Games take bronze in battle for sport industry’s value
By Economics Correspondent Sean Whelan
According to a new study on the economic impact of sport, it seems that the least economically important part of the sports industry is, er….sport.
The European Commission is now trying to promote sport as “a real industry” that can be a significant driver of growth. So can we really run, kick and jump our way out of recession?
The Eurocrats think the sports industry in its broadest sense contributes €295 billion in EU gross value added – that’s about 3% of the total.
And it employs lots of people too – around four and a half million people. That’s about 2.1% of the EU workforce.
But they calculate that every job in the sports “supply chain” generates 0.65 new jobs in related industries outside the supply chain. So they think the total employment generated by sports activities is 7.3 million – or 3.5% of total EU employment.
As the employment share is higher than the value added share, it means the “sports industry” is labour intensive, so the commission – acting for governments that want/need to create more jobs – notes approvingly that investment in the sport related economy “generates more employment than growth in the economy as a whole”.
So what is this sports supply chain of which they speak?
Well obviously there is the “sport” bit – the clubs and teams, the stadiums and sports facilities, and the activities, like skiing or cycling etc.
Then there are the so called “upstream activities” – industries producing goods and services needed for sport. That includes things like sports shoes and clothing, timing devices, sports cars, horse breeding, education etc. (though it notes that most sports-wear in the EU is now manufactured in Asia with “design inputs” from the EU).
And finally the “downstream activities” – industries that use sport as an important input, such as TV broadcasting, betting, hotels and restaurants, vets, diet supplements, health services etc.
But when it comes to hard cash, it’s the upstream industries that generate the most value added – €137 billion by the Commission’s estimate. Next are the downstream activities – worth an estimated €108 billion.
That leaves just €49 billion for the bit in the middle of the chain – the “sport” bit.
It’s the same in the distribution of jobs with upstream activities employing 2.5 million, downstream activities employing 1.3 million, and your actual sport employing just 700,00.
So that dream job as a top striker for Barcelona will probably be as elusive as ever – the jobs growth is more likely to be in hawking sneakers or DVDs of Leinster’s Heineken Cup wins.
The commission lists out the manufacturing sectors with the highest sports related added value.
Top of the list – with €3.4 billion – is printed matter and recorded media. That’s books, programmes, newspapers and DVDs to the rest of us.
Sharing top billing with €3.4 billion in value added is the manufacture of skis, bindings and poles; ice skates and roller skates; water sport equipment; billiard tables; bowling alleys etc.
Third is the manufacture of “sporting boats, canoes, gliders, sport airplanes, balloons etc” – worth €2.9 billion.
Only then do we come to the obvious stuff – “Wearing apparel and furs” (or Man United shirts in this part of the world) – an industry worth €1.5 billion.
There are six other categories in the billion euro plus category, including “chemicals, chemical products and manmade fibres”. Food products and beverages account for €600 million.
The retail sector is thought to benefit from spending on sport-related articles to the tune of €61 billion a year.
The latest figures they had seem to date from a 2005 study, so they are quite out of date in terms of cash spend, but probably indicative of the geographical spread. Bulgaria, Poland and Romania spent less than €20 per capita, while in Luxembourg they spend averaged €300 per skull.
The biggest market for sports articles is Britain (all those Man Utd shirts), followed by France and Italy.
But when it comes to making money from making sports stuff, just like in soccer, Germany wins – followed by Britain and France, with Italy and Austria making up the top five.
Construction is believed to benefit from sport-related spending to the tune of €3 billion a year – largely from stadium and facilities costs.
The next European football championship in France in 2016 will see an estimated €2 billion spent on stadium and other infrastructure, while building projects for the London Olympics amounted to €2.9 billion.
Sports tourism is set for fair growth too, according to the commission, which sees it expanding by 6% a year for the next few years.
Worldwide it estimates 12 to 15 million trips abroad are made for the main purpose of watching sports events, and cities are now developing products around pleasure sports to attract more tourists. The main countries of origin for European sports travellers are Britain, Germany, Italy, Spain, Denmark, Sweden and Finland.
Finally the Commission points out the important role sport plays in driving innovation in other industries. Some of this is driven by the desire to get better performance and results from athletes.
According to Brussels, this has led to innovations in new materials, such as carbon nanotubes, nanocomposites, shape memory alloys, self healing polymers, technical textiles, new sports nutrition and drinks, and improved sports products.
A less obvious area for innovation is in ensuring that rules are properly and fairly applied, such as refereeing aids (Hawkeye is the obvious one here) and doping control tests.
The third group of innovations relate to improving the spectator experience, both for those attending the event live (technology that helps manage crowds safely and comfortably), and for that much larger group, the couch potatoes, who want more and better TV and online experiences related to sport. Yet another area of life the nerds and geeks can exploit for profit.
Apparently sports technology is now a leader in several fields of applied science: textile technology, mechanics of human motion, new materials, sensors, actuators and human oriented design.
But when it comes to the direct impact of sport on EU gross value, the winners are the services sector, which pulls in €127 billion (this is 73% of a smaller value added number – €174 billion).
This is the “old economy” of sport – the main activity here is “recreational, cultural and sporting services” – worth €53 billion.
Education is next at €22 billion, hotels and restaurants make €17 billion, while health and social work services related to sport add €9 billion.
Curiously the paper gives no estimate for the impact of sport on “beer and alcohol related consumption (including Kebabs)” in Europe.
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