How media rights and sponsorship deals will evolve the US sports industry's revenue streams
The North American sports market will grow from $63.9bn in 2015 to $75.7bn by 2020 as a result of growing media rights and sponsorship revenues, according to new forecasts from professional services firm PwC.
Broadcast media is expected to exceed gate revenue within two years
The continually evolving nature of media rights and sponsorship opportunities within in the US sport industry will see the two sectors grow annually at a rate of 5.5 per cent and 3.9 per cent respectively, with media rights revenue rising to $21.3bn by 2020.
As new broadcast distribution deals, such as Twitter's Thursday Night Football deal with the NFL, continue to emerge, the competitive environment amongst potential rights holders will elevate the asking price and draw in more advertisers keen to capitalise on the opportunities. This nature of the advertising deals themselves could change given the recent reports of discontent amongst advertisers involved in the NFL Twitter tie-up.
This is turn will see broadcast rights become the most significant factor in the growth of the US sports market. PwC's report has forecast that revenue from media rights will exceed gate revenue as the industry's largest segment within the next two years.
The report states that while cable operators' influence is likely to diminish they will remain key players through the next deal cycle.
"Broadcast rights preservation is likely to remain industry priority through at last the next deal cycle, which will lead most properties to avoid major disruption of existing distribution and potential further dilution of rights fees,” states the PwC report.
“As a result, direct to consumer offerings featuring live game content will likely continue to be positioned to incremental audiences and/or focus on consumer experiences complimentary to traditional game viewing.”
In terms of sponsorship growth, new inventory deals through digital media platforms, in-venue signage, naming rights and uniform rights is expected to add to the growth of this sector, but at a significantly slower rate than broadcast deals. The NFL, MLB and NHL have yet to approve jersey sponsorship in the same way that the NBA has recently, however if the franchises were to do so it would represent a significant boost for sponsorship revenue.
Merchandising has the bleakest outlook in PwC's report and is expected to fall from £13.8bn in 2015 to $14.8bn in 2020 as a result of market saturation and changes in domestic spending patterns.