A focus on sport events and sporting goods
By Virginia F. Bodmer-Altura
Global sport events do have a tremendous influence on the sale of sporting goods and these are dominated by the two sectors footwear and clothing. We take a close look on the two interconnected markets based on a publication by the specialist international consultancy A.T. Kearny and Equity Research Focus by Swiss Private Bank Sarasin.
The first conclusion by Sarasin Equity Research Focus: “The global sporting goods brands clearly enjoy structurally growing worldwide demand combined with solid pricing power”. The second finding: The sporting goods business is commonly regarded as sensitive to economic cycles, as it is supposedly exposed to non-essential vs. basic consumer goods thus including functional and leisure apparel. However the study from A.T. Kearny and based upon analysis of the developments over a decade – including expenditure of infrastructure, spending, sporting goods, broadcasting rights and events – concludes that sports expenditure over the course of an economic cycle in industrialised countries grew two to three times faster than their GDP Gross Domestic Product. Details can be had by clicking on right hand Table 1 by A.T. Kearny: Sports spending is growing faster than GDP around the globe.
The figures for the Sports Events Market (ticketing, media and marketing revenues for major sports) are impressive: In 2009 the value amounted to EUR 45 billion (around USD 64 billion) and was dominated by Football (soccer) and with a sum of EUR 20 billion (USD 28 billion) or almost as much as the combined value of EUR 23 billion (USD 32 billion) for all U.S. sports, Formula 1 racing, tennis and golf. Football generated in Europe EUR 16 billion (USD 22 billion) and the biggest five leagues were accounting for half and the top 20 teams for one quarter of the market. The foremost events can be had by clicking on Table 2 (A.T. Kearny Fig. 1) Worldwide sports event market 2009.
Another interesting factor is the sports value chain based upon four pillars: Properties, rights, events and content management. Rights owner define the global structure of professional sports dominated by FIFA World Cup and Summer Olympic games in the relevant timeframes of their taking place. However, the worldwide sports industry has grown steadily, despite the cyclical nature of major events as it is shown by clicking on Table 3.
The study and estimates by A.T. Kearny conclude that the global market volume of the sports industry (including all aspects already mentioned and by adding sporting goods) is estimated 2010 between EUR 350 billion to EUR 450 billion (USD 480 to USD 620 billion) and thereof sporting goods range between EUR 100 billion to EUR 150 billion (USD 120 billion to USD 200 billion). Sporting goods are assigned by large companies to the following sectors: footwear, clothing, equipment and outdoor. Along these lines Sporting Goods Intelligence (SGI) is estimating for the sports wholesale footwear market a value of around USD 37 billion and for the sports clothing market around USD 64 billion whereas the sports accessories market is earmarked at USD 20 billion. These three segments form the majority of the estimated lower end of the mentioned total market volume of USD 120 billion. It is worth mentioning that smaller and globally less known brands are accounting for around one third of the business whereas two thirds derive from the world’s largest 25 sporting goods manufactures and their share can be had from Table 4 (Sarasin).
The sports footwear sector is dominated with 80% by the global ten biggest sporting goods manufacturers whereas the segments of sports clothing and equipment are far more fragmented. The ten top companies offering sports clothing account for almost 40 % of the market volume. Table 5 (Sarasin Table 2) gives the details of the two segments worth an estimated USD 100 bn:
Sarasin offers also a sales split by products to be taken from Table 6:
It is also evident that the growth of the global sporting goods market is based upon the economic development of countries like China and also growingly from India.
All of these facts indicate that the future of the world wide sports market is rather bright but with some inherent risks economically and politically. Therefore A.T. Kearny projects a slowing of the growth rate up to 2015 as can be had from clicking on Table 7 (A.T. Kearny Fig. 5):
On the other hand TextileFuture is convinced that sporting goods manufacturer of textiles and clothing will have a bright future because of the ever ongoing technological innovations and applications as well as sporting activities gain further importance in emerging countries and because of a growing world population. Therefore their future slice of the cake might show a performance above the market, including profit margins.