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Top-class sport as a catalyst for economic growth and social change

The sports industry has repeatedly demonstrated its ability to act as a catalyst for economic and social development: connecting global communities, attracting foreign investment, contributing to gross value added, creating employment opportunities and ensuring positive health outcomes.

2024 will see a record number of global elections involving over two billion voters from 50 countries. While each country faces unique challenges, common macro forces such as climate change, geopolitics, digitalization, economic growth and prosperity impact the lives of all voters. The possibility of collaboration between the public and private sectors to address these challenges and seize opportunities is important given the increasing demand for public services and shrinking budgets.

Elite sport has become a powerful catalyst for economic and social growth that can align public and private investment plans. Despite the fluctuations in the M&A market, investment activity in sports remains strong and sports investors, working with governments, have the potential to achieve long-term results that extend beyond the boundaries of pitches, fields and fields.

According to Deloitte's 2024 Sports Investment Outlook, one in five investment deals globally involving sports rights holders in 2023 were with UK-based organisations. We have seen that elite sport in this market delivers proven local economic benefits in five key areas:

1. Global Brand Profile: When used effectively, sport can boost tourism, boost the visitor economy and create tangible connections to the communities surrounding these assets. According to UK Sport, major sporting events had a direct economic impact of £373 million in the UK in 2023, representing a return on investment of 6:1. 93% of the British population agreed that major sporting events increase the reputation of British cities internationally.

The UK hosts an elite group of world-renowned clubs, leagues and major sporting events, with the crown jewels including Premier League and English Football League (EFL) clubs. The commercial appeal of these assets provides a unique opportunity to bring the best of a city to a growing international and domestic audience. And a variety of organizations will benefit, with academic research showing, for example, a link between a decline in university admissions following the relegation of the university's affiliated Premier League team.

2. Infrastructure investment: The Deloitte Football Money League 2024 publication highlights that more effective use of stadiums by clubs, including on non-match days, supported revenue growth in the 2022/23 football season. Stadium development is also expected to result in greater returns: Tottenham Hotspur reported in December 2023 that the development of its stadium had resulted in a three-fold growth in gross value added, with the club contributing an estimated £900m of gross production to the capital's economy.

Since growth is the common goal of the public and private sectors, governments can work with sports investors to provide additional investment in infrastructure such as transport connections and community resources. For example, Luton Town's announcement of the club's stadium construction at Power Court was accompanied by news of the club's ambition to create a “completely new urban district for Luton with 1,200 homes, leisure facilities, restaurants, bars, retail and community spaces”. . “

3. Regenerate communities: Sports organizations can bring communities together, increase a sense of civic pride and cohesion, and further diversify a city's cultural offerings. By using a sports venue as an anchor, local governments can increase visitor numbers and create thriving and sustainable places that people want to visit and live in.

The regeneration of Manchester's Eastlands district is a prime example of how football, and stadiums in particular, can be at the heart of an area's regeneration. Manchester City moved to the Etihad Stadium after the 2002 Commonwealth Games. Since then, the stadium has been at the heart of the region's regeneration, which has seen the creation of a number of new community education and leisure facilities, such as the National Cycling Center and the Co-Op Live Arena.

4. Education, Jobs and Skills: Sports organizations provide more than just entertainment as they function as large businesses. Beyond just the athletes on the field, these organizations contribute to economic growth in local markets by hiring back and front office staff, as well as providing game day and casual jobs. In addition, sports organizations often work with communities to provide education, training and skills programs.

Following the 2012 Olympics, the London Legacy Corporation announced the launch of training opportunities at the Queen Elizabeth Olympic Park. Hundreds of young people took part with employers including construction, digital, cultural, creative and fashion companies, with half of the trainees being local young people. Recently, Knighthead Capital Management announced that the Sports Quarter development in East Birmingham is expected to create over 3,000 local jobs.

5. Health and wellbeing: Sports organizations’ engagement programs provide countless benefits to the industry and wider communities. These programs provide clubs with the opportunity to identify and develop local talent, inspire local communities to be physically active and ensure quality pitches, coaches and competitions.

According to research commissioned by Sport England, for every pound spent on sport and physical activity, £4 is generated for health and wellbeing, strengthening communities and the national economy. The proven link between increased physical activity and improved health outcomes highlights the unique role sport organizations play in helping governments achieve positive health outcomes.

The central theses

For Governments: Each city offers specific demographic drivers and growth opportunities that attract sports investors to the assets. By working with private investors, governments can accelerate the effectiveness of public funding to increase activation opportunities for the council, engage with local and international fans and enable community participation. Local government leadership and willingness to collaborate are critical to success.

For rights holders: Investors and governments provide critical capital to support the growth of sports rights holders and the impact of their activities. By strengthening governance structures, optimizing data management and activation, and, where appropriate, further expanding relationships with government and investors, rights holders will be prepared for future financing and investment considerations.

For investors: We have seen an influx of investment into sport in recent years and Deloitte expects this to continue in 2024 and beyond. As super-premium and premium assets continue to change hands, there could also be opportunities for relatively low entry points in non-premium properties. Proven commercial real estate investment strategies across North America are enticing investors to explore similar synergies in new regions. Investors are increasingly viewing European assets as a commercial growth opportunity, particularly through the prospect of developing a new or expanded stadium and providing social and economic incentives to the community.

For communities: Investing in sports infrastructure in cities and towns can deliver significant benefits for individuals throughout the community. Improved access to sports facilities and grassroots sports programs can increase participation in community sport, improve mental and physical health, and support social inclusion and community connectedness. Life skills can also be improved in the long term if young people complete excellent sports training and develop knowledge about physical activity.

About Deloitte's work in the area of ​​sports regeneration:

Led by teams from Deloitte's Sports Business Group, Economic Advisory and Real Assets Advisory divisions, Deloitte has advised on some of the UK's most ambitious sports-focused regeneration projects.

The company's expertise includes development consulting, securing foreign investment and assessing the social and economic impact that sport has on people and places.

Deloitte's remit included advising on the development of the Queen Elizabeth Olympic Park, Leicester City Training Ground and the growth of the Etihad Campus, including the expansion of the Etihad Stadium and the construction of a new major arena, Co-op Live.

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