Climate change poses a significant threat to the global sports economy, valued at $2.3 trillion, with severe weather events and declining youth participation potentially costing the industry over $500 billion in lost revenue by 2030. A report by Oliver Wyman for the World Economic Forum highlights that the expansion of this sector, heavily reliant on resource-intensive global events like the recent Milan-Cortina Winter Olympics, must now prioritize sustainability and social benefits.
The report, compiled with data from major leagues, investors, and sponsors, emphasizes that the sports industry, considered a societal asset, must act accordingly. Sports tourism, the fastest-growing segment of the industry, is projected to contribute 60% of the total revenue growth by 2030, with the overall sports economy expected to reach $3.7 trillion by 2030 and $8.8 trillion by 2050. This growth trajectory is contingent on addressing the impacts of climate change and nature loss.
Climate Change Threatens Sports Economy Growth
Extreme weather events and a decline in youth engagement are identified as key challenges for the burgeoning sports economy. These factors disrupt competitions, impact landscapes, and strain supply chains, leading to substantial revenue losses. The report argues that continuing to rely on resource-draining global events without mitigating environmental impact is unsustainable.
Tony Simpson, Global Sports Lead at Oliver Wyman, stressed the need for the industry to confront the threat posed by climate change and environmental degradation. He noted that while increased female participation and organized youth activities are boosting overall numbers, a core demographic of young males playing sports is shrinking, impacting the future fan base.
Severe weather phenomena such as heatwaves, floods, and reduced snowfall can lead to the cancellation of events, consequently harming media coverage and advertising opportunities. Outdoor sporting activities, which form the backbone of media rights revenue (over 90%) and sponsorship income (76%), are particularly vulnerable.
The financial implications are substantial. In the UK alone, poor weather conditions contribute to an estimated £320 million ($433 million) in lost income and maintenance costs annually for community sports. Broadcasters are increasingly incorporating clauses into contracts that allow for event cancellation due to extreme weather, directly impacting advertising revenues.
Prioritizing Social Impact and Sustainable Investment
The report advocates for leveraging the sports sector’s growth to maximize social benefits, including reduced public healthcare spending and enhanced gender equality. The concept of “impact investing” is gaining traction, with sponsors and investors seeking tangible social outcomes beyond traditional advertising placements.
Simpson pointed to Standard Chartered’s sponsorship of Liverpool Football Club as an example, where the financial incentive drives social initiatives such as community programs for women and girls and support for recycling efforts. This shift indicates a growing demand for major brands to contribute to social progress through their sports investments.
The potential for the sports economy to grow to $8.8 trillion by 2050 hinges on its ability to adapt and mitigate the risks associated with climate change and to embrace a more socially responsible path. The coming years will be critical in determining whether the industry can implement the necessary changes to ensure long-term sustainability and maximize its positive societal contributions.
The next few years will be crucial for the sports industry to implement strategies that address climate change impacts and promote sustainable growth. A key uncertainty to watch is the extent to which major sporting bodies and global events will commit to and achieve ambitious environmental targets, and how innovative financing models will drive social impact initiatives across the sector.
