Professional Sports
Big League Sports
Big Time Money
• Take Robert Kraft, the owner of the National Football
League's darling New England Patriots
– Paid in 1994 $172 million
– Today $1.2 billion
• Dallas Cowboys owner Jerry Jones
– Paid in 1989 $158 million
– Today $1.5 billion
• NBA's New York Knicks.
– Worth $592 million
• In 2010, Nike and Reebok have spent nearly $550
million in worldwide advertising
Pricing and Planning
• “Big League Sports”
– Big refers to revenue
potential of the sport
– The bigger the game, the
more $ charged for tickets
and advertising
– Downside of having
winning teams
• Higher ticket prices
• Fewer tickets available
– New ticket pricing at
Cubs/Sox Game (big
games)
Big League Sports
• Big=big revenue potential
or commercial value as
much as skill level of
competition
• Average Ticket Price
– Bears $68.89
– Cubs $34.30
– Sox $26.19
– Bulls $50.67
– Blackhawks $34.88
League
Cost for
family of 4
MLB
$171.00
Cubs
Sox
$219.00
$191.00
NHL
$258.08
Blackhawks
$225.52
NBA
$263.00
Bulls
$291.50
NFL
$329.00
Bears
$384.00
Big League Pricing & Planning
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Marketing Department considers the game they have to
offer when determining the prices to charge
– Good season this year, charge more to advertise in
stadium next year
Cost of obtaining the best professional athletes must be
considered
– High ticket prices pay for top players
– Not hard to do when team is winning
Corporations buy groups of tickets to entertain clients
– Corporate sky boxes
Finding a City
• Owners must convince city that
costs will be recouped
– Local businesses will benefit
– Increased Tax Revenues
• NFL Team will Benefit City if:
– All facilities are in the area
– Stadium is used year round
• Concerts
• Circus
– Supporting businesses join in
and promote team
• Hotels, Restaurants, etc.
Why would a city want a team?
• Everyone and everything involved in with the team
stays within the home city area
• The stadium/arena can be used for other events
• The team attracts other business
• Sense of pride in a winning team
– Raise morale of city
– Pride for the people of the city
• “image enhancement”
What needs to be considered before a city has a
professional sports team?
• Stadium
– 16 NFL teams have new stadiums since 1995
– In the last 13 years, 25 of the 32 teams moved
into new or renovated
– $295 million dollar renovation to Lambeau field
• Increase seating by 20%
• 4,000 club seats and boxes
• Packers Hall of Fame and gift shop
– 1.6-2 million square feet
• Multiuse facilities
• Jets-stadium/convention facility
Bringing Resources Together
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Once a city decides to take on a team….
media support, marketing arms, charitable concerns,
and other organizations come together to back it
Dallas Cowboys- earned $60 million in profits in the
last three years from off-the-field products (media
rights, luxury suites, and team sponsorships)
Will people pay those prices?
• NFL sold 90% of available tickets last year!
• Questions to consider– What is the competition for disposable income?
– Are there corporations willing to pay for luxury
suites?
– Are there potential corporate sponsors?
Sources of Revenue for Team
Owners
• Ticket sales
– NFL shares 34% with
other teams
• Concessions
• Parking
• TV contracts
– NFL gets $85 million/team
• League merchandise
• League
advertising/sponsors
– Pepsi and Coors official
NFL
• Local
sponsors/advertisers
– Owners can strike local
deals
– No on-field
advertisement=league
– Signage
• Luxury suites
• Stadium Naming Rights
Attracting a Pro Team
• More Cities than Teams
– Competition is tough
• Teams are Members of a Cartel
– Cartel is a combination of independent business
formed to regulate production, pricing, and
marketing of products.
– The cartel is run by an agreement that controls the
market mix and distribution of products.
– Cartels are exempt from anti-trust laws so they
can control locations & number of teams allowed
in the league.
– Compete on the field, but in the same league
– NFL controls most business decisions
Attracting Pro Team
• Team locations - customer base helps determine
feasibility.
• NFL ex. - 24 of 31 owners must agree on team
location for new teams.
• Bringing in a new team can cost the owner 400 – 600
million -- league expansion fees, stadium costs, etc.
Huge risk for the owner.
• Alternative to public financing of pro sports teams is
community ownership
Attracting a Team
• Build a Stadium First
– Taxpayer money used
– Hopefully a team will come
• San Antonio
– Alamodome
• Community can own the
team
– Packers
– Celtics
SportsNation: The Ultimate Standings
Categories for Ranking
BNG (Bang for the Buck): Revenues
directly from fans divided by wins in the
past three years
FRL (Fan Relations): Ease of access to
players, coaches & management
OWN (Ownership): Honesty; loyalty to
players and city
AFF (Affordability): Price of tickets,
parking and concessions
STD (Stadium Experience): Friendliness
of environment; quality of game-day
promotions
PLA (Players): Effort on the field; likability
off it
CCH (Coach/Manager): Strong on-field
leadership
CHA (Championships): Titles already won
or expected -- soon
• Turn to a person near you
and answer the following
questions:
– Which franchise in all of
professional sports would
fans consider the best?
Worst?
– Where do the Chicago
teams rank? Assign a
number from 1-122
– What could they do to
improve their rankings?
Agents, Managers, Ethics
• Agent
– Legal Representative of
Celebrity
– Paid to manage career
– Usually attorneys
– Paid a Percentage of
Contract
– Free Agency changed the
industry
• Agents more valuable
– Also Find Endorsements
Agents, Managers, Ethics
• Sports & Entertainment celebrities earn
millions from endorsing products. The
spokesperson has to have perceived value.
Who would you want to endorse your product?
• Agents promote their clients to firms with
endorsement opportunities.
Agents, Managers, Ethics
• Handlers
– Paid by Sponsor to take care
of Athlete
– Example…Nike paid
someone to make sure
Dennis Rodman behaved
• Advisors
– Similar to Agents
– Give financial and Career
Advice only
Agents, Managers, Ethics
• Ethics
– System of Deciding what is
right and wrong
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Strikes
Drug Testing
Off-Court Behavior
Role Models?
Too young and too much
money??
Women
• Force Photo Gallery
• IWFL - Independent Women's Football League
Supporting Women in Football
• http://sports.espn.go.com/chat/sportsnation/fra
nchiseRanks?year=2006