Media rights fees are expected to reach $16.4 billion by the end of the year, rising at a compound annual rate of 7.2% and making it the fastest growing segment of the sports business, according to a new report by PricewaterhouseCoopers.
According to PwC’s new report: “At the Gate and Beyond: An Outlook for the Sports Market in North America through 2019,” sports rights fees will only be surpassed by total gate revenue (at $18.3 billion) in 2015. PwC projects that media rights will pass gate revenue as the largest segment of the sports business by 2018 and reach $20.6 billion by 2019.
Local rights for Major League Baseball, the National Basketball Association and the National Hockey League will contribute to overall sector growth with more than 35% of current deals set to expire over the next five years, although on a smaller scale than the national rights deals that are predominately driving industry-wide growth.
“Segment fundamentals and base rights fees should remain strong given the popularity of sports programming with consumers and advertisers,” PwC said in the report. “However, as consumers and advertisers continue to migrate towards Internet-connected devices and ‘second-screen’ activity, it’s more likely the traditional pay-TV model will have been by the next major sports deal cycle.”
Gate receipts, an estimated $17.7 billion in 2014, will reach $20.1 billion by 2019, according to PwC. Sponsorships are expected to rise at a compound annual rate of 4.5% from an estimated $14.7 billion in 2014 to $15.3 billion in 2015 and $18.3 billion in 2019. Licensed merchandise sales are projected to increase at a compound annual rate of 1.4% from $13.5 billion in 2014 to $13.7 billion in 2015 and $14.5 billion in 2019, says PwC.