Professional Sports
Big League Sports
Professional Athletes
• Are defined by the NCAA® as, “individuals who receive
any kind of payment, directly or indirectly, for athletic
participation except as permitted by the governing
legislation of the association”
• Are individuals who earn their living playing sports
• Receive payment for playing sports as well as by
advertising a company’s products through
endorsements
From the Playbook: An endorsement is a public figure’s
personal approval or support for a product or service. Tiger
Woods is one of the highest paid athletes due to his
endorsements.
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Financial ImpactBig League Planning and Pricing
• Financial Impact :
– “Big League” refers to revenue potential of the
industry.
• Ticket prices & associated stadium income(food &
memorabilia)
• Corporations buy groups of tickets to entertain clients
• Corporate/Individual sky boxes
• Income from Television Broadcasting (Networks pay)
• Expenses
• Cost of obtaining the best professional athletes must be
considered
• Cost from Advertising and Events
Professional Sports Leagues
• Divide franchises into conferences and divisions to
regulate game play and simplify scheduling.
• League is a group of sports team or individual
athletes that compete against each other in a
specific sport
• Include the following leagues
– National Football League®
– National Basketball Association®
– Major League Baseball ®
– National Hockey League®
– Major League Soccer®
– Arena Football League®
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Attracting a Professional Team
– Independent sport teams
grouped together and
governed by a league
agreement. (CBA)
Leagues Govern:
– Distribution of teams
– Locations of teams
– Number of franchise teams
allowed to operate
Franchise Success
Success Measured :
• Owners generally find success in making money
• Managers or coaches measure success in winning
• Players find success in winning and reaching certain
statistical milestones paying them bonuses
– for example, a soccer player may have incentives, or
motivators, in his contract to score more goals
• Front office personnel such as marketing or public
relations might measure success based on fan
attendance
From the Playbook: Franchises are specific teams within a
league
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Why would a city want a team?
Financial Advantages
• The stadium/arena can be used for
multiple events or functions.
• Can be franchise-owned,
sponsored or community owned
• The team attracts other business
such as restaurants, hotels, etc.
• Create employment within the
community.
• Sense of pride in a winning team
– Raise morale of city
– Pride for the people of the city
• “Image enhancement”
Attracting a Sports Team
– Stadium will attract a
team
– Attractions within a city
will attract a team
– A wealthy city will
attract a team
– Population of town will
attract team
– Available infrastructure
like hotels and parking
Financial Impact: Leave a city
• Low level of fan
loyalty is a
motivating factor in
relocating a
franchise
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
– On-field advertisement
– League Signage
• Luxury suites
• Stadium Naming Rights
Record Breaking Deals
• In December 2011, the NFL signed a record
setting television rights deal with the three
major networks, Fox, NBC,and CBS that will
result in the networks paying approximately
____ _____ in fees over a nine year period
Revenue Split:
• League Media (including TV and Radio)
• 55% for players vs. 45% for owners
Chapter 3
Lesson 3.2
Sports Agency
• Is an organization which specializes in marketing
and managing sports events, sports teams and
professional athletes
• Are composed of sports agents
• Help companies coordinate sports-related or sportsponsored events
• Provide professionals to help athletes, coaches
and teams negotiate pay, endorsements,
sponsorships, etc.
Notable Sports Agencies- Wasserman
Media
Group, Creative Artist Agency, International
Management Group and Octagon
15
Sports Agents
• Handle contract negotiations with an athlete,
team and corporate sponsors
– these negotiations can include the following:
 endorsements, licensing agreements, films, speaking
engagements and personal appearances
• Are responsible for meeting with team
owners, managers,
coaches and other
individuals to promote
a client.
• Agent Video
16
Sports Agents
• Need to be knowledgeable regarding
investments, business management, financial
and risk analysis and sport trends
• Should have excellent communication and
negotiation skills
• Are in constant contact with clients
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Common Activities for a Sports
Agent
• Meet with athletes, coaches, team owners and
managers
• Draw up contracts and negotiate settlement
offers
• Travel to represent clients in contract
negotiations
• Recruit and market his or her services in
various sports
• Coordinate photo shoots, sponsorships and
endorsements
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Benefits of a Sports Agent
• Help keep clients focused on the sport rather
than the business
• Have an extensive network of contacts
• Knowledge of the laws and regulations of
contracts, sponsorships and endorsements
• Serve as a guide for clients’ long-term financial
success
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Legally Speaking
• Places player in contact with teams
and media
• Must know and follow NCAA and
other collegiate rules.
• Registered with Select Sports
Groups(SSG) database of agents
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.
Handlers/ Advisors
• Handlers are like mentors who work closely
with athletes who have trouble policing
themselves
• Reebok (sponsor) paid a handler to help
Allen Iverson behave.
• Nike paid a handler to help Rodman behave.
• Advisors are financial and business
counselors
•
•
•
•
•
Top Schools
Xavier University in
Cincinnati, OH
University of Oregon in
Eugene
Agents and business
managers of athletes
earned an average of
$97,760
Highest-earning agents
are found in Los Angeles
and New York
Illinois, Tennessee,
Connecticut and New
Jersey also fall into the
highest paid category.
Elite professional athletes
•
•
•
•
•
•
•
Sports agents usually make 4% – 15% of their athlete or client’s
contract.
NFL Agent averages from : $11,250 – $600,000 per client
NBA Agent averages from : $9,460 – $1,120,000 per client
MLB Agent averages from : $16,000 – $1,280,000 per client
NHL Agent averages from : $21,000 – $480,000 per client
MLS Agent averages from : $1,304 – $260,000 per client
UFC Agent averages from : $250 – $75,000 per client
Player Unions
• Are unions joined by players
• Sign Collective Bargaining Agreements with
governing bodies of sports leagues
• Offer services such as salary negotiation and
player grievances
– a player grievance is a dispute a player has with the
league
• Strive for better player contracts with the league
– try to get more money for the players
• For example the Major League Baseball® Players
Association® (MLBPA) is a union for MLB® players
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Legality of It All
• Are contracts existing between
• Contracts
the owners of a sport’s league
– Agreements enforceable by
and the player’s association
law and details your
• Contain rules for player salaries
agreements.
– Noncompete Clause• Also contain requirements for
Agreement that prohibits a
salary caps
person from working in a
• Free agency is the process by
business for a specific time
which players are assigned a
team; when a player is a “free
agent” they are free to negotiate
with any team with whom they
wish to sign
• Defines the rules for free agency
Lockouts
• Are stoppages of league play due to disagreements
between players unions and the governing bodies of sports
leagues
• Are defined by the governing bodies not agreeing to the
players association demands
– the governing bodies do not let the players “work”
• For example, the NFL® lockout of 2011 and NBA® lockout
of 2011 occurred when the players and owners could not
agree on Collective Bargaining Agreements. Even the NFL®
referees experienced a lockout in 2012 when they could not
agree with NFL® owners on a Collective Bargaining
Agreement.
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Strikes
• Are also stoppages of league play due to
disagreements between players unions and the
governing bodies of sports leagues
• Are defined by the players association not agreeing to
the governing bodies demands
– the players refuse to work under the agreement
• For example, Major League Baseball® underwent a
strike in 1994, and cancelled the World Series™ due
to continued disagreements between the MLBPA and
MLB® for a new Collective Bargaining Agreement
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Positive Image
• Is a major factor for an athletes who endorse
products
– an athlete’s image is one of their most
valuable assets
– negative publicity can severely damage an
athlete’s image
– most endorsement contracts include clauses or
statements releasing the company from the
contract if the athlete’s image changes
Negative publicity- anything which places the
athlete in a negative light
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Ethical Behavior
• Ethics – system of what is
right and wrong
• Lack of ethics can result in
publicity that can undo a
players entire career.
• Head-butted his newlywed
wife during an arguments
and arrested. The six-time
Pro Bowl receiver was
released by the Dolphins
later that evening.
•
Performance
Enhancing
Drugs
Are substances such as steroids or steroid based
compound which are taken to increase
performance
• Are a prominent issue in all of sports
• Have been taken by many professional athletes
• Will be an especially large issue in future years as
money and media coverage of professional sports
increase
From the Playbook: Athletes who have been accused of using
performance enhancing drugs are Barry Bonds, Jason Giambi,
Gary Sheffield, Marion Jones, Justin Gatlin, Shawne Merriman
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and many others.
Prime Example- Kobe Bryant
McDonald's dropped Bryant -$10
million endorsement deal.
Coca-Cola pulled Bryant Sprite
ads and replaced him with
LeBron James.
Lost $4 million and $6 million in
endorsement income because
of the sexual assault case.
Latrell Sprewell
• Lost sponsorship
because: Choked his
coach
• Lost his endorsement
deal with Converse
contract was worth
between $500,000
and $700,000 a year.
Earvin "Magic" Johnson
• Sponsor: Pepsi &
Converse
• Lost sponsorship
because: Contracted
HIV because he
cheated on his wife
• Lost estimated $12
million in
endorsement
Tiger Woods
$100 million dollars a year –
endorsement deals.
“We no longer see a role for Tiger in
our marketing efforts and have ended
our relationship," a Gatorade
spokeswoman said. "We wish him all
the best.“
Current Endorsements
Nike: $30million deal
--Accenture: $20-million deal
--Gillette: $15-million deal
--Electronic Arts : $8-million deal
Highest Paid Athletic endorserrs
Maria Sharpova
(22 million ( Avon, mike Samsung, tag
heuer, Evian, head)
Usain Bolt
(
23million Puma, Gatorade, Hubolt, Nissan)
Christiano Ronaldo
(28 million Nike, Toyota, Samsung, Tag
Heuer, Herbalife, Emirate)
Rafael Nadal
30 million Nike, Kia , Babolat
Kobe Bryant
32 million Nike, Panini, Levovo, turkish Airlines
Lionel Messi Futball
Club Barcelona
(43 million Adidas, PepsiCo Ea Sports, Turkish
Airlines, Gillette)
Phil Mickelson
48 million Callaway, KPMG, Rolex, ExxonMobil,
Amgen, Barclays
Roger Federer
(52 million – Rolex, Credit Suisse, Wilson,
Gillette, Nike, Mercedes – Benz)
Lebron James
(53 million Nike, Upper Deck, Mcdonalds,
Samsung, Dunkin Brand, Coca-Cola, Beats
by Dre)
Tiger Woods
55 Million Nike, Rolex, Upper Deck NetJet