Where Does The Money Go: What Makes Sports is A Multi-Billion Dollar Industry

Where Does The Money Go: What Makes Sports is A Multi-Billion Dollar Industry

Watching sports has always been a great form of entertainment. Many see following football, boxing, basketball, cricket, and many other sports as a great form of hobby, and what many do not realize is how big the sports industry is and how much it is worth.

The global sports market is estimated to be already worth over 388 billion US dollars and it is still expected to grow up to over 440 billion USD by next year with a CAGR of 13.5 percent. When it comes to the most followed sports out there, the top three sports belong to football, cricket, and basketball. Billions of people follow different sports events and this is why there is a lot of money involved in the industry.

The sports industry isn’t just fueled by sports betting as many would be quick to assume. Yes, online sports betting in the US and even in other countries are getting bigger each year, but the sports industry doesn’t just have gambling money to thrive. There are a lot of other industries involved too.

The Population of Sports Fans

When it comes to the most popular sport which is football, it is estimated to have over 3.5 billion fans. That is already half of the world’s population. Cricket, the second most popular sport, has over 2.5 billion fans. Basketball is not far away with over 2.5 billion followers.

This is why it’s rare or even impossible to see football stadiums full every time a huge match is on. It’s only the pandemic that was able to clear out a stadium with a live football match, but you get the gist. The more people come to see a game, the more money a tournament could make.

This is why many sports leagues experienced a budget crisis last year when the pandemic hit. The biggest sports leagues like the EPL, the IPL, and the NBA all had to take place behind closed doors, and that only meant that they didn’t earn as much money as they would without a pandemic. The bottom line is that the live audience is one of the industry’s greatest sources of income.

Another source of income for the industry is merchandising and advertising. Sports franchises surely make a lot of money from selling merch and many fans are willing to splurge on this. When it comes to advertising, this is also something that fuels the industry a lot.

This is evident on how almost any sports event. We would always see different brands flashing on our screen when watching live matches on TV. If you are on the venue itself, even the field or court is flooded by different commercial names. Even the jerseys that the athletes wear carry the names of their sponsors and all of those are paid for.

Advertisers are typically willing to spend billions of dollars for a sports league or even a team. This is why major sports events would also get title sponsors like the 2021 VIVO Indian Premier League. The said brand made it to the tournament’s title because they were able to pay for it and that made them the major title sponsor.

An event alone could already gain revenue that is worth billions of dollars. However, know that even teams and athletes themselves can also earn a lot of money on their own. They can also sign sponsorship deals and even create their own merch.

Have you ever seen football star Cristiano Ronaldo on billboards and ads? Of course, he’s also paid for that and the use of his name and image could very well be worth millions or billions of dollars. So far, we have seen the Juventus star partner up with brands like Nike, Unilever, Clear, Herbalife, and many more.

What Happens to All That Money?

And so, you are now probably wondering what happens to all the money that the sports industry is getting? Well, it’s business, and running a business could be expensive. If a sports league was able to get billions of dollars for a single season, the committee in charge will have to figure out how to spend the revenue they make.

They are running a business and they have employees to pay for. They also allot budgets for business plans that could make their organization grow. When it comes to sports franchises, they also allow the budget to shop for new players.

Know that signing up athletes to be on their team can be very expensive. An example is Ronaldo himself with a salary of 60 million US dollars. Currently, there are rumors that he will be leaving Juventus this year and for that to happen, the new team will have to pay over 20 million pounds.

This is why sports teams are always finding ways to earn money and get more revenue. They have to be able to afford the best athletes. Overall, the main source of income of the sports industry is the fans themselves and as more people get into any sport, the bigger and richer the industry will be.