1. 3.1 Big League Sports

2. Financial Impact Big league pricing and planning Big league pricing and planning –“Big” refers to revenue potential – the better the team the more money they make –Must determine costs for multimillion dollar contracts – Better athletes=better ticket sales Financial planning for a sports team Financial planning for a sports team –A sports team is a huge cost (stadium, facilities, etc) –Can bring in huge revenue – Must prove to the city –A professional team can be an asset to a city if:

3. NFL’s Team Values 1) Dallas Cowboys - $2.3 bill. 2) New England Patriots - $1.8 bill. 3) Washington Redskins - $1.7 bill. 4) New York Giants - $1.55 bill. 5) Houston Texans - $1.45 bill. 28) Detroit Lions - $900 mill. 32) Oakland Raiders - $825 mill. http://www.forbes.com

4. World’s Richest Athletes Tiger Woods – $78.1 mill Tiger Woods – $78.1 mill Roger Federer - $71.5 mill Roger Federer - $71.5 mill Kobe Bryant - $61.9 mill Kobe Bryant - $61.9 mill LeBron James - $59.8 mill LeBron James - $59.8 mill Drew Brees - $51 mill Drew Brees - $51 mill Aaron Rodgers - $49 mill Aaron Rodgers - $49 mill Phil Mickelson - $48.7 mill Phil Mickelson - $48.7 mill http://www.forbes.com/athletes/list/

5. Big League Pricing & Planning Professional athletes contracts Professional athletes contracts –Must determine what the team can afford – better players = better team and more income Corporate sponsorships Corporate sponsorships –Must have financial backing from corporations to support activities Television revenue Television revenue –The better the team and fan following the more likely a tv network is to pick up the game

6. Salary Caps Are spending limits affecting how much a team can spend on a certain player Are spending limits affecting how much a team can spend on a certain player Give teams limits on player total player spending Give teams limits on player total player spending May also affect individual player spending based upon factors such as years in the league and position May also affect individual player spending based upon factors such as years in the league and position Are mandated and regulated by the governing bodies of major sporting leagues Are mandated and regulated by the governing bodies of major sporting leagues Affect the National Football League ®, National Basketball Association ® and National Hockey League ® Affect the National Football League ®, National Basketball Association ® and National Hockey League ® –does not affect Major League Baseball ® –Major League Baseball ® is referred to as an “uncapped” league

7. Collective Bargaining Agreements Are contracts existing between the owners of a sport’s league and the player’s association Are contracts existing between the owners of a sport’s league and the player’s association Contain rules for player salaries Contain rules for player salaries Also contain requirements for salary caps Also contain requirements for salary caps Free agency is the process by 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. Free agency is the process by 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 Defines the rules for free agency

8. Financial Planning for a Sports Team A prof. sports team can be a financial asset to a city if A prof. sports team can be a financial asset to a city if –Everyone and everything involved with the team stays within the home city area –The stadium/arena is used for events other than those for which it was built –The team attracts other business development like hotels, restaurants, shops Increased spending by fans Increased spending by fans –If a team can get fans to the city they will spend on hotels, restaurants, shops, etc. Increased tax revenues Increased tax revenues

9. Bringing All Resources Together Media support Media support Marketing Marketing Charitable and other organizations Charitable and other organizations

10. Power, Prestige, & Profitability Perks and payoffs Perks and payoffs Political clout Political clout Professional teams and the community Professional teams and the community Sociological ties to a professional team Sociological ties to a professional team The bottom line The bottom line

11. Perks & Payoffs Perk—a payoff or profit received in addition to a regular wage or payment Perk—a payoff or profit received in addition to a regular wage or payment Company employees receive tickets Company employees receive tickets Media exposure for owners Media exposure for owners –Houston Texans

12. Political Clout Franchise owners bring millions of dollars in business activity to a city Franchise owners bring millions of dollars in business activity to a city –Often given money or other perks by city officials to entice team to stay in city Nashville and the Tennessee Titans Nashville and the Tennessee Titans Frequently associated with wealth Frequently associated with wealth

13. Professional Teams & the Community Teams bring new jobs to a city Teams bring new jobs to a city –Stadium construction, working games, other tourist businesses created (hotels, restaurants, etc.) Boost for surrounding businesses Boost for surrounding businesses –City of Detroit and Tigers playoff run Community service – team and coaches help out community in various ways Community service – team and coaches help out community in various ways

14. Sociological Ties to a Professional Team City’s “image enhancement” City’s “image enhancement” Residents feel pride Residents feel pride –Ex. - Pittsburgh Steelers, Detroit Lions, New York Yankees, Denver Broncos Wholesome family entertainment Wholesome family entertainment

15. The Bottom Line Winning is everything in sports Winning is everything in sports Special contract incentives for winning Special contract incentives for winning

16. Incentives can be….. Can mean different things to different parts of a professional sports organization Can mean different things to different parts of a professional sports organization Owner’s generally find success in making money Owner’s generally find success in making money Managers or coaches measure success in winning Managers or coaches measure success in winning Players find success in winning and reaching certain statistical milestones paying them bonuses 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 Front office personnel such as marketing or public relations might measure success based on fan attendance