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2023 sports industry outlook

A scouting report of five major industry trends

The growth and transformation of the sports industry is forcing organisations to take a more sophisticated approach—one that makes the industry more attractive for investors, more immersive for fans and more supportive of athletes. To make sure this happens, it’s important for sports organisations to look ahead for possible events and actions that can change how the future unfolds.

New opportunities to connect with fans

In this global golden age of sports, 2023 is expected to bring organisations and athletes more chances than ever to deeply connect with their fans. This includes engaging through some important international events, such as the Cricket World Cup (India), Rugby World Cup (France), and the FIFA Women’s World Cup (Australia and New Zealand). This year will also see new media deals and more innovations from streaming providers as their influence grows.

In a challenging economic environment, sports will likely still be seen as an attractive option for investment, with investors endeavouring to take a responsible and sustainable approach. Technology will continue to infuse every aspect of sports, empowering athletes and creating a more immersive experience for fans at live events and at home. In general, 2023 will be about making the most of these near-term opportunities while managing associated risks with the longer term in mind.

Our 2023 outlook in brief:

  • The blending of physical and digital experiences will move from proving concepts to creating new functionality and better experiences.
  • With the possibility of new sports betting restrictions emerging around the world, there will be a greater emphasis on risk management and responsibility as the industry seeks more growth and profitability.
  • Interest and involvement by private equity investment in sports will continue to grow. How will sports organisations respond to new types of investors and their expectations? How will investors act during a potential economic downturn?
  • After a breakthrough year, women’s professional sports are in a strong position to further advance in 2023, but additional work is necessary to improve awareness, expand sponsorship and grow media rights valuations and investment.
  • College athletics in the United States are undergoing unparalleled change. It will be a challenge to balance the extraordinary opportunity with responsibility to student-athletes, schools, fans, partners, and alumni.

Download the full report to learn more about the impacts of sports industry trends, key actions to take and critical questions to ask.

The use of digital assets like non-fungible tokens (NFTs), fan tokens and blockchain-enabled tickets are evolving for sports. Many major sports organisations across the world are working with partners to build markets in these areas. Simple digital collectibles, originally seen as curiosities, are becoming advanced digital assets that can be used to improve fan engagement and loyalty and create new business models and even more new revenue streams.

But NFTs in sports will need to overcome some barriers—and quickly—to progress rapidly. For many fans, the barriers to entry can seem high, mainly because of a general lack of understanding of what NFTs are and how they work. There are also worries about risks and immaturity in the market and the sustainability of the services. Sports organisations and their technology partners should consider making it as easy as possible for the average fan to set up a wallet and purchase digital assets. These challenges will likely have to be addressed if sports organisations want new revenue sources, better fan engagement and more knowledge of their audience.

Strategic questions to consider:

  • Should sports organisations base their NFT strategy on specific benefits or broad utility for fans? Which approach is most likely to drive rapid growth for the market?
  • How can these offerings drive fan loyalty in different ways than traditional activities do?
  • How can sports organisations encourage innovation and interoperability across disparate platforms?
  • How can existing service providers innovate fast enough to keep up, specifically in ticketing and loyalty?

Although sports betting has been legal in some countries for more than a decade, the United States is a relative newcomer, having only opened the door more broadly to legalisation in 2018. In just a few short years, the US market has seen rapid growth, with some type of sports betting legal and active in 31 states and more than US$42 billion of bets placed in the first half of 2022.

A lot of positive attention has been given to the increased economic opportunity and fan engagement that sports betting can bring. However, it is also important to reflect on related societal issues, including the potential for corruption, illegal betting, issues with addiction and financial crime. As the US market matures and evolves, actively fostering a healthy customer base and a responsible industry should be encouraged.

It is important to manage potential risks in this space, and the United States may be able to learn from countries with more experience. With concerns over an economic downturn in 2023 and a greater focus on profitability, betting operators should not lose sight of protecting and supporting their customers. How can betting operators work proactively to best ensure the long-term health of both people and the industry?

Strategic questions to consider:

  • What is the best model to deliver the right balance of economic opportunity and adequate consumer protection?
  • How can operators best focus on customer acquisition and retention while facing the potential for tighter regulations around marketing and advertising?
  • Will increased advertising curbs be effective in discouraging underage and problem gamblers?
  • Will there be an increase in collaboration between countries and the establishment of global standards to address societal issues?

Private equity (PE) has taken an increasingly active role in sports over the past few years—with firms establishing funds and new entities being created to invest solely in sports. They are buying shares of teams, leagues, and broadcast rights. Nearly US$60 billion in private equity was invested in sports in 2021 and more than US$30 billion in 2022 through August. In Europe, the rules are fairly relaxed for PE involvement. In the United States, the NFL doesn’t currently allow PE firms to invest, but the NBA, MLB, NHL, and MLS have encouraged it, with guardrails. These can include setting minimum investment levels, controlling the individual and total percentages that PE firms and other institutional investors can own, and limiting the number of teams a single firm can invest in.

PE’s entrenchment in the sporting landscape brings potential issues to watch out for along with new areas of opportunity. Some of these deals have sparked pushback. Fans may worry that investors could put profit above winning, and athletes may ask whether investors have their best interests at heart. If economic times get tough for teams and leagues, will investors try to exert more control to protect their investment—to the detriment of competitiveness? There are also risks tying investment to on-field performance.

For opportunities, expect to see more attention paid to supporting areas for the sports industry—digital experiences, athlete performance, data and analytics, and sports betting. Also expect to see an even wider variety of institutional investors getting involved in sports, including sovereign wealth funds.

Strategic questions to consider:

  • What happens when the market become saturated and there are fewer “easy” deals to make?
  • What are the consequences for sports organisations, players and fans of a smaller pool of interconnected global owners?
  • Will PE interest drive more leagues to look at expansion?
  • How will organisations respond to the expectations that come with outside investment?

Women’s professional sports had a record-breaking year in 2022. The levels of interest, attendance, viewership, media coverage and investment have never been higher. Attendance records were broken around the world. And women’s professional sports are positioned to advance even further in 2023.

Yet despite all this laudable momentum, women’s professional sports still get significantly less attention, investment and sponsorship than men’s sports do. Over the next few years, some critical areas can help catalyse further growth. The media rights deals for the NWSL and WNBA are expiring soon—the NWSL in 2023 and the WNBA in 2025. Both leagues are looking for significant increases and will look to a combination of linear and streaming providers to maximise their reach and discoverability. These deals should provide proper valuations, favorable broadcasting windows, strong production and substantial marketing to help drive awareness.

Women’s leagues have many other opportunities beyond media rights to drive future success. Although innovative approaches are being taken to sponsor women’s sports, mainstream awareness of sponsors is still low. Additionally, the smart expansion of leagues could help grow talent pools and tap new markets. As sports betting matures in the United States, operators could provide more betting options for women’s leagues, potentially driving increased interest. Finally, there are more female investors and former athletes getting involved in ownership. The result could be a chance to do things differently with athlete representation, fan and community engagement and investment.

Strategic questions to consider:

  • What are the best ways for women’s leagues to seize upon current momentum to grow beyond core fan bases?
  • With media rights in play, what is the best mix of entertainment channels that will drive the most awareness and engagement?
  • How can the excitement and attention from national team events translate to more consistent support for professional domestic leagues and clubs?
  • How can more global collaboration between women’s professional teams and organisations help?

Over the past few years, there have been dramatic shifts and an overall reshaping of the US college athletics landscape. Many of these changes have been sparked by accelerating revenue growth in college football. Since 2021, athletes have been allowed to profit from their names, images and likenesses (NILs), and some have secured deals in excess of US$1 million. The realignment of athletic conferences, highlighted by Texas and Oklahoma’s impending move to the Southeastern Conference (SEC) in 2025 and USC and UCLA’s proposed move to the Big 10 in 2024, has disrupted historical precedents. These shifts are pushing conferences to become more sophisticated and professional in their operations.

It is difficult to predict the future of college athletics, but with increasing revenue and professionalisation comes both opportunity and responsibility. With more freedom for college athletes, it is important that programs take a more unified and holistic approach toward supporting them—addressing their physical and mental health and helping to manage the increasingly complex commercial environment they face.

To drive fan engagement, college athletics events could become even more digitally mediated, personalised and shared across a connected community, for those both in the stands and viewing at home. This will require modernising the digital infrastructure of venues and incorporating real-time data, gaming, sports betting, social content and commerce. With conference realignment, alumni and donor relations will be even more critical, and athletic departments will need new ways to gather insights and new personalised ways to engage.

Strategic questions to consider:

  • What will the governance model for college athletics ultimately look like and what will that mean for student-athletes?
  • How sustainable are the new models for NILs, media rights and expanded conferences?
  • Considering all these changes, how can the historically unique characteristics of college football be best preserved?
  • College football’s higher revenues and increasing professionalisation will likely create downstream impacts on the rest of college athletics. What is the best way to ensure equity across sports?

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