ch. 11 notes

ch. 11 notes - Ch. 11 Start-Up Leagues and Niche Sports 4...

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Ch. 11 Start-Up Leagues and Niche Sports 4 categories o Minor Leagues May serve 3 functions Player development Entertainment Grassroots marketing o Along with TV, allows interest in sports to grow in smaller tertiary markets In baseball Affiliated with MLB teams Independently owned and operated leagues o Purely for entertainment o Top Level of Competition MLS, MLL, WNBA, WPS Typically have large numbers of recreational participants o Indoor Leagues Indoor variations of traditional outdoor games with slight modifications Arena Football o Gender-specific Leagues WNBA, WPS Emerging Sports are Monetized from 3 Different Sources o Gate receipts and concessions o Broadcast revenues o Sponsorships Can provide revenue and/or products necessary to support league and team operations Can provide emerging/niche leagues with invaluable exposure when activation of the sponsorships occurs Broad distribution at little cost Niche sports are appealing to sponsors because of their lower cost and high quality audience Emerging/niche leagues have started using the single-entity structure o Good for surviving the start-up phase But not so good at getting out of this phase and into serious competition with more established leagues Factors for Long-Term Success o Appeal to an audience o TV presence o Deep-pocketed ownership Willing to take losses for a while o Must access appropriate markets
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Strategies Major Markets Regional Popularity Investor Preference o Which can be at odds with the other 2 o Strong leadership Athletes in these sports make very little o Because of… Insufficient revenues Not unionized Unionization may cause the league to collapse Single-entity structure of modern leagues AFL o Founded in 1987 o Financial situation began improving in 1999 When NFL purchased a 3-year option to buy a 49% stake NFL didn’t exercise the option, but 3 owners bought AFL expansion teams And AFL got much needed credibility o NBC Deal in 2003 Sacrificing long-term broadcast revenue for short-term growth Revenue sharing o NBC covers costs, AFL gets next $3 million and they split the remainder evenly Little risk to NBC With option to pick up deal for perpetuity if it succeeded Results Ratings were very low But NBC also gets 5% of the money for franchises sold for
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ch. 11 notes - Ch. 11 Start-Up Leagues and Niche Sports 4...

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