Technology is transforming sport – here’s how to profit

Disputed decisions have created some of sport's most memorable moments.

There's Diego Maradona's infamous Hand of God' goal that put England out of the World Cup in 1986. John McEnroe used to liven up the tennis courts in the 1980s with his tantrums and calls of "the ball was in!" And every other week, losing football fans console themselves with the certainty that the ref was blind or biased.

Sadly, the days of blaming bad decisions for defeat are numbered. From this season onwards, the Premier League is using technology to confirm that the ball has crossed the goal line.

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And these devices are not just about helping out officials.

Teams are already using new technology to improve training and find undiscovered superstars. Wearable computers mean professional levels of feedback are even becoming available to your average jogger.

Here's how you can profit

The rise of the robot referee

Cyclops helped tennis officials to judge whether serves were too long or not. While early versions had some problems (such as being accidentally triggered) the results were generally positive.

Until recently, two main issues prevented the widespread adoption of such systems. Firstly, the equipment was expensive, and not 100% reliable. Given that genuinely dodgy decisions are not that common which is why they are so controversial when they do occur it seemed a lot of money to spend on a minor problem.

Secondly, some sports bodies felt that using these devices would undermine the referees' authority. Some even argued that fans secretly welcome bad decisions, even those that go against them, since this allowed them to blame a defeat on bad refereeing, rather than bad playing.

But in the last 15 years, the price of such systems began to fall. This meant that TV companies started to use them in their coverage. This revealed that referees made more mistakes than anyone had previously thought. That put pressure on sporting authorities to adopt these systems too.

Another big factor driving the rise of robot referees' is the amount of money involved in top sporting events. With tens of millions riding on the outcome of some matches, there's little tolerance for error. Some teams and athletes are even prepared to sue to get a bad decision reversed.

As a result, virtually every sport now uses some sort of technological aid. The less highly monetised' sports, like rugby, just use an official who watches video replays. But an increasing number of sports now bypass human judgement altogether.

Teams are using more technology too

The success of the Oakland Athletics baseball team depicted in the Michael Lewis book and film Moneyball was down to one manager using rigorous statistical analysis to find undervalued' players, and build a killer team on a shoestring.

Of course, his success and the resulting spread of statistical analysis, means that getting an edge is now much harder. Teams have turned to tech companies to help measure player performance ever more finely.

For instance, Prozone' can tell football managers what their star striker does when he doesn't have the ball, rather just than the number of goals that he scores. Similarly, IBM's Slamtracker' system can show the speed of Andy Murray's serve, and its accuracy, rather than just the number of points that he wins.

All of this ever-more detailed feedback can help coaches and players to pinpoint exactly what they need to be working on. And costs are falling so rapidly that much of this technology is now available to amateurs.

For example, studies show that runners and joggers who keep records of their exercise are more likely to stick with it. But keeping records is a hassle. It's hard enough maintaining the discipline to run every day, never mind writing it all down.

So several companies have developed devices that automatically keep track of the distances and times you cover. Some of these also allow you to compare your performance with other users (via data collected online), making it more of a competitive, social experience.

These sorts of products have been around for the past year or so, and demand just keeps growing. Credit Suisse reckons that the wearable computer' market could grow to be as large as £32bn over the next five years.

How to invest in the sports revolution

InvenSense (NYSE: INVN) makes gyroscopes and motion detection technology. It has recently teamed up with sports science firm InfoMotion to help produce a system that could help basketball teams measure the performance of their players.

The device, essentially a basketball with a specially designed gyroscope, can relay real-time information. This means that as well as long-term player analysis, coaches can use it to fine-tune tactics while a match is still in progress. While it was launched a few months ago, it has received a large amount of publicity, getting coverage on the American sports network ESPN.

InvenSense currently trades at a price/earnings ratio of 26. However, thanks to this product, and other lines, its sales and profits are expected to grow strongly. This means that it trades at only 17 times 2015 earnings, not unreasonable for a fast-growing tech stock.

Of the major sportswear firms, Nike (NYSE: NKE) has been the most aggressive in pushing the idea of wearable computers. Last year it launched Fuelband', an armband that logs the number of steps walked (and calories burned). This has already been a hit, gaining glowing reviews, and boosting Nike's bottom line.

To speed up sales, it has invested money in developing a series of apps' (software applications) to encourage people to use the armband for a wider range of activities. The stock isn't cheap, on 16 times 2016 earnings, but sales growth is expected to be in the double digits over the next few years.

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