Sports business playing into the wind, says report

Entertainment now combines with live games to keep fans. Christina Aguilera's appearance helped make the 2011 Superbowl America's most-watched TV programme. Photo / Getty Images

The global sports market will keep growing but faces big challenges as organisers blur the lines between competition and entertainment, a new report says.

Although sporting revenues fell this year by 2 per cent to US$118.7 billion ($154.4 billion), Price-waterhouseCoopers predicts an average increase of 3.7 per cent a year from now to 2015.

This will be helped by a resurgence in television advertising, migration of sports to pay TV and the return of financial services firms and car companies as sponsors.

According to PwC's Changing the Game: Outlook for the Global Sports Market to 2015, revenues will grow about 10 per cent next year, partly due to the London Olympics and the Football European Championships.

The Winter Olympics in Russia and Glasgow's Commonwealth Games will also make 2014 a bumper year with growth of 12.5 per cent.

Revenues from sponsorship, the sale of media rights and official merchandise are all set to increase over the period, but will fluctuate from year to year.

Ticket sales will remain the industry's key source of income making up 32.6 per cent of revenue over the period, the report said.

But despite fans' strong appetite for live events, growth in this market segment is slow and organisers now stage entertainment shows and competitive sport together to maintain audience attention.

The Indian Premier League, for instance, added "theatre and spectacle" to matches with teams owned by Bollywood stars.

The 2011 Super Bowl, the most-watched programme in the history of American television, had Christina Aguilera singing the national anthem before the match and The Black Eyed Peas performing at halftime.

The show had an average US television audience of 111 million viewers, but the report questioned if adding entertainment would allow organisers to keep raising prices at the gate.

The fusion of entertainment and sport doesn't always find favour with purists, who can feel their game "is being hijacked", the report said.

In some instances, fans can feel the competitive qualities of sports have been "sacrificed to mass-appeal".

"This concern over the balance between competitive sport and mass-entertainment can reduce con-sumers' willingness to pay for the live experience, and raise the question of whether prices can continue to rise inexorably at capacity constrained events."

PwC markets managing partner Bruce Baillie said New Zealand had been relatively slow to blend sport with entertainment, but was likely to follow suit.

"We go to rugby to watch rugby, but I think it'll catch on here too and sports like rugby, whether they like it or not, will have to deal with it," he said.

As sports bodies confront these issues, they also face increasing costs as they try to attract the best players.

Rising player fees have led to many of Europe's leading football clubs shouldering huge debts with only 20 per cent believed to be running at a profit, the report said.

High-stakes games

2011 Global sports market revenue

* Gate revenues - US$39 billion
* Media Rights - US$26.9 billion
* Sponsorship - US$35.1 billion
* Merchandising - US$17.5 billion.
* Total - US$118.7 billion.