The North American sports business is expected to grow 3.7% to $71 billion in 2018 as media rights become the biggest ticket item, surpassing gate revenue for the first time, according to a new report by PwC.
Longer term, the PwC Sports Outlook sees the industry growing to $78.5 billion by 2021.
Revenue from media rights will rise 5.6% to $20.135 billion in 2018, and hit $22.667 billion by 2021.
That tops the other categories of revenue tracked by PwC. Gate revenue will rise 2.1% to $19.159 billion in 2018 and hit $20.902 by 2021, according to the report. Sponsorship revenue will grow 5.7% to $17.614 billion in 2018 and climb to $19.976 billion in 2021 and Merchandising will increase 1.1% to $14.554 billion in 2018 and $15.087 in 2021.
PwC says that rights that while national rights deals with most of the major sports leagues are locked in between now and 2021, regional sports network deals with MLB, NBA and NHL teams will be up for renewal.
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Monetization of these rights “should remain strong given increasing competition for right among traditional broadcast intermediaries and emerging distribution partners,” the report says. “There are also stronger paths to monetization across digital platforms in either rights form or direct subscription/ad-based models to the extent consumer engagement shifts from the linear broadcast.”
The changing media landscape may pose some risks, but the emerging forms of immersive media experiences will create new opportunities for the sports business.
Because most rights deal are locked in for he long-term, “any consumer led disruption of the linear broadcast market realized in the near term due to migration, either within pay-TV or from broadcast to digital, is unlikely to materially impair the media rights fee landscape,” the report says.
“Future growth within the media rights segment beyond the next rights deal cycle will primarily hinge on market engagement with future generations of digital products which deliver premium, immersive experiences with either live or archived content enabled by a wide landscape of underlying technology, including personalized video, 3D video, augmented and virtual reality, and augmented video.” PwC says.
Sponsorship revenue growth will come from inventory related to new digital platforms, uniform right and an added in stadium signage and naming rights opportunities.