ARTICLE | April 01, 2024

In the first part of 2024, the sports industry continues its soaring growth, with rising revenues, asset valuations and fan engagement.

A shifting media landscape, easier access to global audiences, private equity involvement and artificial intelligence-enabled engagement with fans are just some of the factors driving this growth.

Here are the top seven trends RSM has identified for the sports industry.

1. Global expansions

As the world becomes more interconnected, successful sports leagues, brands and athletes are able to reach new audiences. U.S. leagues are building initiatives to expand both in-person audiences and international viewers, and sports such as cricket and soccer are making significant inroads in the United States.

As sports leagues and companies seek to tap into this global opportunity, leaders will need trusted advisors with cross-border capabilities to provide market, legal and tax advice on starting and maintaining successful operations in new countries and regions.

2. Franchise acquisitions and private equity involvement

Professional sports teams have proven to be one of the best investments in recent decades, with soaring valuations and unique opportunities for distributed revenue streams. In recent years, more institutional investors have entered the space; according to PitchBook, 63 major North American sports teams have private equity connections, with a total valuation of $243.8 billion. With minority equity-stake structures entrenched within the industry, institutional investments are expected to increase.

3. Emerging league growth

With the demand for sports franchise ownership exceeding the limited supply of franchises in billion-dollar-grossing leagues, investors are turning to new opportunities such as Major League Cricket, the National Women’s Soccer League and the TGL golf league. Activities that are even more niche, such as pickleball and winter sports, are among the fastest-growing sports in America, according to the Sports & Fitness Industry Association. We expect investors will continue capitalizing on the increased demand for emerging sports.

4. Women’s sports growth

Women’s sports have seen a surge in audiences and consumer demand, with sold-out advertisement slots for the 2024 NCAA March Madness women’s tournament. The media rights deal for that tournament is valued at $65 million. Another example is Coco Gauff’s historic tennis final victory in September, which became the most-watched women’s tennis final ever on ESPN and ESPN+. Audiences are clearly engaging with women’s sports more than ever.

5. Unique contract structures

Nontraditional contract structures are becoming more prevalent. Take, for instance, LA Dodgers player Shohei Ohtani’s recent deal in which 97% of his salary is deferred until after the deal expires. That allows him to potentially save $98 million in state income taxes over the life of the contract. Additionally, soccer star Lionel Messi’s arrangement includes a lower base salary along with a stake in the team and profit-sharing interests in two major partners that will bring him both a current and long-term income stream. In this environment, players will continue to pioneer expanded financial opportunities for themselves and their franchises.

6. Media landscape changes

Sports media rights remain one of the most desired media assets by broadcasters and streaming services, with several organizations securing significant fee increases in their latest media rights deals. With the NBA media rights package slated for renewal in 2024, we anticipate continued increases in fees for the NBA as well as for other coveted properties. Significant changes in the balance between broadcasters and streaming services are also expected, as streaming services (including Netflix) make inroads into live sports.

7. AI, data analytics and fan engagement

Leagues are investing in AI and data analytics to glean unprecedented levels of insights and performance analysis to guide strategic decision making. Fans now encounter these enhancements whether consuming sports in stadiums or at home; successful examples include Disney+’s Toy Story Funday Football, a Pixar presentation that engaged a younger (12-to-14-year-old) and more female (59%) audience than NFL broadcasts typically draw. As technology continues to advance, sports franchises will strategically allocate their resources to fund audience expansion through AI. This approach aims to enhance revenue streams and drive sustainable growth.

Jaysen Altman, Matt Fanelli and Taylor Salomon contributed to this article.

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