What Makes Sports Teams Valuable?
According to Plunkett Research, the “Big 4” sports in the U.S. — the NFL, NBA, MLB, and NHL — generate an annual revenue of $23 billion. However, if you factor in less-popular sports, and count their retail sales and other sources of income, the U.S. sports market averages close to $500 billion annually. Worldwide, sports make well more than $1 trillion annually.
Sports is a huge business, and teams are always looking for new ways to bring in money. Discover some of the factors that determine how valuable a sports team is.
How people view a team can impact its clout and operations. One of the biggest, and most variable, factors that influence a team’s reputation is their win-loss record. Winning teams sell more tickets and more merchandise.
However, on-field performance is only one factor that helps to form a team’s reputation. A team’s history, traditions, social responsibility, and management quality all come together to mold how the public views a team.
Students of sport management study marketing techniques that can help them build a team’s reputation.
Image via Flickr by Keith Allison
Even a single player can make a huge difference for a team’s value. Ichiro Suzuki played for the Seattle Mariners baseball team for 12 years. His presence led to what The Seattle Times calls the “Ichiro Effect.” He brought thousands of tourists from Japan to Seattle. The tourists came to watch Suzuki play, but they spent their money in other areas of the city as well.
When Suzuki first came to Seattle in 2001, groups with as many as 70 people would sign up to take Mariners tours. As his performance on the field declined, so did the numbers in the tour groups.
Of course, Ichiro Suzuki is only one example. Other big-name players at major sports teams also impact their teams’ values.
Sometimes, more than the team itself, the team’s fans have the greatest impact on the team’s value. Tickets for Green Bay Packers games at Lambeau Field have been sold out since 1960, according to the Bleacher Report. Some fans wait years — or decades — before they get their hands on Packers tickets.
The Packers’ history, rich with championships and legendary players, is a major reason behind the ardor of the team’s fans. However, the city has an intrinsic spirit of loyalty for its home team.
The nature of a sport itself also plays a role in determining a team’s value. Real Madrid, F.C. Barcelona, and Manchester United are the most valuable sports teams in the world, and they are all soccer teams. Soccer, in fact, is the most popular sport in the world.
What exactly is it that makes a sports team valuable? For people who love sports, they relish the thrill of winning and the adrenaline rush that comes with a jaw-dropping play. However, that feeling is impossible to quantify. A team’s reputation, its players, its fans, and the sport its players participate in all ultimately contribute to its value.
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