Financing Sport 2nd Edition

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Financing Sport2nd Edition

• CHAPTER TWO

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Detailed Outline ofFinancing Sport

• CHAPTER 2
• The Challenges Facing College and Professional
  Sports
• The Financial Status of Intercollegiate
  Athletics
• The Financial Status of Professional Sports
• The Leagues Declining Health
• Controlling Player Costs

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COLLEGIATE SPORTS
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The Financial Status of Intercollegiate Athletics

• 1. The high degree of commercialization in
  college sports is evident in
• A. High salaries of coaches
• B. Television contracts
• C. Corporate sponsorship
• D. Licensing agreement
• 2. College sport programs is no longer a game,
  its a business.
• It is imperative to become more business
  like.
• 3. More than 3/4th of the largest collegiate
  athletic programs are losing
• money.
• 4. NCAA study of the financial condition of its
  member reported only 16 of the division one and
  two had more revenue than expenses.

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The Financial Status of Intercollegiate Athletics
(continued)

• 5. Athletic programs are receiving direct
  subsidies from state legislation.
• 6. Athletic programs are receiving mandatory
  raised in student fees each
• year.
• 7. Over 70 of division one schools reported in
  the NCAA survey that the football program
  operated in the surplus.
• 8. In an elite athletic programs(UT, Penn State,
  and etc.) generated 70 or
• more of the athletic departments budget.
• Football pays for everything.

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Collegiate Sports
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RISING COST OF SPORTS

• Cost control becomes overwhelming in college
  sports because
• 1. The rising cost of travel, equipment,
  scholarships, and etc.
• 2. Investing in athletic stadium, playing
  fields, athletic grounds, and
• marketing campaigns.
• 3. Title IX compliance.

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TITLE IX MYTHS/FACTS

• MYTH Title IX has done its job and is no longer
  needed. FACT In the past five years, the gap
  between male and female athletic participation at
  the high school level has grown.
• Female high school athletes receive 1.3 million
  fewer athletic participation opportunities than
  their male counterparts (3.2 million female vs.
  4.5 million male). 
• MYTH Title IX has resulted in the loss of
  athletic opportunities for men's sports. FACT
  Overall, men's athletic opportunities since Title
  IX's passage have increased. Title IX has been
  wrongly blamed by its critics for cuts to some
  men's sports teams at some educational
  institutions.
• Opponents of Title IX have tried to mislead the
  public into believing that the loss of men's
  wrestling and a few other sports at some schools
  is a sign of massive loss of men's participation
  opportunities overall when exactly the opposite
  is true men's sports participation continues to
  grow. Athletic programs add and drop teams all
  the time. Men are not losing. 

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TITLE IX MYTHS/FACTS

• MYTH Title IX's three-part test imposes a strict
  quota.
• FACT The three-part test imposes no numerical
  requirement even remotely analogous to quotas.
• A three-part test for participation opportunities
  determines if institutions provide female and
  male students with equal athletic opportunities.
  In order to comply, institutions must pass one of
  these three tests a) Proportionality-male and
  females participate in athletics in numbers
  substantially proportional to their respective
  enrollments in school, or
• b) History and Continued Practice of Program
  Expansion-the institution shows a history and
  continuing practice of program expansion which is
  demonstrably responsive to the developing
  interests and abilities of members of the
  underrepresented sex, or
• c) Full Accommodation of Interests and
  Abilities- the institution demonstrates that the
  interests and abilities of the underrepresented
  sex (females) are fully and effectively
  accommodated by the existing programs. 

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TITLE IX MYTHS/FACTS

• MYTH It is not fair that Title IX requires equal
  spending on men's and women's programs because
  the men's programs bring in all of the school's
  money.
• FACT Title IX does NOT require equal spending on
  men's and women's programs, and less than 12 of
  college athletic programs actually make a profit.
  
•  
• MYTH Football should be taken out of the Title
  IX equation because women do not play football.
• FACT No matter how you cut it, football players
  are male participation opportunities, not a third
  sex. They must count.
• www.womenssportfoundation.org

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• Female Collegiate Programs Benefited From Title
  IX.

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The Financial Status of Professional Sports

• Major growth is occurring on the secondary level,
  the minor leagues in baseball, basketball, and
  hockey.
• New leagues were launched in the past decade,
  the soccer professional leagues, Arena Football
  Team and the WNBA.
• A. Baseball had more new minor league teams than
  any other sport.
• B. Arena Football League has one of the most
  successful launch.
• 1. It expanded from one single league to two
  league.

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The Globalization of Professional Sports

• 1. The NFL sponsored European Leagues and played
  early games in countries like Japan, Mexico and
  others.
• 2. The NBA aligned itself with European club by
• A. taking over existing leagues
• B. form alliance with European clubs
• C. formed new leagues with existing teams
• D. awarded franchises to European cities that
  would become a member of NBA.
• E. Draft players from the foreign market ( Yao
  Ming Li Tie).

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Globalization of Sport

• Baseball becomes an Olympic sport.
• It has players from Latin American, and Caribbean
  that increases their market base.

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WOMENS PROFESSIONAL LEAGUE

• Women make 80 of the decisions in the household.
• Women are serious consumer of sports.
• Half of the women in the U.S. engage in some form
  of exercise.
• One-third of all high school girls participate in
  one or more varsity sports.

• WNBA- - Basketball
• WUSA Soccer
• WPSL - - Softball

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The Leagues Declining Health

• 1. Falling Attendance- the number of no-shows are
  increasing.
• 2. Declining Ratings with four major networks
  have increased programming to sports, viewers are
  not watching.
• 3. Economic Disconnect- attending a live game is
  now beyond most fans reach. No longer a family
  affair.
• 4. Players Salaries efforts to control
  salaries by owners are resisted by players.

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Top Ten Reasons for Non-attendance (p. 39)

• 1. Total cost to attend- 57
• 2. Comfort of watching games at home 41
• 3. Players behavior during games 41
• 4. Traffic Parking 38
• 5. Increase in sports on TV 35

• 6. Lateness of game 26
• 7. TV replay and analysis 22
• 8. Unlikelihood of getting good seats 19
• 9. Change in how local team is doing
• 10. Change in familys interest in game.

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Structure of Sport Business

• Different structures offers different benefits
• Types of Structures
• A. Governmental
• B. Non-profit/for profit
• C. Sole Proprietorship
• D. Partnership
• E. Limited Liability Corporation (LLC)

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Single Owner (Private Investor Model)

• This is when one person, independently wealthy.
  Owner can be hands on or hands off.
• Example Dallas Mavericks owner, Mark Cuban plays
  an active role in the basketball operation.

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Multiple Owner (Private Investment Model)

• This is a common model because of two reason
• A. the value of the franchise rises so high that
  no individual can afford to buy it.
• B. the public model has man disadvantage versus
  the private model.
• In some cases, the ownership group will have a
  dominate individual who appear to be a single
  owner.
• Example
• George Steinbrenner was viewed as a sole owner of
  the New York Yankees.

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Multiple Owners (Publicly Traded Corp Model

• With the exception of the Green Bay Packers, this
  is not used in the U.S.
• In this model, the franchise is covered by a
  board of directors who are elected by shareholder
  vote.

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Controlling Players Salaries

• Facts
• 1. The single greatest operational expense for
  pro teams are player salaries.
• 2. Player payroll costs is about two-thirds of
  the total operational expenses.
• 3. Owners are largely responsible for this.
• 4. Strategies used are
• a. salary caps
• b. free agency constraints
• c. luxury taxes
• d. resisting the resistance from collective
  bargaining unit or
• player association
• e. player lockouts

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DISCUSSION

• What is the 1 challenge in collegiate sports in
  your opinion to-date?
• How much of an impact has Title IX made in
  sports?
• What sport on the professional level are having
  more problems with attendance? And why?
• How can player salaries be control?

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Detailed Outline of Financing Sport

• CHAPTER 14
• Soliciting Sponsorships From Business
  Organizations
• Developing a Set of Potential Company
  Packaging Sponsorships
• Pricing Sponsorships
• Preparation of Proposals
• Communicating the Proposal
• Criteria Used by Companies to Screen
  Proposals
• Handling Rejections
• The Contract
• Working Together to Make It Happen
• Post-Event Followup
• Summary

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Detailed Outline of Financing Sport

• CHAPTER 15
• Measuring the Impact of Sponsorship
• Linking Sponsorship to the Communications
  Process
• Measuring Media Equivalencies
• Measuring Impact on Awareness
• Measuring Impact on Image
• Measuring Impact on Intent to Purchase
• Measuring Impact on Sales
• Summary

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Detailed Outline of Financing Sport

• CHAPTER 16
• Fundraising
• Fundraising and Intercollegiate Athletics
• Annual Donor Programs
• Major Gifts
• Systematic Approach to Soliciting Major Gifts
• Anatomy of a Major Gift Campaign UNLVs
  Vision Project
• Cause-Related Marketing
• Summary

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Chapter 1

• Sport in the New Millenium

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How Big Is the Sport Industry?

• Estimates vary widely. Sport is not recognized as
  an official industry in the Census Bureaus North
  American Industrial Classification System. This
  classification divides the economy into 20
  sectors or major economic activities. Sport is
  not designated as one of these major economic
  activities and sport-related activities are
  scattered across 8 of the 20 sectors.

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The Alternative Sports Boom

• The newly emergent extreme or lifestyle sports
  form the fastest growing segment of sport
  spending in the 21st century. They are highly
  individualistic, free-spirited, adrenaline-rush
  activities
• BMX biking bungee jumping
• downhill mountain biking in-line skating
• Skateboarding sky surfing
• Snowboarding street luge
• whitewater kayaking windsurfing

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The 90s Boom

• The sports industry was a major beneficiary of
  the longest sustained period of growth in U.S.
  history. The most notable features of that decade
  included the following
• sports facility construction boom
• proliferation of professional sports
  leagues and teams
• increased corporate investment in sport
• annual sporting goods sales near 75
  billion.

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The Challenges Ahead

• As we enter the new decade, there are many more
  modern and sophisticated venues, much more sport
  product, and unprecedented levels of corporate
  support. However, at the same time, there are a
  number of serious challenges confronting
  managers
• saturated marketplace
• taking advantage of emerging technology
• doing more with less