PROFESSIONAL SPORTS

Big League Sports

Top 10 Sports in the World #10 American Football – 400 Million fans Half come from the US and Canada – Evolved from rugby in late 19 th century Mainly a club or collegiate sport – NFL established in 1920 – No teams outside of North America Source:

Top 10 Sports in the World #9Basketball – 400 Million fans – Developed in America in the late 19 th century Originally dominated by Americans Slowly spread throughout the world – Growth spurred by urbanization – International leagues in Greece, Israel, Japan – Top talents from Germany – Dirk Nowitzki France – Tony Parker Spain – Pau and Marc Gasol Canada – Steve Nash Source:

Top 10 Sports in the World #8Golf – 450 Million fans – Dates back to 13 th century – Home of origin – Old Course at St. Andrews – has been used for the last 500 years – Indirect nature of competition creates a lack of conflict or perceived competitiveness – American players have dominated sport Asian countries are beginning to catch up Source:

Top 10 Sports in the World #7Baseball – 500 Million fans – Developed in England from the game of rounders – One of the longest-standing codes of play Major rules have not changed since 1901 – National League founded in 1876 – Direct competition of single players – the batter & pitcher – within a team sport – Global appeal Leading spectator sport in Japan National sport in a number of Central and South American countries Cuba won numerous Olympic golds Japanese won 2-of-3 World baseball Classics Source:

Top 10 Sports in the World #6Table Tennis – 850 Million fans – Hugely popular in China and gaining acceptance in Europe – Been around for less than a century – Attractive because of ease of play and inexpensive equipment – International play dominated by the Chinese, particularly the women Source:

Top 10 Sports in the World #5Volleyball – 900 Million fans – Played around the world – Simplicity of play and flexibility of what kind of playing surface has made game wildly popular – Introduced into Olympic Games in 1964 Pretty evenly matched over the years with numerous countries winning medals and no one country dominating – Beach volleyball introduced as Olympic sport in 1996 Dominated by the American and Brazilians Source:

Top 10 Sports in the World #4Tennis – 1 Billion fans – Top ranking solo competition – Dates back before the 14 th century Modern rules written mid 19 th century – World appeal as no single player or country has truly dominated sport Last 10 years, #1 ranking held by 14 different players representing 8 different countries Source:

Top 10 Sports in the World #3Field Hockey – 2 Billion fans – Developed independently in Europe and Asia in the 3 rd century B.C. – Modern rules developed in the 19 th century England – Dominated by India & Pakistan mid 1900s – Now Australia & the Netherlands a major force – Viewed as a female-dominated sport in US, across the globe it is male- dominated Source:

Top 10 Sports in the World #2Cricket – 2.5 Billion fans – Thanks to the British Empire, this sport has spread across the globe – Played as far back as the 16 th century, modern rules developed in the early 1700s – Large teams and long games – sometimes up to 5 days in length – England, India, Australia, South America top teams Source:

Top 10 Sports in the World #1Soccer – 3.5 Billion fans – Simplicity of the sport and the ease of play make it the most popular sport in the world to play and watch – Versions of a game kicking a ball towards a target have been around for centuries Mid-19 th century modern rules developed in England – No particularly powerful clubs Dozens in contention for international and top-league titles every year Source:

Soccer 260 million participants worldwide Truly global appeal – National, cultural, religious, gender, class Federation Internationale de Football Association (FIFA) – $700 million annual income – 2014 World Cup most widely viewed sporting event in the world Million people watched final match on TV 3.2 Million attended one of 64 games Highest paid soccer players in world 3. Zlatan Ibrahimovic, PSG ($40.4 million) 2. Lionel Messi, Barcelona ($64.7 million) 1. Cristiano Ronaldo, Real Madrid ($80 million)

Top 10 Sports in the USA 10. Martial Arts 9. Wrestling 8. Motor Sports 7. Golf 6. Tennis 5. Soccer 4. Hockey 3. Basketball 2. Baseball 1. Football Source: / /

Financial Impact Most valuable NFL football teams 5. Houston Texans ($1.85 billion) 4. New York Giants ($2.1 billion) 3. Washington Redskins ($2.4 billion) 2. New England Patriots ($2.6 billion) 1. Dallas Cowboys ($3.2 billion)

Financial Impact New Dallas Cowboy Stadium (2009) – Originally estimated to cost $650 million, actual cost $1.15 billion Financed through approved sales tax increases by the city of Arlington; $325 million from city of Arlington (bonds); $150 million NFL loan; over runs paid by Jerry Jones One of the most expensive sports venues ever built – Seats 80,000 (110,000 including standing room) 3 rd largest NFL stadium – AT&T Naming Rights Deal $17-$19 Million/year for 20 years City gets 5% to help offset cost to build

Cowboy Stadium Since opening, has hosted: – Super Bowl XLV (2011) – NBA All-Star Game (2010) Highest attended basketball game in history – Big 12 Championship Game (2009, 2010) – Cotton Bowl ( , 2015) – Texas UIL State Championship ( ) – NCAA Final Four (2014) – College Football Playoff Championship (2015)

Financial Impact SportYearly Revenue National Football League (NFL)$9 Billion Major League Baseball (MLB)$7 Billion National Basketball League (NBA) $3.8 Billion National Hockey League (NHL)$2.9 Billion Major League Soccer (MLS)$280 Million Source:

Financial Impact SportAverage Salary National Basketball League (NBA)$5.2 Million Major League Baseball (MLB)$2.5 Million National Football League (NFL)$1.75 Million National Hockey League (NHL)$1.3 Million Professional Golf Association (PGA) $0.973 Million Women’s Tennis$0.345 Million Men’s Tennis$0.260 Million Women’s Golf$0.162 Million Source:

Financial Impact SportSalary Cap Major League Baseball (MLB)$178 Million National Football League (NFL)$133Million National Hockey League (NHL)$64.3 Million National Basketball Association (NBA) $58.04 Million Major League Soccer (MLS)$3.1 Million Source:

Highest Paid Athletes Source:

Athletes on Social Media Source:

Athletes on Social Media Source:

It’s All About the Money Professional sports are big business Depend on a large financial commitment and a large financial return A city gains a special identity with a professional team, and a winning tradition fuels the financial fire

How Teams Make Money Ticket Sales Merchandise Sponsorships Naming Rights Media Revenues

Ticket Sales Fan Cost Experience

Merchandise NFL Top Sellers 1.Pittsburgh Steelers 2.Dallas Cowboys 3.New Orleans Saints 4.Philadelphia Eagles 5.New England Patriots 6.Chicago Bears 7.New York Giants 8.Green Bay Packers 9.Indianapolis Colts 10.New York Jets NBA Top Sellers 1.Chicago Bulls 2.New York Knicks 3.Los Angeles Lakers 4.Miami Heat 5.Dallas Mavericks 6.Boston Celtics 7.Oklahoma City Thunder 8.Los Angeles Clippers 9.Denver Nuggets 10.Orlando Magic

Top Selling NFL Jerseys April 1 – October 31, 2014

Top Selling NBA Jerseys

Sponsors NFL Top Sponsors – Gatorade – Marriott – Pepsi – Bud Light – Visa – General Motors – Verizon – Fed Ex – Papa Johns Pizza MLB Official Sponsors – Anheuser-Busch – Bank of America – Bayer – Captain Morgan – Citi – Firestone – Frito-Lay – Gatorade – General Motors (Chevrolet) – Intel – Holiday Inn – MasterCard International – Nike – Pepsi-Cola – Scotts – Sprint – State Farm Insurance – U.S. Army

Sponsors NASCAR Official Sponsors 3M Bank of America Camping World Canadian Tire Chevrolet Coca-Cola Coors Light DIRECTV Dodge DRIVE4COPD DuPont Exide Featherlite Coach Featherlite Trailers Ford Freescale Freightliner Trucks Growth Energy Gillette Goodyear Head & Shoulders NASCAR Official Sponsors Mars Mobil 1 McLaren Nabisco (Kraft) National Corn Growers Assoc. Nationwide Insurance Office Depot Old Spice Safety- Kleen SIRIUS XM Radio Sprint Sunoco Toyota Unilever UPS USG Visa K & N Whelen Engineering Inc.

Naming Rights

Winning is Everything In order to keep ticket sales strong and charge high prices, owners must provide a winning team A team fresh off of a national championship will probably have sold-out games the next season because fans expect continued success

Most Winning Teams

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

Prestige, Power, Profitability The value of sports franchises has skyrocketed due to prestige, power, and profitability Jerry Jones paid $140 million for the Dallas Cowboys in 1989 ($65 million for the franchise and $75 million for the stadium) The Cowboys franchise is currently valued at $3,200,000,000

Perks and Payoffs Perk—a payoff or profit received in addition to a regular wage or payment The position of team owner has many perks, including money and media exposure – Jerry Jones (Cowboys) – Jerry Beuss (Lakers) – George Steinbrenner (Yankees) – Ted Turner (Braves/Hawks) – Mark Cuban (Mavericks)

Political Clout Franchise owners who bring millions of dollars in business activity to a city often find themselves with political clout or influence Political Clout is frequently associated with wealth

The Bottom Line Winning is everything in sports Teams often provide players with special contract incentives for winning

Competition or Collusion? Teams are paid big money to win Sports clubs cannot operate independently – Must cooperate with one another in order to sell their entertainment services to the public

Role of the League Teams that are members of a professional sports league are contractually obligated to one another Teams that are members of a professional sports league are contractually obligated to one another The league determines: The league determines: the schedule of games the schedule of games makes and enforces game rules makes and enforces game rules sets the guidelines for hiring new players sets the guidelines for hiring new players determines when a new team will be admitted to the league and allowed to compete with its members determines when a new team will be admitted to the league and allowed to compete with its members

League Rules Competition on the field would diminish if any club had the ability to hoard the best athletic talent League rules are designed to ensure that each club has the opportunity to employ and retain quality players – Contracts, Drafts, etc. Because specific clubs may hold the exclusive right to contract with a player, athletes are not always free to work for the highest bidder

What Happens if No League Rules? More successful clubs would sell more tickets and team merchandise Earn higher profits Have the ability to attract the best players with higher salaries Over time, these clubs would become so much stronger than the less successful teams that competition on the playing field would deteriorate and become boring for spectators If spectators don’t come, then everyone loses…

How Does it Work? Individual teams are separately operated businesses Cartel—a combination of independent businesses formed to regulate production, pricing, and marketing of a product

Cartels In the case of professional sports, the cartel is a number of independent sports teams grouped together and governed by a league agreement of operations The league controls the distribution of the teams, including the locations of the teams and the number of teams allowed to operate within the league Typically, Cartels are NOT allowed in business – special legislation exempting the professional sports leagues from antitrust laws

League Set Up LeagueYear Established Commissioner# of Teams MLB1869Rob Manfred30 NFL1920Roger Goddell32 NHL1917Gary Bettman30 NBA1946Adam Silver30

Expansion Plans Team owners must prove financial viability before the team can find a home city Owners and managers must convince the city that the costs of a team or new stadium will be repaid through increased spending by fans and by increased tax revenues

An NFL team can be a financial asset to a city if: 1.Everyone and everything involved with the team stays within the home city area 2.The stadium/arena is used for events other than those for which it was built 3.The team attracts other business development like hotels, restaurants, and retail shops

How Easy is it to Add a New Team? Bringing a new team to a city takes more than just an owner’s desire for a new team – League must approve expansion plans – Potential owners have to have the financing to pay the current NFL owners for an expansion team – The new team must have a place to play to attract fans

How Easy is it to Add a New Team? Since there are more cities that want pro teams than there are teams available, the leagues control the location of the teams based on the business benefits to the leagues and owners. The leagues are in business to make a profit

Houston Texans 1997 Houston denied NFL expansion team 1997 Houston Oilers allowed to move to Tennessee 1998 Jacksonville awarded 31 st Expansion team learn 32 nd Expansion team coming in next 2 years, cities being considered: LA (5.5 million households) Houston (1.8 million households) Toronto 1999 Team awarded to LA contingent on ownership team & stadium plans LA financers offering $540 million Houston financers offering $700 million ; won bid 2000 Begin building Reliant Stadium 2001 Hire Head Coach Dom Capers 2002 Expansion Draft to get athletes 9/8/2002 Home opener against Dallas Cowboys 2004 Hosted Super Bowl XXXVIII

Cashing In Super Bowl XXXVIII was played in Houston’s Reliant Stadium in the venues 2 nd year of existence The Super Bowl deal was a part of the financial contract and agreement between the Texans & McNair & the NFL Houston’s city government used the economic impact of the Super Bowl to justify tax support for the stadium – Taxpayers paid 60% of the $310 million stadium

It Pays Off… In addition to the 69,500 ticket-holding fans (paying anywhere from $1,950 - $4,800+ per ticket), another 10,000 – 40,000 non-ticket holders visited the city during the weekend activities The associated business that benefited from the crowd- lodging, food, beverage, & entertainment-generated about $300 million for the host city McNair bought franchise in 1999 for $700 Million, Houston Texans now valued at $1.85 Billion

Super Bowl To host the Super Bowl obligates to a city to meet 20 pages of NFL requirements including: – Having at least 17,500 hotel rooms available – 65 limos exclusively for NFL use – 1,000 buses for transporting fans – And many private and public golf courses for fan use

Super Bowl Rewards If a city does a good job hosting the Super Bowl; then the host city can expect to host the Super Bowl about every five years