ANALYSIS OF SPORTING GOODS MARKETS:
THE PRIMACY OF SPORTS PARTICIPATION RESEARCH

It is axiomatic that consumers participate in the activities for which they buy sporting goods and equipment. Snowboards are purchased for Snowboarding, Fishing Rods for Fishing, Baseball Bats for Baseball, and so on.

The major exceptions to this broad assumption are the fashion-driven athletic footwear and apparel markets; as ASD popularized nearly 20 years ago, more than 80% of all "Running Shoes" are never sweated in, nor do millions of Sweatpants ever witness perspiration. Smaller exceptions to the rule are found in the "Outdoors" market: most Backpacks are merely bookbags, many Sleeping Bags are purchased for "sleepovers", and of course a large percentage of firearms are not destined for Hunting or Target Shooting.

In some cases, we have the obverse condition: people may not necessarily need to buy the products required for sports participation. Bowling shoes and Skis are often rented, a Treadmill may be used at a health club, and Batting Helmets are usually the property of teams, municipalities or school districts.

Nonetheless, in many sports, participation trends are clearly correlated with consumer purchases. In others — even when there is a direct and unambiguous connection between product and sport — the relationships between participation and market trends are less clear, due to purchase cycles, product availability, fluctuations in discretionary income, industry marketing campaigns and other factors. But in the end, just as company "fundamentals" eventually decide market value, sports participation is the defining criterion for most sporting goods markets.

For example, while the long decline in tennis participation closely mirrored the shrinking levels of racquet purchases, a similar correlation between participation data and product purchases has not been found for golf. According to ASD participation tracking research, even with the Tiger Woods-aided "blip" of 1997, golf enjoyed only modest growth throughout the 1990's. However, these research findings were flatly contradicted by the mammoth gains of golf product sales and industry stock prices during the same period.

Upon closer inspection, the phenomenal growth of certain golf companies (most notably Callaway) was not attributable to any large expansion in the golfer population, but rather to the industry’s genius for creating and successfully promoting newer and increasingly expensive products that elicited multiple "discretionary" purchases from an existing participant base. Exploiting the dream of every duffer to hit a golf ball farther and straighter, millions of golfers who already had viable equipment were presented with a smorgasbord of space-age materials, vacuum cleaner-sized club heads, revolutionary new shallow-faced fairway woods and a host of other exotica they found irresistible. But toward the end of the decade, the over-priced, saturated golf club market experienced a screaming descent to reality — one that should have been anticipated by the unremarkable growth of golf participation.

In the final analysis, sports participation defines the size, composition, and ultimately the trend of the product market. Sports participation is in effect, the inexorable "gold standard" to which all markets eventually return.

Another example where sports participation research functioned as a "reality compass" was the sport of fly-fishing. From its inception in 1987 through 2001, ASD had consistently documented a shrinking fly-fishing population — to the consternation and indignation of an industry which was convinced that their sport was enjoying remarkable growth. Industry opinion, aided by the media, Hollywood, and the fervor of its participants — had crystallized into an immutable "fact" — that fly-fishing was one of the fastest-growing sports in the U.S.!

Unfortunately, precious little evidence (save the anecdotal) was ever produced in support of this thesis, and the competing view (based on participation research) was long unaccepted: that the population of fly-fishermen has been sinking, caught in the undertow of a general decline in overall fishing participation. Depleted fish stocks, changing values, an evolving environmental consciousness, and competing leisure pursuits all militate against the growth of fishing, which—despite shrinking participation levels—is still one of America’s favorite pastimes.

In an entirely different arena, sports participation research was able to predict the demise of certain infomercial-driven exercise equipment — years before a one-time darling of Wall Street was forced into bankruptcy. While the stock price of CML Group (parent of NordicTrack) soared, ASD research quietly revealed that exercise ski machines were used predominantly in the home — and not at health clubs. At the time, this finding could have been corroborated by a visit to virtually any health club in the country. Many clubs did not even have such a machine; and if one or two could be found, they invariably gathered dust on the club floor — a very clear signal that nordic ski machines had failed the litmus test of health club acceptance. By contrast, elliptical motion trainers, the present rising star in the fitness firmament, register a much higher proportion of health club users — a finding that validates the activity as an authentic trend.

Unbeknownst to the investing public, the NordicTrack experience was lending credence to the old industry joke that "25% of all home exercise equipment becomes a clothes horse within a month." Indeed, the skyrocketing sales of NordicTrack were ephemeral — compliments of the once-omnipotent TV infomercial. Relevant point: this early-warning was sounded by a sports participation survey, and could not have been detected through standard product research.

On the positive side, for the past several years, ASD research has credited "senior" sports participation as a driving force in physical fitness and health club markets. This is not a forecast based on the well-known, burgeoning demographics promised by Census projections, but a proven historic sports participation trend. When combined with the explosive population projections for older demographics in the new Millennium, these remarkably high fitness participation levels of people over 55 loom as the single most important finding ever produced by ASD — an insight unattainable via any other form of sports research.