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1、 At the gate and beyond Outlook for the sports market in North America through 2022 PwC Sports Outlook At the gate and beyond | 2 2018 edition: Overview 3 Featured research and analysis Sports gambling 5 The future of sports media rights 9 Appendix 13 Contacts 15 Table of contents At the gate and be
2、yond | 3 2018 edition: Overview North America sports market by segment Welcome to the 2018 edition of the PwC Sports Outlook, which updates PwCs perspective on the sports industry, including recent results and potential opportunities and challenges to future industry growth. This years edition refre
3、shes our five-year revenue forecasts through 2022 within four key segments of the North American sports market: media rights, gate revenues, sponsorship, and merchandising. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CAGR US$ millions Media rights 12,262 14,595 16,305 18,372 19,073 20,141 20,9
4、44 21,752 22,655 23,803 4.5% Gate revenues 17,142 17,448 17,963 18,649 19,015 19,311 19,750 20,298 20,723 21,167 2.2% Sponsorship 13,900 14,689 15,481 16,301 16,658 17,169 18,030 19,057 19,538 20,089 3.8% Merchandising 13,144 13,493 13,806 13,966 14,390 14,565 14,739 14,938 15,091 15,238 1.2% Total
5、56,448 60,225 63,555 67,288 69,136 71,186 73,463 76,045 78,007 80,297 3.0% % change year on year Media rights 19.0% 11.7% 12.7% 3.8% 5.6% 4.0% 3.9% 4.2% 5.1% Gate revenues 1.8% 3.0% 3.8% 2.0% 1.6% 2.3% 2.8% 2.1% 2.1% Sponsorship 5.7% 5.4% 5.3% 2.2% 3.1% 5.0% 5.7% 2.5% 2.8% Merchandising 2.7% 2.3% 1.
6、2% 3.0% 1.2% 1.2% 1.3% 1.0% 1.0% Total 6.7% 5.5% 5.9% 2.7% 2.9% 3.1% 3.4% 2.5% 2.9% CAGR - compound annual growth rate Source: PwC Sports Outlook (October 2018) We project the sports market in North America will grow at a compound annual rate of 3 percent across the four segments analyzed, from $69.
7、1 billion in 2017 to $80.3 billion in 2022. Media rights officially became the industrys largest segment in 2017, a year earlier than anticipated due to slower growth for gate revenue than previously forecasted. With key deals underlying the media rights segment locked in until 2022, the growth of S
8、egment definitions For the purposes of this report, the sports market consists of: Media rights fees paid to show sporting events on broadcast and cable television networks, television stations, terrestrial radio, satellite radio, the internet, and mobile devices. Gate revenues primary market ticket
9、 sales for live sporting events. Nonrecurring seat premiums and license costs are not included. Sponsorship fees paid to have a brand associated with a team, league, facility or event, including naming and category rights. Merchandising the sale of licensed products with team and league logos, playe
10、r likenesses, and other intellectual property. Food concession revenues are not included. TICKET TICKET At the gate and beyond | 3 At the gate and beyond | 4 rights in the near term are driven by contractual escalators within the national deals, as well as the run-off of 16 regional sports network (
11、“RSN”) deals across MLB, NBA and NHL through 2020. The monetization of rights should remain strong through the beginning of the next national rights deal cycle, given increasing competition for rights among traditional broadcast intermediaries and emerging distribution partners. Gate revenues are pr
12、ojected to increase at a compound annual rate of 2.2 percent, from an estimated $19 billion in 2017 to a projected $21.2 billion in 2022. Despite benefiting from league expansion and new facility development, gate volume metrics (ticket sales and game attendance) have leveled offand even decreasedas
13、 competition from game broadcasts and price pressure on certain ticket buying segments have continued to increase. Sponsorship is estimated to surpass the $20 billion threshold in 2022, at which point it is projected to close its market size gap to within $1.1 billion of gate revenue. Future segment
14、 growth, projected to be the second highest across the four segments, should be supported by new inventory related to gambling, digital media platforms, uniform rights, and incremental in-venue signage and naming rights opportunities. Licensed merchandise sales are projected to increase at a compoun
15、d annual rate of 1.2 percent (from an estimated $14.4 billion in 2017 to a projected $15.2 billion in 2022). The segment remains a relatively saturated market in North America with broad coverage of key consumer product categories and deep penetration of traditional buyer segments. At the gate and b
16、eyond | 4 Media rights 4.5% Compound Annual Growth Rates (CAGR) Sponsorship 3.8% Merchandising 1.2% Gate revenues 2.2% FINAL TICKET TICKET TICKET Your Ad At the gate and beyond | 5 At the gate and beyond | 5 One of the biggest sports stories of 2018 took place off the field and in the courtroom. In
17、the US, gambling on sporting events has largely been illegal. As we look at the five-year Outlook forecasts through 2022, within the four key revenue segments, we focus on the impact of the legalization of sports gambling on various revenue streams during the Outlook and beyond. Background Gambling
18、on sports (both legally and illegally) in the US has been around for a very long time. In 1949, the state of Nevada legalized sports betting. In the 1960s and 1970s, Congress passed a series of laws outlawing sports wagering including the Federal Wire Act (1961). Still, Americans continued wagering
19、on sports, often through organized crime or friendly betting pools among business colleagues and friends. The Professional and Amateur Sports Protection Act of 1992 (“PAPSA”) was meant to define the legal status of sports betting in the US. The Act made sports betting illegal in the US, with the exc
20、eption of sports “lotteries” in Oregon, Delaware, Montana and Nevada. Over the years, there were a number of challenges to the Act. Finally, in May 2018, the Supreme Court ruled PASPA was unconstitutional as it took power away from the states. It allowed individual states to determine whether to leg
21、alize sports wagering. Sports gambling At the gate and beyond | 6 States moved quickly to take advantage of the ruling. In June 2018, Delaware and New Jersey joined Nevada in legalizing sports betting. Mississippi and West Virginia followed suit and other states, including Pennsylvania and Rhode Isl
22、and, are on track to legalize it as well. What does this mean to the various professional leagues? To the teams? To the fans? We will examine the potential impact on each of these interests. Leagues Major professional sports leagues have opposed legalized sports betting for years. In 1992, then- NFL
23、 Commissioner, Paul Tagliabue, testified before Congress about the NFLs interest in curbing sports betting stating: “Sports gambling threatens the character of team sports. Our games embody our very finest traditions and values. They stand for clean, healthy competition. They stand for teamwork. And
24、 they stand for success through preparation and honest effort. With legalized sports gambling, our games instead will come to represent the fast buck, the quick fix, the desire to get something for nothing. The spread of legalized sports gambling would change foreverand for the worsewhat our games s
25、tand for and the way they are perceived.” Ironically, while the leagues protested keeping sports away from gambling, every sports section of every newspaper listed upcoming games and the point spread. From 1976-1988, CBSs NFL Today featured Las Vegas bookmaker Jimmy “The Greek” Snyder, who performed
26、 a delicate dance around sports and betting. Rather than making a pick against the point spread on NFL games, he would offer up the final score. CBS was playing to the betting crowd and “Jimmy The Greek” became a celebrity. Was CBS onto a potential sponsorship opportunity for that segment? How will
27、the networks incorporate gambling into the broadcasts? What could that opportunity represent in the future? With PAPSA being overruled and states beginning to legalize, the leagues have been forced to reexamine their position. Several of the leagues are seeking an “integrity fee” to be paid by sport
28、sbooks. Initially, leagues suggested a percentage of the handle (gross amount of all wagers). These fees would amount to a tax on legal sports betting, transferring money from the sportsbooks to the leagues. The leagues maintain that with legalized sports betting, there is an increase in the amount
29、of time and money they are required to spend on data monitoring and other compliance items to ensure integrity of the game. Opponents of the integrity fee maintain that sports wagering has existed for years without the imposition of fees. If there is a fee, they want it paid on the net revenue (wins
30、 minus losses). NBA Commissioner Adam Silver stated: “We think the integrity fee is something that we are entitled to, one, because we have the additional costs and alsosomething that as Ive said before, were not hiding fromthat we also think we are due a royalty. And that if the intellectual proper
31、ty that is created by this leagueand I know all the leagues support this position, but in the case of the NBA, we will spend roughly $7.5 billion creating NBA basketball this season. And to the extent that product is then used for casinos, betting parlors to make money on, we feeljust in the same wa
32、y a musician that receives a royalty for the music thats being played, we should receive some sort of royalty. So call it a royalty, call it an integrity fee, we will have additional expenses and its ultimately our intellectual property, and we think we should be compensated for it.”1 Assuming that
33、a mature legalized sports gambling industry could generate an annual handle of $100 billion (in 2017, the total handle in Nevada alone was $4.8 billion), a 1 percent integrity fee would yield $1 billion to the leagues (and potentially collegiate athletics as well) to split. There is potentially a lo
34、t of money at stake. In addition to the integrity fee, leagues are exploring sponsorship revenues. In July 2018, MGM Resorts and the NBA announced a new multi-year 1Legal Sports Report, NBAs Adam Silver On Sports Betting: The Integrity Fee Is Something That We Are Entitled To. June 2018. At the gate
35、 and beyond | 7 partnership making MGM Resorts the official gaming partner of the NBA and WNBA. As part of the partnership, MGM Resorts will use official NBA and WNBA data and branding across MGM Resorts sports betting offerings throughout the United States. According to press reports, the deal is f
36、or three years and worth $25 million. In September 2018, the NFL relaxed its existing policies on accepting advertising from casinos. The NFL is now accepting sponsorships from casinos that offer sports betting (with certain restrictions). Under one of the restrictions, casinos with sportsbooks cann
37、ot mention the sportsbook in their advertising. Another restriction prohibits any type of revenue sharing with sportsbooks and teams. Still, this enables the league, individual teams and broadcasting networks to participate in a new advertising revenue source. Over the last few years, leagues have b
38、ecome less averse to Las Vegas. The NHL placed an expansion franchise in Las Vegas and the NFL has approved a team to relocate to Las Vegas. Casinos will be sponsors and purchase premium seating as well as season tickets. Later in this Sports Outlook we will examine the potential future state of med
39、ia deals (post 2022). Signs point to legalized sports gambling having a positive impact on media rights deals for leagues and teams. According to a September 2018 Nielsen sports study, commissioned by the American Gaming Association (AGA), NFL media rights are projected to increase by nearly 18 perc
40、ent because of the appetite of bettors looking to consume live sports events. Fan engagement revenue Impacted by consumption is projected to 13.4%increase Fan engagement revenue Increase in revenue from fan engagement* Revenue not incurred directly from betting operators, but rather as a result of i
41、ncreased consumption and engagement with the league and its content/products. *Assumes best case scenario: full impact/transfer of consumption habits as people shift bettor segments (non-casual, avid bettors; i.e. non-bettors who say they will become casual bettors will adopt casual bettor consumpti
42、on /involvement with the leagues once they start betting). Gaming-related revenue Revenue paid directly from betting operators, in the form of sponsorship, advertising, and product fees. Gaming-related revenue Source: The Nielsen Company (US), 2018 Total projected revenue $2.326B $1.753B$573M How mu
43、ch could the NFL gain from legal sports betting? Media Rights 17.9%Merchandise2.1% Sponsorship7.6%6.5%Ticket Sales Your Ad At the gate and beyond | 8 Teams In addition to receiving their portion of any league wide integrity fees or sponsorships, teams are free to enter into sponsorships with sportsb
44、ooks (subject to any league restrictions). Initially, these opportunities may be limited to teams in states where sports gambling is legalized; however, as national/international gaming companies become involved, sponsorship opportunities may arise for all teams (whether sports wagering is legal in
45、their states or not). There is the potential for teams to adopt more of a European approach to sports gambling in the future. In the English Premier League, a number of casinos are shirt sponsors. Casinos also have sportsbooks located on the premises of the venue allowing for wagering on the match.
46、Teams are able to participate in revenue sharing with the sportsbooks. Online gaming is also available. All of this has the potential to lead to increased fan engagement and participation. Fan engagement With the increased quality of the in-home experience, together with the rising cost of attending
47、 professional sports events in person, leagues in the US face the challenge of incentivizing fans to continue to attend live sports events. Imagine a future scenario in which a sports gaming company pays to sponsor a professional sports team. The gaming company partners with the team to design a wor
48、ld class app that allows fans to wager on a variety of team and individual outcomes during a game. Further, to incentivize fans to attend the game live and use the app, the app could apply a dollar credit to the fans individual account to be used for wagers. The team could also offer food and bevera
49、ge credits, or retail credits, for fans who arrive early and wager, or stay after the game and wager. This unique experience could be made available only to those attending the game (or at higher incentive levels to fans attending in person versus those fans watching at home). Fans could wager from their seats in the stadium. The opportunities for additional partnerships with technology companies to improve the digital experience are significant. Sports wagering has the