Let's spot the money in world sports

Dr Lascelve GRAHAM

Wednesday, March 12, 2014    

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PEOPLE speak ever so glibly about the multibillion-dollar sports industry, especially in an attempt to rationalise our high schools recruiting youngsters based on their sports ability. But what do we know about this global sports industry and how is it structured? What do we know about the jobs generated by this industry or the revenues that make it a multibillion-sollar enterprise?

Estimates of the size of the global sports industry vary, ranging from about US$500 billion. This includes infrastructure construction, sporting goods, licensed products, live sports events and their spin-offs. The worldwide sports events market was worth about $64 billion. Football (soccer) is by far the greatest revenue puller bringing in at least $28 billion yearly, almost as much as the combined $32 billion for all US sports — Formula 1 racing, golf and tennis — according to A T Kearney, a global management consulting firm. In Europe alone football is a $22-billion business.

The size of the sports market in the USA is estimated at $422 billion, with employment being nearly three million people. As of 2012, there were estimated to be 12,660 professional athletes (~0.4%) employed in the USA; 193,810 coaches and scouts; 15,630 umpires, referees and officials; 489,200 in fitness centres; 39,700 in snow skiing facilities; 68,300 in bowling centres; 342,300 at county clubs or golf courses; approximately 1,500,000 work in the recreation and amusement sectors; 45,000 in the wholesale trade of sporting goods; and 245,800 in retail sporting good stores.

In a recent article (21/1/14) by economics correspondent Sean Whelan titled, 'Games take bronze in battle for sport industry's value', the conclusion is that the money generated by sporting events is only a small part of the overall industry. He pointed out that a recent study on the economic impact of sports by the European Commission disclosed that the least economically important part of the sports industry is... sports. When it comes to hard cash, it's the upstream industries that generate the most — US$188 billion by the commission's estimate. Next are the downstream activities — worth an estimated US$148 billion. That leaves just US$68 billion for the bit in the middle of the chain — the "sport" bit.

It's the same in the distribution of jobs with upstream activities employing 2.5 million, downstream activities employing 1.3 million, and your actual sport employing just 700,000. According to Whelan, "that dream job as a top striker for Barcelona will be as elusive as ever — the jobs growth is more likely to be in hawking sneakers or DVDs".

The European Commission believes that the sports industry, in its broadest sense, contributes about US$404 billion per year, and it employs around 2.1 per cent of the European workforce (~4,500,000 people).

They calculate that every job in the "sports supply chain" generates 0.65 new jobs in related industries outside the supply chain. So they conclude that the total employment generated by sports activities is 7,300,000 or 3.5 per cent of the EU total employment. The sports supply chain includes the clubs and teams, the stadiums and sports facilities, and the activities, like skiing, cycling etc. It also includes "upstream activities" eg industries producing goods and services needed for sport like shoes and clothing, timing devices, horse breeding, education, etc. "Downstream activities" incorporate industries that use sport as an important input, such as TV broadcasting, betting, hotels and restaurants, vets, diet supplements, health services, etc.

Sports tourism is set for fair growth, according to the commission six per cent a year for the next few years. The commission also emphasises the important role sport plays in driving innovation in other industries. Some of this is driven by the desire to get better results from athletes, to influence consumer buying and to improve spectator experience. Sports technology is now a leader in several fields of applied science: textile technology, mechanics of human motion, new materials, sensors, actuators and human-oriented design.

Whatever the financial value placed on the sports industry, one thing is very clear, the jobs for professional athletes are exceedingly limited. Few will be able to sustain themselves as professional athletes and we are doing our youngsters a disservice by enticing so many of them with the carrot of athletic professionalism.

Recruiting for sports purposes by our high schools is a most myopic vision and not in the best interest of our youth. Let us stop it now! Let us use our schools as they should be. There are more efficient ways to nurture sports talent. High school recruiting for sports is not an efficient economic use of resources in organising the sports supply chain. If we are serious about tapping into the multibillion-dollar sports industry in a meaningful way, let us use our schools to supply adequately socialised entrepreneurs, scientists, computer experts and other skilled workers who can add value to our world-class pool of sports talent by way of various upstream and downstream activities in the sports supply chain. We will still produce our world beaters in sports. This would also fit neatly and seamlessly into our vision for a logistics hub. This is where the jobs and money are!

Dr Lascelve "Muggy" Graham is a former Jamaica football captain.





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