Invest in sports: how to profit from the booming global industry
Whether it’s backing sports teams, the media networks that buy the rights or the firms that make the clobber, opportunities abound for investors
“Some people think football is a matter of life and death… it’s much more serious than that.” So quipped legendary football manager Bill Shankly. What he said may be more true now then ever. Sports is now big business – and getting bigger all the time. Whether it is teams being bought for billions, broadcasters spending record sums on securing the broadcasting rights to matches, or the rise of “athleisure” wear, sports is clearly a “potentially attractive growth market globally”, says Sam North, a market analyst with eToro. And although large parts of the industry remain in private hands, there are many ways for investors to grab a slice of the pie. Here’s how.
Why invest in sports?
It’s far from straightforward to work out just how big the sports industry is, says Dan Plumley, a lecturer in sports finance at Sheffield Hallam University – it “can be tricky to pin down” where the boundaries of the sector lie. But using a definition that counts everything from professional sports all the way down to facilities and equipment and individual participation, Plumley has come up with a figure for the size of the global market at just under $485 billion in 2023. This is expected to grow to about $650 billion in 2028 and $862 billion in 2033.
But it’s not just the size of the market or the rate at which it is growing that makes the sports industry unique – sports also “has a reputation for being recession-proof”, says Plumley. This was most clearly demonstrated in 2008, when the industry “quickly emerged from the global financial crisis, powering ahead with significant growth”. Even the more recent cost-of-living issues failed to reduce the amount of money spent on sport and sporting activity – solidifying the reputation of sports as a safe haven at a time of economic volatility.
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This makes sense given that many fans have a “love for their team that defies logic”, giving teams and sports a degree of brand loyalty and enthusiasm that other sectors can only dream of, as Theodora Joseph, an analyst at investment information platform Finimize, argues – and as you might have picked up from Shankly’s quip. This gives the teams and companies involved pricing power and means that the shares of companies in the sports industry “tend to have little correlation with other assets”. Joseph suggests that even those for whom sports will forever remain a foreign land should consider investing in companies in the sector to help diversify their portfolio.
Finding new markets
Sports teams and leagues have also become much better at expanding by “trying to find new fans and moving into new markets”, says Joseph. The North American sports leagues, for example, have been making a major push into Europe and emerging Asia. More people watched the US National Basketball Association (NBA) finals in China than in America. Even the traditionally US-centric NFL (National Football League) now plays some games in the UK, Germany – and even Spain.
International expansion may in part just attract fans who might have otherwise gone to see their local teams. But surveys carried out by organisations such as the Women’s Sport Trust suggest that the rise of women’s sports has created “an environment and fan experience that is fundamentally different from the men’s game”, says Anna Reynolds, a consultant at Yonder Consulting. It has attracted into sport a new demographic of younger women and families who previously would never have got involved.
Women’s sports teams and leagues have also been persuading a wider range of companies and brands to consider sports as part of their marketing strategy. The stadium in which Manchester City women play football, for example, has been sponsored by the baby gear company Joie, a relationship that would be hard to imagine for the men’s team. Similarly, while many of the most successful female football teams in the UK are offshoots of established men’s Premiership clubs, this is not the case in the US and already there are several standalone European clubs, says Reynolds.
All this comes at a time when firms in general “are becoming much more open to sports sponsorship”, says Harry Coe, co-founder and CEO of Luscid, a start-up that helps firms find sponsorship and marketing deals with sports leagues and teams. In the past, firms would typically only sponsor a sports team or event if one of their executives had a personal connection with it. Now, however, with a lot more data available, companies can be more scientific, leading them to spend more than they otherwise would have on sports sponsorship and marketing.
The fusion of sports and entertainment has boosted popularity
One of the factors driving the sports boom has been the huge increase in the amount spent on broadcasting rights. Consultancy SportBusiness estimates that the market for sports media rights has now grown to $61 billion, as David Bishop, a partner at LEK Consulting, points out. This is partly due to the fact that sports is “one of the very few things” that continue to pull in large live audiences. Indeed, 93 of the 100 (and all of the top 20) most-watched US television events in 2023 were NFL games, according to data provider Nielsen.
Large live audiences can be “incredibly commercially valuable” because they attract premium advertising and drive TV subscriptions, says Bishop. The opening up of media markets has also “globalised” the audiences of major sports, such as basketball and Formula One, increasing the size of the audience. These facts, together with the arrival of successive generations of new bidders, such as the various streaming services, coming to market with new business models, has led to bidding wars pushing up the price of the rights to broadcast sporting events. The NFL signed media rights agreements with CBS, NBC, Fox, ESPN and Amazon in 2021 – a deal collectively valued at approximately $110 billion over 11 years, says North. This helped raise the NFL’s annual revenue from $12 billion then to $20 billion in 2023.
Having technology companies competing with traditional media companies for the right to broadcast games certainly helps teams maximise their revenues, says Matthew Pryke, managing partner at law firm Hamlins. But the whole thing has been pushed into overdrive by what he calls the “fusion of sport and entertainment”. A classic example is the relationship between Taylor Swift and Travis Kelce driving interest in the Super Bowl, or the Welcome to Wrexham documentary series about Hollywood stars Ryan Reynolds and Rob McElhenney's investment in Wrexham FC, leading to the Welsh club gaining an international fan base.
Clubs and leagues are taking some lessons from the entertainment industry, says Pryke. Many clubs now offer apps that provide additional content for their fans, such as behind-the-scenes footage, for example. Other clubs are taking advantage by renting out their stadiums for other events. Tottenham Hotspur is one of the pioneers in that regard – they have a stadium that puts on more than 30 music events a year, hosts several NFL games and has a go-karting track under the pitch.
Rising interest in acquisitions
The explosion in the cost of TV rights and sponsorship money has led to a surge in interest in acquisitions, too – and a jump in the amounts buyers are willing to pay. New owners can “bring additional professionalisation” to sports outfits, helping them maximise their commercial potential, but quick profits are not usually the main thing buyers are looking for, says Josh Charalambous, a partner at law firm RPC. They tend to be more interested in the potential for capital gains, either from continued revenue growth or, in the case of sports such as football, from climbing up the league tables, where there is much more money to be made.
There’s a trend of investors buying football clubs and investing in them with a view to getting them promoted and increasing their capital value, says Charalambous. Some owners have bought multiple clubs (as in the case of Red Bull’s portfolio), “though that is a little bit riskier because if one club goes through a bad patch, or is even relegated, that can damage the other clubs in the brand”. There seems to be a trickle-down effect, too: the elite clubs continue to command really big valuations, but the money “is cascading down the pyramid” – even League Two (fourth tier) English football clubs are now able to command “surprisingly high” prices.
Indeed, although the huge sums that have been paid for football teams drive the headlines, there has also been “a major uptick in team values across the board”, says Pryke. Recent deals suggest the value of American football teams, for example, has “more than doubled, if not tripled, over the last four years”. Pryke’s firm has also been involved in transactions for teams in other sports, such as yachting. And with sports leagues loosening their ownership rules to allow for private equity, consortia and (most controversially) sovereign wealth funds, it would seem we are yet “nowhere near the top of the market”.
How technology has impacted sports
With so much money at stake, it’s no surprise that sports team are spending more on technology, which has become a “key growth driver” for the wider sector, says North. Innovations in wearable technology, data analytics and sports apps are “enhancing athlete performance” as well as “creating new monetisation opportunities, as teams experiment with new ways for fans to engage with sports”.
Joni Kettunen, founder and CEO of Firstbeat Technologies, is at the forefront of this trend. His firm’s systems use machine learning to help coaches and managers “select the right players for the team as well as tailoring each team member’s training schedules to help avoid injuries and maximise their performance in upcoming games”.
The most impressive technical advances are taking place in professional sports, where resources are greatest, says Kettunen, but these advances are also starting to trickle down to college teams in the US and player academies. Firstbeat has even developed a scaled-down version of the system aimed at personal trainers. One area already taken up by enthusiastic athletes and members of the public are “wearables” – devices that measure such things as your heart rate, the number of steps you have taken and your glucose levels, says Gillian Diesen, portfolio manager at Pictet Asset Management. There has been a big rise in the number of firms developing products in this area, from tech giants such as Apple to smaller, more focused companies such as Dexcom.
Profits off the pitch
Sporting goods in general are also seeing a surge in demand, including a big rise in “athleisure”, sportswear that has become fashionable to wear off the pitch and outside the gym, such as trainers and joggers. As people around the world, especially in Asia, are getting richer and have more leisure time, they are getting more involved in sport, and spending more on personal trainers and sporting equipment, says Mark Ellis, CEO of Nutshell Asset Management. Innovation is also driving sales, says Diesen, as people go mad for “new running shoes with carbon plates inside and different designs that can help propel you further forward”, for example. Companies are also working on kit that aims to increase comfort or performance with new materials, or just looks more stylish, making products in collaboration with other designers.
Some of the “big names” in athleisure are starting to lose out to upstarts in the battle for consumers’ wallets, says Ben Peters, portfolio manager and director at Evenlode Investment. Nike, for example, despite its experience, expertise and innovation in sports footwear, and its savvy use of athlete sponsorship and marketing, is in danger of being overtaken by challenger brands such as On and Hoka in running shoes, and Crocs and Birkenstocks in leisure. These new brands “have filled the gap with innovative and/or more comfortable alternatives and made material gains in market share, particularly among younger demographics”. We look at some of the ways to invest in all of these trends below.
Best sports stocks to buy now
Most football clubs are privately owned, but there are a few listed on the stockmarket. Celtic (LSE: CCP) is an example. It is currently the dominant team in Scotland, winning 12 of the last 13 Scottish Premiership titles, and is nine points clear at the top of the table at the time of writing. Its storied history, having won no less than 54 top division titles and 42 Scottish cups, gives the club a powerful brand. It has grown revenue by roughly 50% between 2019 and 2024 and is consistently profitable. It trades at 15.7 times 2015 earnings, which looks like good value.
Investing in a single club can be risky, so it might make more sense to invest in a company that owns multiple clubs, such as Madison Square Garden Sports Corp (NYSE: MSGS). It owns two major US professional franchises – the New York Knicks basketball team in the NBA and the New York Rangers ice hockey team in the NHL. Like many sports teams, MSG may make relatively little profit on paper at the moment, but it will benefit from capital gains as a result of a rise in team values thanks to the rapid growth in popularity of American sports across the wider world, says Theodora Joseph of Finimize.
One company at the heart of the sports technology revolution is Garmin (NYSE: GRMN). It has enjoyed success in developing car, ship and plane navigation systems, but gets most of its money from wearable fitness and outdoor-activity products, which account for 58% of its revenue and 68% of operating profits. Sales are strong, with revenue growing by 56% between 2018 and 2023, and earnings per share nearly doubling over the same period. Along with a return on capital employed of 18%, this more than justifies the valuation of 28.6 times 2025 earnings.
Shimano (Tokyo: 7309) gets roughly 80% of its revenue from cycling components, with the rest coming from fishing tackle. Both sports remain popular pastimes globally. Cycling has become incredibly popular at the Olympics, as Ben Peters of Evenlode Global Income points out, with 22 events involving 512 athletes, and has seen an explosion in popularity in China, which should help fuel growth. Shimano has a dominant position in what is essentially a “two-horse race” with rival SRAM, equipping 15 of the 18 World Tour men’s cycling teams and seven of the 15 women’s teams. Shimano trades at 25 times expected 2025 earnings.
Swiss firm On Holding (NYSE: ONON) is a running shoe company currently disrupting the athleisure market. The firm has won plaudits for its shoes, which apparently make running seem easier. As mentioned in the main story above, Peters is a big fan; Pictet’s Gillian Diesen is also impressed by the firm’s product pipeline and strong designs. The shares trade at a pricey 49 times 2025 earnings, but the growth rate has been astounding, with sales growing nearly sevenfold between 2019 and 2023. The firm is expected to keep growing strongly over the next few years.
Another fast-growing company worth looking at is Deckers Outdoor (NYSE: DECK). Deckers makes clothes and shoes that are geared to both the athletic and casual markets. Diesen notes that Deckers’ running shoes (sold under the Hoka brand) are particularly well regarded, especially among younger Asian consumers who “are constantly looking for something new”. Nutshell’s Mark Ellis is impressed by the company’s strong growth rates, with revenues more than doubling between 2020 and this year. This more than justifies the fact that shares are trading at 36 times 2025 earnings.
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