Investing in sports stocks certainly has appeal, as the multi-billion-pound, worldwide sports industry is growing faster than global GDP. As such, businesses operating in this sector may benefit from a tailwind that not all industries enjoy.
Let’s take a look at an overview of the sports market, the individual sports stocks available, and what you need to know about investing in the sports sector.
What are sports shares?
Sports stocks are companies with both a significant involvement in the sports industry and shares that can be bought and sold on the stock market, such as the London Stock Exchange.
There are many sub-categories in the sports market. They include professional sports teams, manufacturers and retailers of sporting goods, and bookmakers. Certain food and nutrition stocks are also closely associated with the sports economy.
There are some big companies with a sports-related divisions that we don’t generally think of as sports stocks, mostly because the size of the rest of the business eclipses the sports element. For example, BT Sport is a relatively small part of telecoms giant BT Group.
When it comes to investing in sports stocks, it can fairly be said that the number available to us depends on how widely we cast the net.
Top sports shares in the UK
Here are the top UK sports stocks by market cap in their respective sub-categories:
|Flutter Entertainment (LSE:FLTR)||Parent company of some of the world’s biggest sports betting and gaming brands|
|JD Sports Fashion (LSE:JD)||International multi-chain retailer of branded sportswear and fashionwear|
|Aston Martin Lagonda Global Holdings (LSE:AML)||Iconic British car-maker with a motor sports heritage, including a recent return to Formula 1|
|Celtic (LSE:CCP)||Illustrious Scottish football club with over 100 major pieces of silverware to its name|
|Science in Sport (LSE:SIS)||Sports nutrition business serving elite athletes and sports and fitness enthusiasts|
Flutter Entertainment is a member of the FTSE 100. It’s the biggest of a number of betting and gaming companies listed on the London market, and the UK’s biggest sports stock bar none.
The group owns multiple brands, including:
- Paddy Power, a central brand within its UK & Ireland division
- Betfair, the world’s biggest betting exchange
- Sportsbet, Australia’s top online betting destination
- FanDuel, the number-one sports book in the US
The group also owns gaming brands, such as tombola, Britain’s biggest bingo site. Sports betting accounts for over 60% of the group’s revenue, with the remainder coming from gaming.
JD Sports Fashion
Retail sports stocks are a prominent part of the sports market. FTSE 100 firm JD Sports Fashion is the largest of these listed in the UK.
JD is a multichannel retailer of branded sports and casual wear under a number of fascias around the world. It sells globally recognised brands, including Nike, adidas, and Puma. It also sells a wide range of own-label brands.
The vast majority of its revenue comes from sports fashion. Goods sold under its ‘outdoor’ banners — associated with rock climbing, cycling, camping, and so on — contribute a single-digit percentage to the group’s revenue.
Aston Martin Lagonda Global Holdings
No UK sports share can match the glamour of Aston Martin. The company’s state-of-the-art headquarters and main production facilities are in Warwickshire, and its Formula One team is headquartered in Silverstone. With its motor racing heritage, and as James Bond’s marque of choice, Aston Martin has long been a symbol of quintessential British style and derring-do.
Although this FTSE 250 firm generates a negligible amount of its revenue from motorsport, its association with Formula One is invaluable for accessing cutting-edge technology and the global promotion of the brand.
Celtic is not only a powerhouse of Scottish football, but also a perennial participant in European competitions. It famously became the first British team to win the European Cup in 1967. The club also enjoys a passionate global following.
Among the sports stocks listed on the London Stock Exchange, Celtic is the only football club. Its shares trade on the exchange’s junior AIM market.
Since the post-pandemic return of fans to matches, about half the company’s revenue has come from its football and stadium operations. The remainder has come from merchandising, multimedia, and other commercial activities.
Science in Sport
Science in Sport is an AIM-listed stock and a science-led specialist sports nutrition business. Broadly speaking, its two divisions — SiS and PhD — contribute equally to revenue.
SiS is an endurance nutrition brand, focused on energy, hydration, and recovery products for elite athletes. It’s an official sports nutrition supplier to over 330 professional teams, organisations, and national teams worldwide. PhD is a premium nutrition brand, with a reputation for high quality and product innovation, targeting the active lifestyle community.
Investing in sports shares on foreign stock markets
Venturing beyond the London Stock Exchange opens up a greater range of sports shares.
For example, a host of European football clubs, including Manchester United, can be traded on the US market. And, of course, this market’s also home to a number of notable US sports stocks:
- Liberty Formula One
- Dick’s Sporting Goods
- Madison Square Garden Sports
- Liberty Braves Group
Are sports stocks right for you?
Sports stocks map on to a range of business sectors. As such, investors need to consider the characteristics of these sectors.
Sports betting is considered what’s termed a ‘defensive’ business. Gambling behaviour doesn’t tend to vary much through the economic cycle, so earnings should be fairly resilient. Of course, these stocks won’t be right for investors with a moral objection to gambling.
The consumer goods sector also has some resilient qualities. Meanwhile, retailers — particularly those reliant on discretionary consumer spending — tend to be more vulnerable in economic downturns.
Owning shares in a sports team comes with some unique features. Among other things, competition success or failure, the hiring or firing of a manager, and a significant player transfer in or out of the club can all impact the share price — for better or worse. Also, in some cases, the priorities and interests of a majority owner of a club may not be the same as those of minority shareholders and fans.
Investing in sports stocks requires consideration of the various sub-categories and individual companies within them, then, assessing how well they align with your investment goals and appetite for risk.
Not all sports stocks will be suitable for all investors. However, with the sports industry as a whole growing faster than global GDP, it’s certainly a sector worth investigating.