It was only a few decades ago that the world of sport looked completely different. Following a team required a lot of work. Watching a game required you to head to the stadium in person and pay the entrance fee.
For a long time, athletes were semi-professional, working other jobs at the same time as being paid to play for a team or compete in events. In the early years of the English Football Association, players were forbidden from being professional, as those in charge felt a professional sport would damage the game.
The Beginning of Commercialisation
Although some sports, like Formula 1, saw limited sponsorship deals in the late 1960s, the change really began around the 1970s and 1980s when sports teams began to sell sponsorship opportunities to businesses. The first English football club to do this practice was Kettering Town FC in 1976, with most following suit shortly after. Nowadays, these sponsorships are worth 10s of millions per year, with Arsenal receiving £40 million per year for its Fly Emirates sponsorship.
A Drop in the Ocean Compared to TV
Although these sponsorship deals bring in large sums of money for the teams, it is a drop in the ocean compared to the money derived from TV rights. The rights to Premier League matches generate nearly £5 billion over 3 years in revenue, while the NBA has a nine-year deal for TV rights that is worth $24 billion – enough to cover the salaries of all players in the league.
Even more is generated through TV rights for the NBA though, as local TV contracts that allow for the broadcasting of games not covered by other rights deals can raise around $150 million more each year.
Not Only Professional Leagues
While it is mostly only the top-flight professional leagues that can command these large sums of money, there are some exceptions.
American football is the most valuable sport in the United States. While foreigners will think of the NFL, Americans will also think of college football. In most countries, sporting competitions at university and college level are given almost no consideration by anyone outside of their leagues. But in America, college football is a widely covered competition.
College games are played in large stadiums that many professional sports teams would be envious of. Fans are often able to follow along at home thanks to extensive TV coverage, and sports bookmakers give college games almost as much attention as professional leagues. For example, Oddschecker provides its customers with college football picks ahead of games, just like it does for the NFL.
The Compound Effect of TV
The value that comes from TV rights deals is not limited to just the cash that is paid by the networks. The reach that these TV broadcasts create helps to bring in more money for the teams and leagues.
For example, the sale of TV rights helps to reach new fans. These fans begin supporting a team and decide to buy merchandise, join the supporters’ association, or attend games in person.
Furthermore, the TV rights deals mean that millions of people are tuning in to watch games. For example, 100 million people watch the Super Bowl on TV, while Formula 1 has a global TV audience of more than 1 billion people. This attracts more advertisers, who will pay to place their branding around the stadiums. While sponsorship like this exists in non-televised sport, TV broadcasts exponentially increase their value.
In a quest to increase these numbers further, sports leagues are looking for ways to spread internationally and use the internet to increase their reach. Examples of this can be seen in Formula 1’s F1 TV Pro, the NBA’s work to spread its brand in China, and the NFL’s international games.
Everyone Wins (Mostly)
Nearly all stakeholders win from this commercialised setup in sport. League owners and teams win from the increase in their revenues, players win from eye-wateringly large salaries, TV networks win from selling ads during games, sponsors win from getting brand exposure to millions of eyeballs, and fans win from being able to access more of their favourite sports.
However, this dramatic commercialisation of sport could come at a cost to the lower leagues of the sport, by taking attention away from the game to focus on sponsors. An example of the former is the recent bankruptcy of Bury Football Club.