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The Business of Sport (2008)

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2008 presentation on the basics as they relate to the business of sports

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The Business of Sport (2008)

  1. 1. If we do everything right this year and win again, we probably will be able to break even. And I’ll tell you this much: I didn’t buy this team to break even. -Minnesota Twins Owner Carl Pohlad, 1992.
  2. 2.  Read Fort Ch. 2 p. 13-20  Answer Worksheet Q#2  Continue working on anthology 09/13/08
  3. 3. • Economics • Scarcity • Opportunity Cost • Comparative Analysis • The Law of Supply/ Demand • Elasticity • Utility
  4. 4. -Jeremy Jacobs (Sporting News, 1992)
  5. 5.  Players › Greedy & lucky?  Owners › Greedy & manipulative?  Teams › Raise prices so the fans take on the burden? 09/13/08
  6. 6. • TSN 100- only 10% of the most powerful people in sports are players. • Owner behavior- stadiums, admission prices, TV rights, player negotiations. • Teams that spend the most have the better chance of winning- why?
  7. 7.  Fans pay to see them perform/play › They produce the product  Compensation should be based on the revenues they are generating  Careers are short, so their salaries should be high  Few have true POWER! 09/13/08
  8. 8.  How is player pay, just like pay for, a non-sports/athletic job?  How does fan envy play into everything? 09/13/08
  9. 9. -Gary Cavalli, ABL Co-founder on shutting down a franchise (AP, NY, 8/26/98)
  10. 10.  Independent legal entities › Free to make/ lose money depending how they operate  Abide by league agreements › Including modifications from Player’s Union in Collective Bargaining Agreements  Want the best team to make $$$ › Players, front office employees, coaches  Player’s can use agents to negotiate individual contracts 09/13/08
  11. 11.  Why do teams/owners that spend the most, generally win the most? › Is this true at DI? DIII?  Do owners have any incentive to misrepresent the economic welfare generated for them by team ownership? Remember their relationships with: › Players › Fans › State & local government officials 09/13/08
  12. 12. Why study the sport enterprise? Reason #1  Sports is big business.  Over $10 billion in public money has been spent in the last 15 years just on new stadiums and arenas. 12
  13. 13. Why study the sport enterprise? Reason #2  Sports has cultural importance far beyond its economic significance  Pro-sport industry ~ same size as cardboard box industry › Nobody talks about boxes around the water cooler on Monday 13
  14. 14. Why study the sport enterprise? Reason #3  Sports is a laboratory for social experiments › Discrimination/Integration › Women’s Rights › Pay for performance/ contracts › Public finance/Urban economics › Demand for tickets › Competitive balance › Revenue sharing 14

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