A new PriceWaterhouseCoopers study says the spread of legal sports betting will enrich the U.S. sports industry by $11 billion over the next five years.
“The opportunity for teams and leagues to monetize it can be great,” according to PwC’s 2018 “Sports Outlook” released last Monday.
“Whether it is through media or sponsorship, combining wagering with increased fan engagement could also increase ticket revenue or retail revenue. In the long run, the stakes are high.”
Gross revenues in 2017 for the five major pro leagues𑁋Major League Baseball, Major League Soccer, the National Basketball Association, the National Football League and the National Hockey League𑁋as well as tennis, golf, minor leagues, college sports and motor sports, totaled $69.1 billion and will hit $80.3 billion by 2022, the study says. The money comes mainly from media rights, gate receipts, sponsorships and merchandising, and all of those will become more lucrative as more states legalize sports betting.
“Media represents the greatest opportunity,” said Michael Keenan, managing director, sports practice leader at PwC. “As people begin to bet on live sports, the demand to view will be increased.”
As proof, last year for the first time, media rights generated more revenue than ticket sales, the study found, and they will increase by an average of 4.5 percent a year, from $20.1 billion in 2018 to $23.8 billion in 2022.
Gate revenue will be No. 2, increasing by an average of 2.2 percent annually, from $19.3 billion this year to $21.1 billion in 2022. Sponsorships are expected to bring in almost $17.2 billion this year and grow an average of 3.8 percent a year to $20.1 billion in 2022. Merchandising will generate $14.6 billion this year, increasing by an average of 1.2 percent a year to $15.2 billion by 2022.
Opportunities for boosting fan engagement are legion, the study says, along with “significant” opportunities for partnerships with technology companies to improve the digital experience. For example, a gaming company that is also a team sponsor could have an app that offers a free or discounted bet available only to fans at a game. The team could offer food, drinks or retail credits for fans who arrive early and wager. Teams could receive additional revenue from any league-wide fees or sponsorship deals as well as from individual sponsorship agreements.
“Live sports remains the original reality TV,” Keenan said. “They are DVR proof. There will continue to be a need to acquire and retain valuable live sports programming.”
And, he added, as broadcasting agreements come up for renewal, “Competition will drive up the cost for (the) rights.”
UK-based H2 Gambling Capital predicts sports betting will be up and running in 20 states by 2023 and generating $4.9 billion in revenue annually, surpassing England, the world’s current leader. Half of that total will come from three states: California, New York and New Jersey.
U.S.-based industry consultants Spectrum Gaming Sports Group is forecasting an even larger haul. The firm notes that in addition to the current regulated markets,18 other states, accounting for half the U.S. population, either have legalized sports betting but have not yet launched it or have legislation introduced to regulate sports betting. If all of them follow through, and provide for remote access, Spectrum believes they could generate $6.6 billion to $9.3 billion in revenue a year.
