Professional Sports in America
History of Professional Sports
in America
• Most notable early professional athlete was Jim
Thorpe
– won gold medals in pentathlon and decathlon in 1912
– Stripped of medals due to playing semipro baseball
• Baseball was the first team sport to employ
professionals
– The National League was formed by William Hulbert in
1876
• The National Hockey League formed in 1917
History of Professional Sports
in America (cont.)
• In 1921, the National Football League formed
• The National Basketball League formed in
1937 and merged with the Basketball
Association of America in 1949 to form the
National Basketball Association
Identification of the Professional Sport
Governing Bodies
• The four major professional sport leagues are MLB, NBA,
NFL, and NHL.
– Each league operates a number of team franchises in major
cities and metropolitan areas around the U.S. and Canada
• Major League Soccer (MLS) falls outside the “big four”
category
– MLS is not an association of franchises but a single business
entity
– Team owners are shareholders in the league
• Many of the smaller professional leagues include Olympics
sports: track and field, lacrosse, golf, and tennis
History of Women in
Professional Sports
• The emergence of women as major sports figures
began with individual sports during the Olympic
Games
• Women’s professional team sports have faced
many difficulties in sustaining themselves
– During WWII, the All-American Girl’s Professional
Baseball League formed to provide entertainment, but
after the war it ceased to exist
• After the 1999 Women’s World Cup in soccer, a
professional league formed, but failed after three
seasons
History of Women in
Professional Sports (cont.)
• In 1997, the WNBA formed, but the collegiate
game is more popular than the professional
game for women
• Female sports professionals within individual
sports (golf, bowling, etc.) have a much longer
history than those within team sports
• Even though, thanks to Title IX, more women
are playing sports, it is difficult for women’s
professional sports teams to survive
Management of Pro Sports
• The sport industry is a unique subset of the
business world, demanding a unique set of
management qualifications
• The management philosophy for professional
sports has evolved over the years in an
attempt to improve its performance
Management of Pro Sports
• Five aspects of professional sport distinguish it
from other industries:
– organizational structure
– governance
– the concept of economic interdependence
– substance control policies
– the role of the electronic media
Organizational Structure
• Every professional sport has its own structure
and system of governance. The structure and
system of governance for each professional
sport, normally denoted to as the league
office, typically involves the following:
– League commissioner
– Board of governors or committee structure
composed of the team owners
– A central administrative unit that negotiates
contracts and agreements on behalf of the league
and assumes responsibility for scheduling,
licensing, and other functions
Organizational Structure (cont.)
• The big four are all “bottom-up” organizations
• The General Manager (GM) is similar to the
head of any business organization; he/she
must make sure that the separate levels
function well individually and cooperatively.
Like the coach on the field, the GM off the
field must institute a game plan and see that
each team member follows it.
Governance
• The job of the league office is not to “run” the league
but to implement resolutions made by the owners
• League offices exist as a headquarters for a number of
reasons. The working relationships between teams in a
league are conducted according to provisions of league
constitutions and bylaws.
• The league offices also have to deal with player–
owners disputes.
– Prior to the start of the 2011 NFL season, NFL
Commissioner Roger Goodell worked with NFL
owners and the NFLPA on settling the NFL lockout which
ran from March 11 to August 5, 2011 (ESPN.com, 2011)
Economic Interdependence
• Interdependence refers to conditions where one
team’s performance is contingent upon how someone
else performs.
• One important feature of professional sports is the
interdependence between the players, the team, and
the league. This interdependence helps make
professional team sports wildly successful.
• The economic success of each professional sports
franchise is dependent on the quality of sports
competition throughout the league and the economic
strength and stability of other league members
Economic Interdependence (cont.)
• Professional sports teams function together
collectively; some teams (small and large market)
sacrifice the potential for higher revenue in the
interest of league stability.
– For example, some small market teams in the NFL may
generate a great deal of revenue from merchandising,
often out-earning large market teams. The Green Bay
Packers and Pittsburgh Steelers were the top two
sellers of NFL licensed merchandise in 2011 (Bailey,
2011). This money, however, is pooled and shared
equally among all 32 NFL teams.
Drug Testing Policies
• One unique characteristic of the big four (MLB, NHL,
NBA, NFL) professional sport organizations in America
is the individual drug testing policies of each sport
• Drug policies, however, are not uniform for all
professional sports.
– Typically, each CBA explains the policy regarding drug
testing and lists banned drugs, potential violations and
corresponding penalties, privacy policies, and rights of
appeal.
• Other professional sports (e.g., track and field and
soccer) conform to the World Anti-Doping Agency
(WADA) code, which is enforced in the U.S. by the
United States Anti-Doping Agency (USADA)
Drug Testing Policies of Professional Sports Leagues in America
Sports
Policies
Leagues
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Pre-employment: administered to free agent players
NFL
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NBA
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MLB
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NHL
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MLS
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WWE
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Annual: all players will be tested at least once per league year. Such testing
will occur at training camp
Preseason/regular season: each week during the preseason and regular
season, 10 players on each team will be tested.
Postseason: 10 players on every club in the playoffs will be tested
periodically as long as the club is in the postseason
Off-season: players under contract who are not subject to reasonable cause
may be tested during the off-season up to 6 times
Reasonable cause testing: any player that tests positive for a prohibited
substance including in college or at the combine will be subject to ongoing
reasonable cause testing
Random testing: a player shall be required to undergo testing for
Prohibited Substances at any time, without prior notice to the player,
no more than 4 times each season.
In season testing: each player will be tested within five days of
reporting to spring training, and all players will be selected for an
additional unannounced test on a randomly selected date.
Additional random testing: an additional 1200 tests shall be
conducted of randomly selected players at unannounced times
Every team has an in-person orientation session on the program
Following the orientation session, every player is subject to up to 3
no-notice tests from the start of training camp through the end of the
regular season.
NHL’s testing for teams goes like this: 10 teams are subject to 1 nonotice test, 10 teams are subject to 2 no-notice tests, and 10 teams are
subject to 3 no-notice tests.
They adopted the WADA list of banned substances in order to have a
stricter policy. Also, many players compete internationally in which
they would already have to adhere to the WADA standards.
Players are subject to year round testing with no notice. There is no
limit as to how many times a player can be tested. There is 1 test
minimum.
Reasonable suspicion: WWE may require talent to submit to a test or
tests including, without limitation, urine, blood, saliva, hair, and/or
breath tests.
Random testing: WWE talent will be subject to an unannounced
testing at any time. This testing is designed to result in talent being
tested a minimum of 4 times annually.
Follow-up Testing: WWE talent who tests positive is subject to
mandatory unannounced follow-up testing for a 12 month period
Drug Testing Sanctions of Professional Sports Leagues in America
Sport
Sanctions
Leagues
NFL
• 1st offense: 4 game suspension without pay (this includes post-season
play, if there are not 4 games left in the Club’s season, the penalty
will carry to the next season)
• 2nd offense: 8 game suspension without pay (this includes post-season
play, if there are not 8 games left in the Club’s season, the penalty
will carry to the next season)
• 3rd offense: 1 year suspension without pay, during this time the player
may not participate in team activities, use the Club’s facilities or have
contact with any club officials (the player may petition the
Commissioner for reinstatement after 12 months)
NBA
• Testing positive for amphetamine and its analogs, cocaine, LSD,
opiates or PCP, players are dismissed and disqualified from the NBA.
• If a player tests positive for steroids,
• 1st offense: the player will be suspended for 10 games and will be
required to enter the program (treatment).
• 2nd offense: 25 game suspension and the player’s re-entry into
program
• 3rd offense: 1 year suspension and the player’s re-entry into
program
• 4th offense: the player shall be immediately dismissed and
disqualified from any association with the NBA
• If a player tests positive for Marijuana:
• 1st offense: player must enter program
• 2nd offense: $25,000 fine and player’s re-entry into program
• 3rd offense: 5 game suspension and player’s re-entry into program
• Any subsequent violation: the player shall be suspended for 5
games longer than his immediately preceding suspension
MLB
• If a player tests positive for PED’s
• 1st offense: 50-game suspension
• 2nd offense: 100-game suspension
• 3rd offense: permanent suspension (player may apply after a
minimum period of two years for reinstatement).
• All suspensions are without pay.
• There are other penalties for using other prohibited substances like
cocaine, marijuana, etc.
NHL
• 1st offense: 20 game suspension without pay and referral to a
substance abuse program (evaluation, education, and possible
treatment)
• 2nd offense: 60 game suspension without pay
• 3rd offense: permanent suspension (the player is eligible for
reinstatement after 2 years)
MLS
• 1st offense: minimum suspension of 2 years
• 2nd offense: permanent suspension
Role of Electronic Media
• After Congress passed the Sports Broadcasting
Action in 1961, the relationship between the
media and professional sports changed
dramatically. All four of the major sports have
had television contracts with at least one of
the “big four" U.S. broadcast television
networks (CBS, FOX, NBC, and ABC).
Role of Electronic Media (cont.)
• Professional sport has several unique
characteristics.
– Sport is an ephemeral (short-lived) product. Viewers
are primarily interested in only live broadcasts.
– Substitution is difficult. A viewer who wants to see a
given sporting event or team is unlikely to be satisfied
with coverage of another sporting event.
– TV networks are signing longer term exclusive
contracts that reduce the accessibility for other
entities to benefit from live events.
Key Legislation Impacting Labor–
Management Relations
• The court system in the United States has
recognized the special characteristics of
professional sports leagues and has enacted
key legislation protecting these unique
organizations
Key Legislation Impacting Labor–
Management Relations
• There are a variety of federal statutes that
impact professional sport leagues and teams
– 1. Antitrust Legislation
– 2. Labor Relations Law
– 3. Agency Law
– 4. Intellectual Property Law
– 5. Sports Broadcasting Act
– 6. Professional and Amateur Sports Protection Act
Major Revenue Sources
• Unlike commercial business, which is normally valued on
cash flow and assets, professional sport franchises are
valued on their revenues
• The primary revenue sources for professional sport teams
include
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media contracts
gate receipts
concessions and restaurant rights
licensing and merchandising revenues
naming rights
parking fees
public financing for stadiums
sponsorship packages
Professional Sport Issues
• Gambling
– Professional sports leagues in America have worked hard
to keep their sports free of gambling. Each league has
faced challenges in dealing with accusations of players
gambling on professional sports.
• Violence
– Professional sports organizations like the NBA have worked
diligently to maintain a reputation of clean, violence-free
sport. Recent league action demonstrates that certain offfield conduct is indeed a consideration of team and league
evaluation as evidenced by discipline of players.
Professional Sports Issues (cont.)
• Employment Diversity
– Diversity is critically important to professional sport
organizations in America. It is a cultural and
organizational imperative around dignity, respect,
inclusion, and opportunity.
• Ownership Restrictions
– All four major leagues have strict rules regarding who
may own a team, and they also place restrictions on
the types of other activities the owners may engage
in. To avoid any perception of being in a conflict of
interest, the major leagues normally do not allow
anyone to own a stake in more than one franchise.
Professional Sports Issues (cont.)
• Broadcasting Issues
– Internet rights, siphoning, home taping, domestic and
international piracy of satellite transmissions,
blackouts, handheld pagers, and satellite distribution
• Labor Disputes
– Labor disputes have impacted every major
professional sport in America, often costing players
and owners large sums of money. In 2011, the NFL
and NBA both experienced work stoppages and
lockouts.
• Globalization