Dollars and Eyeballs: Why the Sporting Industry is so Lucrative

Trends and fads in media and entertainment come and go. One day vampires and werewolves are all the rage, and the next fans can’t get enough Marvel superheroes. But one thing that stays consistent through it all? Sports. The sporting industry continues to be one of the most dominant players in media and entertainment. In 2017 alone, the global sports market was expected to generate $91 billion dollars in revenue. That’s up from $76.1 billion in 2013. It makes sense then that advertisers flock to try and capitalize on the eyeballs that sports receive and use it as a prime marketing opportunity. Between sponsorships, in-stadium advertising and ads run during events, brands have many opportunities to make their presence known. And, with so many different sports, leagues, teams and events that take place throughout the year, it’s important for brands to think hard about where their marketing dollars are best spent.

The sporting industry though, isn’t immune to the controversy and turmoil that seems to be everywhere in our world today. And, while this industry is one of the most popular and sought-after, brands also need to watch carefully.  Take the World Cup. Despite the sport’s increased popularity worldwide, sponsorship revenue for this year’s World Cup has fallen for the first time. This is all due to the reputation of FIFA and the fallout with the governing body of one of the biggest sporting events in the world. In 2015, federal prosecutors indicted FIFA on corruption, charging them with bribery, kickbacks and money laundering involved in awarding some of the most lucrative broadcast and marketing rights for the sport. Key sponsors such as Sony, Johnson & Johnson and Castrol all cut ties with the World Cup this year. According to Nielsen Sports’ research FIFA’s sponsorship revenue for the 2015-2018 cycle was $1.45 billion, down from $1.62 billion for 2011-2014, which included the 2014 World Cup in Brazil. Now, that is still quite a bit of sponsorship dollars, so clearly not all brands are shying away. FIFA actually turned to the East to find sponsors and emerged with a crop of new sponsorships from companies in China. But it is yet to be seen if these companies can truly make up the lost revenue from some of their former sponsors and if more will drop off as time goes on.

Then there’s the NFL. Soccer may be the world’s most popular sport, but the NFL and particularly the Super Bowl, tops Forbes’ list of the world’s most valuable sporting events, worth $379 million (the World Cup comes in 3rd at $103 million). But the NFL is involved in a politically-charged dispute of its own. The National Football League recently enacted a new policy that bans players from taking a knee during the national anthem or they will be fined. The “taking a knee” controversy was sparked by former star quarterback for the San Francisco 49ers, Colin Kaepernick who in 2016 took a knee to protest the oppression of black people and people of color.  After Kaepernick, many players followed suit for the past couple of seasons which ignited a storm of protests on both sides of the fence. With the this new ruling from the NFL, some major sponsors are being bombarded with demands to no longer support the league as they are violating the players’ rights to free speech. Sponsors including Nike, Anheuser-Busch, Bose, Ford and Under Armour have already come out and made statements that they support the players’ rights to free speech. But now these brands are feeling the pressure from football fans and their consumers to put that support into action. There is currently a petition on the Care2 website asking brands to “put their money where their mouth is and stand in support of free speech and against police brutality” and end their relationships with the NFL.

How will this affect the NFL long-term? Only time will tell. One thing is for sure though; the sporting industry is going to continue to generate dollars and eyeballs. And brands and marketers are going to continue to invest in this space. What’s important though is for brands to remember who their target audience is and how they will view them being associated with an institution that may be acting in a way that is against their own beliefs and values. Some may move away from purchasing a product from a company that supports an organization like the NFL or FIFA. Some may not. Is it more important for brands to know their consumers and align themselves with what’s important to them or to strictly go where the money is?  What do you think?