What surprises me about sport business

Sport Business

Sport Business

I has long been a fan of Manchester United and it is fascinating for me to learn about their business and in general, sport business. So, I followed a course in Coursera, https://www.coursera.org/course/globalsportsbusiness to find out more about this industry.

I always have these big questions:

  • How much do these sport companies earn?

  • How do they justify their big spending on player transfer?

  • What are different source of revenues, like advertising, media streaming, player transfer, youth training and transferring, gate tickets?

  • How can the weak team survive, comparing to big teams like Manchester or Real Madrid?

  • How people make sure that these teams don’t cheat on their games?

  • How about drug testing? (this question is already answered on this blog post)

Their Revenue and Income

Big Sport Teams like Manchester United only earns very little comparing with some giant Internet companies like Facebook or Microsoft. Their players can earn a lot comparing to other companies’ employees, though.

Manchester United market capitalisation is: 3.10 Billion $. Well, that is relatively low, comparing to 1B$ of Instagram or 47$B of Facebook. We will investigate each of their sources of revenues to understand where is the big budget and what the league does to make sure it stays competitive and interesting.

Gate Income
is sometimes shared between home and away team, normally ranging from 0%-33% to the away team. Here is the following list of 10 top gate receipts. This gate income contributes a significant part of the income for the clubs:

1 Real Madrid – 438.6m

2 Barcelona – 398.1m

3 Man Utd – 349.8m

4 Bayern Munich – 323.0m

5 Arsenal – 274.1m

6 Chelsea – 255.9m

7 AC Milan – 235.8m

8 Liverpool – 225.3m

9 Inter – 224.8m

10 Juventus 205.0m

Media Income:

The Media is working really well with sport business as the percentage of audience watching a delayed sport is very low, only 4.4%. The following table shows the proportion of audience that watches a delayed show.

Category

% of audience watching delayed

Sport Events

4.4%

Award Ceremonies

14.7%

Comedies

39.5%

There are different business models in this area: TV Networks, Cable TV Model, Regional Sport Network. They can benefit from both the Subscriber Fee and the Advertising Revenue.

The Media Income of some big sporting event:

– Superbowl: 106 million audience (at year 2010)

– UEFA Champions League: 109 million audience (at year 2010)

Other income:

There are other incomes from training the young players and selling them to other teams. The naming fee for the stadiums and the team. There is also salary cap for the players inside the league as well.

 

Leave a Reply

Your email address will not be published. Required fields are marked *