I was asked to complete a short industry analysis of a field that interests me so I chose celebrity and athlete representation. This is a $6.8 Billion industry and is an integral part of the business side of sports and entertainment. In particular, I am drawn towards athlete representation, which accounts for about 35% of the overall services provided.
I am a passionate former athlete, coach, and fan and have always been fascinated by the inner workings of the glamorous world of professional sports. The top priority is usually contract negotiations and sponsorship deals but there are a number of other services provided to athletes including career counselling, wealth management, and health promotion.
Heavy training loads from a young age coupled with the intense pressure of competition during the formative years can cause varying degrees of emotional and social stunting amongst professional athletes. This creates a need for agents to help guide young professionals through situations that might seem trivial to the average bystander. My experience as an educator, coach, and mentor could prove useful in addressing some of these issues while my ongoing MBA training will help fine tune the wealth management and career counselling aspects of this industry.
IBIS World has identified three key professional factors for industry success, all of which match my interests and strengths. These are negotiating, product promotion, and the ability to vary the services provided based on individual needs.
This industry has a unique makeup and segmentation. IMG (formerly the International management Group) is the only firm with more than 5% of total market share, sitting at a mere 5.2%. Concentration is very low and so is the barrier to entry. This does not mean it is easy money, however – in 2012 there were 35,886 registered establishments that represented athletes, entertainers, or authors in the United States, suggesting an extremely competitive environment.
IMG and their main competitors are private companies, so some specific financial data can be hard to come by. However, a lot of information about the industry is known publicly. For instance, the volume of small operations with low overhead costs has created a need for firms to be nimble; this crowded marketplace causes agencies to regularly cut commissions, thereby creating lower industry wide profit margins.
The industry is considered to be in the mature stage of its life cycle, characterized primarily by widespread market acceptance and low levels of technological acceptance. There is still promise of gains to be made, however. This industry, like many, is driven in large part by the health of the overall economy. Better financial times mean more per capita disposable income for consumers (the primary drivers of ticket and merchandise sales) and higher advertising budgets (endorsement deals).
Industry revenues plummeted after the financial crisis in 2008 and showed only modest average annual growth (0.7% year over year) between 2007 and 2012. Projected annual growth through 2017, however, is estimated at 2.3% bringing annual revenues up to $7.6 Billion dollars.
Because of the number of small operations in this industry, M&A activity is pretty normal. It is not uncommon for a small firm representing a notable athlete or celebrity to get gobbled up by a larger establishment seeking easy market share.
Source:
Jose, Eben. IBISWorld Industry Report 71141 – Celebrity and Sports Agents in the U.S. October 2012.