Presentation on theme: "2. SPORTS SYSTEMS Sport has the: –Universality of economy –Specificities of cultures and national histories several systems of organization 1.Comparative."— Presentation transcript:
2. SPORTS SYSTEMS Sport has the: –Universality of economy –Specificities of cultures and national histories several systems of organization 1.Comparative study 2.Focus on US sports 3.Conclusion
I. Comparative study : 2 opposed philosophies SPORTSMOVIES CULTURAL ACTIVITY NON-PROFIT SOCIAL EDUCATION BUSINESS ACTIVITY PROFIT ENTERTAINMENT INDUSTRY SHOW ACTIVITY FOR THE BODY (TRAINING) ACTIVITY FOR THE MIND (ART)
The « strict » state sport system « State management, state funding » (ex: formerly in Communist countries) Governmental Authorities State Sport Federations Amateur Athletes ( officially) State Clubs Arrow = power relationship Universities Schools Youngsters
The « welfare » state sport system « More independent management, but mostly state funding » (ex: formerly in France) Governmental Authorities Nat. Sport Federations Non-profit Associations Arrow = power relationship Universities Schools International federation/league Other countries systems.. Amateur athletes Professional Athletes « Grey » athletes
« The Club » (Affiliation Number) The « sport club » system (ex: France ) « Amateur are mostly state-ruled. Professional are mostly private » Governmental Authorities Nat. Sport Federations Amateur athletes Non-profit Associations National Sport Leagues Private Companies International federation/league Professional Athletes / Unions NB: important influence of public stadia on private sport business in this system Universities Schools European Union Professional sportPublic sphere
7 Sport Institutions in France City Council General Concil Regional Council Association D.O.S R.O.C N.O.C. Regional Committees District Committee Federations TerritoriesSport OrganizationsState D.R.J.S D.D.J.S Ministery Staff Subsidies INSEP Primary Schools City premises Local events High School Aides aux équipements High School Subsidies to high-level athletes Ownership of big premises Competitions Education of trainers Technical supervision Contract Funding/services Selection of athletes subsidies Fees High-level Staff Arrows : mostly subsidies in exchanges of services and goals IOC + SPONSORS LOTTERY & NATIONAL TAXES LOCAL TAXES
The « liberal » sport system (ex: GB, Italy) « Amateur are purely state-ruled, Professional are purely private » Governmental Authorities Nat. Sport Federations Amateur athletes Non-profit Associations National Sport Leagues (assoc.) Independent Companies Professional Athletes / Unions Professional sportPublic sphere Universities Schools International federation/league European Union
The « closed » sport system « Common rules with mostly private funding » (ex: USA) Governmental Authorities NCAA Non-profit Associations Major & Minor Leagues (franchisers) Private Franchisees International federation/league Professional Athletes / Unions University clubs University Amateur athletes Amateur athletes Schools Collegiate SportProfessional sportPublic sphere
II. Focus on US Sport system Professional sport 1.US sport's rich list 2.The franchise system a.Franchise ownership & value b.Premises ownership, naming and permanent seat licences c.The Commissioner d.The Franchise Free Agency 3.Professional athlete employment a.The defunct reserve clause and the athletes free agency system b.The draft system c.Salary caps
General considerations 4 Major Leagues : NFL, NBL, NBA, NHL –Conference system –Subdivided in divisions Minor Leagues : –7 divisions AAA, AA, A (high & low), 3 short season leagues. Collegiate sports : 5 divisions Some marginal semi-pro leagues Pro-tours in individual sports organized by private companies (PGA Tour, PGA of America, …)
NCAA Organization « Principle of Sport Management »
USSports Teams – income comparisons (Top 10) PositionClub Income (m) 1New YorkYankeesMLB243.8 2WashingtonRedskinsNFL197.7 3BostonRed SoxMLB184.6 4SeattleMarinersMLB181.1 5DallasCowboysNFL172.4 6=San Fransisco GiantsMLB168.1 6=Houston TexansNFL168.1 8New England PatriotsNFL164.6 9Cleveland BrownsNFL151.5 10New York MetsMLB150.6 Source: FooballBusiness International 1) US sport's rich list
Summary of the Deloitte Football Rich List, published in conjunction with FootballBusiness International Position (Prior year position) ClubIncome (m) 1 (1)Manchester United251.4 2 (2)Juventus218.3 3 (4)AC Milan200.2 4 (6)Real Madrid (#1 in 2005 with 312 M$)192.6 5 (3)Bayern Munich162.7 6 (12)Internazionale Milan162.4 7 (8)Arsenal149.6 8 (5)Liverpool149.4 9 (13)NewcastleUnited138.9 10 (7)Chelsea133.8 11 (10)AS Roma132.4 12 (15)Borussia Dortmund124.0 13 (9)Barcelona123.4 14 (n/a)Schalke 04118.6 15 (16)Tottenham Hotspur95.6 16 (11)LeedsUnited92.0 17 (14)SS Lazio88.9 18 (17)Celtic87.0 19 (20)Olympique Lyonnais84.3 20 (n/a)Valencia80.5 Source: Sport Business Group at Deloitte 2004
2) The franchise system FRANCHISER (League) FRANCHISEE (Team) Redistribution to handicap big teams and to maintain winning chances of smaller teams Royalties Part of ticket fees Part of local TV rights National Media contracts National Sponsorship Local Media contracts Local Sponsorship Stadia revenues Money Prizes
Franchise solidarity The most egalitarist: field sports –MLB splits national broadcasting and licensing revenues equally among its 30 teams Local rights are also redistributed from 20-34% especially from big cities to smaller areas –NFL : 62% of the revenues are equally shared. Only stadium earnings are differenciating teams The most inegalitarist: arena sports –NBA Shares only 1/3 of its revenue –NHL Shares only 12% of its revenues
2a) Franchise ownership and brand value Washington Redskins NFL –Daniel Snyder $952 M Dallas Cowboys NFL –Jerry Jones $851 M Houston Texas NFL –Robert McNair $791 M New England Patriots NFL –Robert Kraft $756 M New York Yankees MLB –George Steinbrenner $730 M Cleveland Browns NFL –Randy Lerner $695 M Denver Broncos NFL –Pat Bowlen $683 M Tampa Bay Buccaneers NFL –Malcolm Glazer $671 M (Deloitte 2003)
FORBES FRANCHISE VALUES TeamLeagueOwnerValue Washington RedskinsNFLDaniel Snyder$952 million Dallas CowboysNFLJerry Jones$851 million Houston TexasNFLRobert McNair$791 million New England PatriotsNFLRobert Kraft$756 million New York YankeesMLBGeorge Steinbrenner$730 million Cleveland BrownsNFLRandy Lerner$695 million Denver BroncosNFLPat Bowlen$683 million Tampa Bay BuccaneersNFLMalcolm Glazer$671 million Baltimore RavensNFLSteve Bisciotti$649 million Carolina PanthersNFLJerry Richardson$642 million Miami DolphinsNFLWayne Huizenga$638 million Detroit LionsNFLWilliam Ford$635 million Chicago BearsNFLMcCaskey Family$621 million Tennessee TitansNFLBud Adams$620 million Philadelphia EaglesNFLJeffrey Lurie$617 million Seattle SeahawksNFLPaul Allen$610 million Green Bay PackersNFLPublic$609 million Pittsburgh SteelersNFLDan Rooney$608 million St. Louis RamsNFLGeorgia Frontiere$602 million Kansas City ChiefsNFLLamar Hunt$601 million New Orleans SaintsNFLTom Benson$585 million Oakland RaidersNFLAl Davis$576 million New York GiantsNFLW. Mara/P. Tisch$573 million Jacksonville JaguarsNFLWayne Weaver$569 million San Francisco 49ersNFLDenise DeBartolo York$568 million New York JetsNFLWoody Johnson$567 million Buffalo BillsNFLRalph Wilson$564 million Cincinnati BengalsNFLMike Brown$562 million San Diego ChargersNFLAlex Spanos$561 million Indianapolis ColtsNFLJim Irsay$547 million Minnesota VikingsNFLRed McCombs$542 million Atlanta FalconsNFLArthur Blank$534 million Arizona CardinalsNFLBill Bidwell$505 million New York MetsMLBFred Wilpon$482 million Los Angeles LakersNBAJerry Buss$447 million Los Angeles DodgersMLBNews Corp.$435 million Boston Red SoxMLBJohn Henry$426 million Atlanta BravesMLBAOL/Time Warner$424 million New York KnicksNBAC. Dolan/J. Dolan$401 million Seattle MarinersMLBHiroshi Yamaguchi$373 million Cleveland IndiansMLBLarry Dolan$360 million Texas RangersMLBTom Hicks$356 million Chicago BullsNBAJerry Reinsdorf$356 million San Francisco GiantsMLBPeter Magowan$355 million Colorado RockiesMLBJerry McMorris$347 million Dallas MavericksNBAMark Cuban$338 million Houston AstrosMLBDrayton McLane$337 million Philadelphia 76ersNBAComcast Corp.$328 million Baltimore OriolesMLBPeter Angelos$319 million
Qualitative assessment by BRAND-value New York Yankees (334 m$) Dallas Cowboys (300m$) Los Angeles Lakers (272 m$) New York Knicks Washington Redskins New York Giants Chicago Bulls New York Rangers Green Bay Packers Detroit Red Wings Source: Future Brand 2002
2b) Premises ownership Private : –Indianapolis Speedway : Worlds #1 : 250,000 sp. The Hulman Family –Owners since 1945
Premises ownership Public –Michigan Stadium –US #1 in the Majors (107,501 seats) –University of Michigan (State of Michigan)
Premises ownership Private –Stadia + franchise –The 1st to be entirely privately financed –Dolphins stadium H. Wayne Huizega Also owner of the Miami Dolphins, Miami Marlins, …
Naming Naming rights –the right to name a piece of property, either tangible property or an event, usually granted in exchange for financial considerations (wikipedia.com) –Pionneer in sport : Anheuser-Bush Stadium, in St-Louis (1966-2005) –Average price : $ 2 M/13y. –Other examples : Fedex, Qualcomm, Gillette, Bank of America…
PSLs & club/luxury suites/seats Personal/permanent seat licences –One time payment that gives a sports fan the right to buy season tickets for a particular seat in a sporting venue for a pre- determined length of time. Club seats & luxury suites/boxes –Club Seating is a special section of seating in modern sports stadiums. They are exposed to the elements, as opposed to luxury boxes. Club seating allows access to special restaurants and resting areas of the stadium that are off limits to regular ticket holders. 1960 : Houston Astrodome Texas Stadium (Dallas Cowboys) $5,000 – $1M /year
2c) The Commissionner The highest executive position. The exact powers of the commissioner depend on the constitution and/or rules of the league in question. Commissioners are elected by the owners of the league's clubs, and are generally expected to handle such matters as discipline, arbitration of disputes between the clubs, etc. –Bud Selig in the NLB –Paul Tagliabue in the NFL –Gary Bettman in the NHL –David Stern in the NBA
2d) Franchise free agency National Football League Franchise Relocation, 1990 to present TeamMoved FromMoved ToYear Cardinals St. LouisPhoenix 1990 RamsLos AngelesSt. Louis1995 RaidersLos AngelesOakland1995 BrownsClevelandBaltimore1996 OilersHoustonNashville1999 Other examples : 1947 : Detroit Gems Minneapolis Lakers 1960 : LA Lakers 2002 : Charlotte Hornets New-Orleans Hornets & Charlotte Bobcats Oklahoma Hornets Franchises can move from city to city to get better premises and revenues Problem : sometimes low local-fan identification, requires strong national fan-base
3a) Free agency system The defunct « reserve clause » –Invented in Base-ball franchises –NFL : « The Rozelle rule » Towards the free agency system (restricted/unrestricted) –Example : NHL Lock-out (2004-2005) PROBLEM : fan identification to team or to star players? Possible conflicts when a « hated » player join a former « enemy » team!
3b) The draft system Process by which professional sports teams select players not contracted to any team, often from colleges or amateur ranks. National Football League, Major League Soccer, Major League Baseball –determined in a reverse-record order (the previous season's worst team picking first, the best team picking last). –Problems : Trading draft choices between teams is common practice. Teams can play deliberately to have a better draft the next season The National Basketball Association and National Hockey League : –draft lottery whereby the first several draft positions are ordered by random selection. The draft system expanded also in Australia since 1986 NCAAML Best team Last team Best player Last player
3c) The salary cap system Limit on the amount of money a team can spend on player salaries, –either as a per-player limit –or a total limit for the team's roster (or both). Method of keeping overall costs down, and in order to balance the league so a wealthy team cannot become dominant simply by buying all the top players. Salary caps are often the major issue in negotiations between management and players' unions. MLB has the uncapped salary as continental soccer The salary cap system expanded in English soccer, English Rugby and Australian Football Problems : - many ways to by-pass salary caps (http://members.cox.net/lmcoon/salarycap.htm) - « Luxury tax » unefficient in MLB.
Comparison of sport systems EuropeanAmerican Common points Merchandising and Sponsoring are increasing incomes Internationalization of athletes Centralization and sharing of TV rights by the leagues to the clubs Stadia and structures are often owned by city governments Differences -Dominance of soccer -1 league / sport -Clubs sometimes dont own any asset. Their name does not necessarily belong to them. -Finance : Stock market or governemt sponsored -Sponsorship & salaries still lower than US ones. -Leisure centers, content providers (TV channels, restaurants, tourism…) -Cartel of leagues (the big 4(5) : NBA, NFL, NHL, MLB, (MLS)) -Clubs = « franchisees » with assets, capital and brand. -Can be several leagues / sport -College level -Finance : Private millionaires -Earn revenues from stadia & arenas -More familial audience -Rules are adapted for TV -Salary Cap -Draft (1st College=> Last Pro)
Comparison of sport systems Egalitarist State-owned (France) Liberal Private-owned (UK, Italy) Egalitarist Private-owned (USA) Spirit « Sport is not a market nor a business, but a public good that must remain free and social, as education. » Clubs are associations. « Sports is a service as another, and the rules of economics must apply to them » Clubs are independent firms. « Sport must be in a protected and regulated market, to maintain fairness of plays, at still some financial profit. » Club are franchises. Troubl es Inefficiency. Rigidity. Lack of managerial control. Bankrupcies. High pressure on players. Monopoly. Huge salaries and risks.
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