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Lesson 3.2

© 2015 Thompson Educational Publishing, Inc. 1

“WHO’S WHO” IN THE WORLD OF SPORT

~ ~ ~

TOPICS COVERED IN THIS LESSON

• (a) Key Participants in the World of Sport

• (b) Top Athletes and Monetary vs. Non-monetary

Motivations

The Sports Franchise Owner


Owners of professional sports teams may

have non-economic reasons for doing so, e.g.,

contributing to their community or a passion for

sports.

• However, most individuals or corporations that

invest in sports teams desire large profits on their

investment.

• Owners seek out ways to generate extra revenue

beyond collecting money from ticketholders.

• Many professional sports teams are owned by

large media conglomerates.

The Many Business Interests of

a Sports Franchise


A sports franchise consists of a team along with

associated business interests.

A franchise’s business interests include:

• Licensing,

• Concessions,

• Broadcasting rights,

• Equipment,

• Stadium,

• Players, and

• Coaches

Ticket sales provide a great resource of revenue for the NFL, with each team generating approximately $51 million per year. With stadium seating ranging from capacities of 65,000 to 85,000, and with ticket prices at a near average of $80, ticket sales add up. And we can’t forget the Super Bowl because Super Bowl ticket prices rise tremendously in comparison with regular season tickets. For Super Bowl XLVII, average ticket prices were $3,100!

Ticket sales.

Hats, key chains, cups, socks, and of course jerseys name just the surface of available NFL merchandise. In 2010, NFL merchandise sales reached $2.1 billion. Merchandise is one of the most effective revenue sources because the reach extends beyond the United States–a reach that is more difficult for other revenue sources such as ticket sales and venue revenue.

Merchandising.

The NFL takes aggressive measures to insure its copyrights and trademarks are protected. It also charges a considerable fee to use the league’s intellectual property. In fact, at the end of December 2011, it was announced that the league was expected to increase its rights fees by 63 percent. One source indicates that television networks will pay almost $28 billion over a nine-year period to air NFL games! Additionally, advertisers that wish to promote products using NFL terms must license trademarks, which increases the cost of an already very expensive ad or marketing effort.

Licensing.

The venue plays a big role in NFL revenue because it provides a variety of ways to generate revenue. New or updated stadiums are likely to fuel more dollars to the NFL because they tend to offer more seating, better views, and other perks. Forbes indicates that teams increase their value when new stadiums are built. Furthermore, venues position a variety of vendors such as food, beverage, and merchandise directly in front of football fans, giving vendors the ability to charge high prices.

Venue.

For instance, the 49ers make $6.8 million per year on just concession and merchandise sales.

The 49ers make $6.8 million per year on just concession and merchandise sales.

Swimming Pool at Chase Field

The World’s Most Valuable Sports Teams

and their Owners


The Athlete


Athletes are members of a

workforce in which

performance is the one

criterion upon which all

members are judged.

• High-profile athletes in

hockey, baseball, and

basketball earn millions

of dollars a year.

• Many athletes in lower-

division leagues, however,

earn modest salaries closer

to those of the average

worker ($46,000 on average

in 2013).

The Sports Agent


Sports agents, or player

representatives, make their

living by charging a

commission: a pre- arranged

percentage of the value of a

player’s contract.

• The commission is usually

between 4 and 10 percent of a

playing contract and between

10 and 20 percent of an

endorsement contract.

• Agents represent athletes in

all levels of business dealings,

e.g., choosing a team,

negotiating a contract, and

selecting endorsement deals.

In the NFL, players can earn anywhere from $375,000 to $20 million from a playing contract, meaning the agent can earn between $11,250 and $600,000 per player. In MLB, with no commission limits, players earn between $400,000 and $32 million, and agents pull in anywhere from $16,000 and $4 million. The highest-paid MLB agent in 2013 was Scott Boras, who earned $11,728,037 in commissions from $248,222,750 worth of player contracts – a 4.7 percent commission.

Salary Variations

The Sports Fan

Fan loyalty is the most important asset for a

sports franchise. Dedicated fans will support a

team through many years of mediocre success

and even through suspension of play due to

labour disputes.

• Fan loyalty can be

undermined if the

team management

does not make

efforts to improve

a team’s results.

• Players and

agents work to

maintain their

media image

among fans.


Player Strikes and Lockouts


Sometimes players cause work

stoppages because their agents

or player unions have disputed

clauses in their contracts over

salaries or pensions.

• A dispute might involve, for

example, players’ salaries or

players’ status as “free agents”

once a contract has expired.

• Owners sometimes shut down

operations—called a “lockout”—

during contract disputes. The

fans don’t get to see their

favourite teams play and are

not happy.

Intrinsic Motivations of Top-Level Athletes,

Professional and Amateur

• A love and passion for their chosen sport

• The strong bond forged with coach and teammates

• Ideals such as the pursuit of excellence


Extrinsic Motivations of Top-Level Athletes

• Large salaries, bonuses, and endorsement deals

• Benefits of a high-paying, steady job for a

minimum of 10-15 years

• Fame and social status


“I play for the money”

Professional soccer player Benoît Assou-Ekotto

(left) caused waves when he admitted he played

only “for the money.”


Is It Wrong for an Athlete to Play

Only for the Money?


Pro Arguments:

• We are all mercenary to some degree; players

sometimes just want to move on to apparently

bigger things; renewing a contract with the

same club usually means only incremental wage

increases

Con Arguments:

• Athletes play an important role in “advancing

the world”; playing in a major sport is not just

about “folks going to work”; athletes have a

responsibility to live up to certain ideals and to

show respect for fans

Lesson 3.3


SPORT AS AN ENTERTAINMENT

INDUSTRY

~ ~ ~


• (a) The Influence of Media on Sport

• (b) The Sports Media: Who Owns Them?

What Are the “Media”?


Media are the various means of

communication through which people are

reached widely, including print and digital

formats.

The media include:

• Newspapers

• Radio

• Television

• The Internet

• Social and news networks

The Powerful Influence of Television


Early on, newspapers included

sports coverage but fans had to

wait until after the sporting event

to find out who won. In the 1930s

and 1940s, radio broadcasts

broke that pattern by allowing

live sports coverage.

• The first NHL hockey games came

to viewers at home in Canada in

1952. TV has reshaped the rules

of sport, caused the redesign of

players’ uniforms and equipment,

and affected the duration and

tempo of sporting events.

• TV has refashioned the elite sporting event as a

fast-paced, advertisement-interspersed

entertainment vehicle.

• Fans can view sporting events that are televised

live, tape-delayed, and streamed online and on

mobile platforms.

The “Sport-as-Entertainment Industry”

Many technological advances

in television broadcasting have

led to the growth of the “sport-

as-entertainment industry.”

The “extras” include:

• Celebrity interviews

• Play-by-play announcers

• Pre- and post-game analysis

sessions

• Highlights from other games

played simultaneously

• Instant replays, and

• In-depth player profiles


Digital Advances in Sport Entertainment


Significant technological advances in the

delivery of “sport-as-entertainment” are

taking place each and every year.

For example:

• Most professional sports leagues now broadcast

games in high-definition.

• Enormous screens at sporting events offer

crystal- clear, digital pictures.

• Digital video recorders allow viewers to control

live TV broadcasts and save memorable games.

• Viewers can surf the Internet for in-game

stats, vote online for best players and plays,

and get video highlights via mobile devices.

Broadcasting Rights


The primary relationship between professional

sports teams and leagues and the media is the

sale of broadcasting rights to games.

• Television and media organizations pay huge sums

of money for the exclusive right to broadcast

sporting events live.

• A major benchmark was set when the U.S.

networks CBS and Turner Broadcasting signed a

contract with the NCAA for rights to broadcast the

“March Madness” men’s basketball tournament for

US$11 billion for 14 years.

Sport and Social Media


Social media play an increasingly important

role in how fans follow sport.

•Fans can follow live action or catch highlights

on computers or smartphones.

•Fans routinely view game highlights and

bloopers on YouTube.

•They use Twitter and Facebook to receive

and share the latest scores and statistics

within seconds of the action.

•They can engage in direct social exchanges

with their favourite athletes via Twitter.

Lesson 3.4


SPORT AND FITNESS CONSUMERISM

~ ~ ~


• (a) The Boom in Sales of Health & Wellness

Products & Services

• (b) Consumerism and the Growth of the Private

Fitness Industry

The Physical Activity & Sport Marketplace


A staggering number

of companies compete

to sell us products and

services such as:

•Sport drinks

•Exercise equipment

•Workout apparel

•Memberships in fitness

clubs and sports

leagues

Increasing Sales of Health and Wellness

Products around the World


Factors behind

increasing sales of

health and wellness

products worldwide

include:

•An aging population

•High obesity rates

•Raised public

awareness of

unhealthy foods

Global Sales of Health and

Wellness Products by Region


Growing Financial Opportunities


The Business Development Bank of Canada

issued a report in 2013 revealing that:

• Health awareness has increased among

Canadians.

• As a result, financial opportunities abound for small

and medium-sized enterprises (SMEs).

• Many SMEs specialize in products related to

personal fitness, health, and wellness.

Susceptible Target Markets


Several target markets may be

susceptible to fraudulent or

misleading claims by vendors of

products and services related to

fitness and health:

• Many seniors possess significant

purchasing power and are a

lucrative market for sellers of

products and services promising

prolonged vitality.

• Overweight teens and adults are

vulnerable as the market devoted to

weight loss has seen steady growth

over the years.

• Manufacturers of “exergames” have

combined video games and physical

activity into games based on sports to

sell to children hooked on video

games.

The Private Fitness Industry

The private fitness industry refers to the large

number of private clubs offering individuals

opportunities to purchase and enjoy fitness

training and social activities related to fitness.


The Growth of the Private

Fitness Industry


Privately owned gyms and

health clubs in Canada have

grown enormously in the past

three decades.

•There are more than 6,200 fitness

clubs in Canada.

•Fifteen percent of the

Canadian population

belongs to a fitness club.

•Total annual revenue of these

clubs is $2.2 billion (as of 2014).

“Caveat Emptor”—Buyer Beware

Businesses driven by the lure of

profit sometimes make misleading

or fraudulent claims.

• Consumers must be wary of a product

or service that promises maximum

fitness or health benefits for minimal

effort.


Become Well-Informed if You

Want to Join a Fitness Club

Before you sign up:

• Take time to understand what

to look for in a gym or fitness

club.

• Find out in advance how the

equipment, training, and

personnel can help you meet

your personal health- related and

fitness goals.

• Know how to read a

membership contract

before signing and

committing to payments.


Criteria for Assessing the Quality of

a Fitness Club


Know Your Rights as a Consumer


Legislation in Ontario and other Canadian

provinces protects you if you sign a “personal

development services agreement” that costs

more than a modest amount.

• For example, Ontario’s Consumer Protection Act

(2002) covers anyone who signs up with a gym,

fitness centre, weight loss club, martial arts

classes, or dance lessons.

• Consult your province’s website to learn more

about your rights as a consumer of fitness-related

services.

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