The Business of Sports:
Where’s the Money?
Dr Justin Wolfers
Assistant Professor of Economics
www.stanford.edu/people/jwolfers
jwolfers@stanford.edu
Why the Business of Sports?
For all his brilliance, we’re going to have to replace Trewell. He
never quite seems able to reduce his ideas to football analogies.
Gross Domestic Sports Product
Output by Industry
GDP: Top 25 Industries
$-$250
$500
$750
$1,000
Real est ate Reta il Who lesa le Heal th Cons truct ion ness ser vice s Bank ing Utili ties her s ervi ces mm unic atio n Spor ts Chem ical s Elec troni cs Mach iner y Insu ranc e Food Truc king Lega l Prin ting Auto s Meta ls Farm s Fina nce Oil & gas Auto ser vice s O u tp ut m easur e d i n b il li o ns o f $U S p eThe Sports industry is the 11th
largest, reflecting around $152
billion of output, or just over
2% of GDP
Decomposing the Sports Industry
Entertainment
30%
Advertising
revenues
5%
Products &
Services
65%
Decomposing the Sports Industry
Publications
2%
Sports
equipment and
footwear
50%
Advertising
5%
Concessions
2%
Admissions
4%
Pari-mutuel
2%
Sports medicine
13%
Participation
fees
22%
Decomposing the Sports Industry
Sports Fans
16%
Participation
The Business of Pro Sports
Big Four Sports: Valuing the Leagues
(Approximate Values; $Million)
$0 $4,500 $9,000 $13,500 $18,000
Football
(NFL)
Baseball
(MLB)
Basketball
(NBA)
Hockey (NHL)
Attendance
Big Four Sports: Annual Attendance
(Total bums-on-seats; 2001)
0 20,000,000 40,000,000 60,000,000 80,000,000Football
(NFL)
Baseball
(MLB)
Basketball
(NBA)
Hockey
(NHL)
TV Deals
NFL: Deals with Fox, CBS, ABC, ESPN
worth $17.6 billion; with DirecTV worth $2
billion
MLB: $2.5 billion contract with Fox; with
ESPN worth $800 million
NBA: $4.6 billion with AOL Time Warner
and Disney
Economic Structure of Pro Sports
Revenues
56%
58%
73%
60%
Player salaries
Expenses
6%
9%
6%
4%
Miscellaneous
19%
13%
10%
19%
Venue revenues
15%
37%
55%
38%
Media Rights
60%
41%
29%
39%
Gate Receipts
NHL
NBA
NFL
MLB
Participation in Big 4 Sports
Participation in Sports: 2001
0
10
20
30
Football
(inc. Touch)
Baseball/Softball
Basketball
Hockey
(Ice/Roller)
M
illions
of
P
a
rt
ic
ipa
n
ts
Participation in Sports
Participation in Sports: 2001
0
20
40
60
80
100
Gy m Hi k in g W a lk in g C y c lin g Go lf immi n g S kat in g hoot in g Fi s h in g e robi c s B o wlin g Bo a ti n g rd s /P o o l S k iin g b a ll al l/so ft Joggi ng Foot ba ll Da rt s S o ccer o lle y b a ll Tenni s -d ef en se R idi ng es hoes e Tenni s Sc u b a d m in to n n a s tic s H o ckey re s tlin g leadi n tb a ll a ndba llM
illio
n
s
o
f P
a
rt
ic
ip
a
n
ts
The Future: Women in Sports
In 1972 Congress passed Title IX of the Educational
Ammendments Act
– Schools required to provide equal access to sports for women as for men
– Currently under review by the Bush administration
– In 1972, 1-in-27 girls played sports; today 2 in 5.
Consider the Title IX generation:
– World Cup soccer champions (Mia Hamm)
– WNBA has become a viable commercial league
– Fledgling WUSA soccer league shows early success
– Olympic gold medallists: Since 1984 US women have won 301 gold
medals (of a total of 1285 female golds = 25%)
– 80% of female CEO’s of Fortune 500 companies have sports
backgrounds
Women’s apparel and athletic gear market yields revenues in
excess of $20 billion
High School Sports
High School Sports Participants
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
1971
74
78
80
82
84
86
88
90
92
94
96
98
00
02
N u m b er o f co m p et iSoccer: “The Big Five?
0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000Tota l Unde r 18 Unde r 12
S po rts Partic ipatio n by Ag e
Ba s ke tba ll Socce r Footba ll Ba s e ba ll
