Financing
Sport
2nd Edition
CHAPTER TWO
Detailed Outline of
Financing Sport
CHAPTER 2
The Challenges Facing College and Professional Sports
The Financial Status of Intercollegiate Athletics
The Financial Status of Professional Sports
The Leagues’ Declining Health
Controlling Player Costs
COLLEGIATE SPORTS
The Financial Status of
Intercollegiate Athletics
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1.
A.
B.
C.
D.
The high degree of commercialization in college sports is evident in:
High salaries of coaches
Television contracts
Corporate sponsorship
Licensing agreement
2. College sport programs “is no longer a game, it’s a business”.
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It is imperative “ to become more business like”.
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3. More than 3/4th of the largest collegiate athletic programs are losing
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money.
 4. NCAA study of the financial condition of it’s member reported only 16% of
the division one and two had more revenue than expenses.
The Financial Status of Intercollegiate
Athletics (continued)
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5. Athletic programs are receiving direct subsidies from state legislation.
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6. Athletic programs are receiving mandatory raised in student fees each
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year.
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7. Over 70% of division one schools reported in the NCAA survey that the
football program operated in the surplus.
8. In an elite athletic programs(UT, Penn State, and etc.) generated 70% or
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more of the athletic department’s budget.
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“Football pays for everything”.
Collegiate Sports
RISING COST OF SPORTS
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Cost control becomes overwhelming in college sports because:
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1. The rising cost of travel, equipment, scholarships, and etc.
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2. Investing in athletic stadium, playing fields, athletic grounds, and
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marketing campaigns.
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3. Title IX compliance.
TITLE IX MYTHS/FACTS
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MYTH: Title IX has done its job and is no longer needed.
FACT: In the past five years, the gap between male and female athletic
participation at the high school level has grown.
Female high school athletes receive 1.3 million fewer athletic participation
opportunities than their male counterparts (3.2 million female vs. 4.5 million male).
MYTH: Title IX has resulted in the loss of athletic opportunities for men's
sports.
FACT: Overall, men's athletic opportunities since Title IX's passage have
increased. Title IX has been wrongly blamed by its critics for cuts to some
men's sports teams at some educational institutions.
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Opponents of Title IX have tried to mislead the public into believing that the loss of
men's wrestling and a few other sports at some schools is a sign of massive loss of
men's participation opportunities overall when exactly the opposite is true – men's
sports participation continues to grow. Athletic programs add and drop teams all the
time. Men are not losing.
TITLE IX MYTHS/FACTS

MYTH: Title IX's three-part test imposes a strict quota.
 FACT: The three-part test imposes no numerical requirement even
remotely analogous to quotas.
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A three-part test for participation opportunities determines if institutions
provide female and male students with equal athletic opportunities. In order
to comply, institutions must pass one of these three tests:
a) Proportionality-male and females participate in athletics in numbers
substantially proportional to their respective enrollments in school, or
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b) History and Continued Practice of Program Expansion-the institution
shows a history and continuing practice of program expansion which is
demonstrably responsive to the developing interests and abilities of
members of the underrepresented sex, or
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c) Full Accommodation of Interests and Abilities- the institution
demonstrates that the interests and abilities of the underrepresented sex
(females) are fully and effectively accommodated by the existing programs.
TITLE IX MYTHS/FACTS

MYTH: It is not fair that Title IX requires equal spending on
men's and women's programs because the men's programs
bring in all of the school's money.
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FACT: Title IX does NOT require equal spending on men's and
women's programs, and less than 12% of college athletic
programs actually make a profit.
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MYTH: Football should be taken out of the Title IX equation
because women do not play football.
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FACT: No matter how you cut it, football players are male
participation opportunities, not a third sex. They must count.

www.womenssportfoundation.org
Female Collegiate Programs Benefited From Title IX.
The Financial Status of
Professional Sports
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Major growth is occurring on the secondary level, the minor leagues
in baseball, basketball, and hockey.
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New leagues were launched in the past decade, the soccer
professional leagues, Arena Football Team and the WNBA.
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A. Baseball had more new minor league teams than any other sport.
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B. Arena Football League has one of the most successful launch.
1. It expanded from one single league to two league.
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The Globalization of
Professional Sports
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1. The NFL sponsored European Leagues and played early games
in countries like Japan, Mexico and others.
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2. The NBA aligned itself with European club by:
A. taking over existing leagues;
B. form alliance with European clubs;
C. formed new leagues with existing teams;
D. awarded franchises to European cities that would become a
member of NBA.
E. Draft players from the foreign market ( Yao Ming & Li Tie).
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Globalization of Sport
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Baseball becomes an Olympic sport.
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It has players from Latin American, and
Caribbean that increases their market
base.
WOMEN’S
PROFESSIONAL
LEAGUE
WNBA- - Basketball
WUSA – Soccer
Women make 80% of the decisions
in the household.
Women are serious consumer of
sports.
WPSL - - Softball
Half of the women in the U.S.
engage in some form of exercise.
One-third of all high school girls
participate in one or more varsity
sports.
The Leagues’ Declining Health
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1. Falling Attendance- the number of no-shows are
increasing.
2. Declining Ratings – with four major networks have
increased programming to sports, viewers are not
watching.
3. Economic Disconnect- attending a live game is now
beyond most fans reach. No longer a family affair.
4. Player’s Salaries – efforts to control salaries by
owner’s are resisted by players.
Top Ten Reasons for Nonattendance (p. 39)
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6. Lateness of game – 26%
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7. TV replay and analysis –
22%
3. Player’s behavior during
games – 41%
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8. Unlikelihood of getting good
seats – 19%
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4. Traffic & Parking – 38%
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9. Change in how local team is
doing
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5. Increase in sports on TV –
35%
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10. Change in family’s interest
in game.
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1. Total cost to attend- 57%
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2. Comfort of watching games
at home – 41%
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Structure of Sport Business
Different structures offers different benefits
 Types of Structures:
 A. Governmental
 B. Non-profit/for profit
 C. Sole Proprietorship
 D. Partnership
 E. Limited Liability Corporation (LLC)

This is when one person,
independently wealthy.
Owner can be hands on
or hands off.
 Example: Dallas
Mavericks owner, Mark
Cuban plays an active
role in the basketball
operation.

Single Owner (Private
Investor Model)
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Multiple Owner (Private
Investment Model)
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This is a common model because of two
reason:
A. the value of the franchise rises so
high that no individual can afford to buy
it.

B. the public model has man
disadvantage versus the private model.

In some cases, the ownership group will
have a dominate individual who appear
to be a single owner.
Example:
George Steinbrenner was viewed as a
sole owner of the New York Yankees.
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Multiple Owners
(Publicly Traded Corp
Model
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With the exception of the Green Bay
Packers, this is not used in the U.S.
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In this model, the franchise is covered
by a board of directors who are elected
by shareholder vote.
Controlling Players Salaries
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Facts:
1. The single greatest operational expense for pro teams are player
salaries.
2. Player payroll costs is about two-thirds of the total operational
expenses.
3. Owners are largely responsible for this.
4. Strategies used are:
a. salary caps
b. free agency constraints
c. luxury taxes
d. resisting the resistance from collective bargaining unit or
player association
e. player lockouts
DISCUSSION

What is the #1 challenge in collegiate sports in
your opinion to-date?

How much of an impact has Title IX made in
sports?
 What sport on the professional level are having
more problems with attendance? And why?

How can player salaries be control?
Detailed Outline of
Financing Sport
CHAPTER 14
Soliciting Sponsorships From Business Organizations
Developing a Set of Potential Company Packaging
Sponsorships
Pricing Sponsorships
Preparation of Proposals
Communicating the Proposal
Criteria Used by Companies to Screen Proposals
Handling Rejections
The Contract
Working Together to Make It Happen
Post-Event Followup
Summary
Detailed Outline of
Financing Sport
CHAPTER 15
Measuring the Impact of Sponsorship
Linking Sponsorship to the Communications
Process
Measuring Media Equivalencies
Measuring Impact on Awareness
Measuring Impact on Image
Measuring Impact on Intent to Purchase
Measuring Impact on Sales
Summary
Detailed Outline of
Financing Sport
CHAPTER 16
Fundraising
Fundraising and Intercollegiate Athletics
Annual Donor Programs
Major Gifts
Systematic Approach to Soliciting Major Gifts
Anatomy of a Major Gift Campaign: UNLV’s
Vision Project
Cause-Related Marketing
Summary
Chapter 1
Sport in the New Millenium
How Big Is the Sport Industry?
Estimates vary widely. Sport is not
recognized as an official industry in the
Census Bureau’s North American Industrial
Classification System. This classification
divides the economy into 20 sectors or major
economic activities. Sport is not designated
as one of these major economic activities
and sport-related activities are scattered
across 8 of the 20 sectors.
The Alternative Sports Boom
The newly emergent extreme or lifestyle
sports form the fastest growing segment of
sport spending in the 21st century. They are
highly individualistic, free-spirited,
adrenaline-rush activities:
BMX biking
bungee jumping
downhill mountain biking in-line skating
Skateboarding
sky surfing
Snowboarding
street luge
whitewater kayaking
windsurfing
The ’90s Boom
The sports industry was a major beneficiary
of the longest sustained period of growth in
U.S. history. The most notable features of
that decade included the following:
• sports facility construction boom;
• proliferation of professional sports
leagues and teams;
• increased corporate investment in sport;
• annual sporting goods sales near $75
billion.
The Challenges Ahead
As we enter the new decade, there are many
more modern and sophisticated venues, much
more sport product, and unprecedented levels
of corporate support. However, at the same
time, there are a number of serious challenges
confronting managers:
• saturated marketplace
• taking advantage of emerging technology
• doing more with less