Sports participation: can we compete?

In this blog Leigh Thompson, Policy Adviser, looks at the reaction to the latest Active People Survey and some of the lesser discussed reasons behind the participation numbers.

A week or two back the latest Active People Survey (APS) figures were revealed and they made pretty grim reading for many in the sector. Media reaction has focussed on the size of the reduction in the number of people taking part in activity once a week (222,000 since Oct 2014) and what it reflects in terms of a legacy from London 2012. Much of the analysis has focussed on the quality and availability of facilities and the effectiveness of sports governing bodies in the delivery of sport.

This focus on the supply side is understandable – after all, access to inclusive, high quality facilities is essential to getting people involved in sport. However, much less attention seems to have been placed on wider economic conditions and the impact these have had on the demand for sport and recreation. What is going on out there?

As a starting point its worth reminding ourselves that spending on sport and recreation is a discretionary purchase. In other words, my subscription to the local tennis club or the fee I pay to use the swimming pool is just one of many ways I might spend my disposable income. It is not an essential like housing (keeping a roof over my head) or utilities (keeping the gas and electric on). This might seem blindingly obvious but it matters quite a bit when looking at the income people earn and the spending choices they face.

Recession - wages and income

Bearing this in mind, let’s consider what has happened to real wages (i.e. accounting for the effect of inflation) since the financial crisis of 2008. Fig. 1 indicates that real wages of the typical worker have fallen by 10% since 2008; this represents a 20% shortfall on where real wages would have been had they continued to rise in line with the trend since 1980. In short, the recession has had a huge negative impact on wages.

Fig. 1 Annual median real weekly earnings (£) 1980-2014

Source: S Machin, ‘Real Wages and Living Standards’, Centre for Economic Performance (LSE) March 2015

While this impact on wages hasn’t fed through directly to incomes due to the counterbalancing effects of social protection and changes to the tax system, the data nevertheless suggests that between 2008 and 2013, typical real family incomes fell by 4% and in particular real incomes of working age families fell by 7%. Think about that – working family incomes have fallen in real terms by 7% over the last five years or so.

So, if incomes have been squeezed to this extent, it is likely that people will be much more careful about how they choose to spend their disposable income. And they will certainly be much more careful about how they choose to spend the (now smaller) amount of disposable income they’ve earmarked for recreational purposes.

Relative prices

So the next question to ask is: what has happened to the prices people pay to participate in sport over the same sort of period? After a little digging on the Office for National Statistics website I came up with the following graph (Fig. 2). This shows the change in prices for goods and services related to various sport, recreation and leisure pursuits (indexed to 2005). All of these are included in the overall ‘basket of goods’ used to measure inflation via the Consumer Prices Index (CPI).

Fig 2. Consumer Price Indices - Sport, Recreation and Leisure (2005 = 100)

Source: ONS

Fig. 2 demonstrates what has happened to prices for sport and recreation since 2005 compared to the change in prices for what we might think of as ‘competitor’ goods and services, such as cultural attractions, home entertainment and eating out.

What is striking about the graph is that although prices for sporting equipment have stayed pretty much flat, prices for ‘recreational and sporting services’ (which includes fees for exercise classes, admission to swimming pools and golf green fees) have risen by over 40% relative to 2005. This compares to increases of 35% for restaurants and cafes and 38% for ‘cultural services’ (including admissions to cinema, theatres and live music).

What also stands out is the steep fall in prices for home entertainment technology – notably TVs, DVD players and tablet computers. In addition, computer games and games consoles (‘games toys and hobbies’) have become cheaper by 14% relative to 2005. Combined with a relatively modest increase in prices for mobile phones and internet subscriptions, this suggests that alternative forms of home-based leisure present a real economic challenge to traditional – and relatively more expensive – sport and recreation pursuits.

Implications for sports participation

Precisely why prices associated with sport and recreation have increased by so much is not clear. There are likely to be many underlying reasons to do with costs of provision and the indices themselves are not a perfect reflection of what happens in reality – in many cases prices for sports participation will have fallen or stayed fairly constant. But the takeaway point is that sports participation is subject to the same economic forces as anything else.

In a period in which people’s incomes have fallen in real terms, prices associated with some elements of sports participation have increased significantly relative to other, competing forms of recreation and entertainment. Against this background should we really expect levels of sports participation to continue to rise inexorably year after year?

In this challenging economic environment, one thing for the sector to think about is whether it is really competing aggressively enough on price (and indeed quality) to attract participants, particularly those indifferent between sport and other forms of leisure and those on low incomes for whom cost will be a key factor. Clearly some sports have high fixed costs of provision – for example swimming and golf require purpose-built facilities – but as a sector we should nonetheless be asking the question whether it is possible to deliver the same (or an even better) participant experience more cheaply, or at least better tailored to the ability to pay.

All of these sorts of questions – and many more – are forming part of the Alliance’s thinking to help the sector get ‘Fit for the Future’.

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