1. Ch. 10 – Sport and the Economy
1) Who benefits economically from sport:
a. Small % of pro athletes make large salaries
i. Limited Careers
b. Most successful athletes make endorsement money: Tiger Woods
c. Coaching salaries, secondary to pro
d. Officiating salaries, minor league to pro
e. Athletic trainers, wide range from volunteer to pro
f. Sports medicine; lucrative
g. Player agents; 5 to 10% of agreements/ investments
h. Auxiliary business; hotels, restaurants, tourism, taxis
i. Legal (Nevada) and illegal gambling. Millions bet each day
j. Corporations like Nike are the biggest beneficiaries from sport. Nike $40
billion Company. Electronic Arts, advertising: Coke
k. Sponsorships at events
l. Corporate sponsorship of Olympics
i. Coke
ii. Visa
m. Corporate sponsorship of stadiums; Rogers arena
2) Professional Sport as a business:
a. Pro sport as a monopoly
i. Pro leagues operate as cartels i.e. self regulating monopolies
ii. They call the shots
iii. Control of TV contracts
iv. Players drafted must negotiate with team that drafted them
b. Public subsidizing of pro teams:
i. Tax breaks; write offs
ii. Financial losses often misleading
iii. Availability of land and arenas at low cost
3) Ownership for profit:
a. Desire to own a pro franchise driven by:
i. Psychic gratification
ii. Profitable to own franchise in the long run e.g. NY Yankees
iii. Bragging rights
4) Relationship with owner and athletes:
a. Historically most power lay with owners
b. 1960’s players began to organize themselves (Players association)
c. Hence free agency on expired contracts
d. Results= better salaries for athletes
e. Friction/ Strikes
f. Salary caps e.g. NBA 1983
i. Attempt to control salary inflation
2. 5) Amateur sport as a business:
a. 343 AD Olympics abolished
6) College sport as a business
a. Many institutions rely on sports to keep them financially afloat
b. NCAA also acts like a cartel
c. University administrations are coming down hard to ensure academic
credibility
d. But athletic department still put winning championships and acquiring
corporate sponsorships ahead of graduation
7) Sport world wide is a big business. This is not likely to change in the near future.
E.g. no decline in sport interest during the economic recessions