PricewaterhouseCoopers estimated that the global sports industry reached about $135 billion in revenue during 2013, which represented 4% year-over-year growth. Given the size of the industry, it's not too hard to guess that investors can make lots of money by investing in companies with ties to athletics... if you know where to look! Well, you've come to the right place! In what follows, we'll examine three companies with strong ties to the sports industry: The Walt Disney Company (NYSE:DIS), Nike (NYSE:NKE), and Manchester United (NYSE:MANU).
Disney's an unexpected sports giant!
While a lot of people might think of princesses when Disney's mentioned, the fact of the matter is that the entertainment giant has a rugged side to it. As of the end of its 2013 fiscal year, Disney owned 80% of ESPN, one of the largest broadcasters of sporting events in the world. In its most recent annual report, Disney noted that its stake in ESPN carries with it ownership in ESPN2, ESPNEWS, ESPN Classic, and ESPNU.
Unfortunately, Disney does not provide revenue and earnings data specifically geared toward its ESPN operations, but Disney does report data for it in its media networks segment. In 2013, media networks generated revenue of $20.4 billion, up from $18.7 billion in 2011, and represented 45% of the company's consolidated sales. From a profit standpoint, the segment did even better with operating income of $6.8 billion, or 64% of Disney's total operating income for 2013.
Nike's a huge sporting play!
Nike had a big year in 2013. For the year, the company reported sales of $25.3 billion, 8.5% above its prior-year figure of $23.3 billion and the company's all-time high. It did even better on net income, which rose by 12% from $2.2 billion to $2.5 billion as increased sales and lower costs helped the business's bottom line.
Of course, Nike has the sports industry to thank for its success. During the year, nearly all of the company's sales came directly from the athletic market, led by the $5.6 billion the company attributed to its sportswear operations. This was followed by running and basketball at $4.3 billion and $2.6 billion, respectively.
Get your hands on a real team!
Although Disney and Nike are great ways to play the world's love for sports, the purest investment in the industry appears to be Manchester United, the owner of the Manchester United Football Club (soccer for American fans). The company paid Kantar Media to create a report which estimated that Manchester United's team has roughly 659 million followers globally, 277 million of whom picked the team as their favorite in soccer.
During 2013, Manchester United reported revenue of $363.2 million, up 13% from the $320.3 million it earned in 2012 and 30% higher than the $278.4 million the company brought in five years ago. During this time-frame, match-day revenue declined slightly while broadcasting revenue barely budged. This leaves essentially all of the company's sales growth over the past five years to its commercial revenue, which grew 131% from $66 million to $152.4 million. Over the same five-year period, net income rose from $5.3 million to $146.3 million.
Currently, sports are a big business and there are no signs of a slowdown that investors should worry about. The existence of the phenomenon should imply potentially good returns for shareholders who get into the game and choose the right team (stock) to ride. Unfortunately, there is no guarantee on how well each of these companies will perform in the years to come, but with nice, niche pieces of the industry they should make for attractive long-term prospects for the Foolish investor.
Daniel Jones has no position in any stocks mentioned. The Motley Fool recommends Nike and Walt Disney. The Motley Fool owns shares of Nike and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.