Sports

While watching your favorite team from your couch or in the stands (probably sporting your favorite team hat or player jersey) you may have let yourself daydream a time or two…what would it be like to own a team?

But, for most sports fans, that’s only a dream. The Los Angeles Clippers in 2014 were sold for $2 billion. Most professional sporting organizations have similar sky-high values.

This huge cost doesn’t mean, however, that less wealthy investors are precluded from investments in the big sports. The elite nature of teams is, in fact, not a barrier to entry at all. Rather, the loyal fan base these teams attract makes for a broad market of investment portfolio possibilities.

[Is streaming the future of sports?]

More than 16.5 million viewers tune into the average NFL game, according to Sports Illustrated. In 2019, 102 million people tuned in to watch the Super Bowl.  

And, sports are way more than American football. According to FIFA, 3.572 billion people watched the 2018 FIFA World Cup. That’s more than half of the global population aged four and over.

In other words, there is major opportunity to be had in investing and capitalizing on society’s fascination with sports.

In 2019, the sports industry in the United States topped $73 billion. It is anticipated to reach $83 billion by 2023. In part, this is because of the growing number of industry players. 

The sports market has four primary segments: gate receipts (ticket sales for live sporting events), sponsorship, media rights and merchandising. That’s just scratching the surface. 

Outside of the stadiums, technology in sports is helping fans to follow their favorite teams more closely than ever before. Technology is also changing the sports ecosystem in both some expected and some unexpected ways. 

Can You Invest in Sports?

When it comes to investing in sports, opportunity abounds, especially for those who think beyond the playing field. 

Think back to your favorite hat or jersey, and then to the millions of sports lovers wearing something similar that represents the team that they follow.  

For investors, that means money can be well served in merchandising via publicly traded sports apparel manufacturers such as Nike, Under Armour, and Lululemon Athletica, top retailers like Dick’s Sporting Goods, or even equipment manufacturers such as Brunswick Corporation. This type of investing is ideal for those with an interest in investing in physical products. 

Other less tangible opportunities include investing in the broadcasting of sports. ESPN, the world’s largest sports broadcaster, is owned by Walt Disney (NYSE:DIS). The station is a money-maker for Disney, offering live coverage of some of the most-watched sporting events. 

By 1990, The Wall Street Journal ranked ESPN the # 1 channel on cable with 54.8 million subscribers, ahead of CNN & MTV at the time. The channel launched the streaming service ESPN+ in 2018, to provide expanded access to select live MLB, NHL, NBA, and MLS games, in addition to other sports offerings from boxing to cricket.

If ESPN isn’t interesting, there’s also the option of investing in publicly traded companies that own interests in professional sports teams. For example, MSG Networks (NYSE: MSGN), owns the New York Knicks and Madison Square Garden.

Investors can also consider venues. The MGM Grand Casino in Las Vegas, NV (NYSE: MGM) is a tourist hotspot. With its MGM Garden Arena in Las Vegas, it is one of the premier sports venues hosting major events like All Elite Wrestling’s inaugural event, Double or Nothing. According to All Elite Wrestling, the event sold out in four minutes. The Garden Arena also hosts professional boxing matches, UFC mixed martial arts events, amongst many others. 

Why Invest in Sports?

The sports industry is growing and changing. According to Deloitte’s 2020 Sports Industry Outlook, the five trends likely to have the greatest impact on the industry are: (1) The rise of women’s sports, (2) The continued evolution of esports, (3) Legalized sports betting, (4) College athletes maximizing their short-term value, and (5) 5G and sports in the cloud. 

And, perhaps to everyone’s surprise, sports are no longer strictly physical in nature. 

Technology is not only helping fans to connect with their teams, individual athletes, and other forms of sports entertainment more than ever before, it’s allowing sports enthusiasts to attract their own audiences through eSports. 

eSports are described as the world of “competitive, organized video gaming.” According to research firm Newzoo, the number of esports viewers worldwide will grow from 380 million to 589 million by 2020. It’s predicted that eSports viewership will eventually surpass even that of mainstream sports.  

And, big companies are taking notice.

Amazon acquired Twitch streaming service in 2014. Now valued at $3.79 billion, Twitch has an average of 15 million viewers each day who tune in to watch or host live streams.

Sports technology goes beyond even the rise of esports to training and filming. Consider wearables, virtual reality used by athletes to train, and the advancing drone technology that captures live games like never before. These applications of tech are all opening up the market for more investment than ever before.

An investment in sports, with their eager and loyal fanbases and emerging technology applications, includes a world of opportunity beyond the action on the playing field. 

How to Invest in Sports

But sports and its related industries are spread out and difficult for investors to access directly. Investing in the sector via an ETF or mutual fund, however, is a good way to bring these different industries together to gain exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to access sports this way.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.

The information and data are as of the May 28, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.