Institutional investment in sport to grow in the next 3-5 years with overall sports industry growth prospects more positive compared to last year - PwC Global Sports Survey

• Continued levels of investment in sport forecast and valuations are expected to rise

• Women’s sport revenues expected to grow significantly over the next few years

• Big tech companies are predicted to become more active in the sports media rights market 

• Nearly 40% of sports executives reported prioritising a balanced approach to E, S and G moving away from ad-hoc initiatives 

The PwC Global Sports Survey, now in its seventh edition, features responses from 507 senior sports executives from across 43 countries and analyses the market forces likely to transform the sports sector over the next three to five years and looks at how those perceptions have changed in the last 12 months.

Overall, the survey respondents reported optimism about the future of the sports sector following the debilitating impact of the COVID-19 pandemic, with the outlook for growth improving in the last year from 5 to 6.5%. The key revenue drivers of the improving growth are increased media rights, the resumption of ticketing and hospitality and growing betting related revenues. 

Clive Reeves, Global Sports Leader at PwC, said:

“Following a difficult few years due to the COVID-19 pandemic, the sports industry is on the path to recovery and it is great to see in our survey results that the spirit of optimism has returned. With fans now back in stadiums and strong consumer demand for sports content, growth expectations have increased compared to previous years.”

Sports Investment

Following a number of significant investments in sports leagues and teams in the past year, the PwC Global Sports Survey reveals that more than three quarters (83%) of senior sports executives believe institutional investment (Private Equity and sovereign wealth funds) will continue to grow in the next three to five years.

More than two-thirds (68%) of respondents believe the focus for Private Equity and sovereign wealth investment will be on premium sports properties.  The view is that further value can be unlocked through seizing new streaming and digital opportunities, creating alignment across stakeholders and transforming ways of working.

Clive Reeves, said:

“More than ever sports organisations are looking for additional resources to remain competitive both on and off the pitch, while investors have been buoyed by the underlying resilience of consumer demand. Institutional investment has the potential to transform sports organisations and help capitalise on new market opportunities.”

“However, sports organisations face a dilemma as they balance the level of control they are willing to give up in return for investment. This is evident in the results of our survey which show that almost two thirds of respondents believed investors, sports organisations and fans may have misaligned objectives.”

Rising valuations

The value of sports clubs and franchises are expected to rise according to those surveyed amidst growing interest from investors and the increase in sports M&A activity across the globe. For the first time in the survey, PwC analysed the expected growth in sports club franchise valuations with respondents predicting a 6.6% growth rate over the next three to five years. Driving this demand is the scarcity of assets which combined with increasing demand from investors and a strong media rights market is driving valuations higher. In the last 12 months, teams in the NBA, NFL, Premier League and Serie A have all sold for record sums.

Clive Reeves, continued: 

“With strong expectations on the media rights market and the belief that further commercial potential is still to be unlocked, the number of parties interested in investing in teams or leagues is expected to rise, driving up valuations further. We have seen from recent transactions that the valuations of premium sports properties are increasing, which reinforces the views gathered in our survey.”

Women’s sport on the rise

The majority of sports executives view the women’s sport market as a critical part of future industry growth with over 70% believing revenues will grow by more than 15% in the next three to five years. This forecast is supported by the growing interest from media companies and sponsors who are increasingly seeking to realise the opportunities women’s sport offers, with a number of improved partnerships formed in the past year. However, institutional investment is yet to follow this trend, adopting a more cautious wait and see approach.

In order for women’s sport to accelerate its growth, 50% of respondents indicated that greater media coverage is the most impactful driver of growth. Increasing live coverage and achieving wider reach is essential to set the flywheel in motion as increased visibility will attract more commercial partners which in turn will stimulate revenue growth and enable greater investment in talent and sport development. 

Clive Reeves, said:

“Increasing the visibility of women’s sport on high-reach networks can set a powerful flywheel in motion. Extending reach and growing fandom are essential to attract commercial partners and investors who are willing to invest in women’s sport and provide the required financial resources to enable growth at all levels”

“It is essential that all stakeholders work together to accelerate the growth of women’s sport and build a strong, sustainable platform for long-term success.”

Big tech companies becoming more active

In the last 12 months the sports industry has seen tech giants, such as Apple and Google, make significant moves in the sports media rights market. In our survey, 76% of sports executives stated that large tech companies are best positioned to win the battle for sports rights in the next 3-5 years. In addition 75% of respondents also reported that rights owners will need to be more creative in their media rights distribution models to succeed in the future. 

Clive Reeves added:

“The recent rights acquisitions from the big tech companies are great for sport, having new media partners investing in sport and helping grow reach, engagement and fandom can only be good for the sector. It will be interesting to see how the fan experience evolves and new monetisation models emerge over the next few years.”

ESG in sport

More than half of respondents believe they are advanced in their approaches to Environment, Social and Governance (ESG) policies, however there remains significant room for improvement. Sports organisations, like organisations in other sectors, are under growing pressure to shift their business strategies from shareholder capitalism to stakeholder capitalism. Nearly 40% of sports executives reported prioritising a balanced approach to E, S and G moving away from ad-hoc initiatives to more embedded ESG approaches within the organisation’s strategy. However, delivering a balanced and integrated approach is difficult, according to our survey 41% of respondents say the biggest challenge to sustainability is organisational culture.

Clive Reeves commented:

“With growing understanding of the interconnectedness and complexity of ESG it's imperative that sports organisations move away from ad hoc initiatives.  We believe sports organisations will move towards a more balanced and integrated ESG approach. However, the key question remains how organisations can achieve this balancing act whilst managing limited resources and operational demands.

Ends

Notes to editor

The 7th edition of PwC’s annual Sports Survey features responses from 507 senior sports executives from across 43 countries.