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2022 sports industry outlook

Scouting the biggest trends in sports

In 2022, the sports industry will continue to see an influx of money from new sources, shifting power dynamics in college sports, more widespread use of emerging technologies and a greater focus on broader societal issues. Our annual sports industry outlook explores how these trends could create new opportunities and challenges for sports organisations, leagues, owners, teams, players and fans.

Keeping fan experiences at the center

By the end of 2021, we saw most professional sports leagues and college athletics return to a relative sense of normalcy, with full seasons and live fans. We even got to experience the Tokyo Olympic and Paralympic Games. Hopefully, we are heading towards a future where empty stands “bubbles,” and shortened seasons are no longer challenges. It has taken an enormous amount of planning and effort to get to this point, with the return to smooth operations dominating the efforts of many leagues, owners, teams and athletes. When pandemic-era adversities fade, we can bring their lessons and innovations forward into a new future.

Our 2021 outlook highlighted the need for sports organisations to seek new and varied revenue streams and ways to forge deeper fan connections amid the pandemic. We also underscored the need for greater focus and action on equity and justice issues regarding race, gender and LGBT+. We have seen some progress in this space, but there is more to do.

We also see trends and opportunities that had been somewhat dormant during the pandemic emerging over the next few years. They have the potential to shift centers of power in the sports business, create massive new possibilities for growth and cross-pollinate with each other. 

Will programs associated with these areas continue to be voluntary, or should sports organisations and other governing bodies make them mandatory?

Our 2022 sports industry outlook takes a closer look at these five trends:

  • We will see the blending of the real and digital worlds accelerate, with growing markets for data capture and analytics, esports, non-fungible tokens (NFTs) and immersive technologies.
  • College athletics will see some of its biggest changes ever, with student-athletes exercising more self-determination.
  • Blockchain-enabled innovations have a chance to open entirely new markets and options for fans beyond simple collectibles.
  • Sports betting has entered the mainstream and companies will continue their relentless pursuit of new customers.
  • The role and duty of sports in society will continue to receive increased attention, with a focus on sustainability and mental health.

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

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The digitisation of sports is ongoing and transformative, spurred by growth in athlete data capture and analysis, augmented reality (AR) and virtual reality (VR) technologies, sports gaming and betting platforms, and more recently, the rise of NFTs. Sports organisations and media players are looking to combine the best of both the physical and virtual worlds. To do it, they’re adding digital enhancements to live events, including using the power of social media to engage. They are also trying to bring the energy, immediacy and excitement of in-person experiences to the digital realm.

The use of VR and AR in sports has been increasing over the past few years, with new applications for training and simulation, broadcasting and in-venue experiences. With the greater deployment of 5G and its low-latency benefits, AR applications are multiplying.

Another major trend accelerating the merging of physical and virtual worlds is the rapid growth of sports-related NFTs. Leagues, individual athletes and their partners are making digital collectibles, video clips and enhancements to physical collectibles available for sale and trade. We have also seen a rise in the popularity of virtual/fantasy sports games like Sorare, that blend fantasy sports, NFTs and real-world soccer into a completely new way for fans to engage.

Strategic questions to consider:

● What is the long-term sustainability of the sports NFT market? What can be done to drive more demand and engage as many fans as possible?

● Will AR move beyond simply fun and interesting fan experiences to something more pervasive and essential?

● How will these technologies shape other notable emerging business areas, such as ticketing and sports betting?

● What new sports experiences blending the physical and virtual, sport and esport, will emerge?

Several events occurred in 2021 that could cause dramatic shifts in power in college athletics over the coming decade. The NCAA expanded the one-time transfer exception to all Division I sports. After some states passed legislation allowing college athletes to profit from their name, image and likeness (NIL), the NCAA released interim policies so all student-athletes can take advantage of the opportunities that result. Finally, multiple schools announced they would be changing athletic conferences over the next few years.

With many states enacting or proposing NIL-related legislation and the NCAA permitting college athletes to benefit from NIL opportunities no matter what school they attend, the market is now wide open. Student-athletes are free to pursue financial opportunities across social and traditional media, physical and digital merchandise, endorsements and many other areas. As such, we are likely to see a redistribution of power between student-athletes, coaches, teams and schools.

The second major power shift that will continue to unfold in 2022 is the significant realignment of conferences, with schools looking to boost their status and revenue. Some see this as a further concentration of power for teams that are already highly successful.

These structural changes will shift the balance of power, creating new opportunities and challenges for student-athletes, schools, conferences, the NCAA and college sports fans.

Strategic questions to consider:

● Will federal action take place regarding NIL? If it happens, will it be narrowly focused or a broader change to student-athlete rights?

● Will these changes exacerbate or improve gender disparity issues in college athletics?

● How will the proposed changes to the NCAA constitution, which gives more power to the divisions, impact these issues?

● What will be the implications of these issues to smaller schools and the vitality of their sports programs?

Sports-related NFTs have seen a lot of attention and investment over the past year, opening the door to additional blockchain-enabled innovations. With the rising use and involvement of cryptocurrency and associated exchange platforms, a nexus will form around sports collectibles, ticketing, betting and gaming.

In their quest for greater brand awareness, legitimacy and customer acquisition, crypto players have been investing heavily in sports sponsorships. The crypto exchange FTX signed a five-year deal with MLB and bought the naming rights to the arena for the NBA’s Miami Heat. And Coinbase has partnered with the NBA and WNBA in the hopes of better educating fans.

A practice where we are likely to see more experimentation in the next few years is that of linking individual and season tickets to blockchains—turning what was once a simple piece of paper into a more dynamic product or investment vehicle. At first, we could see the bundling of tickets with NFTs to reward fans. In the future, with proper smart contract capabilities, we could see fractional ownership of season tickets and suites and a reinvention of the ticket resale process.

This activity could increase the use of dynamic ticket pricing and portions of ticket resales going back to teams or leagues, creating a new revenue source. Before this becomes widespread, which could take many years, standards should be established, robust consumer protections enacted, fans educated and compliance and tax implications considered.

Strategic questions to consider:

● What ultimate role will crypto play in sports betting?

● Will potential US regulation of the crypto market have a significant impact on its growing connections with sports?

● Will we eventually see universal wallets that will work across sports so that fans can have a simple and easy user experience?

This past year has seen sports betting enter the mainstream. As of November 2021, it is currently legal and active in 29 states plus the District of Columbia, and legal in another three states, with more to come. Online betting dominates the overall market, with billions in monthly bets placed, led by three major players: DraftKings, BetMGM and FanDuel. All three are jockeying for national dominance in the rapidly growing space.

The main players are in a frenzy for customer acquisition and are spending enormous amounts on advertising and sponsorships, as they assume that sports betting will eventually become legal nationally and are working to build brand awareness and expand their traditional base. This effort runs the risk of overwhelming the nascent market or alienating fans. Aware of this, the NFL has limits on the number of TV spots they will sell to sports betting companies, and the NBA isn’t allowing sportsbooks to advertise on jerseys, although the NHL does.

This tipping point in the market has started a wave of acquisitions, partnerships, and joint ventures. In the coming year, we are likely to see an acceleration of market consolidation. In building out their infrastructure and portfolios, companies are looking to acquire strategic technologies to bring in-house and expand their user base.

Strategic questions to consider:

● Will the sports betting spending boom on advertising convert to new customers and will it lead to sustainable growth?

● How much regulatory and fan pushback will we see, especially with regards to problem and underage gambling?

● What innovations will we see as sports betting blends into the overall fan experience, including in-venue, broadcasting and streaming?

● As the market consolidates, what common attributes will the most successful sports betting operators have?

Sports have always been able to transcend “the game,” serving as a way to reflect on who we are as a society and offering a chance to see both our progress and shortcomings. Sports organisations, teams and players have embraced this role, and have influenced and improved their communities as a result. In 2022 and beyond, we will see the sports business continue to make progress, focusing more on the welfare of athletes, society and the planet.

Mental health in sports has continued to gain attention in the past few years as more Olympic and professional athletes have spoken publicly about their struggles. In coming forward, athletes help to reduce the stigma around these issues, as well as encourage open conversations with their fans and teammates. The good news is that all major professional leagues have dedicated mental health professionals on staff among their available resources. But more attention is needed at the college level.

Environmental sustainability is becoming another increasingly important business goal, driven, in part, by more sustainably minded sponsors, fans and professional organisations, like the Green Sports Alliance. All the major professional sports leagues now have green initiatives and are looking to reduce their overall environmental impact. These include projects and programs around recycling, renewable energy use, food recycling and donation, single-use plastics elimination and LEED certification for venues.

Strategic questions to consider:

● Will programs associated with these areas continue to be voluntary, or should sports organisations and other governing bodies make them mandatory?

● How can organisations and teams transform into purpose-driven organizations, moving beyond raising awareness to make lasting change?

● How can efforts across these areas drive deeper, more meaningful connections with fans?

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