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Games People Play

7 April 2014 in Trading Ideas

As if there was any doubt, the world of sports is no longer a niche market merely catering to hardcore participants.

The growth in premium fees being paid for televising rights to the most anticipated events has only surged with the Internet effectively lighting a fire in media coverage.

The boom in the opportunity by consumers to follow sports via television, radio, the Internet and assorted social media channels has led to a surge in popularity of sports among the masses – not only for spectators, but also for participants.

Market research firm Global Industry Analysts estimates that the worldwide market for sporting goods will reach $303 billion by 2015.1

It’s this widespread increase in sporting interest that inspired us with regard to our newest World of Sports motif, a portfolio of stocks of companies that manufacture and sell sporting goods equipment and related merchandise.

 

Of course, it’s not just getting to see more sports that is spurring people to play more sports – a revamped health consciousness seems to be at hand. Just two months ago, a comprehensive federal survey found that the rate of obesity in preschool-age children dropped about 40% in the past decade.2

The precise reasons for the drop aren’t known, but the Centers for Disease Control pointed out that many child-care centers are offering more healthful food and opportunities for exercise.

And with young consumers marking the most important consumer cluster for the sporting goods industry, let’s not forget fashion. Global Industry Analysts pointed out that this demographic is increasingly adopting sports apparel and footwear as casual wear, thereby boosting market prospects for sporting goods even in the casual wear segment.

Most of the youngsters try to imitate their sporting idols and purchase same brand and design of apparel or footwear that their favorite sport celebrities use or endorse, for their off-field use, the research firm said thereby driving demand in the market.

Although Europe and the US have been the traditional revenue contributors in the global sporting goods industry, Global Industry Analysts said that developing regions such as Asia-Pacific and Latin America will drive future gains, thanks to growing awareness about international brands, coupled with rising standards of living to complement inspirational purchases.

With demand reaching saturation in developed markets, much of the industry focus is now shifting to Asia-Pacific, Central & Eastern Europe, and Middle East countries. Asia-Pacific especially is fast emerging as a major sporting hub in the world with growing participation in sports in the region. The region is already the fastest growing market for sporting goods worldwide, thanks to growing consumption in emerging markets such as China and India.

Investors expecting steady demand growth in the global sporting goods market may want to consider this motif as an alternative opportunity.

1Press release, Global Industry Analysts, Feb. 2, 2012, http://www.prweb.com/releases/sporting_goods/sports_apparel_footwear/prweb9148721.htm, (accessed April 2, 2014).

2Betsy McKay, “US Childhood Obesity Rates Fall 40% in Decade,” WSJ.com, Feb. 25, 2014.

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