We all know that professional sports are big business. After all, the most talented athletes in the biggest leagues can command eye-watering sums of money. Teams, leagues, stadium owners, clothing brands, and sponsors are all benefiting greatly from the industry. In recent years, we’ve also seen the sports betting industry really take off as more and more people look to get in on the hobby. The market has also been helped by the fact that most bookies offer free promotions to new customers when they sign up and/or make a deposit.
The entire industry is growing too. Between 2021 and 2022, global sports revenue rose from $354.96 billion to $501.43 billion and, by 2026, it is expected to increase further, reaching over $700 billion. That represents a compound annual growth rate (CAGR) of 9%, a percentage that would make many industries envious.
Of course, not all areas of the sports industry are growing at the same rate. Some are faring better than others. So which ones could offer the biggest opportunities for fans?
Formula 1
Formula 1 is one of the few sports leagues that can be traded publicly on the stock market. The world’s premier motorsports competition was purchased by Liberty Media in January 2017.
Technically, purchasing FWONA, FWONB, or FWONK stocks buys you more than just Formula 1, since it also includes some of the other businesses owned by Liberty Media. But the company has been renamed to the Formula One Group to reflect its primary focus on the sport.
While keeping in mind that past performance is never a guarantee of future success, looking at F1 stock since the acquisition, we can see just how lucrative Liberty Media’s acquisition has been. In January 2017, the FWONA stock was trading at around $30. As of January 2023, it’s sitting at just under $60, near its all-time high.
Looking forward, Formula 1 is making some big moves to continue its growth. This includes a third race in the United States from 2023, further calendar expansion into new markets, and moves to increase the number of teams.
Sportswear
While F1 is practically the only major sports league you can invest in, there are dozens of sportswear brands that are traded publicly. The industry is also very diverse, covering everything from retailers like Dick’s Sporting Goods to leading brands like Adidas and Under Armour.
Nike is, by far, the biggest of these companies. Its market cap currently sits at more than $195 billion, making it worth almost five times more than second-placed Lululemon Athletica. Since 2009, the American company has increased its value in every year bar two, with double-digit percentage increases in all but three of those positive years.
This reflects Nike’s continual growth both in revenues and profits, which have both increased in the majority of accounting periods over the last decade.
The swoosh isn’t alone in this either. Long-time rival Adidas saw its market cap increase by 10.67% in the last year, a sharp contrast against the overall 45.72% decline over the market in its native Germany.
With more people realising the benefits of fitness, and an increasing acceptance of sportswear as a fashion, these companies have a lot of room to grow.
Wearable Tech
Does a run count if you didn’t track it on your smartwatch and publish your time and route to social media? While this is a joke, it is reflective of the current trend in the consumer technology world and demand for fitness tracking products.
Fitbit was an early pioneer in this sector but Apple, Garmin, and other major players have all got in on the action too.
Wearable devices like this reportedly generated more than $61 billion in 2022, and the market is expected to grow at a CAGR of 14.6% between this year and 2030. This means that more than $180 billion of watches and other tracking devices will be sold each year by the end of the decade.
This could, therefore, present an opportunity to investors who can identify which companies could be best placed to capitalize on this growth.
