The Olympic Games—Fueling Sports Brand Value

Sports brand value is growing exponentially. The status of sports is rising, seemingly unstoppably, and with it, the value of associated brands.

The transformation of sports brand value

In the past, a few sports, such as polo, cricket (in the UK) and rugby were highly prized by elites. Mass sports have always been popular, but their status was low. Soccer was seen as only for blue collar workers.

When I was at university in the UK, we looked up to people who went into theater and arts. Colleges which admitted students for their rowing prowess were looked down on. The same was true in the US, where Midwestern state colleges prized their football teams, while the likes of Harvard and Yale disdained them.

Owning a sports team was a vanity project for businessmen who wanted to show they’d made it and a source of financial loss.

A transformation has been underway for some time.

Rise in the value of media rights

It began with the commercialization of media rights. Their value has been multiplied by social media and globalized as a result of legalization of international trade in sports stars, attracting millions of Asian fans to watch their countrymen play for teams such as Manchester United and the Dallas Cowboys. Costs are exploding. Previous records of $2 billion for a Superbowl are now dwarfed by the NBA’s new deal with Disney, CNBC/Universal and Amazon, who have agreed to pay $76 billion over 11 years ($6.9 billion a year).

Who benefited from rising sports brand value

Sports offered a way out and up for players from disadvantaged minorities, especially from Latin America and Africa. But it was the team owners and colleges who made buckets of money off the backs of the athletes, who were generally exploited, wasted any money they made and ended up impoverished.

Growth in sports star brand value

All this has now changed. The relaxing of restrictions on college athletes is making sports the pathway to real riches for more athletes and at a younger age. The basketball player Bronny James (son of LeBron James) signed away his NIL (name image and likeness) rights for $7.2 M while still at Sierra Canyon High School.

More and more, it is about the individuals, not just the teams. In 2024 the world’s top ten richest athletes will earn over $100 M each. The soccer star Cristiano Ronaldo is #1, at $260 M followed by the Spanish golfer Jon Rahm at $208M, LeBron James at $128M, and the Greek basketball player Giannis Antetokounmpo at $111M.

It’s about women, not just men. Look at the popularity of the US women’s’ soccer team, and, increasingly, women NBA stars, far outpacing that of the men. However, their salaries have not kept up. On average, pay for women sports players is 18% that of men.

Private equity—a driver of higher sports brand value

As the prospects for making money rise, private equity is rushing in.

David Rubinstein, co-founder and chairman of the Carlyle Group, bought the Baltimore Orioles for $1.725 million in March.

In June, The Carlyle Group purchased a majority stake in the Seattle Reign women’s soccer team in a $58 million deal. Josh Harris, co-owner of Apollo Group Management the Washington Commanders for $6.05 million in July.

Half of Britain’s 20 Premier League teams are owned by wealthy Americans. Silver Lake companies have stakes in Manchester City, own 34 minor league baseball teams, the WWE (World Wrestling Entertainment) as well as PBR, ‘the world’s premier bull riding organization’ and EuroLeague Basketball, which manages Europe’s top men’s basketball league and competitions. Avenue Capital and Arctos Partners have launched a dedicated sports investment funds.

And the Saudi Arabian Sovereign Wealth Fund sees sports as a way to restore the country’s image and is said to have a $10 billion sports war chest. It already owns Newcastle United and LIV Golf (now merging with the PGA) has recruited soccer megastar Ronaldo, and invested in?boxing,?wrestling,?cricket?and tennis.

Louis Vuitton’s Olympic impact on sports brand value

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? Paris - Ugo Gattoni - 2024[/caption]

From a totally different angle, luxury fashion brands are getting in on the game. The border between sports and fashion is disintegrating.

Serena Williams has been on the cover of Vogue multiple times. Right now, almost all fashion magazines are using Olympic athletes as their models. The Paris Olympic Games are completing the rise of sports stars to the top of the celebrity ladder.

Louis Vuitton is the major sponsor of the games, and is trying to take it over, presenting itself as the Olympic Games’ “creative partner”. Lots of different LVMH brands have jumped in. The Olympic Torch arrived in a custom-made Louis Vuitton trunk. The torch relay, sponsored by Sephora, stopped at LVMH’s Cheval Blanc hotel in the St. Emillion wine region and the Louis Vuitton Foundation art museum just outside Paris. Berluti made the opening ceremony uniforms for the French team. Moet & Chandon champagne and Hennessy cognac are flowing at the hospitality venues. Chaumet designed the medals, each of which incorporates a piece of the Eiffel tower. They are presented of course, in a custom Louis Vuitton designed box, by volunteers wearing Louis Vuitton uniforms.

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? Nelson Rosier[/caption]

Louis Vuitton has been getting into sports for some time. Its 2022 ad featuring soccer stars Cristiano Ronaldo and Lionel Messi broke records for the number of likes. They are now trying again, featuring tennis stars Roger Federer and Rafael Nadal hiking the Alps. Other luxury brands have joined in. Prada started sponsoring the China women’s soccer team and designed its unforms last year. Rolex is a fixture at tennis tournaments.

Is this commercialization of sports a good thing or a bad thing?

There are many bad things about it. It kills off the community feeling of shared affiliation to a local team. It removes the sense of pride and ownership, with neighbors crying together over consistent Knicks losses, or rejoicing over championship wins. It removes the halo of striving, struggle and achievement radiated by sports stars who made it.

Sports has become a business not a labor of love. Going to many sports events is now prohibitively expensive. They’ve become occasions to save up for, not weekly family outings. Sports is becoming more elitist in every way. Sports stars are now like film or pop stars, not local heroes.

Sports can also be a force for good. A sport is a healthier passion than playing video games or going to pop concerts. It’s great to see athletes displacing film stars as fashion models and role models.

Above all, the globalization of sports unites people. They are just about the only thing that crosses over all political and national divides. I remember visiting a village in Kenya and the first thing the boy selling soda said to me: “I’m an Arsenal fan”. Sports brings people together people from all walks of life, cuts across the polarization of societies. Perhaps not Palestinians and Jews, or Ukrainians and Russians. But in the US, it’s one of the very few things that Harris and Trump supporters can agree on.