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Sports and the Economy

Sports and the Economy. Class and Commercial Sport. Golf should not be on TV It is boring It is difficult to produce It is difficult to commentate High proportions of people who do play golf are wealthy and powerful

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Sports and the Economy

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  1. Sports and the Economy

  2. Class and Commercial Sport • Golf should not be on TV • It is boring • It is difficult to produce • It is difficult to commentate • High proportions of people who do play golf are wealthy and powerful • They are people who buy luxury cars and fleets of cars for their businesses • Advertisers will pay big money to reach this audience • Therefore, Golf is on TV and Bowling is not!

  3. I. Sports and commercialization • Michael Jordan has been defined as the key figure in corporations using sports to boost bottom lines • Jordan spread the ideology that sports are not just games, but marketing tools for advertisers • Red and Black Air Jordans • Before the AJ I, most basketball shoes were white, but the bold black and red styling of the Jordan I flouted this convention. The NBA banned the shoe from the league in response, but Jordan wore them anyway, racking up serious fines of up to $5000 a game. Nike, of course, was more than happy to pay these to keep the shoes on Jordan's feet and in the public eye. All this controversy and Jordan's spectacular numbers that year served to put the Air Jordan line on the road to becoming a household name. (sneakerhead.com) • See all Jordans • Eventually his own line of Jordan products

  4. II. Sports and Branding • Branding-Entire process involved in creating a unique name and image for a product (good or service) in the consumers' mind, through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers. (businessdictionary.com)

  5. B. Stadiums sell naming rights and every surface is for sale • Advertisers use College Bowls to help brand their products D. NASCAR is sponsorship on wheels E. Even events themselves can be used to brand- McDonald’s All-American, or Mercedes Championship F. Vodaphone paid $58 million (2003) to have their name on Manchester United’s Soccer Uniforms for 4 years. G. Even 12 year olds can be Nike, Reebok or Adidas kids • Corporate execs know that it is best to brand athletes as early as possible • Nike was huge when I was in middle school and I have been loyal ever since

  6. III. Sports do not resist corporations • In less than a generation, people have become so used to corporate branding that you think it is normal to have logos everywhere • Baseball did resist putting Spiderman 2 Movie images on their bases, • but even Wrigley field has signs in the ivy now!

  7. IV. Linking Sports and Companies together • Disney owns ABC, ESPN, the Anaheim Angels and the Mighty Ducks—Where was the parade for the Angels held? Disneyland! • ESPN created the X-Games so it had programming • There is a reason the most powerful people in sports are not athletes. • Professional Sports Leagues become Cartels

  8. V.Cartels • A centralized organizing group that coordinates the actions of a collection of people or businesses • Even though each franchise is a separate business, they come together to represent their collective interest • When a cartel succeeds it becomes a monopoly • Each professional league is a monopoly

  9. VI. Monopolies • The single buyer of athletic labor in a particular sport • Example: NFL • If a college football player wants to play professional football they must go to the NFL • The NFL forces players to negotiate with the team that drafts them thus avoiding a bidding war for new players • As a monopoly, owners prevent new leagues from forming. • A new team can join the monopoly, but the owners must agree and it is very expensive. • EX. The Houston Texans paid $700 million to join the NFL • The US Congress has agreed to let professional leagues operate as a monopoly.

  10. VII. Leagues are different • The NFL for example does not let teams negotiate independent contracts for local broadcasts. • MLB does. • The Yankees sold their rights to broadcast games in 2002 to the YES Network for $60 Million • The former Montreal Expos sold their rights that same year for $500,000. • Hence the Washington Nationals!

  11. VIII. How do Professionalowners make money? A. Gate Receipts B. Media Revenues (see T.V. slide XII for NFL) • Stadium Revenue • Naming Rights • PSLs • Concessions D. Licensing Fees E. Merchandise Sales

  12. IX. Professional Athletes • Players were forced onto teams and controlled by owners completely until 1976 when Free Agency was established • Since 1980, professional athletes salaries have soared • BUT consider that the top 15% of MLB players make about the same as the other 85% • The average (mean) salary is about $2.63 Million, but the middle salary (median) is only $850,000 per year. (2005) • The big salaries drive up the average of the entire league • On opening day 2010, the mean salary for MLB topped $3 Million • Cincinnati Reds mean was $2.7 Million, but their Median was only $485,000

  13. X. CBA’s-collective bargaining agreements A. Players Unions realize they need to stay together to negotiate their CBA with the league B. CBA Issues include: • Extent to which teams will share with each other • Salary limits for rookies, restrictions for veterans and minimum salary levels for all players • Conditions in which players become free agents • A salary cap – sets maximum player payroll • A salary floor- sets minimum payroll • Requests for outside arbitration • Changes in game rules

  14. XI. Amateur Sports • Athletes have few rights and no formal means of filing complaints • Athletes are not allowed to share the revenue they generate and have no control over how their skills names and images can be used by the University or the NCAA • They cannot endorse products, promote events or sell merchandise • Challenging the University or NCAA would be expensive and take years of a young athlete’s life

  15. But they get scholarships… • In 2003, 87,015 male athletes participated in D1 athletics. There are only 29,888 full scholarships. 47,579 athletes received some aid. • In 2003, 68,670 female athletes participated in D1 athletics. There are only 23,577 full scholarships. 38,160 athletes received some aid. • Only 4.7% of all NCAA athletes receive full scholarships (tuition, room and board) • About 65% of all intercollegiate athletes receive no financial aid. • NCAA scholarships how many? • NCAA scholarships how much?

  16. And More…. • http://chip-patterson.blogs.cbssports.com/mcc/blogs/entry/24156338/28142828

  17. How much is a scholarship worth? • http://www.usatoday.com/sports/college/mensbasketball/2011-03-29-scholarship-worth-final-four_N.htm • http://www.usatoday.com/sports/college/mensbasketball/2011-value-of-college-scholarship.htm

  18. XII. TV • What we get to see is heavily influenced by capitalist corporations who sponsor nearly 100% of all sports programming. • The goals are to create consumers that are loyal to capitalism and generate profits for corporations and shareholders. • Our sports are shaped by what we are allowed to see and what we are allowed to hear.

  19. XIII. Do sports need the Media? • How would a game be different if you went to it in person versus watching it on TV?

  20. Media Cont. B. 2006–2013 • AFC on CBS ($622.5 million/yr) • NFC on Fox ($712.5 million/yr) • Sunday Night on NBC ($650 million/yr) • Monday Night on ESPN ($1.1 billion/yr) • Thursday Night on NFL Network ($0/yr) • Total $3.085 billion/yr • NFL Sunday Ticket is an additional $700 million/yr

  21. http://www.sportsbusinessnews.com/_news/news_347260.php • http://www.insidehoops.com/nba-tv-contracts.shtml • http://articles.latimes.com/2007/jun/28/business/fi-espn28

  22. XIV. Fantasy • 1st fantasy league was created in 1979 by a baseball fan. (30 for 30) • Average fantasy player is White (93%), 40 years old, has a college degree and an average income of $80,000 (2005) • Fantasy players spend $2 Billion per year to get data on their teams. • Stop following teams, follow players. • Provides a sense of ownership and control • Allows men to share interests and backgrounds

  23. XV. Video Games • Lets you be in control of all aspects of play. Management, coaching playing. • Madden uses NFL player names. • Must be approved by the NFL and the NFLPA • No off field drug use to boost your team • College males measure themselves by Madden playing ability.

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