Investing Sentiments in Sports
March 15. 2022
Sports are considered the ultimate unifier, extending beyond borders and rising above partisan politics to align and facilitate the mingling of multiple audiences. What’s the secret behind the success of global unification through sports? Technology!
Shrewd investors minted billions by buying shares in big and profitable teams in football and basketball. However, the evolution of technology and the advent of digital assets have impacted decision-making in sports investment, and investors are now considering other sports-related investment opportunities.
According to statista.com, the global sports market is broad. It extends to other submarkets besides sports goods (sporting equipment and apparel), such as broadcasting & licensing, sponsorship, eSports (sports gaming), and sports betting.
Revenue for global sports equipment and apparel markets were $192 billion and $135 billion, respectively, in 2021, while global revenue for athletic footwear was $56 billion.
The most popular sports brands were considered to be Nike– having a revenue of $35 billion, and Adidas– having a revenue of $20 billion in the same year (2021).
So, where is investing in sports right now, and what’s the general mood among investors?
Venture funding, to startups or small businesses with high-growth potential. Funding comes from wealthy investors and financial institutions. Venture funding can be risky because success is not guaranteed. However, the return on investment is high.
Sports tech refers to the intersection of technology and sport to enhance user experience. Among others, sports tech has transformed the sporting sector in many ways, including athletes’ training, fans’ engagement & data consumption, and construction of sporting facilities. Estimates predict that the sports tech sector will be worth $30 billion by 2024–meaning it’s a high-growth market.
Venture funding in sports tech was projected to be a staggering $12.7 billion in 2021–which was more than total investments for the previous 2 years. Over ten sports tech startups emerged in 2021, promoting VC to support sports tech. A sports tech company specializes in developing sports-related apps and games. The chart below shows the adoption of technology in different sports.
The sporting industry approximately rakes in over $1 trillion annually–and income from sports apparel and equipment companies form the largest share of that income. The COVID-19’s stay-at-home restrictions and the social distancing guidelines resulted in increased demand for sporting goods when people were grounded at home.
Sports stocks thrived with increasing demand for sporting equipment. Sales of sports goods retailers grew by 20% in 2021, according to statistics from the United States Census Bureau, while revenue jumped by more than 30%. The following table highlights some sports stocks that thrived during the COVID-19 pandemic.
Sports digitization was influenced by data capture and analysis in athletics AR & VR, sports gaming and betting platforms, and NFTs. In addition, the sports sector and the media are seeking to merge the real and virtual worlds by enhancing live events through digitization, like social media.
Incorporating VR and AR into sports has increased in the recent past considering new applications meant for enhanced training, broadcasting, and remote experiences. NFTs also accelerated the merging of AR and VR.
Leagues and athletes introduced digital assets, such as physical & digital collectibles and video clips for trade. Deloitte Global expected transactions related to sports NFTs to be $2 billion in 2022. Some athletes made a fortune through NFTs, and popular leagues have partnered with NFT platforms, such as the Top Shot platform, Candy Digital, and Dapper Labs.
AR and VR blend virtual sports, NFTs, and real soccer–enhancing user experience and engagement. The gaming industry is now a high-growth market thanks to AR & VR technologies, and investors are already taking note.
Sports betting officially became mainstream in 2020 although it was illegal in most jurisdictions. However, 30 states, plus the District of Columbia, had legalized sports betting. The sports betting sector’s revenue was roughly $1.5 billion in 2020 and was expected to grow to $6 billion after two years. Online betting is dominated by DraftKings, BetMGM, and FanDuel who toiled to increase betting awareness.
Increased awareness triggered acquisitions, partnerships, and joint ventures. For instance, Caesars Entertainment acquired William Hill and Bally merged with Gamesys Group in 2021. In addition, market leaders acquired strategic technologies, such as fantasy sports and iGaming, besides sports betting to expand their customer base. Sports betting is a high-growth potential market, and investors are scrambling to fund sports betting firms and make a kill eventually.
Investing in sport is growing, as we’ve seen in this article. Sports tech has endeared itself to investors, thanks to innovations and emerging technologies & trends. Small-scale players looking to profit from sport-related investments prefer trading digital assets because they can start with a small portfolio and grow it gradually. The big boys, on the other hand, see venture funding as lucrative thanks to the high returns associated with it. Investing in sports should be done from an informed point of view, and different investment options should be considered to increase the probability of success.