Jennifer Nietz - Manager of Operations
November 2014 – Every year around this time I usually write about trends in Colleges and Universities due to “the best time of year” college football season. However, I wanted to take it up a level this year to the Sport Franchises in the US. These organizations are true profit centers and are implementing different strategies to drive profit. The main supporters to these franchises are people like you and me and we directly affect the growth and decline of these organizations.
To gain some clarity to the segment I am referring to; this industry comprises sports teams or clubs that participate in live professional or semiprofessional sporting events before a paying audience. The sports franchises included may or may not operate their own facilities for staging games.
Over the past five years from years 2009-2014 annual industry growth was 2.6% and for the next five years the prediction is down a little but still achieving annual growth of 1.6%. The chart below illustrates the products and services that affect the revenues generated; no surprise that ticket sales are the biggest item and media is a close second.
Some interesting facts from IBISWorld regarding franchises include:
- The value of professional franchise can range from $200.0 million to $2.0 billion in total assets.
- Team owners are responsible for generating revenue through ticket sales, media deals and endorsements, and maintaining the team’s facilities.
- Winning is not everything to them; generation of robust and diversified streams of revenue to keep the business growth is crucial.
The recent recession challenged these franchises as personal disposable income fell which created a significant drop in discretionary spending and attendance at sporting events. During this time ticket prices increased which is when many teams saw a decrease in attendance or struggled to maintain. There has been a rebound though and we have seen stabilized ticket prices and increased disposable income. Also, with the opening over new stadium and installation of new technology in these arenas that has also helped sustain and grow revenues and business.
Can you guess the top market share holders?
- Dallas Cowboys – 2.1%
- New York Yankees – 1.9%
- New England Patriots – 1.6%
- Washington Redskins – 1.5%
While this article took a little bit of different approach than I usually take, I thought you would enjoy some facts and figures into an industry that most people hold deep to their hearts. I hope your team has a successful season…Who Dey!
Questions or comments? Please contact Jennifer Nietz at jnietz@teamCOACT.com.