Professional Sports-1

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Unformatted text preview: SPM 205 Professional Sports Professional Sport Professional sport is any sport activity or skill for which an athlete receives compensation. Compensations can come in the form of: 1. 2. 3. 4. Salary Bonuses Reimbursement for Expenses Any other form of direct payment (memberships, vehicles, vacation packages, merchandise, etc. Professional Sport While most professional sport performances include entertainment elements, AN AUDIENCE IS NOT A CRITERION BY WHICH PROFESSIONAL SPORT IS DEFINED. Professional Sport Teaching professional a professional athlete who focuses primarily on teaching other athletes the intricacies of the sport, such as, a golf or tennis pro. These individuals also compete in tournaments, but typically do not compete on high profile tours like the PGA or LPGA Tour. Professional sport is exemplified by two main attributes: 1. It depicts the highest level of performance; 2. It generates the majority of print, electronic and social media coverage. THREE PRINCIPALS OF THE PROFESSIONAL SPORT INDUSTRY: 1. Labor the collective group of athletes in team sports that unionize in order to bargain collectively with league owners/ management. THREE PRINCIPALS OF THE PROFESSIONAL SPORT INDUSTRY 2. Management the collective group of ownership that is negotiating with the players or labor. Will try to will back or regain leverage and control what has been lost over the past three decades. THREE PRINCIPALS OF THE PROFESSIONAL SPORT INDUSTRY 3. Governance in professional team sport, this is the league structure that exists to oversee the competitive and business elements of the sport. The National Football League, the National Basketball Association and the Women's United Soccer Associations are all forms of governance. HISTORY OF AMERICAN PROFESSIONAL SPORTS Professional sport can be traced to ancient Greece, with the beginning of the Olympic games in 776 BC. In America, boxers, jockeys and runners were the first athletes to be paid for their prowess during the early and mid-19th century. Professional Sport in America Baseball became the first team sport to employ paid professional athletes. The first professional baseball team was formed in 1869, when the Cincinnati Red Stockings played baseball. Professional Sport in America Two years later (1871), the National Association of Professional Base Ball Players emerged as this country's first professional sport league. This organization became the foundation for today's Major League Baseball. Unlike today, middle-class entrepreneurs owned these early teams, and stadia were built as a matter of civic enterprise, which were extremely popular and profitable. Professional Sport in America For nearly a half-century, no other professional sport league existed in the U.S., until the National Hockey League was formed in 1917. This league emerged following the suspended operations of the National Hockey Association of Canada Limited. Professional Sport in America The National Football League was created in 1920 and remained strong for the next 40 years. The NFL fended off several rivals, until the American Football League was founded in 1960. Professional Sport in America The first pro basketball league was formed in 1937, and was known as the National Basketball League. In 1949, the NBL and the Basketball Association of America merged their operations into the National Basketball Association. (Earl Lloyd) Professional sport opportunities for minorities did not exist in the U.S. until about 65 years ago, when in 1947, Jackie Robinson became the first black athlete to play professional baseball for the Brooklyn Dodgers. Before that time, African American players played in separate, segregated professional leagues. Professional Sport in America The Negro Baseball League was actually founded in the late 1800's by African Americans who weren't allowed to play in the all-white major leagues. This league existed until the late 1950's once the integration of professional baseball occurred. Professional sport leagues for women have developed over the past 60 years or so. The first women's pro league, the All-American Girl's Baseball League, was formed in 1943 in response to the decreased player quality in Major League Baseball because of World War II, and the wide popularity of women's amateur softball. All American Girls Baseball League This league lasted for 11 seasons before folding in 1954 due to poor management and business practices. Professional Sport in America Between 1979 and 1991, there were four failed attempts to capitalize on the popularity of women's basketball. Four different professional leagues were unsuccessful due to financial difficulty. In 1996, two more professional women's hoop leagues emerged; the American Basketball League (ABL) and the Women's National Basketball Association (WNBA). The ABL lasted two and a half seasons before dissolving due to financial woes. The WNBA still exists, but is strongly supported financially by the NBA. WNBA Growth WNBA's 15th anniversary season in 2011 has been successful. Attendance increased for 5th consecutive year TV viewership on ESPN2 reached its highest level since `05. Formed eight new marketing partnerships Boost Mobile became first league wide marquee partner. Professional Sport in America The Women's Professional Fastpitch Softball League began in 1997 and remains in existence today. Women's Professional Sports As a result of the U.S. Women's National Team's first-place showing in the `99 FIFA Women's World Cup, a seemingly viable market for the sport germinated. In the summer of 2001, the Women's United Soccer Association (WUSA) emerged. The WUSA was the world's first women's soccer league in which all players were paid professionals. Women's Professional Sports The WUSA fielded eight teams , but suspended operations in September 2003, shortly after its third season was completed. Neither TV ratings nor attendance met projections, while the league spent its initial $40M budget -- planned to last five years. In2011, the most dramatic Women's World Cup final in history produced its most surprising champion. Japan twice came from behind to tie USA, first in regulation and then in extra time, and then went on to win the penalty shootout, 3-1, after a 2-2 tie in front of a sellout crowd in Frankfurt Germany. The U.S. was trying to become the first three-time world champion. Instead, Japan became the first Asian champion. PROFESSIONAL SPORT AND MEDIA A significant development occurred in 1961, when Congress passed the Sports Broadcasting Act, which changed the relationship between professional sports and media dramatically. Sport and Media Until then, federal antitrust law had prohibited professional sport leagues from negotiating network television contracts on behalf of their members. Professional Sport in America The Sports Broadcasting Act allowed the leagues to negotiate a collective agreement on network television contracts on behalf of their membership, rather than individual teams creating their own broadcast deals. The rationale behind the SBA was to create financial viability for professional leagues. By having the three major networks (ABC, CBS & NBC) bid on league-wide rights, the leagues and their teams would be able to receive significantly more revenue. Professional Sport in America Media The NFL successfully led a lobbying effort to exempt sport leagues from antitrust laws, thus granting them the right to collectively negotiate fees with the network. Uniqueness of Professional Sport There are four aspects of professional sport that distinguish it from other industries: 1. Interdependence in professional sport, there is the need of teams to compete and cooperate simultaneously. There must be a unity of purpose. They depend on one another to stage the events that constitute the product. Essentially, teams must recognize the importance of their competition and share revenues to ensure that their competitors remain strong. (League Think). The professional league that best exemplifies this is the NFL, where there is a high level of competition and parity amongst its members. (Green Bay, Buffalo, Jacksonville) League Think All members make sacrifices and concessions for the long-term benefits and growth of the league, whether its sharing television rights, merchandise royalties, etc. Revenue sharing is essentially the premise behind this economic model of stability and parity 2. Structure and governance Each professional sport typically has its own structure and system of governance, i.e. the "league office." It usually includes: a. League commissioner b. Board of governors or committee structure of team owners c. Central Administrative unit that negotiates contracts on behalf of the league, coordinates scheduling, licensing, etc. What are the similarities and differences among the four primary professional sport leagues in the U.S.? (MLB, NFL, NBA & NHL) Most pro leagues have a minor league system to help cultivate and develop talent, promote the sport, enhance revenues. a. Baseball has four different levels within its b. c. minor league structure (Rookie, Class A, AA & AAA) Hockey American Hockey League is the premier developmental league. NFL NFL Europe, a summer pro league in Europe that served as a training ground for future NFL players. United Football League debuted in `09 with four teams competing across the nation playing 13 games. NBA National Basketball Development League. d. Structure & Governance In the past decade, a variation on the typical league structure and governance has emerged, known as a SINGLE-ENTITY STRUCTURE. In a single-entity structure, the league is the owner of all of the teams. Structure & Governance The Women's United Soccer League, National Basketball Development League and the WNBA are examples of this structure, where there are no individual team owners. Instead, individual investors pay for the right to "operate" teams. Players actually sign contracts with the league. 3. Labor-Management Relations five unique conditions are related to the labormanagement relationship in North American professional sports. a. Baseball's Antitrust Exemption MLB is exempt from the Sherman Antitrust Act, which prohibits companies from dominating their respective markets in interstate commercial activity, thus creating a monopoly. Labor-Management Relations Regular businesses are prohibited by law from attempting to eliminate all competitors in the marketplace. In 1922, the U.S. Supreme court granted MLB the right to undertake strategies that would prevent the establishment of competitive leagues. It gives MLB significant leverage over the cities in which they operate. Labor-Management Relations b. Collective Bargaining provides players the right to: 1. join a union; 2. to have a basic player contract (establishing a minimum salary, benefits, and working conditions) negotiated collectively by union representatives; strike or conduct other activities that help achieve objectives. Collective bargaining usually includes: Specific contract length Compensation (minimum salary, pension, fringe benefits) Rules for use of labor (number of games played, starting times, consecutive days played, travel, free agency) Right of union bargaining Methods of enforcement Agent Certification Injury protection Economic benefits Discipline (fines, suspensions, dismissal) Labor-Management Relations c. Free Agency ability of players, after fulfilling an agreed-upon number of years of service with a team, to sell their services to another organization with limited or no compensation to the team losing the player. This gives pro athletes the ability to move from one team to another in a free enterprise system. Labor-Management Relations d. Salary Caps established to protect owners from one another by setting a ceiling on individual player payrolls. This also includes a minimum player salary. These are agreements in which both labor and management share the revenues generated by the league. e. Player Draft designed to be an equitable system for distributing new talent among all league members. Teams with poor won/lost records have an advantage over teams with strong winning records to acquire the most talented new players. Recently, the number of rounds in a player draft have been reduced to allow more players to become free agents and sign contracts to any team they wish who offers them an agreement. Work Stoppages Of the major professional sports leagues, Major League Baseball has encountered the most labor problems between players and management. From 1972 to 1995, there were eight work stoppages in MLB either strikes or owner lockouts -- that resulted in games being cancelled and lost revenue for both parties. Labor in Professional Sports The 1994 MLB strike was the eighth work stoppage in baseball history including four that occurred during the season. The strike lasted 232 days and caused the cancellation of over 930 games including the entire 1994 postseason and World Series. Labor in Professional Sports The cancellation of the `94 World Series was the first time since 1904. MLB became the first professional sport to lose its entire postseason due to a labor dispute. MLB Strike The primary reason behind the `94 baseball strike was precipitated by a poor national economy and a deteriorating financial situation in baseball, especially among small-market franchises. As a result, MLB owners demanded that a salary cap be imposed. The player's union was adamantly opposed and went on strike. NHL strike A league-sanctioned financial audit revealed that NHL teams collectively lost nearly $275 M two seasons prior to the strike. NHL commissioner Gary Bettman wanted the player's union to accept a compensation package tying player salaries to league revenues, which was rejected. Eventually a salary cap was implemented. Labor in Professional Sports The NFL had two labor strikes in the 1980's. In '82, in a dispute over the percentage of gross revenues that the league gave to its players, a 57day strike resulted during the season. The 16-game regular season schedule was reduced to nine games. Labor in Professional Sports A "Super Bowl Tournament" resulted as the NFL expanded the playoffs to include 16 teams eight from each conference. From late September until mid-November when the NFL strike occurred, television networks were forced to make programming adjustments. Labor in Professional Sports NBC, which broadcast AFC games, added more Major League Baseball games and aired Canadian Football League games. CBS, which telecast the NFC, rebroadcast Super Bowl games and added CBS Sports Spectacular (similar to Wide World of Sports) to its Sunday afternoon lineup. ABC's Monday Night Football was replaced by movies. Labor in Professional Sports In 1987, the NFLPA struck for one month; however the disruption caused only one week of the season to be canceled! For three weeks, owners formed "replacement teams" consisting primarily of several players cut from training camp, some veterans ("scabs") who crossed the picket line and undrafted free agents. Labor in Professional Sports The on-the-field product was deplorable. The NFLPA had made a significant tactical error failing to establish a strike fund to cover player's lost salaries. Nearly 90 veteran players were fearful that the owners would cut off their annuities and crossed the picket line, breaking the union's strength. Labor in Professional Sports By mid-October, with a weakened player's union and angry public sentiment, the NFLPA union elected to end their strike and return to playing the regular season without a collective bargaining unit! Labor in Professional Sports The player's union and NFL management eventually agreed to a system that allowed free agency -- in return for a salary cap structure tied into the player's share of total league revenues. Labor in Professional Sports The NBA strike of 1998-99 lasted 191 days and resulted in the cancellation of 928 games. The NBA was experiencing record revenue and TV rating, thanks to the "Michael Jordan factor." The season was shortened to 50 games, but did not disrupt the playoffs. Labor in Professional Sports The players lost a fortune an estimated $50M a week and nearly $500M in total salary. Numerous players also lost endorsement deals as many companies suspended payments to NBA players under personal services contracts during the strike. NIKE suspended payments to 230 NBA players. Uniqueness of Professional Sport 4. Role of electronic media No single factor plays a more critical role in influencing the popularity of professional sport and generating enhanced revenue for teams. How? Impact of Television on Professional Sport: 1. Enhances attendance by popularizing teams, star players, flamboyant personalities and showcasing stadium excitement/atmosphere. 2. Overall escalation of player salaries 3. Free agency 4. Growth and enhancement of corporate sponsorship involvement Unique Components of Pro Sports I. Interdependence II. Structure and Governance III. Labor Management Relations IV. Electronic Media Coverage ...
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  • Spring '08
  • RYAN
  • Major League Baseball, National Hockey League, Professional sports, National Basketball Association, PROFESSIONAL SPORT

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