IFS3109 Exam 2 Ch. 9 Professional Sport

In professional sports, a free agent is .............

A player who is eligible to sign with any club or franchise i.e. not under contract to any specific team Also refers to a player who is under contract at present, but who is allowed to solicit contract offers from other teams

When did it come into wider uses?

After sports leagues stopped using a "reserve clause", which provided a repetitive option for the club to renew the contract for one or more years but did not allow the player to terminate it

Salary Cap

Agreements collectively bargained between labor and management that establish a league-wide team payroll threshold that cannot be exceeded in most cases

Collective Bargaining

All athletes in professional leagues except for MLB (because of its antitrust exemption) are provided the rights from the National Labor Relations Act (NLRA) and therefore can engage in collective bargaining with team owners or leagues on matters such as salaries, drug testing, and disciplinary measures

What effect did free agency have on professional sport?

Allowed player salaries to skyrocket Led to an increased in labor stoppages with the heightened power of players' unions as well Allowed players to sign with the highest bidder; consequently, spending on players' salaries increase significantly, especially among teams with greater resources; led to methods for limiting payrolls

Professional sport

Any sport activity or skill for which the athlete is compensated in the form of salary, bonuses, or reimbursements for expenses

Why league think?

Competitive balance- balance comes down to how varied is the group of teams competing for a title over a period of time Parity

What is the major implication of Baseball's Antitrust Exemption?

Baseball owners may choose to move their teams to different cities at any time, and therefore they exercise great control over the cities in which they reside

What are 5 unique circumstance/conditions present in the labor-management relationship in North American professional sport?

Baseball's Antitrust Exemption Collective bargaining Salary caps Player draft Free Agency

Why free agency?

Before free agency, athletes were often taken advantage of by their teams and often had no choice to play for any other team, as they were locked into contracts with the team that originally signed them

What type of athletes were first paid in the U.S.?

Boxers, jockeys, and runners were paid for their prowess during the early and mid-19th century

Provide examples of labor-management relations.

DeMaurice Smith is the lawyer of the NFL players' union so he represents the labor; whereas, Roger Goodell is the NFL commissioner so he represents the management The "NFL Plantation" cartoon depicts how the NFL combine is basically a bunch of black bodies being assessed and measured to be 'sold to the highest bidder' or in this case the owners of the teams Owner of the Houston Texans, Bob McNair, recently stated "we can't have the inmates running the prison," in regards to the issue of NFL players kneeling during the National Anthem; in response, the majority of the Texans' players knelt in the next game and Jadeveon Clowney dressed up as an inmate for Halloween the following Tuesday

How are professional sport leagues becoming limited competitors as well as partners?

Each league now has its own network from which to broadcast games

Describe structure & governance.

Each professional sport has its own structure of governance, typically referred to as the "League Office" which is usually is made up of: ---League Commissioner ---Board of governors or committee structure composed of team owners ---Central admin unit that negotiates contracts and agreements on behalf of the league and assumes responsibility for scheduling, licensing, recording keeping, financial management, publicity, advertising...

What role does television play in professional sports?

Expansion of television in sport has made it into the multi-billion dollar business it is today Drive the popularity of professional sport Generate additional revenue for associated teams

What is a royalty?

In return for the right to use their names and logos, the leagues and teams receive a percentage of the selling price for each item sold by the manufacturers

What do player drafts and salary caps both do?

Instill parity among the teams in a league

What are the 4 unique aspects of professional sports?

Interdependence Structure & Governance Labor-management Relations Role of electronic and new media

How is luxury tax different from other methods of limiting payroll?

It doesn't really prohibit big payrolls BUT it imposes a penalty on the teams whose total payroll exceeds a certain amount previously defined on the Collective Bargaining Agreement (CBA)

Who does the free agency benefit more: labor or management?

Labor

What are the 3 principles from the professional sport industry?

Labor= players Management= owners of the teams represented by the commissioner Governance= professional sport leagues

Why do professional sport leagues need TV?

League and member teams receive significant revenue from network, satellite, and cable networks Enhances the enjoyment associated with watching professional sports Increases the amount that teams and leagues can charge for sponsors because of the increased exposure it provides

What are emerging sources of media coverage in professional sports?

Live streaming of games Satellite technology/TV providers offer packages to the average sports fan

Which professional league is the oldest in the U.S.?

MLB

What professional sport league is the only one in the U.S. to not have a salary cap?

MLB But the luxury tax mentioned in the "Interdependence" section of this chapter has attempted to curb the ever-increasing salaries and to instill more parity in the league

Baseball's Antitrust Exemption

MLB is exempt from the Sherman Antitrust Act of 1922 which basically means that the league is not deemed to be involved in "interstate commerce"

Who does the salary cap benefit more: labor or management?

Management

Who does the player draft benefit more: labor or management?

Management (owners)

What do local television contracts provide to teams in the MLB, NHL and NBA?

Provide teams with additional media revenue beyond what they receive from their national television contract

Provide an example of league think from the documentary Head Games.

The NHL commissioner believed "as long as hockey continues, there will continue to be head injuries; but they don't make the players want to stop playing and they don't make the fans want to stop watching"

What are some revenue sources for professional sport teams?

Media contracts Ticket sales Memorobilia Sponsorship

Revenue Sharing

Members make sacrifices and concessions for the long-term benefit and growth of the league Ex: The Dallas Cowboys and Oakland Raiders typically sell a disproportionate amount of NFL-licensed merchandise; however, this money is pooled and shared equally among the 32 teams in the league

Give an example of how TV has elevated professional sport beyond competition and athleticism into the realm of entertainment.

Monday Night Football was a pioneering effort to package professional sport as entertainment Added analysis, commentary, special guests, additional camera angles, video replays, graphics, etc.

How much revenue do gate receipts and concessions account for?

More than 92% Major in NHL and MLS

Which of the following professional sports leagues was the first to implement a salary cap for its 1985-86 season?

NBA

What professional sport league does not permit its member teams to negotiate local television contracts?

NFL

Which professional league has the highest revenue?

NFL with $13 billion

Which professional league is the 2nd oldest in the U.S.?

NHL

Do other labor markets in professional sports around the world have player drafts?

NO

In professional sports, what system is used to distribute new talent among all league members?

Player Draft

When were athletes first paid?

Professional sport can be traced to Ancient Greece, beginning with the Olympic Games in 776 BCE

What concepts exist only in the context of professional sport?

Reserve clauses Free agency League think Antitrust exemptions

League think

Teams must be willing to share profits with other teams in the same league in order to keep the entire league functioning well

Describe interdependence.

Teams need to compete and cooperate simultaneously Ex: Tom Brady and Peyton Manning; the NFL Combine

Provide an example of how each sport has its own structure.

The MLB is composed of 30 teams situated into two leagues (National and American); each league consists of three divisions (East, Central, & West)

Provide an example of league think.

The NFL's "Protect the Shield" platform could become negative when the league starts ignoring and covering up players' scandals such as domestic assault cases

Workers involved in interstate commerce, including all professional sport teams except MLB, are covered by?

The National Labor Relations Act (NLRA) which gives players: ---the right to self-organization, to form, join, or assist labor organizations (AKA unionize) ---the right to bargain collectively through agents of one's own choosing (AKA basic player contract negotiated collectively by union representatives) ---the right to engage in concerted activities for employees' mutual aid or protection (AKA go on strike)

Free agency

The ability of players, after fulfilling an agreed-upon number of years of service with a team, to sell their services to another team with limited or no compensation to the team losing the players

Sponsorship

The acquisition of rights to affiliate or associate directly with a product or event for the purpose of deriving benefits related to that affiliation

Collective Bargaining Agreement

The contractual agreement between an employer and a Labor Union that governs wages, hours, and working conditions for employees and which can be enforced against both the employer and the union for failure to comply with its terms; such an agreement is ordinarily reached following the process of Collective Bargaining

Luxury Tax

The disparity in local media revenues has created discrepancies in the amount of money MLB teams are able to play their players; THEREFORE, the league implemented a luxury tax on teams that had the highest payrolls; the collected luxury tax money is then shared among teams with lower pay rolls Ex: New York Yankees dominance in World Series titles due to their market location

Why was the Sherman Antitrust Act created originally?

To prohibit companies from dominating their respective markets in interstate commercial activities, thus creating a monopoly in which consumers only have one choice rather than several

When are licensing and merchandising revenues generated?

When leagues and teams grant merchandise and apparel manufactures the right to use their names and logos

What matters can be negotiated through collective bargaining?

salaries/benefits drug testing disciplinary measures