The Three Main Income Streams for Sports Teams
Sport is a big business and it is growing every year. Football, basketball, and soccer are gaining record yearly revenues due to increased global attention. Yet there are also many teams struggling to make ends meet, which find themselves falling into bankruptcy. So just how do the top teams stay afloat? Below, we give the three main income streams for sports teams.
Television and Media Rights
The biggest earner for major sports teams is the television and media rights afforded to them for the broadcasting of their games. This is mostly arranged by the league they play in, with more money being given as they move into higher divisions. Individual tournaments will also have their own broadcast rights, and some teams may even stream non-televised games on their websites for a fee.
In ExpressVPN’s survey on sports streaming in the US, they found that « stream football » remains the most requested search term. Second to this is « stream basketball ». Minnesota is the only US state where hockey is the most searched-for term and in the US, these three make up the most lucrative sports. All of this is against quite an odd backdrop for entertainment providers. US cable service companies are expected to lose 1/3 of their pay subscriber base in the next few years. Yet revenue for major leagues is up, mainly down to increased popularity across the globe.
To put these amounts in perspective, Standard Media Index reported that the television ad revenue for the NFL alone is $3.4 billion. This has been caused by an increase in the number of televised games and the addition of extra playoff teams. This works out at around $321 million for each team per squad.
Licensing and Sponsors
Another big revenue stream for clubs is the licensing deals and sponsorships they can sign. There are multiple ways the licensing of products can be done. A team may allow companies to make everything from stationary to sports action figures with their graphics and logos on. In recent years, teams have even signed deals to advertise businesses like cryptocurrency exchanges.
Sponsorships are also another way large sums of money can be brought into the team. The highest payers will get their brand added to shirts and advertising boards in the arena, along with any club media packs and literature. Statista reported that Emirates paid Real Madrid around $70 million to advertise their airline on their soccer kit. This is particularly attractive for sports brands, who can become official suppliers of kits to teams.
Attendance is often overlooked, mainly as it does not bring as much money in as other revenue streams. Yet it is still vital to all sports teams. When people come to see a game, they pay money to do so. This can be pushed up with the sales of corporate boxes and premium seating. Any refreshments and food sold in the stadium also increase profits.
When people visit a stadium, just like a concert, they are often looking for an experience. This can involve taking something home, be it a hat or shirt of the team they have watched. Thus, footfall at games can also increase merchandise sales, pushing profits even further.
There are other ways clubs make money. In certain areas like soccer, schemes to bring up youth players can prove lucrative with long-term contractual rights. The future looks bright for sports and is sure to bring up more chances to make money in the near future.