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Unformatted text preview: FINAL LECTURE REVIEW ESS CORPORATE SPORT ECONOMICS I. Introduction A. Corporate sport is big business B. Entertainment business 1. in contrast to informal and organized sport C. Income sources 1. gate receipts 2. concessions, parking, etc 3. sponsorships 4. media broadcasting rights II. Conditions for corporate sport A. Financial rewards must be valued 1. Team owners, athletes, sponsors, spectators B. Large, densely populate urban areas C. High standard of living 1. time, money, transportation, media connections D. Huge amounts of capitol (private, public) 1. publicity, profit, power III. Commercialization of sport A. the uncertainty of the events outcome 1. is it going to be a close contest? B. the risk or financial rewards 1. money, pride, ego, physical well-being, etc C. the anticipated display of excellence, heroics, or dramatic play D. A good game 1. outcome in doubt until the last minute or second 2. high stakes so athletes totally committed to and engrossed in the action 3. a number of excellent, heroic, or dramatic performances IV. Who benefits from corporate sport? A. Players 1. less than 3,000 players total in the big 4 a. football ((3.8 years average career) b. basketball c. baseball d. hockey 2. Individual sports, 1000 athletes a. tennis, golf, boxing, auto racing, horse racing B. coaches 1. 200,000 employed in secondary schools 2. college level a. 22,000 men b. 4,200 women C. Officials 1. youth 2. high school 3. college 4. pro 5. NOTE: pro baseball players best paid D. Sports medecine/ psychology E. Player agents 1. PAID BETWEEN 5% AND 10% of athletes gross salary 2. Some very good- honest 3. Others take advantage of athletes 4. No governing body overseeing agents F. Auxillary services 1. hotels, taxi, restaurants 2. gambling- multi billion $ industry 3. corporations a. direct sale of sport related items (400,000 companies) b. $50 billion in sales c. use of sport to sell items endorsements by athletes- certain audience strengthen visibility and sanitize products sponsorship of events (bowl games, etc) relationship of sport and beer- Phillip Morris (miller beer), Anheuser- Bush (Budweiser), coors corporate ticket sales V. Pro sports are a business A. corporate sports are designed to maximize profit (contrast to informal and organized) B. corporate sport in USA has no federal or state governing body (FAA, FCC, etc) C. monopoly (one seller) D. monopsony (one buyer) VI. Each pro league a cartel A. a combination of independent commercial or industrial enterprises designed to limit competition or fix prices B. Professional league cartels 1. team owners make arrangement on matters of mutual interest a. rules b. schedules c. promotions d. expansion e. media contracts f. player salaries (draft, salary caps, etc) C. advantages of a cartel 1. each team is protected from competition a. if city has 2 teams- different leagues b. territorial exclusivity 2. cartel controls # of teams allowed a. scarcity permits higher ticket prices...
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