Global brands in sports: identifying low-risk business opportunities
| Pages | 62-83 |
| Date | 11 March 2019 |
| Published date | 11 March 2019 |
| DOI | https://doi.org/10.1108/JEPP-03-2019-103 |
| Author | Alice Aguiar-Noury,Pedro Garcia-del-Barrio |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Global brands in sports:
identifying low-risk business
opportunities
Alice Aguiar-Noury and Pedro Garcia-del-Barrio
Universitat Internacional de Catalunya, Barcelona, Spain
Abstract
Purpose –The purpose of this paper is to accomplish several goals. First, it studies the relevance of the
sports sector as part of the entertainment industry. Second, it identifies promising markets within the sports
industry, paying special attention to the relative importance of soccer in the context of team-sport leagues.
Finally, the paper helps entrepreneurs to recognized market opportunities in the sports industry by
identifying the soccer clubs that were found to be low-risk global brands.
Design/methodology/approach –To evaluate the relevance of the entertainment and sports industries,
both in the USA and EU-28, the authors rely on their respective contribution to the domestic product and to
employment. Two procedures are proposed for establishing the status of global sport leagues: one is based on
the annual revenues and the other on the degree of interest that the public shows for each professional sport
league. (The latter is performed by comparing the intensity with which internet users search for contents
related to each of the Top-10 sports leagues worldwide.) Finally, by estimating the fixed effects of a model in
which sport performance is filtered out, we calculate the expected low-risk revenues that clubs generate due to
their heterogeneous brand value.
Findings –This paper reaches some few relevant results. First, we find that the greater employment
opportunities in the European sport industry are concentrated in the UK, Spain, France and Germany, which
may orientate entrepreneurs to start projects in promising sport markets. Then, data on annual revenues is
used to rank the main team-sport leagues worldwide: NFL, MLB, NBA, Premier League and NHL. Another
rank is based on the degree of interest of fans (as captured by Google Trends) yields a different result, where
the NFL, NBA and the UEFA Champions League are, respectively, at command. Besides, the paper also ranks
clubs as valuable assets by identifying which of them are low-risk soccer brands. The empirical study
provides insights to select business opportunities by targeting the less-risky clubs or leagues, by calculating
the expected annual revenues of clubs regardless of their recent sports performances.
Originality/value –This paper is innovative in two ways. First, it develops an analysis based on Google
Trends to establish the comparative status of team-sport leagues worldwide. Second, by adopting an original
empirical approach, it identifies markets and brands to carry out low-risk entrepreneurial projects. The
expected potential revenues derived from this procedure are not contingent to the risk due to poor sport
achievements in a particular season. To our knowledge, researchers have not computed in the past such
calculations as that we name here low-risk revenues.
Keywords Sports industry, Professional soccer, Media visibility, Sport talent and performance,
Low-risk investment
Paper type Research paper
1. Introduction and related literature
The entertainment industry comprises different sectors, including motion pictures,
television, music, fine arts and also sports. (Sometimes, gaming and gambling are also
considered part of this industry). The sport industry provides entertainment at a global
scale, and has become an important business in the global economy (Ratten, 2011a). The
continuous growth of the sports sector (Doherty et al., 2014) generates increasing interest on
part of practitioners and researchers (Coates et al., 2014; Ratten, 2011b).
Even though from an economic perspective the direct economic impact of the
entertainment sector does not represent a large contribution to the national product of the
countries, leisure activities play a significant role concerning economic and social
development. Moreover, leisure activities and the practice of sports help improving the
individuals’well-being by arising the feeling of social inclusion and improving lifestyle in an
Journal of Entrepreneurship and
Public Policy
Vol. 8 No. 1, 2019
pp. 62-83
© Emerald PublishingLimited
2045-2101
DOI 10.1108/JEPP-03-2019-103
Received 30 November 2018
Accepted 15 January 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
62
JEPP
8,1
integrated system (cf. Statistical Office of the European Union, 2015). Moreover, given its
educational nature, sport is actually seen as a driving force procuring positive social
changes (Coalter, 2007; Eime et al., 2013).
The practice of sports and the enjoyment of fans have increased over time in modern
societies. Widespread sports facilities make individuals, especially young people, to benefit
from wholesome entertainment, healthy lifestyle, improved habits and shared values.
All these factors play a role in improving social cohesion as well as to promote the practicing
of sports among all type of people (Wicker and Breuer, 2013). Other theoretical
contributions (Ratten, 2010, 2011c) develop aspects that link sport-based entrepreneurship
to social projects, stressing the relevance of embodying sport activities with social
entrepreneurial character.
Besides, entrepreneurial marketing theory focused on the importance of marketing
activities to innovate and create value for customers (Morris et al., 2002). Successful
marketing strategies, to develop the international expansion of companies, require
recognizing the changing environments that exist in many markets (Collinson and Shaw,
2001). Moreover, global international markets represent an opportunity for innovation.
Previous papers (Knight, 2000) stress also the effect that globalization would have had in
generating entrepreneurial-oriented firms. Entrepreneurs have the skills to identify
opportunities and to transform their ideas into products. All these features also apply to the
context of professional sports, where global brands reach a strong international profile.
The sports industry has a direct and indirect impact on a variety of economic activities
as it involves transactions across different sectors such as education, tourism, construction,
clothing, etc. This fact, however, implies that the contribution of sports to the economy is
something very difficult to determine. Specialized studies have been conducted to appraise
the economic status of sports (e.g. SportsEconAustria, 2012). Also, some countries report the
economic activity of the sport industry as part of the entertainment sector (e.g. in the
“National Income Accounts”or “Sports Satellite Accounts”).
In this paper, we claim there are many opportunities to venture into a variety of markets
through sports. Emerging technologies facilitate the expansion of new sport-related
businesses while consolidated enterprises engaged with the community through sponsoring
sport events or sport heroes. These features may encourage entrepreneurship in the form of
projects linked to innovation or as strategic partnership with public or private institutions.
Mobile applications that allow people to join communities or to practice sports using public
facilities would be examples of this.
2. Objectives and methodology
In this paper we aim to providing an economic description of the sports industry, paying
special attention to professional soccer. This analysis will help entrepreneurs and investors
to achieve a better understanding of the sector and to judge to what extent these businesses
offer promising investment opportunities.
To appraise the comparative economic status of professional soccer within the sports
industry, we adopt two alternative approaches. Previously, to give some context, we analyze
the economic contribution of the sports industry as part of the entertainment (and leisure)
sector. Finally, we apply a fixed-effects model to identify less risky investment opportunities
in the sector, by calculating the predicted annual revenues of soccer clubs as if they had no
recent sports attainments. We argue that this approach is a good procedure for identifying
also the soccer clubs with high inherent risks.
To accomplish our first goal we initially carry out a descriptive analysis of the gross
domestic product (GDP) in the USA, and the gross value added (GVA) in the European
Union (EU-28). To analyze the output generated by the entertainment sector in the USA we
rely on the “Industry Economic Accounts,”released by the Bureau of Economic Analysis
63
Global brands
in sports
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