In case you hadn’t noticed, sports are kind of a big deal. Every day, millions of Americans watch sports in person or on TV, millions more take part in athletic activities, and countless more wear athletic clothing regardless of how active they are.
There’s a lot of money to be made in sports. But aside from those that work incredibly hard throughout their whole life to become an elite athlete, most of us won’t make a dime as a pro player. So, how can the rest of us cash in on the popularity of sports?
There are many ways that average investors can make some money through sports. Here are a few.
Publicly Traded Sports Companies
The simplest way to get an ownership stake in the world of sports is through buying shares of publicly traded companies in the space. There are public companies involved in making athletic footwear and clothing. You can invest in companies that make sports equipment like helmets, baseballs, and shin guards. It’s also possible to own shares of the companies that broadcast sports.
Before you start dreaming about starting your own sportswear company or buying the Houston Rockets of the NBA, consider buying shares of sports companies that are trading publicly.
Top publicly traded sports apparel manufacturers include Nike (NKE), Under Armour (UAA), and Lululemon Athletica (LULU). You can also invest in major retailers, such as Foot Locker (FL) and Dick’s Sporting Goods (DKS), or equipment manufacturers including Brunswick Corporation (BC) and Vista Outdoor (VSTO).
Do you want a piece of ESPN? You’ll have to buy shares of its parent company, Walt Disney Corp (DIS).
You may not have a hidden treasure of rookie cards stashed in a shoebox under your bed, but it is possible to amass a valuable collection of sports memorabilia that can serve as an investment.
Sports trading cards, autographed balls, game-worn jerseys, and vintage sports artwork all count as collectibles. Even old stadium seats from demolished stadiums have their price. These all qualify as collectibles that could rise in value and can supplement, or even fund, your retirement.
If you’re patient and know where to find memorabilia at a good price, you may be able to build a lucrative collection. Just keep in mind that collectibles don't enjoy the same favorable tax treatment as stock investments.
Be aware that the demand and value of these artifacts can rise and fall just like any investment, and it may be difficult to determine which collectibles will increase in value. Owning sports memorabilia also involves caring for it, storing it, and insuring it.
There may be easier and more lucrative ways to make money, but collecting memorabilia may be one of the most fun ways to invest in sports.
Yes, it would be absolutely amazing to own a pro sports franchise. Think of the perks. Access to great athletes. Awesome seats to every game. Lots of revenue, and the likelihood that your team will one day be worth far more than what you paid for it.
But let’s be honest: There are only so many major pro sports franchises to go around, and it requires tremendous wealth to purchase one. Consider that there are 122 franchises from the NBA, NHL, Major League Baseball and the NFL. The team with the lowest value, according to Forbes, is the NHL’s Arizona Coyotes, worth $285 million. When former Microsoft CEO Steve Ballmer bought the NBA’s Los Angeles Clippers in 2014, he paid more than $2 billion.
That said, there may be ways for people of more modest means to get in on the sports ownership game. Minor league teams, especially from small and independent leagues, are plentiful and priced more reasonably than teams from the Big Four.
Buying Shares in a Team
There are a handful of teams that are publicly owned, making it possible to own part of a team in the same way you might own a share of a company. The Green Bay Packers are a high-profile example of this. The team has had five stock sales over the years, distributing more than 5 million shares. The last stock sale in 2011 netted the team enough money to renovate the team stadium and install a high-end scoreboard.
Carefully consider this option before buying shares, as it may not be a viable way of making money. For example, Packers stock is not a tradable security, giving it no market value. Furthermore, the Packers organization is a non-profit, which means it does not distribute profits to shareholders in the form of dividends.
Health Club and Fitness Franchises
If you work out at a gym, it’s likely a private business or owned by a franchise. Fitness centers including Planet Fitness, Anytime Fitness, Crunch Fitness, and Workout Anytime are taking advantage of the growing demand for low-cost gyms with expanded hours (many are open 24 hours). Other gyms include OrangeTheory and offer trainer-led workout sessions.
By purchasing a gym franchise, you are buying something that is set up and ready to go, and much of the marketing is handled by the parent company.
The upfront costs to buy a franchise can be prohibitive. Larger and more established companies with recognizable brands will have a higher initial investment. You’ll also be on the hook for royalty fees and possible advertising fees of hundreds of dollars per month.
The requirements to open a franchise may be broken up by an investor's total net worth and liquid assets. For instance, Crunch Fitness requires franchise owners to have a net worth of at least $2 million, including at least $500,000 in liquid assets. While this may be a high barrier to entry, investors can gather partners to go in on a franchise location together.
In addition to gyms, you can buy a franchise of a personal training business, such as Gym Guyz, or franchise a trademarked workout such as Zumba or Jazzercise.