Sports consultancy firm Two Circles has released a report that projects the global sports industry to grow to $260 billion by 2033, a dramatic increase on the current $159bn in revenue generated by sports intellecutal property owners.
The Two Circles report — available for download — comes in part from its work with more than 400 sports properties around the world.
“Sports fans are consuming more sport, the experiences are becoming more varied, and the economic models are becoming more sophisticated,” the report reads in part. “We believe that any growth in the popularity and consumption of sport is a positive. At a micro-level this means sports IP owners can invest in fan experiences. While at a macro level it means that sports become more central to the media industry, sports sponsorship becomes a greater priority for brands, and sports become more of an asset to governments and NGO’s in stimulating positive societal change.”
The agency sees three primary levers in driving growth:
1. More fans, more attention
The underlying value of sports IP will grow as audiences grow and consumption deepens.
2. Diversified sports experiences
Stimulated by market forces, sports properties will act more like entertainment businesses and evolve their products and experiences to better serve broader audiences.
3. Direct value capture
Sports IP owners will leverage direct relationships to capture more value and optimize and grow B2B revenues.
Sports fans are consuming more sport, the experiences are becoming more varied, and the economic models are becoming more sophisticated. The agency believes that any growth in the popularity and consumption of sport is a positive. At a micro-level this means sports IP owners can invest in fan experiences. While at a macro level it means that sports become more central to the media industry, sports sponsorship becomes a greater priority for brands, and sports become more of an asset to governments and NGO’s in stimulating positive societal change.
Not all sports IP owners will grow in the next decade. There will be winners and losers but ultimately the biggest winners will be the fans, as the sports IP owners that grow the most will put them at the heart of their approach.
These growth levers will favor the biggest IP owners as they have done in the last 30 years. 100% of the biggest ten IP owners visualized overleaf were established over 30 years ago.
Ultimately though it is sports that are focused on innovating through the only lens that matters, the fan, that will win. Sport comes with its inefficiencies – borne out of political legacies and suboptimal business models – and sports that can collectively cast those aside and be bold in their pursuit of growth will realize the biggest rewards.
Fan-focused growth
Sports properties have outsourced fans for too long. They have been focused on, and organized around, schedules and calendars through a supply-side first approach.
We’re in an era that needs to flip and we need to focus on demand first models. Focus on the fans; the people who drive consumption and whose attention drives value for sports.
By knowing fans best, we will ultimately build sports products and economic models that will win a greater share of attention from the growing number of sports fans globally. It will be a future that celebrates the best traditions of sports, that can be played on the biggest stages in the world with more notoriety and more social impact than ever before.
Sports IP to surpass television
Sports IP has delivered significant growth in the last ten years, resulting in a +50% growth, and the agency’s base case sees sports IP continuing to flourish. Rising from $159B to $260B. At that rate, market projections would see it overtake the annual advertising and subscription revenue realized by traditional television.
Of course, the growth of video games from immaterial sums in the 80s to being twice as big as any other medium is a story deserving of its own spotlight, but sports’ relentless growth is evidence of the resilience and value of its IP. As consumption habits shift away from traditional TV towards streaming, and advertising and subscription revenues with it, the unique nature of sports’ IP will ensure it has an array of options that will help it secure its position amongst the most valuable mediums in the entertainment ecosystem.
Stable Growth
Sport has captured the attention of humans for thousands of years and over the last 60 years, since color television became mainstream, and 20 years through the internet, the industry has found new ways to meet and monetize that attention. ‘More fans, more attention’ means that the underlying value drivers in sport are heading in a positive direction and while demand for entertainment mediums can be more affected by macroeconomic conditions, sport has proven itself to be relatively cyclically resilient. It is able to continue to grow whether markets are up or down.
There are plenty of examples of this, across all revenue lines, and the chart at the bottom of the page shows just one example where attendances in English soccer have consistently climbed since 2000, while total UK box office revenue fluctuated with GDP per capita.
Growing Cultural Relevance
In 2023, the global population consumes 2.5×1 more media, across 3x more mediums and across almost infinitely more IP owners than 15 years ago. Sports’ ability to foster belonging and tell unmissable stories with its heroes means sport is penetrating every medium and becoming more culturally relevant than ever before.
Sport has an elevated status on all mass media platforms and its IP is consistently leveraged to acquire and retain consumer attention. Whether that is in more traditional mediums like television, cinema or radio or newer mediums like streaming, with series like Drive to Survive, video games (think EA FC or
Madden), or even theatre.
The IP of the largest entertainment medium in the world, video games, has proven itself particularly adept at this over the last 20 years, with multiple successful movie titles being produced that leverage gaming IP. In fact, 2023 saw the highest-grossing video game film ever, with The Super Mario Bros. movie generating over $1.36bn.
Consistently captivating
Sport succeeds where other types of entertainment can fall short. It is consistently captivating. Passionate and casual fans alike don’t tire of sports at its brilliant, unscripted, unpredictable best. It’s why for many properties media rights fees have continued to grow. It is why 93 of the top 100 most watched broadcasts in the US last year were live NFL games.
Sports IP remains one of the few live media formats that still draws crowds. The combined economics of value and scarcity creates conditions that are more of a barrier to disruption for Sports IP where other formats like music and on-demand television were less safe.
With Netflix already experimenting in the world of sport – from staging its own events to entering the rights market as the recent $5bn WWE Raw deal evidenced – sports’ ability to consistently deliver quality will set it apart in the decade to come.
Fans will win
Any sports IP owner of today could win or lose in the sprint to $260bn, but sports fans will be the ultimate winners.
Whilst every sports IP owner has the opportunity to grow, conditions will favor the biggest as we’ll explore in “win younger, win bigger”. In fact, we predict that 11 of the big 20 will outperform the market in the next 10 years.
The sports IP owners that grow the most and outperform the market will do so by putting fans first – through better understanding their needs and behaviors to deliver diversified sports experiences. The good news is that in all scenarios, whether a small, mid or big sports IP owner of today, fans will be at the heart of the approach and be better served in 2033.
“By knowing fans best, sports organizations will build better sports products, experiences and opportunities, creating better value for everyone,” said Gareth Balch, chief executive officer and co-founder at Two Circles. “Ultimately, the fans will be the real winners of this exciting growth in years to come.”
