Professional Sports Teams and Organizations
Buy This Industry Report
Get more in-depth industry information with a First Research industry report containing business challenges, trends, executive insight, call prep questions, and so much more!
Increase Appointments
Engage Prospects
Build Your Confidence
Industry Overview
The US professional sports teams industry includes about 800 organizations with combined annual revenue of over $16 billion. The dominant professional sports leagues in the US are the National Football League (NFL); the National Basketball Association (NBA); Major League Baseball (MLB); and the National Hockey League (NHL). Other leagues include the Women’s National Basketball Association (WNBA); Major League Soccer (MLS); and the National Lacrosse League. The industry is concentrated: the top 50 organizations have 60 percent of industry revenue.
The industry includes both major league and minor league sports teams, but not “non-team” professional sports, such as golf, tennis, and boxing.
Competitive Landscape
Demand is driven by consumer income and corporate entertainment spending. The profitability of individual teams depends on achieving high fan attendance and a large TV audience, both of which are enhanced by effective marketing and competitive play. Teams in large metropolitan areas have advantages in the population base and TV audience they can draw on, though they may face competition from other teams. Teams in smaller markets, along with less popular sports and minor league teams, can compete by building fan loyalty through local marketing promotions and an appeal to civic pride. Average annual revenue per worker across all sports teams is over $325,000.
Products, Operations & Technology
Major revenue sources for professional sports teams are admissions (about 40 percent of revenue); TV and radio fees (40 percent); advertising and endorsement fees (10 percent); and food and concession sales (5 percent). Other revenue comes from program sales, merchandise sales, and facility rental fees.
Major League Baseball (MLB); the National Basketball Association (NBA); and the National Hockey League (NHL) consist of 30 teams each, while the National Football League (NFL) has 32. Within each league, teams are assigned to conferences and divisions for regular season play. The number of games played by each team in the regular season varies from 16 for the NFL to 162 for MLB; NBA and NHL teams play 82 games each.
Teams prepare for the regular season through training camps and preseason exhibition games. Coaches assess player talent during the preseason to determine the depth chart for each position – which players will be starters and which will be backups. Some players are cut from the team to get to the active roster the league allows. The number of players allowed on the active roster ranges from 12 for the NBA to 53 for the NFL.
The winners of each division and other teams with the best won-loss records during the regular season qualify for the playoffs. The number of playoff teams depends on the league: eight for MLB, 12 for the NFL, and 16 each for the NBA and NHL. The playoffs culminate with the crowning of a league champion.
Due to its large number of games, MLB has a total attendance greater than the other three leagues combined. In 2008, MLB had an attendance of over 78 million, or about 34,000 fans per game. The NFL averaged about 68,000 fans per game, but less than 18 million in total attendance due to fewer games. Both the NBA and NHL averaged about 17,000 fans per game and 21 million in total attendance.
Venues for professional sports include stadiums and arenas, of which 70 percent are publicly owned. NFL stadiums range from 60,000 to 91,000 seats, while MLB stadiums seat 34,000 to 57,000; NBA and NHL arenas vary from about 16,000 to 22,000. Public facilities may be operated by the team owner (about 45 percent); the municipality (35 percent); or a facility management company (20 percent). Constructing new stadiums and arenas typically costs $400 to $600 million.
Professional sports teams use information technology to analyze team and player statistics, develop marketing programs, and automate accounting and administrative functions. Many teams use data mining software to gain insight into customer demographics and develop targeted marketing promotions and campaigns. Video technology helps coaches analyze games and provides instant replay capabilities to officials. Some teams are experimenting with “smart tickets” incorporating radio frequency identification (RFID) tags to speed admissions and prevent counterfeiting. Most teams have an official website where fans can learn about players, review game schedules, order tickets, and buy team merchandise.
