How do sports competitions make money? What’s in it for investors?

The African nations cup is coming up in a few days (9th of January precisely). The tournament kicks off with fanfare in Cameroun in a four-week-long competition that brings together the best African football has to offer. This will culminate in a final on February 6 at the 60,000 capacity stadium in Yaounde.

Beyond all the hard tackles and sublime goals, where does the money come from for these huge tournaments? The simple answer is TV rights and gate takings, even though gate takings from football tournaments held in Africa are almost irrelevant compared to other continents.

Apart from the 2010 World cup held in South Africa, gate-takings have been low across tournaments held on the continent. The more minute answer is adverts. Adverts reach a larger audience across Africa and beyond. This is one of the main reasons these countries jostle to host the competitions.

The state provides the facilities and infrastructure needed for successfully hosting the championships. The ripple effect is that jobs will be created, and infrastructure like roads and rail lines will serve much longer than the tournament itself.

For investors, it is an opportunity to put money where there are the potentials of making returns. This is where bonds make money. When governments put up bonds for infrastructure, investors tend to have a higher bond yield (https://www.investopedia.com/terms/b/bond-yield.asp) when the infrastructure is put to use. The Nations Cup is a good example of infrastructure making money for the state.

Apart from the infrastructure, investors also need to look at companies placing adverts. These companies are reaching the right audience, and it increases market potentials for those companies. This invariably implies that they have the opportunity to make profits.

Buying shares from these companies is a good investment, and it should be considered when looking for an investment opportunity.

If you buy shares from these companies before the Nations Cup, then there is a higher chance of making more from your investment for as long as that investment lasts. My advice would be to take a not so cursory look at these companies when looking for investment opportunities.

They are healthy and ambitious enough to advertise at the Nations Cup. This means that there is strong enough growth potential and return for your investment.