Economics of sports

BR Research December 13, 2018

Given the current economic crisis at hand, some out-of-the-box theories have been presented to address the situation. From banning cheese to ‘eggonomics’, the misnomer “Ikonomics” has sprung up as an umbrella term for proposing rather unique solutions.

Last month the PBC organized a talk by Nadeem Ul Haque, former deputy chairman of the Planning Commission Pakistan on the outlook for Pakistan’s economy. In spirit, he had a similar view in that he talked about breaking out of traditional mindsets and exploring new options. One such suggestion was to develop the sports industry. Giving the example of World Wrestling Entertainment that has a market capitalization of $6 billion on Nasdaq, he talked about sports industries in developed and developing country.

The global sports apparel, equipment, and footwear industry alone was valued at $310 billion in 2016 by KPMG. Infrastructure construction, sports clubs, and events add another $335 billion. Many sector come under the sports ambit, from food and memorabilia stands to media rights and sponsorships.

Given the size of the pie, emerging markets are increasingly engaging with and investing in sports with Qatar hosting the next FIFA world cup and the next three Olympic Games being staged in Asia. China is leading the way with the government fueling major investment across all aspects of sports from events and facilities to grassroots program. Concentrated efforts are being made in India to promote the sports and fitness industry which is considered a sunrise sector.

India has set aside $262 million for its “Khelo India” program as part of its strategy to create jobs, generate revenue and attract investment. This project will finance athletic scholarships, promotion of sports excellence in various universities, and setting up of open gyms in parks. While cricket is popular both sides of the border, this program seeks to promote other regional sports such as kabbadi.

Since 2000, India’s spending on sports has risen by 17 percent annually. Sports are considered a serious business with various sports and fitness companies listed on the Indian bourses. And no wonder, sports sectors opens up opportunities in various businesses from brand building and infrastructure to niche entrepreneurial ventures, emerging technologies and services. Investment prospects are dispersed across the value chain from manufacturing and retail of equipment and apparel to advertising and training. Over half a million people are employed in the sports and retail manufacturing sector alone.

Between the $1 billion sports good industry in Sialkot and $135 million worth of PSL teams (for 8-10 years agreement), Pakistan’s sports sector has not been at a standstill either. However, there has been no governmental focus on developing the sector, be it the sports good hub in Sialkot or the promotion of playing of various sports. With new sporting leagues mushrooming across the globe, demand for sports-related goods is rising and hence the scope for exports.

The success of Pakistani footballs in FIFA (read “Economics of FIFA and Pakistan”, published on July 9, 2018) is indicative of the country’s ability to develop sports good at par with global standards.

The over $230 million combined media exposure that PSL-3 garnered shows the power of branding and marketing.Yet, the growth of the sports industry has been more organic than focused on by the government. Keeping options of dairy and poultry aside, sports may be a good bandwagon to jump on.

Copyright Business Recorder, 2018

Related Articles

  • Leave a Reply

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





    Close