Estimates of the dimensions of the sports market in the US.
Humphreys, Brad R. ; Ruseski, Jane E.
Introduction
Sport is a complex activity encompassing spectacles like the
Olympic Games and informal pick-up games on urban basketball courts; a
recreational jogger, a runner in the Boston Marathon--a competition with
thousands of participants--and people watching the Boston Marathon on
television all participate in sport in some way. Academic research on
sports can be found in many disciplines, spanning the humanities, social
sciences, laboratory sciences, law, and business. In this paper, we
document the size of the sports industry in the United States from an
economic perspective.
A sizable literature on the economic impact of specific sports or
sporting events already exists, in part because of the ease of defining
the limits of events like a golf tournament or season of professional
baseball. Relatively little attention has been paid in the past to
estimating value of economic activity in the sports market, perhaps
because of difficulties formulating an economic definition of sport. In
our opinion, a thorough accounting of the size of the sports industry is
an important undertaking for several reasons. First, such an estimate
provides some general context for research on sport finance and
economics. Second, the sport industry receives significant subsidies
from national, state, and local governments. These subsidies take many
forms, including facility construction and operation, training for elite
athletes, and promotion of participation in sport for health benefits,
among others. Any full cost-benefit analysis of sports subsidies should
take into account the relative importance of the sport industry in the
economy. Finally, unlike other industries, the sport industry has a
cultural significance extending well beyond its economic boundaries. An
estimate of the overall importance of the sport industry must start with
an estimate of the economic dimensions of the industry.
The first step is to define sport, a topic that lies outside the
discipline of economics. Several definitions have been proposed.
Sociologist Jay Coakley (2003) characterized sports as activities
involving gross motor skills, competition, and an organized set of
rules. Economist Rodney Fort (2006) qualifies Coakley's competition
criteria to include only competition based on objective scoring and
further restricts sports to activities only using simple devices, like
bats and balls, or no devices at all. These definitions, and others,
like the criteria that some participants must receive a financial reward
for success, suffer from the limitation that many sport-like activities
exist. For example, hot dog eating and bass fishing would both appear to
qualify as a sport under these definitions.
One key issue in defining sport involves identifying criteria that
separate sport from games of skill like chess or poker and from
recreational activities like dancing, hiking, fishing, and gardening. A
secondary issue involves identifying criteria that appropriately define
competition in a way to distinguish sport from exercise. For example,
running has a competitive dimension but jogging does not. Weightlifting
is an Olympic sport, bodybuilding is a professional sport, and
competitions based on an athlete's performance on fitness equipment
like stationary rowing machines, elliptical trainers, and stationary
bicycles exist, blurring the already murky distinction between exercise
and sport.
Defining sport in a way that allows estimation of the value of
economic activity in the sports industry in a straightforward manner is
very difficult. We proceed by making arbitrary, but defensible decisions
about which activities constitute sport, exercise, recreation, and games
of skill. Those better equipped to answer this difficult question can
extend this research, or show that our results are not robust to
alternative definitions.
An Economic Definition of Sport
The second step is to define the sport market in economic terms.
Gratton (1998) discussed a general method for estimating the economic
dimensions of the sports industry from national income and product
accounts, and points out that economic interest in sport extends well
beyond the boundaries of professional sports. While a national income
and product accounting approach has some appeal, because of the
well-developed methodology and the existence of rich set of frequently
updated accounts for many developed economies, it also has a number of
weaknesses. First, on the national product side, the researcher is at
the mercy of the existing production classification system. The North
American Industrial Classification System (NAICS) does not identify the
sports industry. The sports industry makes up only a fraction of the
activity in any existing industry classification, leading to
overestimates of the size of the sports industry from national product
accounts. Second, on the national income side, the published spending
data are not detailed enough to identify the size of consumer spending
on sports, no mater how broadly defined. Third, in the US all levels of
government are involved in the provision of sports facilities and other
important activities on the supply side of the sports market, and
national income and product accounts do not contain detailed estimates
of government spending. Fourth, much of the activity in the sports
market involves non-traded goods and labor inputs not valued at market
prices. For example, the labor inputs provided by intercollegiate
athletes are not valued at market prices (Brown, 1993). Fifth, sports
markets feature both significant consumer surplus and non-market
consumption benefits that are not reflected in national income and
product accounts (Alexander, Kern, & Neil, 2000).
Given these problems, we draw on data from a wide number of sources
and use these data to develop estimates of the economic value of sports
from different perspectives. We define the sports market as having three
primary components:
1. Activities involving participation in sport,
2. Activities involving attendance at spectator sporting events,
and
3. Activities involving following spectator sporting events through
some media.
While some sport-related activities are not included in this list,
all three items can be thought of as part of sport and are also easily
defined and measured.
Each component contains elements that could be defined as
recreation, exercise, or games of skill. For example, including
participation in sports means that some activities that could be defined
as exercise, like aerobics or walking, will be included. Including
spectator sports means that auto racing, figure skating, and other such
activities fall into this definition of the sports industry. The most
difficult choice we face is the inclusion or exclusion of activities
like hunting, fishing, kayaking, horseback riding, sailing, and hiking.
These popular activities attract many participants, and require both
considerable time and expensive equipment. Many are recognized Olympic
sports. However, we exclude these activities from our definition of the
sports market because we believe that they fall under recreation, not
sports.
Participation in the Sport Market
Individuals can participate in the sport market in three ways: by
participating in some sport; by attending a sporting event; or by
watching or listening to a sporting event on television, radio, or the
internet. Each generates direct and indirect economic activity.
Participating in sport requires equipment, fees, and potentially travel,
all of which generate economic activity. Attending a sporting event
involves purchasing tickets, travel, and perhaps other purchases like
food and souvenirs. Watching or listening to sporting events requires
equipment, in the form of televisions, radios, or computers, as well as
subscriptions to broadcast services. Since all of these economic
activities increase with the number of participants, documenting the
number of participants is an important indicator of the size of the
sports market.
More importantly, individuals' participation in the sports
market generates significant economic benefits beyond direct and
indirect economic activity. Individuals derive satisfaction, or utility,
from participation in the sports market, which has economic value. In
the jargon of economics, individuals' participation in the sports
market produces consumption benefits. These consumption benefits are not
bought and sold like tickets, but they are important when assessing the
overall size of the sports market. Although placing a dollar value on
sport-related consumption benefits is beyond the scope of this paper, it
is safe to say that the value of these consumption benefits rises with
the number of participants in the sports market.
Sport Participation
There are a number of sources of data on participation in sport in
the United States. The National Sporting Goods Association (NSGA)
periodically produces estimates of the number of participants in sport
in the United States. The NSGA participation estimates are based on a
mail survey sent to about 300,000 households. Table 1 shows NSGA's
estimates of the reported number of participants for a selected group of
sports in the United States for the most recent year available, 2005.
Walking is by far the most popular sport, in terms of total
participation. This is to be expected, because walking is not a costly
activity. Participating in walking requires relatively little equipment,
few fees, and does not have to involve much travel, since many people
can walk simply by stepping outside their home or workplace. Because of
the low participation costs, walking also generates relatively little
economic activity. The other sports on Table 1 generate more economic
activity per participant than walking because they require more
equipment, membership fees, and travel costs.
Aggregating the number of participants reported on Table 1 points
out an important limitation of these estimates as an indicator of
economic activity. Table 1 suggests that over 484 million individuals
participated in sport in 2005. Since the US population was about 297
million, the methodology that generated these estimates involves
counting of some individuals multiple times. The survey question asks
the respondents to list each sport participated in more than once in the
past year, and to list all the sports that every member of the household
over the age of seven participated in more than once during the past
year.
Clearly, any individual can easily participate in both bowling and
golf, so in one sense this accounting method is appropriate for
assessing the dimensions of the sports market. The economic activity
associated with participation in any sport also depends on the intensity
of participation. For example, the participation count for golf on Table
1 may include a person who borrows a set of clubs and plays a single
round and a person with a country club membership who plays three rounds
of golf a week and takes a vacation to play golf every year. The total
value of economic activity, in terms of the direct economic activity and
consumption benefits generated by these two golfers differs
significantly. Because of this heterogeneity in the intensity of
participation, the participation figures on Table 1 do not provide
precise information about the dimensions of sport participation in the
US.
A measure of participation in the sports market that accounts for
intensity of use will help overcome this problem. We use the Behavioral
Risk Factor Surveillance System (BRFSS) for evidence on sport
participation that accounts for intensity of use. The main element of
the BRFSS is the Behavioral Risk Factor Surveillance (BRFS) survey, a
nationally representative survey of the adult population of the United
States conducted by the Centers for Disease Control and Prevention
(CDC). The BRFS collects uniform state specific data on health
prevention activities, including physical activity. The BRFS employs a
telephone survey, meaning that individuals must live in a household with
a telephone to be eligible for the survey.
The 2000 BRFS contained detailed questions about sport
participation. This includes questions that ask respondents to list the
sport that they spent the most time participating in, given that they
reported participating in any sport. The specific BRFS question was:
What type of physical activity or exercise did you spend the most time
doing during the past month? Individuals who answered this question are
not just casual, once or twice a year, participants in sport. So the
sport participants identified by this survey question probably generate
significant economic activity while participating.
Since the BRFS is a nationally representative sample, the results
of this survey can generate estimates of the total number of
participants in various sports. Table 2 shows the estimated number of
participants for a group of sports from the 2000 BRFS. Many other types
of physical activities, including gardening and housework, were reported
as physical activities in the 2000 BRFS, but we consider this to be the
relevant group of sports for this analysis.
Again, we interpret the totals on Table 2 as reflecting frequent
participants in these sports and the totals on Table 1 as reflecting
both frequent and infrequent participants. The participation totals on
Table 1 and 2 show some consistencies. Walking has the most participants
on both tables. About 70 million people, or 25% of the population,
reported walking frequently for exercise according to the BRFS in 2000.
About 87.5 million people, or 30% of the population, reported walking
for exercise either frequently or infrequently according to the NSGA in
2005. The biggest difference between these two tables is the smaller
number of frequent participants in all the sports except walking. For
example, while only 2.3 million people reported swimming frequently for
exercise, 56.5 million people reported swimming in the NSGA survey on
Table 1 that includes infrequent participants. This pattern can be seen
in the participation counts for all the other sports.
These participation data suggest that in any year over 50% of the
US population participate in some sport regularly, and a larger number
participate in sport occasionally. By either measure, individual
participation in sport in the US is significant, and generates a
considerable amount of economic activity.
Attendance at Spectator Sporting Events
The National Sporting Goods Association also compiles total
spectator attendance for a number of professional and amateur sports.
Table 3 contains estimates of total attendance for selected sports
leagues in 2005. Professional baseball draws the most spectators of any
US sport, over 74 million people in 2005. An additional 15.6 million
attended a minor league baseball game. In part, this reflects the large
number of professional baseball teams at the major and minor league
level, and the relatively long baseball season that provides consumers
with many opportunities to attend games.
The next two largest sports in terms of total attendance are
college football and college basketball. These totals reflect college
attendance at all levels. Hundreds of colleges and universities have
football and men's basketball teams, so this large total is
expected, given the ample opportunities to attend these games. Some
might be surprised to see that National Football League (NFL) total
attendance is smaller than the other major professional sports
leagues--including hockey--and smaller than NCAA football and
basketball. However, the NFL plays a relatively short 16-game regular
season schedule and, as we will soon see, focuses on television viewing
as its primary means of public exposure. NASCAR attendance is broken out
into Nextel Cup, Busch Series, and Truck Series on Table 3. Total NASCAR
attendance was just under 12 million in 2005, and when the other car
racing sports are added to this, total attendance at all professional
racing in 2005 was over 17 million, exceeding total attendance in the
NFL. But total professional and NCAA football attendance, including
arena football, at over 63 million in 2005, dwarfs total professional
racing attendance.
Total attendance at the sports events listed on Table 3 was just
over 277 million in 2005. This total includes many individuals who
bought tickets to multiple games, including season ticket holders who go
to many games in one sport every year and people who attend many
different sporting events every year. Still, 277 million tickets sold in
2005 is a large number compared to the total US population of 296.6
million. This represents a significant amount of economic activity, both
in terms of spending on tickets, spending on other related goods and
services like travel, and the opportunity cost of the time spent
attending sporting events.
The 277 million people who attended pro and college sporting events
in 2005 generated a substantial amount of direct and indirect economic
activity. Tickets were purchased for each of these events, along with
parking, concessions, and souvenirs. For those spectators who traveled
long distances to attend a sporting event, attending the event also
generated travel spending, including hotels and meals. An estimate of
the indirect economic impact of this spending could be generated from an
appropriate input-output model, but that exercise is beyond the scope of
this paper.
Viewing and Listening to Mediated Sport
Spectator sports play an important role in print and broadcast
media. Almost every daily newspaper in the country has a sports section
and sports broadcasts appear on many local and national television and
radio stations across the country. According to the Vital Statistics of
the United States, 2005, the total multimedia audience in the United
States was 215,800,000. This implies that, of the 295,194,000 people
counted as the resident population of the US in 2005, 73% of them had
access to some form of media, including newspapers, television, radio,
and internet. The National Sporting Goods Association reports estimated
television viewing audiences for a number of professional sports
leagues. Unfortunately, estimated television viewing audiences for NCAA
football and men's basketball are not readily available. Table 4
shows the estimated television audiences for the professional sports
leagues tracked by the NSGA in 2005.
The National Football League has the largest television viewing
audience of any US professional sports league. The 105 million person
NFL television audience is over one third of the total US population in
2005.More than one person in every three watched NFL football in 2005.
Following the NFL are Major League Baseball (MLB) and the National
Basketball Association (NBA), two other traditionally popular
professional sports leagues.
One interesting feature on Table 4 is the relatively large TV
audiences for professional golf (about 38 million viewers) and tennis
(about 26 million viewers), and horseracing (21.5 million viewers), a
sport widely perceived to be in decline in the US. The estimated
television audience for these sports may reflect the popularity of a few
events, like the four "Major" championships in golf, the
United States Open and Wimbledon in tennis, and the three "Triple
Crown" races in horseracing. The popularity of these sports on
television may not have the same durability of the NFL, MLB, and the
NBA, which probably have a larger day-to-day following. Also, note that
NASCAR has a very large estimated television audience; the total
audience for the three NASCAR series is over 85 million, which placed it
at a similar level to the "big three" professional sports. A
caveat is that adding those three estimated television audiences may
lead to a lot of double counting, as many of the people in the Nextel
Cup series television audience are probably in the Busch series and
Truck series audiences as well.
The figures on Table 4 point out the problem with adding up the
estimated television audiences for individual sports to estimate the
total sport television audience. The NSGA estimates of total television
size do not indicate how long an individual spends watching each sport
in the average week or month, so we have no idea of the intensity of
viewing. Also, unlike live game attendance, the actual amount of time
spent "watching" a sporting event on television is difficult
to measure. A fan watching a sporting event on television could be doing
a number of things at the same time. For example, while writing this
section of the paper, the live television coverage of the Tour de France
was on in the background. Was that time spent watching sports on
television, or working?
In any event, watching sports on television generates the smallest
direct and indirect economic activity of any of the activities discussed
so far. Watching sports on television requires the purchase of equipment
(a television) and may also require a subscription to cable or satellite
programming packages. Beyond this, the primary economic activity
generated by watching sports on television comes from the consumption
benefits, as well as advertising and sponsorship.
Aggregate estimates of the number of people who listen to sporting
events on the radio in the US are difficult to find. According to the
Statistical Abstract of the United States, the estimated radio listening
audience in 2005 was about 181 million people, a total that is not much
smaller than the television audience. Anecdotal evidence suggests that
quite a bit of sports programming is available on radio, perhaps as much
as is available on television for the NFL, MLB, and the NBA. So the
opportunity cost of time listening to sporting events on the radio may
be comparable to the opportunity cost of watching sports on television.
Determining the amount of sports viewing done over the internet is
also difficult to estimate. The Statistical Abstract of the United
States reports that about 138 million people had access to the internet
in 2005. In one recent survey, the fraction of surveyed internet users
who reported "checking sports scores or information" was
larger than those reporting downloading music, although smaller than
those using the internet for email. In any case, the amount of time
spent following sports on the internet is proportionate to overall
internet use, which is growing rapidly. Furthermore, much of the
sport-related internet use may take place at work, where many people
have internet access, unlike sports viewing on television, which takes
place primarily at home or in bars and restaurants.
Estimating the Value of Economic Activity in the Sports Market
A second indicator of the size of the sports market is the dollar
value of the direct and indirect economic activity that takes place in
it. Markets are composed of suppliers who make and sell goods and
services and demanders who purchase and consume goods and services. This
distinction suggests two alternative methods for estimating the value of
economic activity in the sports market: add up the value of output or
revenues of all of the producers in the sports market, or add up the
total spending of all consumers in the sports market.
How much direct economic activity, in terms of dollar value of
goods and services produced and consumed, takes place in the sports
market? The answer to this question is surprisingly difficult to
determine. We can easily find out the total sales of the hotel industry
for any recent time period ($170,767,400,000 in 2005), and have some
idea of the amount of economic activity that takes place in the market
for hotel rooms in terms of the dollar value of sales made by all
businesses selling short-term accommodations. This supply side estimate
is readily accessible because the accommodations industry has been
defined in the existing industrial classification system used a by the
United States Census Bureau to quantify economic activity; but we cannot
find out the total sales of the sports industry so easily. The sports
industry is not defined by any government agency that collects
statistical data on economic performance in the United States. Because
of the lack of a commonly accepted definition of the sports market, any
measure of the value of the economic activity in the sports industry
must be cobbled together from various sources.
Supply Side Estimates of the Sports Market
The US Census Bureau groups individual firms into industries based
on the North American Industrial Classification System (NAICS). The
NAICS includes the Arts, Entertainment, and Recreation industry (NAICS
71) that contains a number of sub-industries that are clearly part of
the sports market, based on the definition offered above. These include:
Spectator Sports Teams and Clubs (NAICS 711211), Racetracks (NAICS
711212), Other Spectator Sports (NAICS 711219), Golf Courses and Country
Clubs (NAICS 71391), Skiing Facilities (NAICS 71392), Fitness and
Recreation Centers (NAICS 71394), and Bowling Centers (NAICS 71399). The
NAICS also identifies Promoters of Performing Arts, Sports, and Similar
Events (NAICS 7113) and Agents and Managers for Artists, Athletes,
Entertainers, and Other Public Figures (NAICS 7114), but these
sub-industries appear to include activities outside sports. This group
of sub-industries in NAICS Industry 71 accounts for a large fraction of
the businesses on the supply side of the sports industry. One important
exception is manufacturers of sports equipment. These firms are
primarily grouped in Sporting and Athletic Goods Manufacturing (NAICS
33992).
There are several other sport-related sub-industries in the NAICS.
These include Sporting Goods Stores (NAICS 45111) and Sporting and
Recreational Goods and Supplies Merchant Wholesalers (NAICS 42391).
These two sub-industries are related to the distribution of sporting
goods. We do not include the wholesale and retail sub-industries in the
estimates of the size of the sports industry because these
establishments also sell general recreation goods like camping, hunting,
and fishing supplies that are outside of the sports market as defined in
this paper. Also, other wholesale and retail establishments handle
sporting goods, so these sub-industries would not reflect all of the
sporting goods equipment sales in the United States. We turn to other
sources of data to estimate the size of the sporting goods and supplies
industry in the sports market.
The primary source of economic data disaggregated to the four-digit
to six-digit NAICS code level is the Economic Census. The Economic
Census, a complete census of firms in the US, takes place every five
years and reports summary statistics like total revenues, total payroll,
and total employment for all of the industry-groups in the NAICS. In
addition, supplementary Economic Census publications contain details on
sources of revenues of firms in various industry-groups.
Table 5 shows some summary statistics for the NAICS sub-industries
identified above that are part of the sports market. In terms of number
of establishments and employees, the Fitness and Recreation Center
sub-industry is the largest of these, with over 25,000 firms employing
over 445,000 people. In terms of total payroll, the Spectator Sports
Team sub-industry is the largest, with $9.1 billion in total payroll in
2002. Despite the small number of employees in this sub-industry, the
total payroll is so large because of the high salaries received by
professional athletes in the top leagues. In terms of revenues, the Golf
sub-industry is largest, generating about $17.5 billion dollars in
revenues in 2002. In total, these sub-industries included 49,159
establishments employing 1,080,306 people in 2002. The total payroll for
these establishments was just under $26 billion and the total revenues
earned by establishments were about $71.5 billion. In terms of revenues,
the plastics manufacturing industry (NAICS 326) is of similar size; in
terms of employment, about the same number of people are employed at new
car dealerships (NAICS 44111).
Table 6 shows some summary statistics on sources of revenue for the
same NAICS sub-industries in Table 5 (excluding Sporting and Athletic
Goods Manufacturing). The primary sources of revenue differ slightly
depending on the nature of the sub-industry but the main categories are
admissions, revenue from radio and television, membership dues, and sale
of food and beverages. In the Spectator Sports Team sub-industry, 35.5%
of the revenues of establishments come from admissions (about $4.6
billion in 2002) and 37% come from radio and television broadcast fees
(about $4.8 billion in 2002). In the Golf sub-industry, 57% of revenues
come from membership dues or admissions, and 24% from the sale of food
and beverages. In the Fitness and Recreation Center sub-industry, 57% of
the revenues come from membership dues ($8.6 billion in 2002). No other
single category of revenues contributed more than 10% to total revenues
in this sub-industry. The operation of establishments in these
sub-industries differs considerably in terms of how they generate
revenues. Also, note that total revenues earned by spectator sports
teams and racetracks in 2002 were about $5.2 billion dollars. This is
the only estimate of the value of following sports through some media
that we were able to find. It understates the total value of following
sports through media because it ignores internet-based sports content.
Several alternative sources of data about sporting goods equipment
manufacturing firms exist. The NSGA publishes estimates of the revenues
for sports equipment manufacturers. The NSGA revenue estimates are for
equipment manufacturers like Nautilus and Callaway ($7.5 billion in
revenues in 2005), footwear manufacturers like Nike ($31.4 billion in
2005), and apparel manufacturers like Russell Athletic and Under Armour
($5.5 billion in 2005). The NSGA estimate of total revenues for all
sports equipment, footwear, and apparel manufacturers was $44.4 billion
in 2005.
Demand Side Estimates
The other side of the sports market is composed of purchases of
tickets to spectator sporting events, sports equipment, fees paid for
admission to participatory sport, and subscriptions and equipment used
to watch and listen to sporting events on some sort of media. In
general, these purchases can be made by households, other firms, and
even the government at various levels. For example, households and
businesses can buy tickets to spectator sporting events. Individuals,
professional sports teams, high school and college sports teams, and
amateur sports teams all buy jerseys and other equipment for athletes.
So spending on sports participation and spectator sports can come from
all parts of the economy. However, we only have access to data on
sport-related spending by households.
There are a number of sources of data on household spending on
sports. Each has its strengths and weaknesses, and none are
comprehensive because of the lack of a standard definition of the sports
industry. The National Sporting Goods Association conducts an annual
survey of consumer purchases of sporting goods. This survey was sent to
80,000 households across the US and was returned by 77% of the
households contacted. The NSGA survey asks questions about annual
spending on many types of sporting goods, including footwear, apparel,
and equipment. The US Bureau of Economic Analysis publishes estimates of
annual consumer spending on admissions to spectator sporting events.
This estimate includes spending on admissions to amateur and
professional sporting events, including horse and dog race tracks and
auto racing.
Table 7 shows the estimated consumer spending for several sectors
of the sports market in 2005.According to the NSGA survey, spending on
equipment, footwear, and apparel by participants in sport was $50.3
billion dollars in 2005. However, this total includes equipment
purchases for a number of activities like hunting, fishing, and camping
that we exclude from the sports market. The estimated spending on
equipment for activities that fall within our definition of the sports
market is about $13.5 billion. The NSGA survey estimates for sports
apparel and footwear were $10.9 billion and $15.7 billion, respectively,
in 2005. These estimates overstate the spending on apparel and footwear
in our definition of the sports market, but the NSGA data does not
contain enough detail to adjust the estimate. The US Bureau of Economic
Analysis, in the August 2006 Survey of Current Business, reported
spending on admissions to spectator sports to be $15.9 billion dollars
in 2005. Admissions to spectator sports consist of admissions to
professional and amateur athletic events and to racetracks. Note that
this definition of spectator sports varies in an important way from the
definition employed by the US Census Bureau's NAICS codes. Recall
the NAICS definition for the spectator sports teams and clubs comprises
professional or semiprofessional sports teams such as baseball,
football, and basketball but does not comprise amateur athletics like
high school and college sports.
Together, this spending on sport accounted for less than 1% (0.76%)
of the $8.7 trillion of personal consumption expenditures in the United
States in 2005. In comparison, this spending is roughly equal to the
amount that consumers spent on gas in 2005, and about one ninth the size
of annual consumer spending on health care.
Table 8 presents more detailed data from the NGSA survey of
consumer spending on sporting equipment in 2005 reported on Table 8. The
sports represented in Table 9 roughly correspond to some of the sports
that respondents indicated they participated in the BRFS survey that are
listed in Table 2. The largest expenditures are for exercise equipment
($5.2 billion) and golf equipment ($3.5 billion). These two expenditure
categories comprise 36.48% of total spending on equipment that was $23.7
billion in 2005. The consumer expenditure data presented in Table 9 does
not add up to $23.7 billion because not all sports for which the NSGA
collected data are represented in this table. For example, we do not
show spending on camping equipment or fishing tackle because these
activities do not fit the definition of sport used in this paper.
Spending on camping equipment was $1.4 billion in 2005 and spending on
fishing tackle was $2.1 billion so spending on equipment for these
activities is substantial. After exercise and golf equipment, consumer
spending on athletic goods for teams was the next largest category of
expenditure at $2.6 billion in 2005.
Alternative Estimates of Consumer Spending on Sport
The NSGA survey and the US Bureau of Economic Analysis (BEA) are
not the only sources of data about consumer spending on sport. While
these data sources provide important information about consumer
spending, they also have limitations. The NSGA survey does not require
the respondents to consult financial records when reporting their
spending, so estimates based on this survey may have recall bias. The
BEA estimates are based on National Income and Product Account estimates
and must conform to North American Industrial Classification System
(NAICS) industries that do not capture all of the sport market as
defined above.
An alternative source of data on consumer spending on sport is the
Consumer Expenditure Survey (CEX). The Consumer Expenditure Survey is a
nationally representative quarterly survey of household spending.
Approximately 7,500 households take part in the interview survey each
quarter, and the respondents are asked to consult bills and other
financial records when responding to hundreds of detailed questions
about their household spending and other characteristics. Since the CEX
is conducted quarterly, and each household appears in the survey for
five consecutive quarters before being replaced, the survey is a rich
source of data about consumer spending. Dardis et al. (1994) used CEX
data to estimate expenditure on several forms of leisure, a broader
category of consumer spending than we consider here.
The CEX asks a number of detailed questions about consumer spending
on sports. Table 9 shows the CEX section and spending item description
for all of the sport-related spending variables in the CEX. These
spending variables include spending on consumer durables like exercise
equipment, nondurables like clothing and shoes, tickets to spectator
sporting events, memberships to fitness clubs and country clubs, and
fees for sport participation. We group these different sport spending
variables into three categories: spending on sports equipment, spending
on spectator sport, and spending on sport participation. The category
that each variable belongs to is shown in column three of Table 9.
These spending variables, along with the sampling weights in the
CEX, can be used to generate national estimates of total annual spending
on each of the types of consumer sport spending shown on Table 9. If
[s.sub.j] is the spending on CEX item s by household j and [w.sub.j] is
the sampling weight for household j, an estimate of total annual
consumer spending on item j can be generated by
S = [[summation].sub.j] [w.sub.j] [s.sub.j]
where S is the estimated total annual spending on CEX item s.
As part of the sampling methodology, the BEA publishes sampling
weights for each household in the CEX. These sampling weights link the
sampled household with the total number of households in the United
States with these characteristics. In other words, each household
sampled in the CEX represents a certain number of households in the
United States, and the sampling weight reflects this number. If a
sampled CEX household spends $100 in a year on tickets to sporting
goods, and that household represents 50 households in the US population,
then [s.sub.j] equals $100, [w.sub.j] equals 50, and their product
equals $5,000 in total annual spending. Adding this up for the entire
CEX sample produces an estimate of total spending for the entire
country.
The fourth column on Table 10 shows the annual estimated spending
on each of these categories of consumer spending in 2005, the most
recent data available in the CEX. Consumer spending on sports equipment
was $9.177 billion in 2005, consumer spending on single-game and season
tickets to spectator sporting events was $4.902 billion, and consumer
spending on memberships to health clubs and fees for sport participation
like ski lift tickets was $12,980 billion. The total estimated consumer
spending for all these categories in 2005 was $30.4 billion.
Estimating Total Economic Activity
We identified three main components of the sports market:
participation in sport, attending sporting events, and following
sporting events through some media. Estimates of the value of these
economic activities can be derived by adding up total revenues earned by
businesses operating in the sports market, a supply side approach, or by
adding up total expenditures by purchasers in the sports market, a
demand side approach. Table 10 summarizes the various individual
estimates developed above and shows three alternative aggregate
estimates of the economic value of the sports industry in 2005. Table 10
disaggregates sports participation into equipment, apparel, footwear,
and fees to facilitate comparisons.
Table 10 contains two demand side estimates because we have two
alternative estimates of consumer spending on sports equipment and
spectating. In each case, the estimate derived from the Consumer
Expenditure Survey is lower than the alternative estimate. In addition,
both demand side estimates understate the actual size of the sports
market because we do not have an estimate of consumer spending on
following sports through media like TV, radio, and internet. Both
estimates clearly overstate the size of the sports market, since not all
athletic apparel and footwear is used by participants in the sports
market. Another discrepancy in the demand side estimates of the size of
the sports industry come from estimates of consumer spending on
spectator sporting events. The Bureau of Economic Analysis, in the
August 2006 Survey of Current Business, estimated consumer spending on
admission to spectator sporting events in 2005 at $15.9 billion. The
Consumer Expenditure Survey estimate of spending on season tickets and
single admission tickets to spectator sports in 2005 was $4.9 billion.
The Consumer Expenditure Survey estimates are considerably less than the
other sources of data. One possible explanation for this difference is
that the Consumer Expenditure Survey is not capturing corporate spending
on admissions to sporting events. Corporate spending is likely a large
component of the US Census Bureau data due to corporate spending on
premium seating locations and luxury boxes. The difference between the
BEA and CEX estimates of personal spending on attendance at spectator
sporting events is difficult to explain. Future research should explore
the source of this discrepancy.
Our supply side estimate exceeds the two demand side estimates by a
wide margin, primarily because of the roughly $20 billion difference
between revenues earned by footwear manufacturers and consumer spending
on athletic footwear. One reason for this difference could be exports of
athletic footwear. Setting the revenues of footwear manufacturers equal
to consumer spending on athletic footwear reduces the supply side
estimate to $52 billion, a figure that falls within the range of demand
side estimates. All three estimates are much lower than the $152 billion
estimate of the size of the sports industry reported by Meek (1997),
which would be $195 billion in 2005 dollars. However, this is a national
income and product accounts based estimate that, for reasons discussed
above, probably overstates the size of the sports industry by a wide
margin.
Note that we do not interpret the difference between the supply
side and demand side estimates as reflecting disequilibrium in the
sports market. We used two approaches as a rough check on the validity
of the estimates, since they are based on different underlying data
sources from different parts of the economy. Also, these figures are
based on point estimates of spending, not confidence intervals. The
confidence intervals would clearly be quite large since we are adding up
estimates from different data sources and different methods of
estimating aggregate values.
Conclusions
We set out to document the dimensions of the sports market in the
United States by estimating individual active and inactive participation
in sport and the value of economic activity in the sports market from
both a supply and demand perspective. While conceptually simple, both
aspects of determining the dimensions of the sports market proved to be
challenging because of the lack of a commonly accepted definition of the
sports market. The sports industry is somewhat unique in this regard
since many industries are clearly defined by the United States Census
Bureau or other government agency that collects statistical data on
economic activity. In addition, determining the amount of inactive
participation in sport through attendance at sporting events and viewing
and listening to sports on television, radio, and internet is difficult
given the existing data. Despite the challenges, we developed a working
definition of the sports market for purposes of the paper and used a
variety of publicly available data sources to develop estimates of the
size of the sports market.
We define the sports market as having three principal components:
1) activities involving individual participation in sport, 2) activities
involving attendance at spectator sporting events, and 3) activities
involving following spectator sporting events on some media. We then
examined participation and developed estimates of industry revenues and
expenses and consumer expenditures related to these three components.
Our analysis indicates that individual participation in sport in
the United States is significant. In any year, over 50% of the US
population reported participating regularly in sports, and a much larger
fraction of the population participate either regularly or occasionally.
We estimate the value of the economic activity in the sport market in
2005 to be in the range of $44 billion to $60 billion dollars. However,
this estimate is based on tangible economic activity. The total economic
importance of the sport industry would be much larger if intangible
benefits, like those generated by the shared experience of following a
sports team or the national pride generated by living in the country
that hosted the Olympic Games were included. For example, Davis and End
(in press) found evidence of significant intangible benefits associated
with living in the city that is home to the NFL team that wins the Super
Bowl; Johnson, Mondello, and Whitehead (2007) estimated that the
presence of a professional football team in a city generated $36 million
in intangible benefits; and Atkinson et al. (2008) estimate that hosting
the 2012 Summer Olympics will generate 2 billion [pounds sterling] in
intangible economic benefits in the UK.
While we believe that this exercise has been worthwhile, we also
hope that this paper will spur additional research. A number of
important questions are raised by these results. First, and foremost, is
the question of how to best define the sports market in economic terms.
This is important because it also helps to define sports economics.
Although we develop a working definition of the sports market that
allows us to generate estimates of the economic size of the industry,
our definition has a number of important limitations that can only be
overcome by additional research. Second, our estimates have uncovered
several interesting and potentially important discrepancies between
estimates of specific types of consumer spending in the sports market
generated from the Consumer Expenditure survey and other alternative
sources. Further research should examine the source of this discrepancy.
Third, despite a thorough search, we found no comprehensive estimates of
the amount of spending by consumers who follow sports through media like
television, radio, and, increasingly, the internet. Given the obvious
importance of this facet of consumer behavior, and the increasing use of
the internet, this gap in the literature clearly needs to be filled.
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Brad R. Humphreys (1) and Jane E. Ruseski (1)
(1) University of Alberta
Brad Humphreys is an associate professor in the Department of
Economics. He holds the chair in the economics of gaming. His current
research focuses on the economic impact of professional sports, and the
economics of sports gambling.
Jane Ruseski is an assistant professor in the Department of
Economics. Her current research focuses on the economics of
participation in sport and physical activity and the relationship
between sport participation and health.
Table 1: Estimated Participants in Sport, 2005
Sport or Activity Number of Participants
Walking 87,500,000
Swimming 56,500,000
Bowling 44,800,000
Health Club Membership 37,000,000
Bicycling 35,600,000
Weightlifting 32,900,000
Running/Jogging 29,200,000
Basketball 26,700,000
Golf 24,400,000
Baseball 14,600,000
Soccer 14,000,000
Softball 12,400,000
Volleyball 11,100,000
Inline Skating 10,500,000
Tennis 10,400,000
Mountain Biking 9,200,000
Downhill Skiing 6,400,000
Martial Arts (2004) 5,400,000
Snowboarding 5,200,000
Ice/Figure Skating (2003) 5,100,000
Cross Country Skiing 2,600,000
Ice Hockey 2,600,000
Table 2: Estimated Sport Participants, 2000
Based on BRFS Survey
Estimated Number of Participants
Sport Lower bound Mean
Walking 68,600,000 69,301,784
Running/Jogging 12,500,000 12,901,119
Weightlifting 7,118,775 7,396,304
Golf 4,787,312 4,982,688
Bicycling 4,588,754 4,791,467
Aerobics 4,189,563 4,355,448
Basketball 3,276,901 3,461,372
Health Club Workout 2,375,871 2,510,246
Swimming 2,216,229 2,356,134
Calisthenics 2,054,979 2,208,816
Bike or Rowing Machine Exercise 1,493,113 1,622,729
Tennis 1,072,147 1,171,802
Soccer 878,774 1,010,848
Martial Arts 570,918 649,406
Skating (Ice and Roller) 544,010 633,485
Bowling 543,637 611,725
Volleyball 456,615 531,830
Snowskiing 315,119 373,660
Raquetball 298,842 359,900
Boxing 167,959 208,423
Touch Football 133,717 179,878
Waterskiing 120,486 158,624
Squash 57,243 101,219
Surfing 57,243 101,219
Badmiton 29,427 50,090
Table Tennis 20,818 38,056
Handball 8,264 18,249
Softball 4,339 8,203
Total 118,481,056 122,094,722
Estimated Number
of Participants
Sport Upper Bound
Walking 70,000,000
Running/Jogging 13,300,000
Weightlifting 7,673,832
Golf 5,178,063
Bicycling 4,994,179
Aerobics 4,521,333
Basketball 3,645,844
Health Club Workout 2,644,621
Swimming 2,496,039
Calisthenics 2,362,652
Bike or Rowing Machine Exercise 1,752,346
Tennis 1,271,457
Soccer 1,142,922
Martial Arts 727,895
Skating (Ice and Roller) 722,960
Bowling 679,813
Volleyball 607,045
Snowskiing 432,201
Raquetball 420,958
Boxing 248,887
Touch Football 226,039
Waterskiing 196,761
Squash 145,194
Surfing 145,194
Badmiton 70,752
Table Tennis 55,295
Handball 28,234
Softball 12,067
Total 125,702,581
Table 3: Estimated Total Attendance at Sports Events, 2005
Sport Total Attendance
Major League Baseball 74,385,100
NCAA Football 43,486,574
NCAA Men's Basketball 30,568,645
National Basketball Association 21,369,078
National Hockey League (2004) 19,854,841
National Football League 17,011,986
Minor League Baseball 15,636,000
NASCAR Nextel Cup Series 6,300,000
Minor League Hockey 6,179,000
Horse Racing 5,979,000
Professional Rodeo 5,429,000
NASCAR Busch Series 3,911,000
Professional Golfers Association 3,200,000
Arena Football League 2,939,000
Major League Soccer 2,900,715
Minor League Basketball 2,625,000
Professional Tennis 1,970,000
Professional Boxing 1,931,000
IndyCar Racing 1,914,000
National Hot Rod Association 1,835,000
NASCAR Truck Series 1,708,000
Champ Car Racing 1,490,000
Professional Bowling Association 1,310,000
Women's National Basketball Association 1,087,000
Professional Lacrosse (MLL, NLL) 1,019,000
Major Indoor Soccer League 992,000
Table 4: Estimated Total Television Viewing Audiences, 2005
Sport TV Audience
National Football League 105,874,000
Major League Baseball 76,744,000
National Basketball Association 60,877,000
NASCAR Nextel Cup Series 45,588,000
Professional Golfers Association 37,899,000
NASCAR Busch Series 27,981,000
Professional Tennis 26,187,000
Horse Racing 21,560,000
IndyCar Racing 19,366,000
Professional Rodeo 18,862,000
Professional Boxing 18,094,000
Arena Football League 17,094,000
National Hockey League 13,870,000
Professional Bowling Association 13,470,000
Women's National Basketball Association 12,220,000
NASCAR Truck Series 12,073,000
Major League Soccer 10,010,000
Minor League Baseball 9,668,000
National Hot Rod Association 7,900,000
Minor League Basketball 7,126,000
Champ Car Racing 6,678,000
Minor League Hockey 3,315,000
Professional Lacrosse (MLL, NLL) 3,103,000
Major Indoor Soccer League 2,338,000
Source: National Sporting Goods Association (NSGA)
Table 5: Summary Statistics for Firms in the Sports Industry, 2002
NAICS
Sub-Industry Code # Estab. Employees
Spectator Sports Teams 711211 674 40,746
Racetracks 711212 646 47,121
Other Spectator Sports 711219 2,752 19,860
Golf Courses 71391 12,261 312,812
Skiing Facilities 71392 387 70,083
Fitness/Rec.Centers 71394 25,290 445,508
Bowling Centers 71399 4,924 82,010
Sporting/Athl.Gds.Mfg. 33992 2,235 62,166
Revenues Payroll
Sub-Industry (mil) (mil)
Spectator Sports Teams $13,025 $9,106
Racetracks $6,702 $995
Other Spectator Sports $2,585 $664
Golf Courses $17,533 $6,656
Skiing Facilities $1,801 $631
Fitness/Rec.Centers $14,987 $4,953
Bowling Centers $3,074 $904
Sporting/Athl.Gds.Mfg. $11,855 $2,075
Table 6: Sources of Revenue for Firms in the Sports Industry, 2002
(hundreds of thousands of dollars)
Sub-Industry NAICS Admissions Dues
Spectator Sports Teams 711211 4,623 n/a
Racetracks 711212 1,169 n/a
Other Spectator Sports 711219 31 n/a
Golf Courses 71391 n/a 5,904
Skiing Facilities 71392 13 138
Fitness/Rec. Centers 71394 636 8,620
Bowling Centers 71395 12 .38
Food/
Sub-Industry Beverage Radio/ TV
Spectator Sports Teams 171 4,852
Racetracks 260 306
Other Spectator Sports 8 21
Golf Courses 3,931 n/a
Skiing Facilities 213 n/a
Fitness/Rec. Centers 641 n/a
Bowling Centers 847 n/a
Table 7: Consumer Spending on Selected Sports Items, 2005
Item Total Spending
Sports Equipment (NSGA survey) $13,474,300,000
Sports Apparel (NSGA survey) $10,898,000,000
Sports Footwear (NSGA survey) $15,719,000,000
Admission to Spectator Sporting $15,900,000,000
Events (BEA)
Table 8: Consumer Equipment Purchases by Sport, 2005
(millions of dollars)
Sport Spending
Baseball and Softball 372.4
Basketball 309.3
Bowling 183.5
Exercise 5176.6
Football 95.2
Golf 3465.5
Skating (Hockey & Ice Skates) 138.5
Racquetball 45.4
Snowskiing 642.7
Soccer 66.5
Tennis 379.1
Volleyball & Badminton Sets 32.1
Athletic Goods Team Sales 2567.5
Total 13,474.3
Table 9: Sport-Related Expenditure Items in the Consumer Expenditure
Survey, 2005
CEX Section Item Description Category Spending
Appliances and General sports Equip.
Equipment equipment
Appliances and Health and exercise Equip.
Equipment equipment
Appliances and Winter sports equipment Equip.
Equipment
Appliances and Water sports equipment Equip.
Equipment
Appliances and Bicycles Equip.
Equipment
Appliances and Other sports and Equip.
Equipment recreation equip.
Equipment Repair Sport and recreational Equip.
& Service equip.
Clothing Active sportswear Equip.
Estimated Total Spending on Sports Equipment, billions $9.177
of dollars
Subscriptions/ Season tickets to Spectator
Memberships sporting events
Entertainment Single admissions to Spectator
expenses spectator sports
Estimated Total Spending on Spectator Sports, billions of $4.902
dollars
Subscriptions/ Country clubs, health Particip.
Memberships clubs,etc.
Entertainment Fees for participating Particip.
expenses in sports
Estimated Total Spending on Sports participation, billions $12.980
of dollars
Table 11: Estimated Total Economic Value of Sports Industry, 2005
(billions of dollars)
Demand Side
Component Estimate 1 Estimate 2
Participation Equipment (a) $7.50 $13.47 $9.18
Footwear (b) $31.40 $10.90 $10.90
Apparel (c) $5.50 $15.70 $15.70
Fees (d) $16.60 $3.25 $3.25
Subtotal, $61.00 $46.39 $39.03
Participation
Spectating (e) $6.30 $15.90 $4.91
Mediatedf $5.65
Total $72.95 $59.22 $43.94
(a) : Supply side estimate from NSGA; estimate 1 from NSGA, estimate
2 from Consumer Expenditure Survey
(b) : Estimates from NSGA
(c) : Estimates from NSGA
(d) : Supply side estimate from U.S. Census Bureau, demand side
estimate from Consumer Expenditure Survey
(e) : Supply side estimate from U.S. Census Bureau; demand side
estimate 1 from BEA Survey of Current Business, demand side
estimate 2 from Consumer Expenditure Survey
(f) : Estimate from U.S. Census Bureau (see Table 6)
