The 3 reasons why the French Sports Economy has a bright future.

Economy & finance, Strategy / 17 November 2021

France is internationally known for its highly talented athletes like Kylian Mbappé (Soccer), Tony Parker (Basketball) or Teddy Riner (Judo), its major sporting events like Le Tour de France, Roland Garros or the French Grand Prix, or even for one of the most iconic French sport retailers in the world, Decathlon.
France is an important nation of sport and it’s becoming even bigger.

The necessity of physical activities to stay healthy during the repeated lockdowns due to the recent covid-19 pandemic, the 2024 Paris Olympic Games and the peak in investment into French startups create an environment where the French sport economy growth is accelerating.

Let’s take a closer look!

(1) The necessity of sports! “Thank you” Covid-19

Although the activity levels decreased during the coronavirus pandemic…

Compared to pre-restrictions, a study showed that overall self-reported physical activity levels decreased by 42.2% for the vigorous activities. “Vigorous activities are those that get your heart racing, make you sweat and so short of breath that you find it difficult to speak (e.g., repeated lifting of heavy weights).”

The activity levels declined both in our personal life and at work. Indeed, the repeated confinement made it more difficult for the population to have an outdoor physical activity. Also, many companies decided to deploy remote working tools and discourage their employees to come to work, thus they had even lesser opportunities to increase their heartbeat.

…Sport helped to stay healthy, especially mentally

Highly listened, highly praised but also highly criticized, the doctors have been in front lines in both medical facilities as well as the media during the coronavirus pandemic. They often expressed their recommendations with regard to physical and sport activities to mitigate the effects of the confinement, especially to overcome some depressive symptoms.

Some researchers advocate that vigorous activities may be associated with greater reduction in depressive symptoms.

For children and adolescents, moderate-to-vigorous physical activity and exercise during the day are associated with elevations in self-esteem, improved concentration, reductions in depressive symptoms, and improvements in sleep.

University of Michigan: Importance of Physical Activity Exercise during the covid19 pandemic

Pushed by the doctors’ recommendations, the French population, like any other nation in the world, realized how important a physical activity was in order to maintain a healthy lifestyle. The mental health, usually less considered, got awareness during the crisis.

If you practice sport regularly, you are more protected against covid19

The American Heart Association recommends at least 150 minutes of sport and/or physical activities per week. Again, studies show that not only physical activity help to feel better, but it reduces the risk of many diseases like heart disease, cancer, and dementia.

Recently, a study showed that physical activities reduce the risk of severe covid 19 outcomes.

This study shows that the people who were mostly inactive had a greater risk of hospitalization, ICU admission, and death after getting covid-19 than those who were active for at least 150 minutes per week.

We will never tire of repeating that the regular practice of physical activity and sport remains the most powerful preventive measure of non-communicable diseases, scourges of our modern society, but also a good way to stimulate immunity.

Sport vs covid ou sport et covid

So people changed their minds! More sports in the future.

Covid 19 had a positive impact on our society. It helped people to understand the importance of mental health in their life. As described earlier, sport was one way to stay mentally and physically healthy even during lockdowns.

The French population is not only more aware of the benefits of sport and physical activities, but also more willing to practice sport and physical activities to stay physically and mentally healthy. The activity levels will increase in the future. Consequently, the demand in sporting goods, software/app and games related to sport is most likely going to increase in the future.

Here below a graph from McKinsey, one of most reputed management consulting firm in the world, showing the expected increase in sports participation in 2021 vs pre-covid-19:

screen shot 2021 11 17 at 8.59.34 am
McKinsey report: Sporting goods 2021, the next normal for an industry flux

(2) 2024 Paris Olympic Games

Private actors and the French government are investing massively into the French economy to prepare the next Olympic Games, Paris 2024.

paris 2024 logo
The logo of the Paris 2024 Olympic Games

More money to athletes!

As President Emmanuel Macron said earlier this year, “The French government is expecting more medals in Paris than Tokyo”. So…

On October 27th 2021, the French Parliament examined the 2022 Budget, it included an additional 10 Million euros for the French high-level athletes in order to support them in their preparation for the 2024 Paris Olympic Games.

The 10 Million euros will be allocated to the Agence Nationale du Sport, a public organization in charge of supporting the development of sport in France. Created in 2019, this agency has been mostly supporting Federations as well as athletes, although it funded several new facilities.

Overall, according to Roxana Mărăcineanu, former swimming champion and Minister Delegate in charge of Sports for the French government, the budget of the Minister of Sports increased by 22%, compared to 2021, to reach an all-time record of 987 Million euros.

More investments in sports facilities

On October 14th 2021, the French President Emmanuel Macron announced a budget of 250 Million euros to assist in the construction of 5,000 new sport facilities.

According to the French newspaper Le Monde, this investment will be distributed as follow:

  • 1,000 multisport ground
  • 1,000 dojos
  • 500 basketball court (3×3)
  • 500 paddle-tennis court
  • 500 skate parks
  • 200 mobile sites
  • Others

The Olympic Games represent a valid reason to invest in infrastructure, facilities and equipment related to sports, and most of these new constructions will stay after the Olympics and benefit the population.

A positive impact on the French economy

The French Center of Law and Economics of Sport estimated that the Olympic Games will create 250,000 jobs in France, before, during and after the event.

Also, the same organization projected the economic benefits of the Paris Olympic Games at 10.7 Billion euros.

President of the French National Olympic Committee, Denis Masseglia, summarized what an entire nation is thinking.

The Olympic and Paralympic Games can be a great accelerator for development and sport would be a major benefactor in this process, both in terms of infrastructure, facilities and improving quality of life. Our ambition is to harness this unique opportunity to encourage our population to ‘think sport and ‘live sport.

Paris2024.org

(3) Peak of company creation and investments

More companies in France

During the pandemic, even though the French government has been very generous by widely supporting businesses and employees, many small businesses like gyms, personal coaches or even sport clubs had to face substantial losses, some of them had to file bankruptcy.

However, ironically the access to capital is much easier today than a few years ago and also the willingness to create companies is higher in France.

As we can see here below, the number of company creation has been constantly increasing since 2017.

Here below a chart representing the number of new companies in France from 2017 to 2020.

More investments in sports

The covid-19 pandemic had a profound impact on the economy, especially the sports economy because of the repeated lockdowns and the closure of the major sport facilities globally. Sports companies financially suffered during the pandemic.

However, investors were willing to invest in sports companies and curiously enough, they were more willing to invest in sportswear companies than other apparel industries.

Here below a graph from McKinsey, one of most reputed management consulting firm in the world, showing the market capitalization of the sportswear companies and the other apparel companies:

screen shot 2021 11 17 at 12.02.38 pm
McKinsey report: Sporting goods 2021, the next normal for an industry flux

Sporting goods companies […] tended to outperform the wider marker as the year progressed, with sports-equipment makers […] doing especially well. Sportswear companies were also more resilient than the rest of the apparel industry.

McKinsey report: Sporting goods 2021, the next normal for an industry flux

Thanks to a combination of several factors, the sports economy in France is growing and this will remain true for the coming years.

Indeed, the increased visibility of the importance of sport on physical and mental health, the preparation of the Paris 2024 Olympic Games and an offer that is constantly increasing, thanks to the creation of companies and the support of investors. It allows us to be optimistic about the future demand of this specific market.

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Julien Mendez

28 years old Engineer and MBA (soon to be) graduate passionate by strategy, finance and business development.

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