Revenue Streams In Sports Industry
In the world of sports today, there are a lot of factors that contribute to the success of a team such as Revenue Streams In Sports Industry.
From the signing of the right players to the recruitment of the right coaches and staff members, undergoing the
right training, following the right diets, to name a few, the importance of these factors cannot be
overemphasized.
However, one other important factor that plays a huge role in the success of a team, one which many do
ignore, is revenue. While the efforts of a team on the field of play is often believed to contribute to its
success, its activities off the pitch can also contribute to its failure when not taken seriously.
What are revenue streams
Revenue streams, simply put, are sources of income. They could be sources of income of a private
organization, a government organization, a body, an institution, or even an economy.
Revenue streams can come in four different forms:
Recurring revenue:– which is mostly used by companies that offer services or sell subscriptios,
and is generated regularly for a period of time. For example, customers paying for data
subscriptions.
Transaction-based revenue:– which is based on transactions by customers. For example,
customers coming into your supermarket to purchase groceries. This type of revenue stream is
based on the sales one makes from their goods.
Project revenue:- which is usually generated through projects that are carried out just once. A
good example is revenue generated from a sporting event or tournament.
Service revenue:– which is usually generated through the time one spends in doing something.
For example, a consultation firm offering advice and getting paid by the number of hours it
spends offering this advice.
Benefits of having multiple revenue streams
Now that the concept of revenue streams have been established, as well as the forms in which they
come in, what then are the benefits of revenue streams?
Some of the benefits of having multiple revenue streams include:
i. Financial stability:– one of the benefits of multiple revenue streams is that they can help reduce the
negative effect unexpected events or situations might have on one’s business. In a situation where one
depends on just one source of revenue, they can fall prey to risks like a change in the demand of
consumers, change in regulations or even economic downturns.
Read More On Managing Sports Team Finances
As such, having multiple streams of income makes one financially stable as it gives them options to rely
on to keep their business going when faced with issues pertaining to money.
ii. Opportunities for growth and innovation:– having multiple revenue streams gives one opportunities
for growth and innovation in the sense that they can explore new markets, products and services, and as
well expand their business as much as they want. For instance, if an organization is already successful in
producing mobile phone batteries, with multiple streams of income, they can diversify and start
producing mobile phone chargers. This way, they can reach new audience and grow even more.
iii. Providing backup during economic downturns:- the reward for entrepreneurs in business is profit or
loss. In a situation where there is no profit but loss, most business owners or organization tend to suffer
and struggle to get back on their feet. But this is not the case for those with multiple revenue streams.
Am organization or business with multiple revenue streams, when faced with economic downturns, do
not suffer but rather stay afloat as a result of its other streams of income.
Revenue streams in sports industry
Some of the post popular means through which revenue is generated in the sports industry include:
i. Ticket sales:- one of the most common means through which revenue is generated in sports is the sale
of tickets. By simply selling tickets to fans for them to come in to stadiums to watch matches or
tournaments, sport teams get to generate a decent revenue. Aside from direct ticket sales, these teams
can also generate revenue through sales of parking passes, snacks, drinks and other in-person sales that
can be made in stadiums or other sporting venues.
Provided there are mathces to be played and tournaments to be organized, ticket sales will always be a
profitable source of revenue.
ii. Sponsorships and advertising:- sponsorships and advertising are other known revenue stream in
sports. In fact, according to reports, the global market of sport sponsorship is expected to grow to
around $97 billion by 2027.
By partnering with corporations and organizations, the sports industry generate revenue during sporting
events or tournaments. These corporations and organizations pay a particular amount of money as
sponsorship fee and in exchange have their image or brand promoted in various forms of displays for
the duration of the event. A very good example of this is the partnership between Pepsi, a carbonated
drink brand, and the UEFA Champions League, a football tournament.
By sponsoring the UEFA Champions League, Pepsi pays an agreed amount of money as sponsorship fee and I’m exchange have its products advertised in various forms fromnthr start to the end of the tournament.
iii. Media and broadcasting rights:- just like sponsorships and advertising, media and broadcasting rights
are also popular means of revenue generation except that in the case of the latter, media organizations
do not pay to advertise their brand but rather pay to get the exclusive right to air matches or games as
the case may be.
It is worthy of note that media and broadcasting rights as a form of revenue generation in the sports
industry is not just limited to traditional radio and TV stations but also extend to online broadcast
stations and online streaming platforms.
iv. Merchandise:- as a result of the love and strong passion fans have for sports, they tend to do things
to remember their attendance at a sporting event or show affiliation with a particular sport, league,
team or even athlete. This is where merchandise comes in as a revenue stream in sports industry.
Teams can decide to sell their jerseys, t-shirts, hats, scarves, vests, sweatshirts, etc., to die-hard fans,
generating revenue in the process. The same applies to event or tournament organizers who can decide
to sell merchandise like team flags, pennants, wavers, to mention a few.
iv. Sports betting:- revenue can also be generated in the sports industry through sports betting. Valued
globally at $66.98 billion in 2020, the sports betting market value is expected to rise to $140.26 billion in
- This shows how lucrative this niche of revenue generation in sports industry is.
Conclusion
In conclusion, revenue streams are basically sources of income. Just like every other aspect of life, there
are also revenue streams in the sports industry. Some of the means through which teams or event
organizers generate revenue in the sports industry include ticket sales, sponsorships and advertising,
media and broadcasting rights, merchandise sports betting, digital experience boosting revenue, merchandising and licensing, income from sport, are the sources, experience boosting revenue in sport, business of american sports, to mention a few.