Intro to Sports Management Final

Large Market Teams
Pro teams located in large media markets that offer high potential for lucrative local media contracts (NY,LA,SAN FRAN, CHICAGO, PHILLY, BOSTON)
Small Market Teams
Pro teams located in midsized or smaller markets that offer modest potential for media contracts (TAMPA, MILWAUKEE, BALTIMORE, CINCY, CLEVLAND)
Luxury Tax
A tool used by MLB and the NBA to tax teams that spend the most on player payroll- the teams that spend over the luxury tax threshold pay the league the tax. The league shared those collected taxes with the teams that have lower payrolls (if the league chooses) or uses it for “league purposes”
Single-Entity Structure
A form of league governance in which teams are owned by the league and players sign contracts with the league instead of individual teams. Individual investors pay for the rights to “operate” teams, but the league owns the team. ONLY MLS is still a single-entity league. WNBA used to be but now NBA teams owners own their sister WNBA team. HASN’T been successful
Baseball’s AntiTrust Exemption
MLB was granted an exception to standard antitrust law – so MLB team owners have leverage over the cities in which they operate. They have territorial rights (a team needs approval to enter a market). Provides leverage for a team owner over a city (subsidies, construction, etc.). Allows for establishment of a competitive league. This exemption has been challenged but has not been overturned.
Collective Bargaining (CBA)
Interstate Commerce- Working in different states – all pro team sports have workers in this category
Collective Bargaining
Players are a part of a union and negotiate as an entire union for minimum employee rights. Negotiating a new CBA is why labor stoppages happen
Common Elements of a CBA
Contract length, compensation, rules for use of labor (including free agency), individual job rights, Rights of union and management in the bargaining relationship, Extra economic benefits
Free Agency
The ability of players, after fulfilling an agreed-upon number of years of service to a team (contract) can sign a contract with another team. Free agency specifics are negotiated in CBA’s
UnRestricted Free Agency
The team losing the player does not receive compensation for losing a player (usually happens with older players who have more service years)
Restricted Free Agency
The team losing the player receives compensation – usually draft pick(s) or money or in some cases the teams can work out a trade instead of the required compensation
Free Agency Cont.
Began in the 1970’s and salaries began to rise with this change. Allowed players to sign with the highest bidder. Free Agency rules/restrictions can be negotiated with each new CBA that is negotiated.
AVERAGE MLB Salary
1976- $42000
2005- $2.63 M
2011- $3.1 M
Salary Cap
MLB has no salary cap, NBA NFL and NHL do.
Salary cap sets a ceiling on total team payroll.
A cap slows down the escalating player salaries – but salaries still escalate over time because salary cap limits continue to rise. NBA started this in 1983 for the 85-86 season. MLB has no salary cap.
Parity
AKA “Competitive Balance” – the idea that every team has a chance to win due to the fact that resources are equal.
Basketball Related Income
Regular Season and playoff gate receipts. Broadcast rights. Proceeds from other basketball related events. Novelty, program, concession sales. Parking. Arena Club Revenues. 40% of revenue from arena signage and luxury suites
Luxury Tax Cont.
Idea is that this tax will help offset the disparity in “competitive balance”. NBA instituted “luxury tax” in 2002-03 season. League determines if the luxury tax is distributed among the non-taxed teams (generally it is).
In 2004, MLB teams with payrolls above $120.5M faced a penalty and teams that do not exceed the luxury tax threshold split the tax
Player Draft
Designed to be an equitable system for distributing new talent that helps maintain “parity” or “competitive balance”
Hallmark Events
Highly visible events that are attended by many people and watched by even more on tv and on the internet. NFL alone could survive just through its national TV broadcasting rights
Revenue Sources for Pro Sports Teams
Media Contracts, Gate Receipts, Licensing and Merchandising Revenues, Sponsorship
Media Contracts
Includes league wide national TV contracts and local TV contracts. Local TV contracts are above and beyond what the league negotiates. Fox Sports Regional, YES, NESN, etc. NFL is only national TV contract (negotiated by league). MLB, NBA, and NHL are both national and local television contracts
Gate Receipts
Includes all ticket sales, luxury box revenue, club seat revenue. Important for NHL but not for NFL.
Licensing and Merchandising Revenues
This area may now be saturated. NFL in 1999- Revenue $3.0 Billion, 2004 – Revenue $3.2 Billion. Companies have to create new ways to sell products and create an “in-demand” item
Sponsorship
The acquisition of rights to affiliate or directly associate with a product or event for the purpose of deriving benefits. Significant source of revenue for teams. most teams don’t set a limit on the number of sponsors but do use rights of “exclusivity”
Naming Rights
Rights for a company to have its name on a venue in exchange for money
Rotating Signage
Placed on scoreboards or around playing surfaces that can rotate between advertisers
Virtual Signage
Signage generated by digital technology and placed in a sports even telecast (appears to be a part of the playing surface)
LED Signage
Computer generated signage that is usually around the stadium bowl- it can have sound, animation, etc.
National Collegiate Athletic Association (NCAA)
Formed in 1910 by President Theodore Roosevelt. Princeton, Yale, and Harvard. Headquartered in Indianapolis, IN. More than 1,250 colleges, universities, conferences and sport organizations
NCAA
1973- Membership was divided into 3 divisions.
NCAA D1 Criteria
Must offer 7 sports for men and women. OR 6 sports for men and 8 sports for women. Must have at least 2 sports per gender. Offer full grants-in-aid. Financed through: student fees, gate receipts, tv revenues, licensing revenues and private donations
D1 Break Down
Division 1-A- 117 Active Members
Division 1-AA- 118 Active Members
Division 1-AAA- 91 Active Members
Division 1-A is called “Football Bowl Subdivision” by NCAA and Division 1-AA “Football Championship Subdivision”
Licensing Revenues
Royalties paid to athletics departments by second parties in return for the right to produce and sell merchandise bearing a logo or other mark associated with that program
NCAA Division 2
Must offer at least 4 sports for men and women and must offer 2 team sports for each gender. D2 athletics is funded in the same way any other academic program is funded. 281 active institutions.
NCAA Division 3
421 active institutions. Must offer 5 sports each for men and women and 2 team sports for each gender. No athletic scholarships offered. Focus on participation rather than competition.
NAIA (National Association for Intercollegiate Athletics)
Headquartered in Olathe, Kansas. Established in 1940. More than 360 institutions. 1948- NAIA was first national organization to offer postseason opportunities for black student athletes. NAIA was first National organization to offer athletic championships for women’s sports (1980)
NCCAA (National Christian College Athletic Association)
Founded in 1968 in Greenville, SC.
AIAW (Association for Intercollegiate Athletics for Women)
Established in 1971 by female educators from colleges nationwide. Dismantled in 1982 because it offered similar opportunities and championships for both mens and women’s sports
NJCAA (National Junior College Athletic Association)
Founded in Fresno, CA in 1938. Approx. 550 institutions. Currently headquartered in Colorado Springs, CO
Athletic Conferences
A group of colleges/ universities that governs that conduct and organizes the competition among its member institutions. (SEC, ACC, BIG TEN, BIG 12, PAC-10)
Organizational Chart
Hierarchy of power in an athletic dept. or conference office. Going to widely vary. Specialized task, more focused on specific items, more people vs. less people, smaller organizational structure, wide variety of taks
One-Plus Three Model
A model of Intercollegiate Athletics (ICA) reform that emphasizes individual presidential control over three areas: Academic Integrity, Financial Integrity, Independent certification of athletics programs.
Knight Commission on ICA
Group established to monitor and evaluate ICA – they provide statistics, research and advice. In response to the crisis of the late 1980’s where over 50% of programs were censured, on probation or sanctioned. Academic Fraud- Inappropriate conduct in academic areas- having tutors write papers, tests to athletes, changing grades.
Athletic Director
Seen as the CEO in big D1 athletic department. Most important areas are: Revenue generation, program addition and subtraction, negotiation, public perception. Fundraising is important. D1 and D2 AD reports to college president. D3 AD goes to Office of Student Affairs
Associate or Assistant AD
Middle level managers. Usually second in chain of command and works a bit more closely with the managers of each specific department
SWA
Highest ranking female administrator in an Athletic Department. Position ensures that women have a role in the decision making process in college sport. Some still serve only as figureheads, while approx. 79% also serve in an administrative type role (Asst. or Assoc. AD). SWA’s are becoming more common in the conference setting as well