extremely or very interested in sports and watch sports at least once a week.
2. Omri Wallach, Artic (2022) The world’s growing middle class (2020–2030), Elements by Visual Capitalist. Available at: https://elements.visualcapitalist.com/the-worlds-growing-middle-class-2020-2030/.
3. Two Circles, Two Circles analysis

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1. Live music and the rise of the ‘enormodome’. Available at: https://www.ft.com/content/0183485d-fb0d-4115-ad9b-ec2b1602bf97.
2. 30, J., Jennewine, T. and The Motley Fool, Founded in 1993 in Alexandria (no date) The 2 best ‘Magnificent seven’ stocks to buy now, according to wall street, Nasdaq. Available at: https://www.nasdaq.com/articles/the-2-best-magnificent-seven-stocks-to-buy-now-according-to-wall-street-0.
3. Two Circles Analysis
   – Two Circles, Annualized sports revenues 2023, Two Circles analysis.
   – Two Circles, Fan Origination’ analysis 2023, Two Circles analysis

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1. Two Circles, GWI Audience Insights Platform, Two Circles analysis.
2. Sport, stereotypes and stolen dreams: Why girls still feel they don’t belong in Sport (2024) Women in Sport. Available at: https://womeninsport.org/resource/sport-stereotypes-and-stolen-dreams/.

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1. Two Circles, Two Circles Analysis
2. Elchlepp, K. (2023) ESPN platforms set unparalleled records with NCAA Division I women’s basketball, ESPN Press Room U.S. Available at: https://espnpressroom.com/us/press-releases/2023/04/espn-platforms-set-unparalleled-records-with-ncaa-division-i-womens-basketball/#:~:text=Sunday’s%20NCAA%20Women’s%20Basketball%20Championship,men’s%20or%20women’s)%20on%20record.
3. Elchlepp, K. (2023) ESPN platforms set unparalleled records with NCAA Division I women’s basketball, ESPN Press Room U.S. Available at: https://espnpressroom.com/us/press-releases/2023/04/espn-platforms-set-unparalleled-records-with-ncaa-division-i-womens-basketball/#:~:text=Sunday’s%20NCAA%20Women’s%20Basketball%20Championship,men’s%20or%20women’s)%20on%20record
4. Division I women’s volleyball championship sets attendance, TV ratings records to close out historic season | NCAA.com(no date) ncaa.com. Available at: https://www.ncaa.com/news/volleyball-women/article/2023-12-19/division-i-womens-volleyball-championship-sets-attendance-tv-ratings-records#:~:text=Regular%2Dseason%20matches%20averaged%20116%2C000
5. Iowa draws 55K in women’s basketball record(2023) com. Available at: https://www.espn.com/womens-college-basketball/story/_/id/38668171/iowa-draws-55646-set-record-women-basketball-game.
6. December 12 and 2023 (no date) SBJ Unpacks: Gatorade takes a shot on Caitlin Clark, sportsbusinessjournal.com. Available at: https://www.sportsbusinessjournal.com/SB-Blogs/SBJ-Unpacks/2023/12/12.aspx#:~:text=Gatorade%20signs%20Caitlin%20Clark%20as%20second%20CBB%20endorser&text=Clark%2C%20who%20is%20repped%20by.
7. NCAA agrees to $920 million, 8-year deal with ESPN for women’s March Madness, 39 other championships(2024) AP News. Available at: https://apnews.com/article/ncaa-espn-womens-basketball-3a749734984eabde52ea5ec8a7dfe34e

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1. Defining the value of women’s club football in europe the business case for women’s football contents  (no date). Available at: https://editorial.uefa.com/resources/0278-15e121074702-c9be7dcd0a29-1000/business_case_for_women_s_football-_external_report_1_.pdf.
2. Deloitte Football Money League – Growth grasped in the women’s game (no date) Deloitte United Kingdom. Available at: https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-money-league-women.html.
3. McCaskill, S. (2023) NWSL agrees US$240m domestic broadcast deals with Amazon, CBS, ESPN, and Scripps, SportsPro. Available at: https://www.sportspromedia.com/news/nwsl-espn-cbs-amazon-scripps-tv-deal/.
4. TURBO-CHARGING WOMEN’S FOOTBALL UEFA European Women’s Championship 2022 Post-Tournament Report(2023). Available at: https://editorial.uefa.com/resources/0283-186cff205f72-b18d4799cb75-1000/uefa_women_s_euro_2022_post-tournament_report.pdf.
5. Two Circles, Two Circles analysis

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1. (2023). Secondary ticketing solves a problem – and puts fans back in control. Available at: https://www.sportbusiness.com/2023/07/secondary-ticketing-solves-a-problem-and-puts-fans-back-in-contro
2. Two Circles, Two Circles analysis
3. Two Circles, ‘Sports Media Rights’ Data Opportunity’ analysis 2022, Two Circles analysis

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1. Sport Journal, Club Financial Reports, Two Circles analysis
2. Two Circles, Two Circles Proprietary data

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1. Sudevan, P. (2022) ‘How Pro Kabaddi made kabaddi the most-watched sport in India after cricket’, The Hindu, 27 October. Available at: https://www.thehindu.com/sport/other-sports/how-pro-kabaddi-made-kabaddi-the-most-watched-sport-in-india-after-cricket/article66052306.ece

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