Is it wise to make money from sports?

It is a very exciting era that every day there is big news about politics and economics around the world. However, I want to talk something more relaxing and less serious, which is sports. CVC Capital Partner is attempting to acquire Premiership Rugby with a £275m. CVC Capital Partners is a private equity firm and this is not the first time for this firm to enter the sports industry that CVC Capital Partners owned a Spanish sports management company and Formula One previously. Therefore, we can see this private equity firm has experience in the sports industry and seems to be good at making money from the sports industry. Then how easy is it to earn money from sports?

When people look at Ronaldo and Messi and many other famous sports, people believe that it is easy to make lots of money from playing sports. However, people only know those successful sportsmen, there have been millions of unsuccessful sportsmen and those who put efforts but have failed to be professional sportsmen. Therefore, the expected return from being a sportsman is very low, so it is not worth of investing in being a professional sportsman.

How about actually investing in sports related assets including companies’ stocks? Sports is entertaining but not necessarily good for businesses or investment. Sports businesses rely on sports supporters who do not pay for enjoying their sports as frequently as surfing on the Internet. They are not stable income sources, as their consumption decide is made based on various factors, such as their incomes and their luxury choices. Sports businesses rely on sponsorship and advertisement. However, these income sources are dependent of sports achievement; meanwhile, incomes and achievement are correlated with each other Good results need high income incentives and good sponsorship goes to sports firms with good results since only good sports firms have more opportunities to play in front of large crowds.