Courtesy of our Partners, Torrens University Australia
Over the course of my almost three-decade career in business, I’ve seen a lot of industries going through cycles, but the sports industry in 2020 faced some altogether unprecedented challenges.
From the Tokyo Olympics to Wimbledon, events and competitions worldwide were cancelled or postponed indefinitely, virtually overnight. During the early days of the pandemic, uncertainty became the new normal and doomsday industry predictions abounded.
For some of my students at Torrens University Australia (TUA) who have been working towards a career in the sports business, it’s been a worrying time. Many have wondered what kind of future they could expect, after all the hard work they’d put into studying Sports Management.
As we head towards the finish line of what has been a hard year for sports, we can finally take a deep breath. We have a few big reasons to be optimistic about the comeback of this huge global industry next year.
Sports events are getting back on track worldwide from 2021
With the ‘doubling up’ of competitions that were postponed during 2020 and additional events, such as the Olympics, 2021 is expected to be a big year for the sporting calendar – provided the coronavirus is managed effectively.
The Tokyo Olympics are going ahead in July, with overseas spectators required to undergo a two-week quarantine on arrival in Japan. Major league sports, such as football have been competing again across the globe for several months now with restrictions, and are soon expecting fans to return in numbers.
In America, the NBA, NFL and other leagues may resume ticketed stadium events by summer, with social distancing restrictions and stadiums at 25 – 50% capacity.
There is an important discussion going on at present about when and how it’s safe to resume sporting events. In fact, there is no one-size-fits-all solution.
Each country has developed it’s own strategy on how to balance public safety with consumer demand for the reopening of ticketed competitions. Some of the sports event restrictions being trialled in 2021 include:
Limited stadium capacity
Temperature screening on entry
No indoor events
Physical distancing between fans
Quarantine ‘bubbles’ for players
Regular testing for teams and staff
Industry recovery in 2021 will rely on whether these restrictions and the vaccine are effective, and how confident fans are that their safety is being taken seriously.
At present, the latest industry projections anticipate a strong recovery for sports from 2021 onwards.
According to the ‘Spectator Sports Global Market Report 2020-30: COVID-19 Impact and Recovery’ report, the global spectator sports market is expected to grow at a Compound Annual Growth Rate (CAGR) of 8%, from early 2021, over the next several years.
In 2021 the global economy is expected to begin growing again
Although we are still currently in a global period of downturn, the worst predictions of economic disaster have so far proved unfounded and global economies appear to be recovering faster than expected.
The OECD is expecting a global economic rebound, and the International Monetary Fund also predicts a reversal in 2021 to +5.2% GDP growth, up from a -4.4% average in 2020.
Studies also anticipate that consumer spending will increase, as people eagerly travel, attend concerts or matches, and participate in other activities they’ve been unable to do this year.
It appears that the worst economic impact of the pandemic may soon be behind us.
Australia is looking great for a 2021 sports industry recovery
In Australia, the coronavirus has been effectively managed through strict social distancing policies. Restrictions are now easing in many states, a return to normal sporting activities is already underway, and a vaccine rollout is on track to begin in March of 2021.
Outdoor stadiums in NSW, for example, have just this week been given permission to seat people at 100% capacity, while indoor stadiums can seat at 75%.
Because of this swift reopening and a high level of consumer confidence in the safety of events, booming growth rates are projected for the Australian spectator sports sector over the coming year.
Revenue is expected to show a CAGR of a huge 31.7% per year over the next few years, resulting in a projected market volume of AU$693m by 2024. That’s basically a tripling of the current market volume of $231m, as it stands in 2020.
Sustained growth after a period of downturn means a growing number of job opportunities, across a more diverse range of roles. In another sign of confidence, ‘Sports Administrator’ is at present considered a strong growth occupation by the Australian Government.
This is great news for TUA Sports Management students, or for anyone wanting to enter the sports industry in the coming years. With all the time and money you invest in your studies, you can still be confident that you’re going to have a fulfilling career waiting for you after graduation.
New challenges bring new opportunities
Although it’s great to finally hear some good news regarding sports industry growth projections, that’s not all there is to the macro industry landscape.
Some industry players have sadly been hit harder by the pandemic, and some are finding new ways to profit and invest.
On average, 14% of firms across all sectors tend to grow both revenues and margins during downturns. This is not just due to being in the right sector at the right time – it’s also about effective leadership.
With disruption comes opportunity. If a firm can assess, measure, interpret and act on the dynamics of their sector early, they may be able to turn a crisis into an advantage.
Similarly, for anyone considering a future as a leader in the sports business, it’s essential to understand the long game. Think about where you see yourself in the new economy, and set yourself up with the skills you’ll need for a leadership position.
The accelerating trend towards digital
Perhaps the biggest emerging trend that has been accelerated by the pandemic is the growing importance of digital tools and platforms in sports.
E-sports, sports data analytics, competitive gaming, and digital media have all emerged as essential avenues for reaching global audiences, and generating new content and revenue streams.
Demand for online content and virtual products has grown hugely this year in lieu of postponed real-world competitions, and savvy sports brands are going digital in response.
Professional Athletes have begun generating regular content, such as workout videos, to connect with fans via social media. Unable to televise actual competitions, networks and brands have instead turned to digital alternatives.
The inaugural ePremier League Invitational, for example, brought 150 million viewers to Sky Sports and social media to watch their favourite football stars represent their clubs virtually on FIFA. The Formula1 Virtual Grand Prix also debuted this year, bringing in 3.2 million viewers on YouTube, Facebook and Twitch.
Overall, eSports sponsorship deals are reported to have increased during 2020 by 53% compared to 2019, and gaming viewership online has shot up by as much as 75%.
For the next generation of sports managers, your understanding of digital technologies is going to be a big asset in 2021 and beyond. You’ll also need to develop leadership skills, such as innovation and creative problem solving, to ensure you can confidently turn any future crisis into an opportunity.
A once-in-a-lifetime learning experience
As a final word to students, graduates and aspiring business leaders in the sports industry, I’d like to leave you with this thought:
Just as the pandemic itself is, thankfully, a once-in-a-lifetime event, the industry recovery period we’re about to enter is also a once-in-a-lifetime learning opportunity.
It’s a rare chance to learn from direct experience what it takes to manage a sports business through an international crisis.
This is also a unique moment of market disruption where you can develop innovative ideas, reshape existing business models and try creative new approaches to sports. It’s going to be challenging, but it’s also an exciting time to begin a career.
Justin Pierce, Director of Innovation, Industry and Employability at Torrens University Australia (TUA).