Welcome to the second article of The Sports Economy series.
The old adage of ‘the numbers never lie’ is one that governs much financial and economic analysis.
When it comes to sport there is often a layer placed over the hard data and that is equally true of the Sports economy as it would be in measuring gains, splits and values.
Nonetheless, it is worthwhile taking a look under the hood of the numbers as they relate to the Sports Economy and seeing what lessons can be learned.
In financial markets where daily fund prices (or net asset values) are made publicly available, comparing the histories of hundreds of different funds is straightforward. Various financial metrics and ratios with powerful explanatory values can be derived, scored and ranked.
Trying to understand the financial characteristics of any sector within an economy is difficult in general but when it comes to sport, where financial information is not always available, understanding the nature and direction of the sector from a financial point of view is even more challenging.
Furthermore, let’s not forget those factors beyond the figures when it comes to sport and its importance to people, society and the economy in terms of health, wellbeing and identity.
In the first part of The Sports Economy we looked, in the context of employment, at the Annual Services Inquiry, a CSO survey of enterprises within the non-financial services sectors of Ireland.
This survey provides valuable insights into the financial characteristics of the Irish sports economy with financial data such as turnover/revenue, purchases, labour costs and gross value added.
We also referenced the NACE classification which divides an economy into twenty-one broad categories alphabetically from A to U. These broad categories are further divided into sub-categories numbered in a two-digit style 01 to 99. For example, sporting activities sit in category R ‘Arts, Entertainment and Recreation’ and two-digit sub-category 93.
The ASI deals with non-financial services companies and for the full sample period of 2008 to 2018, there are data for twenty-nine ASI two-digit sectors which facilitates the comparative analysis of the sporting sector.
Sporting Activity Turnover Rising and Falling
Today we are looking at detailed data for sporting activities from 2008 to 2018 with a reference point in 2014 when the numbers reached a post-recession low across the board.
The headline figures show that while sport has made a strong recovery from the low point, it has in many cases yet to regain the numbers it had from over a decade ago.
Annual fluctuations are to be expected due to, for example, changes in the levels of attendances. For example in 2016, the All Ireland series of hurling and football matches attracted 786,242 spectators. In 2017 this increased by 24% to 977,523. The 2018 figure was 802,466, a drop of 17.9% but the 2019 attendance increased to 897,975.
However, some of the ASI annual changes greatly exceed these expected fluctuations. These atypical annual changes may reflect data collection issues as opposed to real movements in the financial indicators.
That said it does provide a solid picture of the broad trend over the period of 2008 to 2018 and sports activities comparative performance and structure.
|Sports activities (931)|
|Distribution and Services Enterprises (Number)||2,637||3,156||3,458|
|Turnover (Euro Thousand)||1,309,966||1,033,727||1,276,807|
|Turnover per enterprise (Euro Thousand)||497||328||369|
|Purchases (Euro Thousand)||824,223||527,276||758,188|
|Purchases per enterprise (Euro Thousand)||313||167||219|
|All Employees (Number)||16,352||15,095||17,569|
|Personnel Costs (Euro Thousand)||446,904||412,742||479,135|
|Wages and Salaries (Euro Thousand)||396,006||359,462||432,957|
|Average Wages and Salaries (Euro Thousand)||24.2||23.8||24.6|
|Gross Value Added (Euro Thousand)||555,520||532,522||576,991|
|Gross Value Added per enterprise (Euro Thousand)||211||169||167|
- Between 2014 and 2018 turnover in sports activities increased from €1.03 billion to €1.28 billion, an increase of €243 million or 23.5%. Over the same period purchases by sports activity enterprises increased from €527.3 million to €758.2 million, an increase of 43.8%.
- Turnover for the 3,458 enterprises within Sports Activities in 2018 (of €1.28 billion) was below its 2008 level of €1.31 billion. Of the twenty-nine two-digit services sectors within the comparative analysis, only seven are still under 2008 levels.
- The broad trend in turnover, but not consistent year-on-year, was for a decrease between 2008 and 2014 followed by a substantial increase between 2014 and 2018.
- Average turnover per enterprise for sports bodies/clubs etc was €369K in 2018.
- The sports sector is quite labour intensive. Personnel costs (wages and salaries plus employer PRSI and superannuation) were 37.5% of turnover and 83.0% of gross value added in 2018. The 2008 shares were 34.1% and 80.4%.
- For aggregate wages, sports activities are one of eighteen sectors (of twenty-nine) where the 2018 value is larger than in 2008, rising 9.3% over this period. Fourteen sectors experienced higher jumps in aggregate wages.
- Wages per capita growth for sporting activities was very small at 1.8% between 2008 and 2018. Eleven of the twenty-nine sectors experienced a higher percentage increases in wages per capita from 2008 to 2018. For this indicator, we have calculated wages per capita as total wages divided by all employees.
- In absolute terms wages per capita in sports (at €24.6K) is lower than most sectors. It is higher than only five other two-digit sectors in 2018 (these are retail trade, accommodation, food and beverage service activities, services to buildings and landscape activities and other personal services activities such as for e.g. hairdressing).
- The relatively low average wage level partly reflects the relatively large number of part-time workers in the sector.
- Sports purchases in 2018 (€758M) are below the 2008 value (€824M). In total eight of the twenty-nine sectors in 2018 are still below 2008 purchases value. Of course, purchases are an economic contribution of the sector in addition to the direct employment. Purchases are substantially higher than wages and salaries.
- Sports activities turnover in Ireland per head of population was €263 in 2018. By comparison, the UK figure was €399. In 2008 the Irish figure was €292 based on the ASI turnover data. The 2008 to 2018 Irish pattern is surprising as one would have expected average sport spend to have increased. This issue merits further examination.
Some stand out indicators from the financial data are the relatively low wage level, the high labour intensity, the performance between 2008 and 2018 and the large role of purchases in absolute terms and relative to the wages bill.
This is quantitative and needs to have a layer of qualitative analysis to present a full picture.
The impact of sport goes far beyond the financials and the aggregation of money and direct jobs.
The financial data alone fails to reflect the very large numbers of people who connect emotionally on a regular basis with sport in Ireland as opposed to their much less frequent expenditure of money on sport.
Still, they do present food for thought when it comes to areas that we can analyse and improve.
Join us again on Thursday, November 5th when we will be exploring the topic of the qualitative impact of sport on the economy
Conor Foley has a business degree from Trinity College Dublin, an MSc in finance from DCU and is a Chartered Financial Analyst. Over a 12-year professional career, Conor has experience of advising clients such as institutions, charities and bodies in the areas of global strategy, project management, asset allocation and financial structure. Conor will be working with Sport For Business to produce The Sport Economy, a regular piece, offering insights from the domestic and international sporting worlds of finance, economics and business, aims to bring Sport For Business members lessons and information from around the world to aid you in your strategy, financial affairs and business decisions. Conor has worked in leading financial institutions both at home and abroad and is committed to the growth and development of professional and amateur sport in Ireland.