Executive Summary

THE ROLE OF SPORT

Sport is becoming increasingly important to the British, and indeed as a global phenomenon, at several levels. The incorporation of the word `sport' in the renamed Department of Culture, Media and Sport (DCMS) was a significant step forward.

Fitness is seen as a public health issue, and the Government is encouraging a sporting lifestyle. The UK's National Lottery has contributed to many sporting projects, and local authorities are crucial for providing sporting opportunities by subsidising leisure centres, swimming pools and playing fields.

Sport is also more important than ever before as a passive entertainment, both in the media and for spectating, although higher expenditure on these is not necessarily matched by higher numbers of participants.

AMATEUR PARTICIPATION

Around two-thirds of adults claim to take some form of regular exercise, but this proportion has not increased over the last 10 years. It was in the 1970s and 1980s that public participation increased, with more women and older players being attracted to sport. In the 1990s, participation in most sports either declined or reached a plateau, with more consumers devoting their time to general fitness — swimming, walking, or working out in a gym — rather than involving themselves in an organised, competitive sport.

Target Group Index (TGI) data in this Review shows that, of the fitness-related activities, walking/rambling, swimming, and weights/working out were the most popular with adults in 2000. Golf, snooker and football were the most popular sports/games activities.

Total household expenditure on sport was £8.13bn in 2000, of which £2.85bn was spent on participation costs.

THE EQUIPMENT MARKET

The bias in participation towards activities that involve little or no equipment (e.g. swimming and gym work-outs) means that consumers spend only £700m a year on equipment, a total which has not changed significantly in recent years. This static total means that the most popular `equipped' sports are increasing in importance, and above all it is the golf equipment market that has increased its share.

Other important equipped sports include fishing and the racquet sports, although organisations also buy capital equipment for sport, so the consumer spending underestimates the total industry. For example, in-home fitness equipment has grown in importance. However, clubs and gyms spend far more on modern equipment, to which club members gain access by paying considerable annual subscriptions.

Fragmentation is the order of the day in sports equipment production, which is globalised so that specialist companies can sell their products to participants in numerous national markets. Leading companies making equipment for more than one sport include Dunlop Slazenger Group, the overall UK market leader, with interests in golf, racquet sports and cricket. Most other global giants have their commercial bases in the US or Japan, with the manufacture of golf-related equipment dominating.

Europe's largest companies, apart from Dunlop Slazenger, are adidas-Salomon of Germany and France, and Amer Group of Finland, which owns the Wilson brand.

SPORTS AND FASHION

Consumers spend far more on sports wear than on equipment, but this is exaggerated by the wearing of sports garments and shoes as all-purpose leisure wear. Much lower amounts are spent on actual participation. In 2000, the sports apparel market (both clothing and footwear) came to £3.8bn, although market growth, even for fashion, has slowed considerably.

The largest clothing sectors are fleeces and other outdoor products, swimwear, golf clothing, and football kits. The football clothing market includes the replica kits of professional teams. This boom sector of the 1990s underpinned the growth of many of the sports retailing multiples, leading independents and mail order companies as the more important sources of equipment.

In footwear, the use of sports designs for general leisure means that hiking boots, trainers and running shoes have taken their turn at being popular. The most significant result of this fashion trend has been the creation of three global giants — Nike, Reebok and adidas-Salomon — which dominate both the `function' and `fashion' markets for sports footwear, and increasingly for sports clothing.

HEALTH CLUBS

In active participation, the key trend of the 1990s was towards keeping fit in a gym or health club, using sophisticated fitness equipment, rather than chasing a ball around a field or swimming lengths in a public pool. Whereas public facilities dominate in most sports, the initiative in fitness was taken by the private sector (companies such as David Lloyd Leisure, part of Whitbread, and LivingWell, owned by Hilton Group). Eventually, public flotation of many of the health club companies made them even more prominent, and some have even developed pan-European operations.

SPECTATOR AND MEDIA SPORTS

Consumers spent twice as much on spectating in 2000 as in 1995, although fewer people were involved. This reflects the higher charges made by football clubs and other grounds with improved facilities.

The main trend for following professional sport, however, has been the growth of televised sport. As more households have subscribed to sports channels, there have been commercial battles for media coverage of the large events.

Field research for Key Note in 2001 found that the Olympic Games was the most popular event on television, with the Sydney Olympics in 2000 apparently having restored the appeal of the event.

FUTURE TRENDS

Spending on sport is forecast to remain in line with consumer spending as a whole, with the demographic projections being more favourable than in the 1990s. There will be more 15 to 24 year-olds in the population — crucial for participation frequency, and also more 35 to 44 year-olds — with a desire to maintain their health and fitness and learn sports. The shift to using private clubs will continue until saturation is reached fairly soon in this decade.

The choice for spectators and passive media observers will be improved, and the commercial funding of sport will increase. Global sports companies, such as Nike and adidas-Salomon, will strengthen and diversify into equipment, retailing and even sports participation.

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