From stadia to the trading floor: here's how to invest in sport

When we think about sport, passion, sweat and adrenaline may come to mind rather than balances and potential returns. Yet behind the goals, racquets and treadmills lies a multi-billion-euro industry with investment opportunities.

The world of sport is much more than just games and entertainment – it's big business. In 2024, the global sports industry accounted for around 450 billion euros in turnover, and the sector is growing by around 8% year-on-year (source). This figure indicates that the sports industry is consistently outperforming the global economy, which has seen annual growth of 3% on average over the past decade. Several trends are behind this dynamic.

1. Health and fitness are booming

The desire to lead a healthy lifestyle is a global trend. Since the pandemic, 'staying healthy' has become a priority instead of being just an aim. Gym memberships, sportswear and wearables have been flying off the shelves. According to McKinsey, the global wellness market is worth more than €1,550 billion, and sport is right at the heart of it (source). Consumers are increasingly investing in their physical and mental well-being and, in turn, in the brands that enable them to do so. Around 3.5 billion people play a sport (source).

2. Sport as entertainment

Sport has become one of the most popular forms of live entertainment. Broadcasting rights for major competitions such as the Premier League or the NFL go for record sums. Streaming platforms are diving into sports content to attract subscribers. And brands pay huge amounts of money to ensure they are visible in stadia or on shirts. Sport isn't just a game; it's also a marketing engine that turns the experience into business.

3. Technology is changing the game

From sensors in shoes to AI-driven data analysis, technology is penetrating deep into the world of sport. Companies offering smart sportswear, performance analytics or virtual reality training are springing up all over the place. Wearables are transforming all of us into aspiring athletes, while data companies are enhancing professional teams' performance. Sportstech has emerged as a niche sector in which both start-ups and publicly listed giants see opportunities. Significant growth potential remains in this field as the sports industry is still lagging behind other sectors when it comes to digitalisation (source).

4. The rise of women's sport and e-sports

Two sectors that are gaining momentum are women's sport and e-sports. Women's football and basketball competitions are attracting more and more viewers, sponsors and investors (source). As an example, the prize money for the Women's FA Cup in England was recently doubled from £3 million to £6 million (source).

E-sports, in turn, has become a multi-billion-euro industry in its own right, featuring professional teams, sold-out arenas and a global audience of over 500 million fans (source). For investors, this represents a new, fast-growing subcategory within the sports economy.

5. Fan experience and sports betting

The fan experience is a 24/7 business. Sports betting, in particular, has seen significant growth and now represents one of the largest sources of income in the sports industry (source). Fans are also exploring new ways to connect with their sporting heroes through fantasy sports and collectibles. One such example is Fanatics, which has grown into the world's largest sports merchandise online shop and is considering an IPO (source).

6. Sports tourism and events

Sports tourism is also growing rapidly. Millions of people travel the globe to see and experience live sport at the Olympics, the World Cup or marathons, for example. This generates a huge economic impact for both the organisers and hotels, airlines and host cities. According to the Best-Howard model, the total revenue of the global sports industry amounts to as much as €1,970 billion when all sectors, from participation and health to entertainment and tourism, are taken into account (source).

How to invest in sport: from trainers to streaming rights

Most investors associate 'sports stocks' with Nike or Adidas straight away. However, the real growth opportunities may be found in the less obvious segments:

1. Sports brands and sportswear

Nike, Adidas, Puma and Under Armour are probably the best-known names. However, the big boys face saturated Western markets, strong competition from Asia (such as Anta, Xtep and Li-Ning) and pressure on their margins.

Niche players and fast-growing brands such as On Running, Hoka (Deckers Outdoor Corporation) or Lululemon could offer potential, as they focus on specific demographics (runners, yoga enthusiasts) and are growing quicker than the established players.

2. Media and streaming rights

Companies that own media rights or provide distribution include:

• Disney/ESPN: still the biggest player in sports media
• Liberty Media: owner of Formula 1
• DAZN: the 'Netflix of Sport' (also considering an IPO)
• Amazon Prime and Apple TV+: fast growth in sports content

Media rights are worth their weight in gold. The Premier League, NFL and NBA have closed billion-dollar deals with broadcasters. For investors, this can mean stable long-term contracts and predictable cash flows.

3. Technology and data

The real disruption, however, happens behind the scenes. Think of technology companies that gather, analyse and commercialise data, such as:

• Garmin: wearables that measure performance
• Strava and Zwift: digital platforms for athletes (Strava is considering an IPO)
• Sportradar and Genius Sports: data providers for clubs, media and betting companies

These companies deliver the infrastructure that powers the world of sports.

4. Sports clubs and events

Some sports clubs, such as Manchester United, Juventus and Borussia Dortmund, are listed on the stock market. Note, however, that not all clubs are profitable. Football clubs often represent emotional investments rather than purely rational ones.

Events management also presents opportunities. Companies that build stadia, supply artificial turf or manufacture LED screens benefit from the demand for modern sports infrastructure.

5. Health and fitness

Listed fitness chains such as Planet Fitness (USA) and Basic-Fit (Europe) are continuing to grow and expand. Indirect channels are also available, such as sports drinks and nutrition through PepsiCo (Gatorade), Monster Beverage Corporation or other food and beverage companies.

6. Sports betting and gaming

A controversial yet lucrative sector, it includes companies such as DraftKings and Flutter Entertainment who generate billions in revenue.

This sector involves risks – and remember that not every player reaches the finish line

As with any sector, the sports industry offers opportunities that also come with risks:

• Cyclic sensitivity. Sport is a consumer story, at least in part. In times of economic headwinds, people are putting their spending on sports – membership fees, streaming subscriptions or new running shoes, for instance – on hold more quickly. This means the sector is sensitive to economic fluctuations.
• Fashion sensitivity. Sports brands are dependent on trends. What's popular today may be out of fashion tomorrow, making clothing and footwear companies more volatile.
• No pure sports exposure. Not all businesses provide a 'pure play' exposure to sport. Large amounts of revenue also come from other segments. Even sports brands such as Nike and Adidas are increasingly positioning themselves as fashion and lifestyle brands. This may pose disadvantages for anyone looking for a purely sports-related investment, but it can also offer the benefit of diversification.
• Currency risks. Many sports companies are active on an international level. Fluctuations in exchange rates may affect profits.
• Competition from Asia. Chinese sports brands are expanding at pace and capturing market share both in China and around the world. Western brands are feeling the pressure.
• Value traps. Not every company is profitable. Some companies are overvalued purely because of the hype. Think of Peloton, which peaked during the pandemic and subsequently lost more than 90% of its market value. A thorough analysis remains essential.
• Gambling regulations. Stricter legislation, especially in Europe, may limit the growth potential of sports gaming companies. Some countries even prohibit online betting or restrict advertising.

How to invest in the sports industry

Your choice depends on your risk profile, investment horizon and preference for diversification.

1. Individual shares

Buying shares in sports-related companies is the most direct route. Doing so gives you full control over your portfolio, but also requires thorough research. You need to analyse numbers, assess competitive positions and estimate trends, which takes time and expertise.

2. Trackers and thematic funds

If you want to diversify without selecting individual shares, ETFs (trackers) and investment funds can work as a solution. These funds spread the risk across dozens of companies in different subsectors. The downside is that a pure 'sports industry ETF' covering all of the segments isn't available at present. You can, however, invest in trackers that specifically focus on e-sports or broader consumer ETFs with a significant sports component.

Before investing, be sure to read up on the key features and risks of financial instruments.

How to invest in the sports industry

• Log in to Keytradebank.be on your laptop or desktop
• Click on Advanced at the top of the search window
• Search for the share or tracker in which you want to invest