By Valentina Za
MILAN, Feb 25 (Reuters) – Extreme weather threatens annual revenue growth in the $2.3 trillion sports economy, where expansion is driven mainly by tourism tied to resource-depleting global events such as the just-concluded Milano Cortina Games, a report has shown.
The sector’s growth should be used to maximise social benefits such as reducing public healthcare spending and advancing gender equality.
That entails tackling the threat the industry faces from climate change and nature loss – which it risks exacerbating through its own footprint, said Tony Simpson, partner and global sports industry lead at consultancy Oliver Wyman, the report’s authors.
“Sports has more power than any other sector to drive behaviour because it sees itself as a community asset. And if you’re a community asset, you need to act as one,” he told Reuters.
Elite sports’ $140 billion slice of the industry is dwarfed by sports tourism worth $672 billion and a sporting goods sector with annual turnover of $612 billion, the report prepared for the World Economic Forum showed.
The fastest-expanding segment of the overall tourism industry, sports tourism is forecast to account for 60% of total sports economy revenue increase until 2030.
Participatory sports and sports-driven revenues in sectors such as broadcasting, nutrition, wearable technologies complete the picture of an economy which the report said is set to grow to $3.7 trillion by 2030 and $8.8 trillion by 2050.
For the report, Oliver Wyman analysts gathered and cross-checked data from organisations including major leagues, investors, sponsors and the World Federation of the Sporting Goods Industry, Simpson said, adding the project required more than 5,000 hours of work.
“By showing how large the sports economy is — and doing so through a rigorous process … — this report highlights what’s at stake if we don’t put the right behaviours in place,” he added.
HEATWAVES AND FLOODS
Growing youth inactivity and extreme weather events disrupting competitions, the natural landscape and supply chains could cost the sports industry over $500 billion in lost revenue by 2030, the study found.
“There are fewer young men aged 15 to 25 playing football at weekends than ever,” Simpson said, highlighting a trend that undermines the future fan base.
While women’s rising involvement and more children joining organised activities lift the overall numbers, “the ‘core’ segment — young men playing sport — has shrunk,” he said.
Meanwhile weather events such as extreme heat, floods, lack of snowfall and pollution can lead to competitions being cancelled, hurting media coverage and advertising slots.
Last year, France experienced heat waves ahead of the Tour de France, forcing cyclists to find ways to cope with sweltering temperatures.
“Broadcasters are increasingly writing into contracts the risk that events may not take place because of extreme weather – which means lower advertising revenues,” Simpson said.
Outdoor activities account for more than 90% of media rights revenues in professional sport and 76% of sponsorship revenues – the sector’s two main revenue streams.
As for community sport, in the UK alone adverse weather conditions translate into around 320 million pounds ($433 million) in lost income and maintenance costs annually.
However, growing awareness among sponsors and investors as sport evolves can help channel its positive effects through “impact investing”, Simpson said.
“Sponsors increasingly want their money to drive outcomes, not just put a logo on a shirt,” he said, pointing to Standard Chartered’s sponsorship of Liverpool FC, which has led the club to set up community programmes for women and girls or support recycling initiatives.
“That’s financial incentives driving social outcomes — and major brands are now pushing for exactly that,” he said.
($1 = 0.7391 pounds)
(Reporting by Valentina Za; Editing by Hugh Lawson)
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