The sports economy is a major contributor to global economic growth, with revenue expected to exceed $680 billion by 2028, driven by sectors like media rights, sponsorship, and tourism. As the industry evolves, what new opportunities will shape the future of sports?

Table of contents:

• Introduction
• The evolution of the sports economy
• The importance of the sports economy
• Key components of the sports economy
• The economic impact of sports events
• The role of technology in the sports economy
• Final thought 

Sports have always had economic importance. Even the ancient Olympic Games were not just about athletic competition but also generated trade and tourism. However, the professionalisation of sports in the late 19th and early 20th centuries marked a major change.

With the establishment of professional leagues, like the English Football League in 1888 and Major League Baseball in 1903, sports shifted from being hobbies to becoming structured businesses, earning money through ticket sales, sponsorships, and media rights. Today, the sports economy includes many sectors, such as sports merchandise, broadcasting rights, tourism, and sponsorship deals, making it a global economic force.

According to statista, in 2022, the industry’s revenue amounted to over 403 billion U.S. dollars and was expected to grow at a compound annual growth rate of 9.13% between 2022 and 2028. By 2028, the global sports market was expected to be worth over 680 billion U.S. dollars. This growth is driven by increasing media rights, digital platforms, and sports tourism.

The sports economy represents a growing and multifaceted sector of the global economy, contributing not only to financial markets but also to social and cultural landscapes. Its influence spans from local community-level activities to international tournaments that attract billions of viewers. 

Understanding the sports economy requires an exploration of how financial, social, and regulatory aspects intertwine to sustain the vibrant world of sports.

The importance of the sports economy

Economic contributions

The sports economy plays a key role in economic development both nationally and globally. Sporting events create direct job opportunities and also support other industries, such as hospitality, transport, and construction. For instance, building new sports facilities creates jobs and stimulates economic activity. The London 2012 Olympics reportedly created over 100,000 jobs in sectors like security, retail, and infrastructure.

Sports also boost local economies by attracting tourists, benefiting hotels, restaurants, and local businesses. According to UK Sport, major sports events hosted in the UK in 2023 generated £373 million in direct economic impact, a 6:1 return on investment, with 93% of the British population agreeing that major sporting events raise the profile of UK cities internationally.

Health and well-being

The sports economy also contributes to public health. Participation in sports and physical activities improves physical and mental health. Governments and health authorities are investing more in sports programmes to fight lifestyle-related diseases such as obesity, diabetes, and heart disease. The UK government’s 'Sporting Future' strategy, for example, aims to boost grassroots sports participation to improve health and reduce healthcare costs.

Social impact

Sports are a platform for social interaction and community building. From local amateur leagues to international tournaments, sports bring people together, creating a sense of unity and shared identity. Large events like the Olympics or FIFA World Cup can be moments of national pride and global connection. Sports have also been used to bridge social divides, promote gender equality, and support underprivileged communities through various charity initiatives.

Key components of the sports economy

The sports economy can be understood through various interlinked sectors that generate revenue and contribute to the industry's overall growth.

1. Media and broadcasting rights

Broadcasting rights are one of the most valuable parts of the sports economy. Major leagues and competitions, like the Premier League and NFL, secure multi-billion-pound deals with broadcasters and digital streaming platforms. In 2022, the Premier League signed a £10 billion broadcasting rights deal, highlighting the high value of live sports content. These rights now extend beyond television, with platforms like Amazon Prime and DAZN streaming live events worldwide.

2. Sponsorship and advertising

Sponsorship is another crucial part of the sports economy. Companies use sports to reach large and diverse audiences, leveraging the popularity of athletes and teams to promote their brands. In 2023, global sports sponsorship spending reached $65 billion, with brands like Nike, Adidas, and Coca-Cola investing heavily in big events such as the Olympics and the FIFA World Cup.

Sponsorship is not just limited to sporting goods brands; it also involves financial services, car companies, and tech firms. For instance, technology giants such as Microsoft and Google have invested in esports sponsorship, a growing area within the sports economy.

3. Merchandising

Merchandising is a major source of income, especially for teams with global fan bases. Clubs like Manchester United and FC Barcelona earn millions from selling branded jerseys, hats, and other items. In 2022, global sports merchandise sales were estimated to be worth over $30 billion. The growth of online retail platforms has further boosted this sector, allowing fans worldwide to buy official merchandise.

4. Sports tourism

Sports tourism, which involves travel for attending sports events or participating in sports activities, is a fast-growing part of the sports economy. The Olympics, FIFA World Cup, and Super Bowl are some of the biggest drivers of sports tourism. For example, the 2022 FIFA World Cup in Qatar was expected to attract over 1.2 million visitors, generating around $5 billion for the local economy.

Besides international tournaments, regional and local events also play an important role in sports tourism. Marathons in cities like London and New York draw participants and spectators from around the world, boosting local economies through spending on accommodation, food, and entertainment.

5. Player transfers and wages

The sports economy is significantly affected by athletes' wages and the fees paid for top players. Football, in particular, sees enormous amounts exchanged between clubs for players. In 2023, Jude Bellingham's transfer to Real Madrid from Borussia Dortmund was reported to be worth over €100 million. These transfer fees, along with high salaries for top athletes, have made professional sports a highly lucrative career.

In sports like basketball and American football, player salaries are among the highest worldwide. In 2023, the average annual salary for an NBA player was over $8 million, reflecting the substantial financial rewards for elite athletes.

The economic impact of sports events

Sports events, whether local or international, bring significant economic benefits to host cities and countries. Hosting the Olympics or FIFA World Cup can generate billions of dollars in tourism revenue, job creation, and infrastructure development. However, these events also come with high costs. For instance, the 2020 Tokyo Olympics cost an estimated $15 billion, while the 2022 FIFA World Cup in Qatar reportedly cost over $200 billion in infrastructure spending.

Despite these expenses, many cities and countries see hosting major sports events as a long-term investment. The economic impact goes beyond the immediate boost in tourism, as these events often lead to better infrastructure, increased international visibility, and a lasting tourism legacy.

The role of technology in the sports economy

Technological advancements have played a crucial role in shaping the modern sports economy. From digital streaming platforms to the use of data analytics in player performance, technology has become integral to both the business and competitive aspects of sports.

1. Data analytics and performance

Data analytics is transforming how teams and athletes approach training and performance. In sports like football and cricket, data-driven insights help coaches make strategic decisions, improving the chances of success. Similarly, wearable technology allows for real-time monitoring of players' physical health, reducing the risk of injury and optimising performance.

2. eSports

The rise of eSports represents one of the fastest-growing segments of the sports economy. Competitive video gaming has attracted massive audiences, with global revenue from eSports projected to reach $1.6 billion by 2024. Major tournaments, such as The International (for Dota 2) and the League of Legends World Championship, now rival traditional sports in terms of viewership and prize money.

eSports' growing popularity among younger audiences has attracted significant investment from both traditional sports teams and global brands, further integrating it into the broader sports economy.

3. Fan engagement and digital platforms

The proliferation of digital platforms has also enhanced fan engagement. Social media channels allow fans to interact with their favourite teams and athletes, while mobile apps provide real-time updates, statistics, and personalised content. For example, the NFL’s mobile app allows fans to follow live scores, watch replays, and engage in fantasy leagues, deepening their connection to the sport.

Final thoughts 

The sports economy is a dynamic and rapidly expanding sector, driven by media rights, sponsorship, merchandising, and tourism. Its impact goes beyond financial aspects, shaping social cohesion, national pride, and global culture. As technology continues to advance, the sports economy will undoubtedly see further changes, with new opportunities arising for athletes, teams, businesses, and fans.

The growing globalisation of sports, combined with the rise of digital platforms, ensures that the sports economy will remain a major force for economic growth in the coming years. Whether through broadcasting a football match, selling a jersey, or hosting a mega-event, sports continue to demonstrate their significant economic and cultural value on a global scale.

Key takeaways 

• The sports economy is a major contributor to global economic growth, with revenue expected to exceed $680 billion by 2028, driven by sectors like media rights, sponsorship, and tourism.
• Sporting events stimulate local economies by creating jobs and enhancing infrastructure, with examples like the London 2012 Olympics generating over 100,000 jobs.
• Beyond financial gains, the sports economy promotes public health and social cohesion, encouraging physical activity and bringing communities together.
• Technology plays a key role, from data analytics in training to digital platforms enhancing fan engagement and the growth of eSports.
• While hosting events like the Olympics offers economic benefits, it comes with significant costs, often requiring careful consideration of long-term value.