Nov. 13 (Bloomberg) -- North American sports industry revenue will grow at a compounded annual rate of 4.8 percent to $67.7 billion by 2017, according to a report by PricewaterhouseCoopers LLP.
PwC, based in New York, analyzed four key revenue streams - - gate receipts, media rights, sponsorship and merchandise -- for professional, college, minor league and some individual sports properties.
Media rights are projected to increase the most, growing at a compounded annual rate of 7.7 percent to $17.1 billion by 2017. PwC cites upcoming rights deals for major properties and the media industry’s ability to make money from new platforms such as smartphone applications and streaming games over league websites for the future growth.
“What’s really driving it is the media rights and sponsorship segment,” Adam Jones, PwC’s director of sports advisory services, said in an interview. “In at least the next five years we are still anticipating the industry’s ability to leverage new inventory across both of those segments.”
PwC said the 4.8 percent growth will be a significant step up from the five-year period from 2008 to 2012, which was affected by the U.S. recession and labor fights that led to lockouts.
Compounded annual growth for that period was 0.8 percent to $53.6 billion, Jones said.
Gate revenue, which will remain the largest of the four key revenue producers, is projected to increase 3.9 percent compounded annually to $19.1 billion in 2017.
Teams will need to focus on improving value-added amenities at the stadium, park or arena, the report said. Adoption of smartphone applications, exclusive content for game attendees, data analytics and dynamic pricing models will improve fundamentals and lead to greater revenue.
Sponsorships are projected to increase 6 percent compounded annually to $17.7 billion in 2017, fueled by new inventory and category rights resulting from new in-venue spaces and media platforms, according to the report.
Licensed merchandise sales are forecast to increase the least, at an annual compounded rate of 1.6 percent to $13.8 billion in 2017. Growth is linked to “sluggish economic conditions that are expected to hamper consumers’ willingness to spend,” the report said.
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