Professional Sports

1. Professional Sports Big League Sports

2. Big Time Money • Take Robert Kraft, the owner of the National Football League's darling New England Patriots • Paid in 1994 $172 million • Today $1.2 billion • Dallas Cowboys owner Jerry Jones • Paid in 1989 $158 million • Today $1.5 billion • NBA's New York Knicks. • Worth $592 million • In 2010, Nike and Reebok have spent nearly $550 million in worldwide advertising

3. Pricing and Planning • “Big League Sports” • Big refers to revenue potential of the sport • The bigger the game, the more $ charged for tickets and advertising • Downside of having winning teams • Higher ticket prices • Fewer tickets available • New ticket pricing at Cubs/Sox Game (big games)

4. Big League Sports • Big=big revenue potential or commercial value as much as skill level of competition • Average Ticket Price • Bears $68.89 • Cubs $34.30 • Sox $26.19 • Bulls $50.67 • Blackhawks $34.88

5. Big League Pricing & Planning • Marketing Department considers the game they have to offer when determining the prices to charge • Good season this year, charge more to advertise in stadium next year • Cost of obtaining the best professional athletes must be considered • High ticket prices pay for top players • Not hard to do when team is winning • Corporations buy groups of tickets to entertain clients • Corporate sky boxes

6. Finding a City • Owners must convince city that costs will be recouped • Local businesses will benefit • Increased Tax Revenues • NFL Team will Benefit City if: • All facilities are in the area • Stadium is used year round • Concerts • Circus • Supporting businesses join in and promote team • Hotels, Restaurants, etc.

7. Why would a city want a team? • Everyone and everything involved in with the team stays within the home city area • The stadium/arena can be used for other events • The team attracts other business • Sense of pride in a winning team • Raise morale of city • Pride for the people of the city • “image enhancement”

8. What needs to be considered before a city has a professional sports team? • Stadium • 16 NFL teams have new stadiums since 1995 • In the last 13 years, 25 of the 32 teams moved into new or renovated • $295 million dollar renovation to Lambeau field • Increase seating by 20% • 4,000 club seats and boxes • Packers Hall of Fame and gift shop • 1.6-2 million square feet • Multiuse facilities • Jets-stadium/convention facility

9. Bringing Resources Together • Once a city decides to take on a team…. • media support, marketing arms, charitable concerns, and other organizations come together to back it • Dallas Cowboys- earned $60 million in profits in the last three years from off-the-field products (media rights, luxury suites, and team sponsorships)

10. Will people pay those prices? • NFL sold 90% of available tickets last year! • Questions to consider- • What is the competition for disposable income? • Are there corporations willing to pay for luxury suites? • Are there potential corporate sponsors?

11. 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 • No on-field advertisement=league • Signage • Luxury suites • Stadium Naming Rights

12. Attracting a Pro Team • More Cities than Teams • Competition is tough • Teams are Members of a Cartel • Cartel is a combination of independent business formed to regulate production, pricing, and marketing of products. • The cartel is run by an agreement that controls the market mix and distribution of products. • Cartels are exempt from anti-trust laws so they can control locations & number of teams allowed in the league. • Compete on the field, but in the same league • NFL controls most business decisions

13. Attracting Pro Team • Team locations - customer base helps determine feasibility. • NFL ex. - 24 of 31 owners must agree on team location for new teams. • Bringing in a new team can cost the owner 400 – 600 million -- league expansion fees, stadium costs, etc. Huge risk for the owner. • Alternative to public financing of pro sports teams is community ownership

14. Attracting a Team • Build a Stadium First • Taxpayer money used • Hopefully a team will come • San Antonio • Alamodome • Community can own the team • Packers • Celtics

15. SportsNation: The Ultimate Standings • Turn to a person near you and answer the following questions: • Which franchise in all of professional sports would fans consider the best? Worst? • Where do the Chicago teams rank? Assign a number from 1-122 • What could they do to improve their rankings?

16. Agents, Managers, Ethics • Agent • Legal Representative of Celebrity • Paid to manage career • Usually attorneys • Paid a Percentage of Contract • Free Agency changed the industry • Agents more valuable • Also Find Endorsements

17. 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.

18. Agents, Managers, Ethics • Handlers • Paid by Sponsor to take care of Athlete • Example…Nike paid someone to make sure Dennis Rodman behaved • Advisors • Similar to Agents • Give financial and Career Advice only

19. Agents, Managers, Ethics • Ethics • System of Deciding what is right and wrong • Strikes • Drug Testing • Off-Court Behavior • Role Models? • Too young and too much money??

20. Women • Force Photo Gallery • IWFL - Independent Women's Football League Supporting Women in Football

21. http://sports.espn.go.com/chat/sportsnation/franchiseRanks?year=2006http://sports.espn.go.com/chat/sportsnation/franchiseRanks?year=2006