The Size of the Sports Industry in the United

States

Jane E. RuseskiUniversity of Alberta

Department of Economics

Brad R. HumphreysUniversity of Alberta

Department of Economics

IASE 10th Annual Conference 10 May 2008Gijón, Spain

Organization of Presentation

• Motivation• Definition / Data Sources• Estimates of Size of Sports Industry

– Sports participation– Sports viewing– Economic Value - Demand Side– Economic Value - Supply Side

Motivation• Few estimates of the total economic scope of the

sports industry– Studies estimate the contribution of sport to the local

economy– Many studies estimate the economic impact of

sporting events

• Document the economic scope of sport in the US from a macroeconomic perspective– Focus on US for convenience and access to data

Definition of Sports Industry

• Three primary components– Individual participation in sport– Attendance at spectator sporting events– Following spectator sporting events through media

– newspaper, television, internet

• Why these three components?– Encompasses active and passive

participation in sports– Both aspects are important in trying to

estimate the size and scope of the industry

Challenges• Estimating economic value and extent of

participation proved to be challenging• Unlike other industries, such as the hotel

industry, there is no commonly accepted definition of the sports industry for measuring economic performance

• Solutions – develop a working definition of the sports industry – use a variety of data sources, construct estimates

from both supply and demand side

Data Sources

Data SourceActive Participation

Inactive Participation

Economic Value: Supply Side

Economic Value: Demand Side

NSGA – 2005 ▲ ▲ - tv ▲ - revenues ▲ - spending

BRFSS – 2000 ▲

Vital Statistics of US – 2005

▲ -multimedia

Statistical Abstract of US – 2005

▲ - internet

US Census – 2002

▲ - revenues

Datamonitor – 2005

▲ - revenues

US BEA – 2005 ▲ - admissions

US CEX – 2005 ▲ - consumer spending

Sport or ActivityNumber of Participants % of Total

Walking 87,500,000 18.1%

Swimming 56,500,000 11.7%

Bowling 44,800,000 9.3%

Health Club Memb 37,000,000 7.6%

Bicycling 35,600,000 7.4%

Weightlifting 32,900,000 6.8%

Running/Jogging 29,200,000 6.0%

Basketball 26,700,000 5.5%

Golf 24,400,000 5.0%

Active Participation in Sport

Includes frequent and infrequent participation in sport

Sport Lower bound Mean Upper Bound

Walking 68,600,000 69,301,784 70,000,000

Running/Jogging 12,500,000 12,901,119 13,300,000

Weightlifting 7,118,775 7,396,304 7,673,832

Golf 4,787,312 4,982,688 5,178,063

Bicycling 4,588,754 4,791,467 4,994,179

Aerobics 4,189,563 4,355,448 4,521,333

Basketball 3,276,901 3,461,372 3,645,844

Health Club 2,375,871 2,510,246 2,644,621

Swimming 2,216,229 2,356,134 2,496,039

Total 118,481,056 122,094,722 125,702,581

Active Participation in Sport

Table 3: Estimated Total Attendance at Sports Events, NGSA 2005 –

Sports with at least 2 million in Attendance

SportTotal

AttendanceMajor League Baseball 74,385,100NCAA Football 43,486,574NCAA Men's Basketball 30,568,645National Basketball Association 21,369,078National Hockey League (2004) 19,854,841National Football League 17,011,986Minor League Baseball 15,636,000NASCAR Winston Cup Series 6,300,000Minor League Hockey 6,179,000Horse Racing 5,979,000Professional Rodeo 5,429,000NASCAR Busch Series 3,911,000Professional Golfers Association 3,200,000Arena Football League 2,939,000Major League Soccer 2,900,715Minor League Basketball 2,625,000

Inactive Participation - Attendance

Total attendance just over 277 million

Estimate of opportunity cost, based on average wage of $18 per hour ≈ $19.9 billion in 2005 or 0.25% of $8.2 trillion of personal spending

In addition to opportunity cost of time, other economic activity associated with tickets, parking, concessions, etc.

Table 4: Estimated Total Television Viewing Audiences, 2005

At Least 4% of Audience

SportTV

Audience

National Football League 105,874,000

Major League Baseball 76,744,000

National Basketball Association 60,877,000

NASCAR Winston Cup Series 45,588,000

Professional Golfers Association 37,899,000

NASCAR Busch Series 27,981,000

Professional Tennis 26,187,000

Horse Racing 21,560,000

IndyCar Racing 19,366,000

Source: National Sporting Goods Association (NSGA)

Inactive Participation: Television Viewing

• Relatively large viewing audience for tennis, horse racing, golf → may reflect popularity of major events in these sports

• Limitation – have no idea of intensity of viewing

Table 5: Summary Statistics for Firms in the Sports Industry, 2002

Sub-Industry NAICS Code

# Estab. Employees

Revenues (mil)

Payroll (mil)

Spectator Sports Teams 711211 674 40,746 $13,025 $9,106

Racetracks 711212 646 47,121 $6,702 $995Other Spectator Sports 711219 2,752 19,860 $2,585 $664

Golf Courses 71391 12,261 312,812 $17,533 $6,656

Skiing Facilities 71392 387 70,083 $1,801 $631

Fitness/Rec. Centers 71394 25,290 445,508 $14,987 $4,953

Bowling Centers 71399 4,924 82,010 $3,074 $904Sporting/ Athl. Gds. Mfg. 33992 2,235 62,166 $11,855 $2,075

Economic Value: Supply Side – Economic Census Data

Table 10: Consumer Spending on Selected Sports Items - 2005

ItemTotal

Spending

Sports Equipment16,539,200,00

0

Sports Apparel10,898,000,00

0

Sports Footwear15,719,000,00

0

Admission Spectator Sporting Events15,900,000,00

0

Economic Value – Demand Side

•Total consumer spending = $43,172,100,000

•Active participation spending is 63.6% of total spending

• Consumer spending on sport is less than 1% of consumer expenditures → roughly equal to spending on gas or 1/9th of personal spending on health care

Sport Related Expenditure, Consumer Expenditure Survey, 2005

Category Spending

Estimated Total Spending on Sports Equipment, billions of dollars

$2.294

Estimated Total Spending on Spectator Sports, billions of dollars (attendance)

$1.226

Estimated Total Spending on Sports, billions of dollars (participation – membership dues, admission fees)

$3.245

• Estimated total spending = $6.77 billion → active participation is 81.8% of total based on CEX data

Economic Value: Demand Side

Table 13: Estimated Total Economic Value of Sports Industry, Billions of 2005 Dollars

Component Supply Side Demand Side

Estimate 1 Estimate 2 Estimate 3 Estimate 4Participation Equipmenta $7.5 $16.4 $16.54 $2.29

Footwearb $31.4 $10.90Apparelc $5.5 $15.70Feesd $16.6 $3.25Participation Subtotal $61.00 $69.90 $46.38 $32.14

Spectatinge $6.3 $15.90 $1.22

Mediatedf $5.65Total $72.95 $81.85 $62.28 $35.65

Economic Value – Summary of Estimates

Summary of Estimates• Difference in supply side estimates → value of sports

equipment produced and sold– NSGA estimate is $7.5 billion– Datamonitor estimates is $16.4 billion. – Difference could be due to different definitions of sports

equipment, survey methods or survey samples• Difference in demand side estimates

– Estimates of consumer purchases of sports equipment generated by Datamonitor and the Consumer Expenditure Survey → CEX includes only household spending while Datamonitor includes household, business and institutional spending

– Estimates of spending on attending spectator sports generated by the Bureau of Economic Analysis Current Business Survey and the Consumer Expenditure Survey → not clear what explains difference