Sports revenue pie – What are its ingredients?

The sports marketing business has 6 essential focus points which are the ingredients of the revenues in this business:

• Properties (Teams, leagues, events, athletes)
• Corporate participation (Advertisers and sponsorships)
• Venues (Arenas and stadiums)
• Media (Print, radio and Television)
• Merchandising (Sports goods, logoed apparels and memorabilia)
• Agencies (Sports marketing focused on properties, sports marketing focused on sponsors, sales promotion and advertising and public relation companies)

Each of these areas represents significant slices of the sports revenue pie and they are all intertwined. As a matter of fact, the first five areas have a significant impact in the revenue generation and the other five areas help create a combination as a better marketing tool primarily use the sixth ingredient.

Properties are represented by any entity that can sell the rights, names and likeness for commercial purposes. Primary examples are teams (team owners) and leagues but athletes and personalities are also included in this category.

Corporations are the sponsors that use sports as a marketing tool to reach targeted demographics and psychographic groups. Corporations will sponsor properties, venues and medias while using agencies to help them in these areas. You can consider Corporations and fans the universal donors in this equation and the properties the universal receivers.

Venues are the playing fields for the game and the sponsorships and the rights of business extending to the corporates. Example- The Emirates stadium the stadium of the English premiere league out fit Bolton wanderers, who are a part of the burnden leisure group’s plc.  And the De beers park at Kimberly, a cricket stadium in South Africa.

Media and corporations, along with fans, are the primary money generators in this recipe.

Merchandising is the fastest growing ingredient in this recipe. A company that produces a t-shirt in labour markets of south East Asia like Vietnam and Bangladesh for Rs.100 receives a licensing agreement from a property and the t-shirt that costs Rs.100 actually is sold for nothing less than Rs.2000 and more because it has a logo on it.

Agencies are becoming larger and larger players, as the money pot gets larger. The classic example of cricket in India Mr. Jagmohan Dalmiya on the player’s side, Mr. S. Saha of Sahara on the corporate side, Mr. Ravi Krishnan of IMG on the agency side and to complete the fourth corner o the ever increasing squared circle is Mr. Kunal Dasgupta CEO Sony television and the media side control the flow of money in this business.

To understand the example to illustrate each areas influence better, the following constituencies represent some of the players in the business.

EXAMPLES

Properties
FIFA – world cup, UEFA – champions league, ICC – world cup, BCCI, IOC – Olympics, NBA, MLB, MLS

Corporations
Coca – cola, Ford, Hero Honda, Sahara, Compaq

Venues
Amsterdam arena, Wembly, Staples center, Lords

Media
ESPN – Star sports, ABC, DD

Merchandising
Adidas, Nike, Diadora, Puma

Agencies
IMG, Sporting frontiers, Octagon