Stock market: "sports economy should grow twice as fast as GDP", how to benefit from it?

Stock market: “sports economy should grow twice as fast as GDP”, how to benefit from it?

When we remember the actions of Johnny Weissmuller at the 1924 Olympic Games and on the eve of the 2024 Olympic Games in Paris, it is striking to see that in a century modern sport has formed many banners under the gallery of athletes, national teams. , youth role models and even stars. These athletes, leading personalities in their discipline, promoted its democratization and globalization, attracted more spectators and contributed to the development of amateur sports. Over decades and increased media coverage, a veritable sports economy has thus been built around manufacturers of sports equipment, infrastructure, sports nutrition and even broadcasting rights.

Regarding the economic prospects of the topic economics of sport, we estimate the market to be 5,000 billion dollars in 2023. According to our projections, it should grow by 7% per year until 2030 (double global growth). This significant increase can be explained mainly by the development of individual sports, which was necessary during the pandemic and which favored the purchase of specialized equipment and applications or even videos.


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It is in e-sports that the growth of the sports economy will be most impressive

In addition, carried causalization and development street wearsportswear leaders reach far beyond athletes by appealing to new generations through rap muses (like Booba, with Puma) or even pop culture. Burn the suits and put on the jogging pants! However, apart from Nike, Adidas and Puma, the most impressive growth will be in eSports (according to our projections around 22% per year until 2030), which will gradually take over, not in “traditional” sports. Benefiting from a very significant degree of technological innovation, eSports companies excel in their ability to deliver a successful and quality player experience.

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In the stock market, the sports economy outperformed the stock market

From a stock market perspective, our sports economy Galilee Thematic Indicator (ITG) reported a performance of 24.5% in 2023 compared to 23% for the MSCI World (comparative global stock index, editor’s note). With one-year volatility of 16%, this theme features an almost even split between “growth” (growth values) and “value” (discounted values) companies, which explains its PER (market capitalization compared to next year’s expected earnings). 12 months, the traditional measure of the degree of rarity of stocks) of approximately 20 times the estimated results for 12 months. In the first lines of the indicator, we logically find sportswear players (Nike, Puma, Adidas) and specialized manufacturers of sports equipment (Garmin or Shimano). Also note the presence of eSports players such as Electronic Arts, the publisher of FC 2024.


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How can we use the long-term growth potential of the sports economy?

In terms of investments, savers who want to benefit from the long-term growth potential of the stock market theme can place themselves in live securities directly or through actively managed investment vehicles. To illustrate, the M Sport Solutions fund from Montpensier Finance invests in a wide range of topics: world leaders in sportswear, infrastructure related to sports practice or even professional organizations. The Mandarine Global Sport fund is another interesting alternative for investors who want to be among the leaders of this topic (Deckers Outdoor, Puma or even JD Sports Fashion).

Aurélien Lux (analyst and assistant manager) and Roni Michaly (CEO), from Galilee Asset Management, commentators for Capital

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