Sports is not big business

Looking at the multi-million dollar contracts that star athletes sign, we regularly fall into the fallacy of assuming that sports teams and leagues are quite lucrative organizations.

Forbes just released a list of the most valuable sports teams and one might think that sports is big business considering that each of those 50 teams is worth at least 50 billion dollars, the most valuable one being the Dallas Cowboys with a market value of roughly 5 billion dollars.

But Bill Gates and Warren Buffett smirk when they see those numbers.

Let me list a few other companies that are worth 5 billion dollars or more and see if you can recognize them (Source: Forbes).

You get the point. But what about the most valuable league in the world, the NFL, which reportedly generated $16B in revenue last year?

Well, let’s see the yearly sales of a few companies not as sexy as big men smashing into each other on the gridiron.

And those are individual companies, whereas NFL is the whole industry.

Don’t get me wrong, I’m a big sports fan, and sometimes I find myself disillusioned with the enormous wealth that superstars seem to be generating while we just want to enjoy the game.

But sports seems to be a small industry overall. I follow sports but I rarely go to see a game or buy merchandise. And sport carries a cultural significance that none of the chemical or insurance companies listed above will ever achieve.

You don’t expect to hear water cooler conversations about how awesome the new travel insurance of company A is; nor is there a dedicated “industrial appliances” section in the newspaper. Nobody cares if a consultancy acquired talent from a rival company and what the contract is.

Until those things happen, sports will still dominate our culture no matter what their market value is.