Global brands in sports: identifying low-risk business opportunities

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.