PESTEL analysis of the sports Industry
This is a detailed PESTEL analysis of the sports industry which draws relevant examples from the UK, USA, Canada, Australia, and some other countries. There is no doubt that sports is a multi-billion dollar industry that includes various sectors such as sport events, sports media, sports equipment, and sports apparel. It is a very vast and diverse industry, with a wide range of stakeholders, including athletes, teams, fans, sponsors, broadcasters, and governing bodies.
Political factors that impact on the sports industry
Political factors have a significant impact on the global sports industry. For example, government policies and regulations can influence the way sports events are organised and managed. In some cases, governments may provide funding or tax incentives to support the development of sports infrastructure.
On the other hand, political instability or conflict can disrupt sports events and affect the safety and security of athletes and spectators. Cancellations of games due to political unrest are often seen in many countries around the world.
Politics has become an integral part of sports, with many events being used as platforms for political statements. However, while it is important to address social issues, politicizing sports can have negative consequences.
For instance, it can lead to division and alienation of fans and countries who do not share the same political views. It can also distract from the actual purpose of sports, which is to provide entertainment and promote healthy competition.
Economic factors that impact on the sports industry
Economic discussion is a major part of this PESTEL analysis of the sports industry. This industry generates significant revenue through various sources, including ticket sales, sponsorships, broadcasting rights, merchandise sales, and licensing fees. It is likely to be worth around 700 billion dollars by 2026 (Statista, 2023).
Economic factors such as inflation, recession, and fluctuating exchange rates can impact the sports industry’s revenue streams. If people struggle financially, they may prefer to watch sports on TV rather than going to the stadiums.
However, this is less evident in the UK as the British love of live sport shows no sign of slowing down as evident from so much enthusiasm and attendance in stadiums to watch Premier League football matches (Rogan, 2023). This is indeed happening during the worst cost of living crisis.
In recent years, the sports industry has faced a range of economic challenges, including increasing competition for sponsorships and broadcasting rights, and the rising cost of player salaries. For instance, the transfer fee of a top footballer in popular football leagues in Europe can go well over 100 million Euro (Statista, 2023).
Sociocultural factors that impact on the sports industry
Sociocultural factors have a significant impact on the sports industry. The industry is heavily influenced by social trends, cultural values, and consumer behavior. For example, changes in consumer preferences and lifestyles can affect the demand for different sports and types of sports events.
The Summer Olympics, Winter Olympics, FIFIA World Cup, Tour de France, ICC Cricket World Cup, Asian Games, and Rugby World Cup are some of the greatest sporting events on earth. Billions of people watch these events live on TV and in person in stadiums. These events offer great opportunities for people to understand different cultures.
Sports have become an integral part of many societies, and it is not uncommon to find certain sports being more popular in some regions than others. For instance, soccer is more popular in Asia, Europe, Africa, and South America. On the other hand, American football, Basketball, and Baseball are the top three sports in the USA.
Ice hockey, lacrosse, soccer, baseball, and cricket are the most popular sports in Canada, while rugby, football, netball, swimming, and cricket are very popular in Australia. Basketball, soccer, table tennis, badminton, and esports are very popular in China. In fact, China has the largest esports market in the world.
History plays a significant role in shaping sports preferences. For instance, soccer has been played in Asia, Africa, and Europe for centuries, and it has become deeply ingrained in the culture.
Likewise, cricket is extremely popular in West Indies, South Africa, India, Pakistan, Bangladesh, Sri Lanka, Zimbabwe, the UK, Australia, and New Zealand. It is worth noting that cricket came to India with the East India Company during the British colonial period.
In recent years, there has been a growing concern about the social impact of the sports industry, particularly in relation to issues such as doping, bribing, illegal betting, competition manipulation, abuse, corruption, and discrimination. In fact, the past two decades have witnessed a substantial increase in criminal activities that have affected the sports industry badly (UN, 2023).
Consequently, organisations within the sports industry are increasingly focused on promoting ethical and responsible behavior and addressing social issues through their activities and initiatives.
Technological factors that impact on the sports industry
Technological discussion is a major part of this PESTEL analysis of the sports industry. Technological factors have impacted on the industry in different ways. For instance, FIFA’s video assistant referee (VAR) system supports the decision-making process of the referee in match-changing situations. The system has already been introduced in many countries (FIFA, 2023).
Advances in technology have enabled organizations within the industry to reach a wider audience and provide a more engaging experience for fans. For example, the rise of social media has enabled organizations to engage with fans in new and innovative ways, while developments in virtual and augmented reality have opened new possibilities for live streaming and immersive experiences.
However, technological advances have also created new challenges for the industry, such as the rise of online piracy and the need to protect intellectual property rights.
Environmental factors that impact on the sports industry
Environmental factors have become increasingly important for the sports industry in recent years. This industry has a significant impact on the environment, particularly in relation to issues such as energy consumption, waste management, and carbon emissions.
Organisations within the industry are increasingly focused on promoting sustainable practices and reducing their environmental footprint. For example, many sports facilities are now powered by renewable energy sources, while initiatives such as recycling programs and carbon offsetting schemes are becoming more common.
Legal factors that impact on the sports industry
Legal environment is the last part of this PESTEL analysis of the sports industry. Legal factors have a significant impact on the sports industry, particularly in relation to issues such as intellectual property rights, contract disputes, and regulatory compliance. Organizations within the industry must comply with a range of legal and regulatory requirements, both at the national and international level.
Summary of PESTEL analysis of the sports Industry
In conclusion, the sports industry is influenced by a range of external factors, including political, economic, sociocultural, technological, environmental, and legal factors. These factors offer both opportunities and challenges for players, and organisations alike.
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Last updated: 10 March 2023
FIFA (2023) VAR, available at: https://www.fifa.com/technical/football-technology/football-technologies-and-innovations-at-the-fifa-world-cup-2022/video-assistant-referee-var (accessed 08 March 2023)
Rogan, M. (2023) What cost of living crisis? Why live sports attendance is booming, https://www.standard.co.uk/sport/live-sports-tickets-cost-of-living-b1037105.html (accessed 10 March 2023)
Statista (2023) Transfer value of players at the FIFA World Cup in 2022, available at: https://www.statista.com/statistics/1298095/top-player-market-value-qatar-world-cup/ (accessed 10 March 2023)
UN (2023) UNODC Global report on corruption in sport, available at: https://www.unodc.org/unodc/en/safeguardingsport/grcs/index.html (accessed 09 March 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.