Sport’s back! Now it’s time to consolidate and grow
Phew! After over 10 weeks of twiddling our thumbs and watching classic matches from the 90s to quench our thirst for sport, finally our favourite codes are starting to reappear from the shadows.
Barracking for our favourite teams is important but participating in sport at all levels, is imperative to the Australia psyche. Community sport has been sorely missed, and the focus on supporting the sector to get back on its feet and return to delivering the strong social and health outcomes for society is very welcome.
However, the broader sports industry also contributes to the economy in a material way. Looking forward we expect the sports industry to rebound as social distancing measures are relaxed and participants regain the confidence to return to playing fields and stadiums. In addition, there may be growth initiatives with the potential to unlock opportunities for the industry to bounce back as a bigger and more resilient part of the economy.
To explore the growth potential of the sports industry, we need to be clear on its size and contribution to the economy. This is not a straightforward task, as the ABS only captures a narrow definition of sport in the national accounts, with much of the sport related economic activity allocated to other industries (e.g. education or media). With this in mind, KPMG partnered with the Commonwealth Department of Health to analyse the Australian sports industry in the recently released report, Sports Industry Economic Analysis.
The report found the Australian sports industry generates annual sales of approximately $32.2 billion, contributes $14.4 billion dollars to GDP, and supports 128,443 full-time equivalent jobs.
While there is a significant component of the sports industry focused on delivering sporting and physical activity outcomes, rather than economic outcomes, the report identified opportunities for economic growth within the industry.
These were summarised into three key industry segments.
Education & Training
There is an opportunity to increase the level of sport and recreation services at the higher education level and potentially also at the Vocational Education & Training (VET) level, through increasing the number of international students studying sport and recreation courses in Australia.
In 2018, overall international students accounted for 37.3 percent of higher education enrolments. Only 8.2 percent of those were studying sport and recreation related courses. In comparison, education was at 12.4 percent and health at 15.2 percent. The highest was information technology at 67.9 percent and management and commerce at 63.2 percent.
Something to explore in a COVID safe future, particularly if there are ongoing changes to international student demand is the significant opportunity to diversify education services by increasing the export of sport and recreation related higher education.
Sports technology has high growth potential and high value jobs. Current sports tech start-ups have identified a number of challenges to growth, such as access to skilled personnel, funding and leadership. If addressed, improved opportunities could be established for future market entrants.
Fostering an entrepreneurial climate with dedicated assistance programs may encourage new innovations in the segment. The high concentration of sports tech companies in our major cities has positive agglomeration benefits from co-location, but also presents an opportunity to expand their presence across other locations.
Although economic activity is difficult to measure in the sector, innovation in the sports industry is vital to outpace competition and to contribute to sustainable long-term growth.
The Australian professional sporting landscape is very strong, with well supported teams and strong broadcast figures domestically. However, this demand does not extend to international consumption of our sporting content. There is an opportunity to explore growing the export of this content to an international market. We saw a brief glimpse into this during COVID-19 when Australian sport was put on the world stage when no other content was available. With Australia currently doing well to ‘flatten the curve’, could this be a very precedent opportunity?
Given the changing nature of the media landscape, with people shifting towards on-demand consumption of content, broadcasters are placing higher reliance on live sporting content as part of their business strategy, as live sport content is time sensitive and can secure viewers at specific times. While time zone differences present a challenge, greater broadcast penetration into international markets also presents strong sponsorship opportunities for sport more broadly.
Sport remains one of the hardest hit sectors by the COVID-19 pandemic but its significant economic, social and health benefits means that a strong and resilient sports industry will be a vital player in Australia’s post-COVID recovery. Now is the time to explore the growth potential of the sports’ industry and how to maximise its ongoing contribution to Australian society.
This information can be found in the report, Sports Industry Economic Analysis.
Thanks to KPMG Management Consulting Associate Director Mitchell Malone and Director Chad Gardiner.