Football, basketball, American football – in many sports, it’s all about the right combination of offensive and defensive elements. The winger’s sprint, the scoring of a goal. This can lead to striking scenes, full of passion, and at the same time, to a multi-billion dollar market, which is also of interest for investors. Care for some examples?

Romelu Lukaku transfers to Manchester United for 85 million euros, while Paul Pogba has slipped into a new shirt for 105 million euros. And Neymar dos Santos Junior is said to be worth 222 million euros to Paris Saint Germain. Money doesn’t score goals, but it does clear the path towards scoring even more money. The record transfer fees in football actually have a ripple effect, causing other clubs to invest more money as well. And that is also reflected in the sport industry’s sales figures. In 2017 alone, five segments of this industry generated a total of 90.9 billion dollars. In 2005, it was only half as much. It should continue to be similarly dynamic thanks to steadily increasing demand, for example from the Far East. This is a market made for Zeitgeist investment. As long as a few rules of play are observed. The most important thing is not to back just one segment.

Segment 1 is predominantly three internationally active football clubs: Manchester United, Juventus and Dortmund. Manchester United, for instance, has the most fans worldwide – and that means high stadium attendance and high shirt sales as well as strong online marketing. For its part, Juventus has not only won Italy’s Seria A three years in a row and made it to the final of the Champions League twice in the last three years, but also has a correspondingly high number of fans. Borussia Dortmund in turn doesn’t just have sporting success, but also has economic power, such as via the sale of Ousman Dembélé to Barcelona for 105 million euros. They therefore have enough money in the transfer bank to invest in new players, so that they will be able to strike in the lucrative Champions League.

Bookmakers are segment number 2, benefiting from the worldwide enjoyment of sports. After all, every fan nowadays knows that he can also bet on a game or a sports event. Not just on the result, but also on penalties or even injuries. Turnover for the “bookies” has increased correspondingly in the last 10 years. This is likely to continue. As an example, according to forecasts, the global value of online betting in 2018 is expected to be around 42 billion euros. In 2009, it was just over 19 billion.

Before the bet, however, the information is needed – is Neymar fit, is Christopher Froome’s calf holding up? Sports media provide this information, streamlining the entire sector. They’re something like the turbocharger of the sports industry. And profiteer number 3. The benefit for viewers is fast pictures and reports; providers see the benefit in their accounts. Sky, for example, collects between 40 and 60 euros monthly from viewers who have an appetite for football and other European sports. And anyone who wanted to see the recent fight between Floyd Mayweather and Connor McGregor had to pay 30 dollars to stream the sporting event via computer.

What else counts besides the enthusiasm for a sport, the cheering? The right outfit. The simple fan scarf is a thing of the past – nowadays it’s Neymar’s shirt, Ronaldo’s shoes. And every year, there’s a new collection. For football in Europe, as well as for basketball or American football in America. And not only for the fan himself, but for future supporters too: you can even get baby onesies in your club’s colours. For the fan it can be expensive, for the company it’s a big earner: even an average European player shirt costs 80 euros. Millions of these are sold. And new production methods create new possibilities. For example, 3D printers such as those used by Adidas, Nike and Under Armour reduce costs and increase the already healthy production numbers. But the final spurt for this growth industry is a fifth element. And gets right to the heart of sport.

As is well known, the ultimate way to enjoy your sport is live in the stadium. The clubs profit from this, but so does the operator of the arena. These companies, like Madison Square Garden, sell millions of tickets each year. They broaden their customer base in much the same way as investors spread their risks, because the arenas are not only suitable for sports events, but also for concerts.

To really celebrate sport requires the sportsmen, of course. But also the arenas, the outfit, the paraphernalia. In sum, sport captures the Zeitgeist – and thus makes the strategy of five segments a Zeitgeist investment.

 

Robert Halver small circle image
ROBERT HALVER

Sports affect us all. We all do sports, we all watch sports, it’s a mass attraction, even in the Roman Empire they had ‘bread and games’. And that was how the Romans enticed people away from everyday problems. It’s exactly the same today. Sports bring people together, for me they’re an integrative force.

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GILES KEATING

In our Sports Zeitgeist we see five segments: the clubs themselves, like Manchester United or Dortmund. Then you’ve got the media companies that transmit the games. Then you’ve got the clothing companies and the footwear companies like Nike. Then you’ve got the stadiums where the games take place, and finally you’ve got the bookmakers and the betting companies.

Zeitgeist allocation

Published on 27.11.2017

Description Instrument ISIN TER Allocation
Adidas AG Stock DE000A1EWWW0 0% 11,00%
NIKE Inc. Stock US6541061031 0% 10,50%
Under Armour Inc. Stock US9043111072 0% 9,50%
Madison Square Garden Co. Stock US55825T1034 0% 11,00%
Borussia Dortmund GmbH & Co. KGaA Stock DE0005493092 0% 8,00%
Liberty Media Corp. Stock US5312298707 0% 10,00%
Manchester United PLC Stock KYG5784H1065 0% 8,00%
World Wrestling Entertainment Inc. Stock US98156Q1085 0% 10,00%
BET-AT-HOME.COM AG Stock DE000A0DNAY5 0% 7,00%
Constantin Medien AG Stock DE0009147207 0% 8,50%
Juventus Football Club SpA Stock IT0000336518 0% 6,50%

Index performance since inception: 

+40,59%
Disclaimer: Historical returns are no guarantee for future performance. A negative development of the instruments contained in the index can lead to a negative development of the overall index. The performance shown here is indexed to a starting value of 100 and corresponds to the gross value development of the Zeitgeist, which will be reduced by the asset management fee of up to 0.85% p.a.
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