NFL ratings have fallen precipitously thus far this year, but don’t expect sports rights to also drop.
According to accounting firm PwC, the overall North American sports market is expected to grow from nearly $64 million in 2015 to nearly $76 billion in 2020. That number is largely based on estimated revenues from media rights and sponsorship, which are expected to grow at a compound annual rate of 5.5 percent and 3.9 percent, respectively, as reported by Forbes.
Of that total, PwC $21.3 billion can be attributed to the amount networks pay to air live sports, such as the NFL’s contracts with NBC, CBS, Fox and ESPN or the NCAA’s March Madness contracts with CBS and Turner. In fact, those revenues are expected to outpace so-called gate revenues — what people pay for tickets to see games — within the next two years, even though cord-cutting is taking its toll on live-sports viewership on cable networks, and on ESPN in particular. Part of that is because of increased demand and competition for those rights, such as Twitter’s recent $10 million acquisition of streaming rights to certain NFL games.
“Broadcast rights preservation is likely to remain industry priority through at last the next deal cycle, which will lead most properties to avoid major disruption of existing distribution and potential further dilution of rights fees,” says the PwC report. “As a result, direct to consumer offerings featuring live game content will likely continue to be positioned to incremental audiences and/or focus on consumer experiences complimentary to traditional game viewing.”
Another reason that sports rights will continue to grow is because many of those deals are locked in for several years to come, so even if ratings are dropping, the deals will remain in place. Future deals may suffer, however, if ratings for live sports continue to fall off.
Meanwhile, gate revenues still are expected to increase at a compound annual growth rate of 2.7 percent, growing from an estimated $18.3 billion in 2015 to $20.8 billion in 2020.
The worst-faring category of revenue growth may be merchandise, according to PwC. Sales of branded goods — including team jerseys and sneakers — are projected to increase at a compound annual growth rate of 1.4 percent from an estimated $13.8 billion last year to $14.8 billion in 2020.
READ MORE: Forbes
[Photo courtesy of Getty Images via Forbes]