Sport MGT 210 Exam 2 (Ch. 8, 10, 11, 13, 14)
The "Powers" of the Commissioner
-Approval of player contracts -Resolution of disputes between players and clubs -Resolution of disputes between clubs -Resolution of disputes between player or club and the league -Disciplinary matters involving owners, clubs, players, and other personnel -Rule-making authority
Current Issues in Pro Sports
-Salary Caps -Globalization -Concussion Litigation -Drug Testing and HGH
Current Issues in Sport Agency
Unethical Behavior Agent Regulation
NCAA
Voluntary association More than 1,250 institutions, conferences, organizations, and related associations Goal: Maintain athletics as part of education program 1956: Creation of "university" and "college" divisions 1973: Three-division system, Divisions I, II, and III, was created to increase flexibility of the NCAA in addressing member needs and interests of schools of varying size Two of the more prominent NCAA administrative areas are legislation and governance and academics. Enforcement oversees violations, imposes penalties
5 Factors that influenced the growth of Sport Agency
1. Evolution of players' associations -Through collective bargaining, the MLBPA negotiated the right for players to be represented by agents and labor grievance arbitration. 2. Reserve system: onset of free agency granted to players through the Messersmith-McNally arbitration decision 3. Need for tax and financial planning with increased salaries 4. Development of competing leagues created competition for players and thus higher salaries 5. Increased opportunity for athletes to increase income through endorsements with expansion of television and entertainment industries
First intercollegiate athletic event in the United States
1852 Crew Race on Lake Winnipesaukee in New Hampshire between Harvard and Yale. Sponsored by the Boston, Concord & Montreal Railroad Company, which wanted to host the race in New Hampshire so that both teams and spectators would have to ride the railroad to get to the event.
First collegoate baseball contest
1859 between Amherst and Williams, two of today's more athletically successful Division III institutions. Amherst defeated Williams 73-32
History of Professional Sports
1869: First professional team, the Cincinnati Red Stockings 1876: North America's first professional sport league, the National League, emerged -Included bylaws for limits on franchise movement, club territorial rights, and mechanism for expulsion of a club Self Governance vs corporate governance models: Owners act as the board of directors, and the commissioner acts as the chief executive officer
Labor Relations
1885: John Montgomery Ward (a lawyer and HOF infielder/pitcher) established first players' association to: -Fight reserve system, salary caps, and practice of selling players without the players' receiving a share of profits -Negotiate wages-benefits-rights with owners When his plan did not work, about 200 players organized a revolt that led to the organization of the Players League; folded after first year 1952: MLBPA formed -Dominated by management -Negotiations limited to pensions and insurance 1966: Marvin Miller organized players as true labor union by convincing all players that each of them was essential to game revenues. -Convinced players to fund players' association by giving their group licensing rights to the union from which the union would operate and give remaining funds back to players in pro-rata shares
Women in College Athletics
1892: Senda Berenson introduces basketball to women at Smith College after modifying the rules 1896: 1st women's basketball game: Cal vs. Stanford Predominant theme of women's involvement in athletics was participation 1966: Creation of the Commission on Intercollegiate Athletics for Women (CIAW) 1971: Became Association for Intercollegiate Athletics for Women (AIAW)
NCAA Growth and Worth
1906 president Roosevelt - national collegiate athletic association 1930's -> 1953 Debate on if student athletes should be given scholarships for their athletic ability 1979: Bird & Magic and ESPN PE classes --> intramural --> extramural --> intercollegiate programs (ncaa) "initiate, stimulate, and approve intercollegiate athletics for student athletes" . . . vs. 8 team ('39), 27-1 ('66), '79, '84 $32M, 5th renegotiation $11B
Individual Pro Sports: PGA as a Case Study
1916: Birth of PGA -Objectives are to grow golf interest, elevate standards of golf professionals, establish a relief fund, and hold meetings and tournaments 1960s: Many factors created growing tension between the PGA tournament professionals and the local country club professionals, and conflicts arose. -1968: PGA tournament players broke away from the larger membership to form a Tournament Players Division (1975: renamed PGA Tour) 1916: Birth of PGA Objectives are to grow golf interest, elevate standards of golf professionals, establish a relief fund, and hold meetings and tournaments 1960s: Many factors created growing tension between the PGA tournament professionals and the local country club professionals, and conflicts arose. 1968: PGA tournament players broke away from the larger membership to form a Tournament Players Division (1975: renamed PGA Tour)
Commissioners
1920: First commissioner of a pro sport league -MLB's Judge Kennesaw Mountain Landis League constitution and bylaws set forth commissioner's powers -Granted authority to investigate and impose penalties when individuals are suspected of acting against the best interests of the game Players' associations have used collective bargaining to limit commissioner's powers. -Owners have also challenged commissioner in court, but rulings usually upheld
Carnegie Reports and result
1929 Carnegie Reports painted bleak picture of intercollegiate athletics, identifying many academic and recruiting abuses, payments to student-athletes, and commercialization of athletics. NCAA pressured to change to an organization that would oversee academic standards for student-athletes, monitor recruiting activities of coaches and administrators, and establish principles governing amateurism.
Labor Relations (Cont.)
1957: NHL players tried to unionize. -NHL owners humiliated, threatened, traded, and/or released players for involvement in players organizing efforts. Labor relations did not play major role in professional sports until the late 1960s, when growing fan interest and increased TV and sponsorship revenues transformed leagues. Once players unionize, collective bargaining must occur before league management can change hours, wages, or terms and conditions of employment. With a players union in place, a league can negotiate acceptance for restrictive practices with players' association. -Practices that on their own might violate antitrust laws When the collective bargaining process reaches an impasse (a breakdown in negotiations), the players can go on strike or owners can "lock out" players. Strikes and lockouts are far more disruptive in professional sports than in other industries because of the lack of replacement players (employees). Leagues encourage unions because labor exemptions can be used to implement restrictive policies.
"Truisms" of the Sales Function
A sales staff needs to be trained and prepared to sell either a winning or a losing team. The major emphasis should be on identifying and satisfying consumers' wants and needs instead of focusing simply on selling. A priority needs to be placed on the collection and effective use of customer data. Simply handing out free tickets to a sporting event sends a distinct message to fans about the perceived quality of the product: If it's free, it can't be worth all that much.
Contract Law
All players sign a standard player contract particular to each league. Commissioner of league can refuse to approve player's contract if he or she believes it violates league rule or policy. Disputes may occur over which team retains rights to a particular player, and such disputes may lead to legal battles between teams and players of different countries.
Antitrust Law
All professional sport leagues adopt restrictive practices (drafts, reserve systems, salary caps, free agent restrictions, and free agent compensation) to provide financial stability and competitive balance between their teams. -Restrictive practices may depress salaries or keep competitor leagues from signing marquee players. Such practices are often challenged under antitrust law as anticompetitive. -Argument is that such practices restrain trade or monopolize the market for professional team sports.
Other Collegiate Athletic Organizations
National Association of Intercollegiate Athletics (NAIA) founded in 1940 for small colleges and universities National Junior College Athletic Association (NJCAA) founded in 1937 to promote and supervise a national program of junior college sports and activities
Intercollegiate Football Association (1876)
Association made up of students from Harvard, Yale, Princeton, and Columbia who agreed on consistent playing and eligibility rules.
History of Sport Agency
C. C. "Cash & Carry" Pyle often cited as first sport agent -Worked with Susan Lenglen and Red Grange in 1920s Until the 1970s, was extremely rare for pro team sport athlete to have an agent -Teams generally refused to deal with agents -Athletes sometimes held out for more money (Koufax) -No free agency until 1976, so little leverage to negotiate Agents have existed in individual sports such as golf and tennis for a longer time. -Mark McCormack and Arnold Palmer in the 1960s
9 MAIN Agency Functions
Client representation: Acting on behalf of a client in contract negotiations Client marketing: Locating appropriate endorsement opportunities, booking appearances, and developing entertainment extensions Event development and management Meeting increased demand for television production and development work Soliciting corporate sponsorships Hospitality services Developing/marketing grassroots programs Evaluating the success of events and initiatives through market research: Implementing mail surveys, focus groups, on-site surveys, and sponsorship/economic impact surveys Financial planning
CRM
Customer relationship management (CRM) -A system that enables sport organizations to build and utilize a database of demographic and psychographic information, as well as past purchase behaviors, for existing and potential customers. -Demographics (e.g., age, gender, education level, occupation, ethnicity). -Psychographics (e.g., motivations, interests, and opinions). -Sales analytics are readily retrievable through CRM systems and software, dramatically changing the sales landscape. -Archtix, Flash Seats, and Prospector.
Risk Management DIM Process
Developing, implementing, and managing the risk management plan Waiver and release of liability: Form signed by participants and volunteers that releases venue and event managers from negligence Purchasing insurance: Provides security to an event regarding potential financial losses
Three Primary Methods of CRM
Direct mail: Mail campaigns that reach only those people the organization wants to reach. Telemarketing: Utilizes telecommunications technology as a part of the well-planned, organized, and managed sales effort that features the use of non−face-to-face contact. Personal sales: Face-to-face, in-person selling.
Tournament Operations
Divided into pre-event, actual event, and post-event Pre-event: Determine type of event and the event's goals Script: Specific, detailed, minute-by-minute schedule of activities throughout the event 1. The time of day and what is taking place 2. The operational needs (equipment and setup surrounding each activity) 3. The event person(s) in charge of each activity Post-event: Activities surrounding completion of event
NCAA Philosophy: Division I vs. Division III
Division I: Direction: National Service: external Revenue: Income generating Equity: tiering Recruitment: Scholarships Division III: Direction: regional Service: student athlete Income: Institutional, underwhelming Equity: balance Recruitment: Financial aid
NCAA Division II and III
Division II: Awards athletic scholarships but on a more modest basis than Division I Must sponsor at least 10 sports At least two team sports for each gender Division III: Does not allow athletic scholarships Emphasizes participation, placing primary emphasis on regional in-season and conference competition
AIAW
Endorsed an alternative athletic model for women, emphasizing educational needs of students Early 1980s: Engaged in a "power struggle" with NCAA over governance of women's athletics 1981: NCAA membership voted to add championships for women in Division I 1981: NBC did not televise any AIAW championships and would not pay the monies due under its contract 1982: AIAW executive board voted to dissolve its association
Assistant Athletic Director Roles (Division III)
Event Planning Compliance/Eligibility Marketing and Promotions
Current Issues in Event Management
Event Security Olympic Games in Russia Niche Sports
Sales Strategies and Methods: Eduselling
Evolutionary form of selling that combines needs assessment, relationship building, customer education, and aftermarketing Monitoring consumer utilization and satisfaction through regular communication Proactively assisting customers in developing ways to better utilize and leverage their investment with the organization
Fees charged by Agents - 4 Methods
Flat Fee Arrangement -Athlete must pay agent an amount of money agreed upon before the agent acts for the athlete Percentage of Compensation Method -Often covers negotiation plus all of the work related to the provisions of the contract over its term; most popular Hourly Rate Hourly Rate with a Compensation Cap
The Knight Commission
Formed October 19, 1989. Composed of university presidents, corporate executive officers and presidents, and a congressional representative. Played a major role in supporting legislation to alleviate improper activities and emphasized institutional control in an attempt to restore the integrity of collegiate sports.
Intercollegiate Conference of Faculty Representatives AKA the Big Ten Conference (1895)
Formed to create student eligibility rules
Types of Agencies
Full-service agencies perform the complete set of agency functions (e.g., IMG, Octagon). Specialized agencies limit either the scope of services performed or the type of clients serviced (e.g., Redmandarin). In-house agencies are formations of separate departments or divisions dealing with event management within major corporations.
Event Management Functions
Nearly all event managers must oversee the following critical functions: -Finance/budgeting -Risk management -Tournament operations -Registration -Volunteer management -Event marketing
8 Main functions of the Sport Agent
Negotiating and administering client contracts Marketing the client Negotiating marketing and endorsement contracts Financial planning Career and postcareer planning Dispute resolution Legal counseling Personal care
Key Skills Required for Sport Agents
No established educational standards or degree requirements necessary to become a sports agent Professional degree not usually required, but expected Know industry sector: -Contracts, policies, rules and regulations, constitutions and by-laws, and collective bargaining -Negotiations -Shielding client from media
Sport Agency FIrms
No set agency firm "blueprint"; 3 common models Freestanding Sport Management Firm -A full-service firm providing a wide range of services to the athlete/client Law Practice-Only Firm -Lawyer performs many legal tasks (contract negotiation, arbitration, legal counseling, dispute resolution, and the preparation of tax forms) Sport Management Firm Affiliated with a Law Firm -Each fills a void by providing the services the other does not offer.
Finance/Budgeting
Zero-base budgeting: Review of all activities and related costs of an event as if it were the first time Cash-flow budgeting: Accounting for the receipt and timing of all sources and expenditures of cash
General Manager
In charge of all player personnel decisions Traditionally former player or coach, but as position has become more complex, individuals with graduate degrees have become desirable
Sales Inventory: Advertising Inventory
Includes both electronic and print inventory Electronic advertising inventory includes television, radio, and team Web sites. Some teams have brought their television and/or radio rights in-house. Team bears the production costs of its broadcasts but has the opportunity to retain all of the advertising sales. Print inventory: In-game programs, media guides and newsletters, ticket backs, ticket envelopes, scorecards/roster sheets, and team faxes
Representing Individual Athletes
Income dependent on consistent performance in events, appearance fees from events, and the ability to promote and market athlete's image. Agent often travels with athlete, tending to daily distractions so athlete can stay focused on playing. Large firms doing individual representation are often involved in all aspects of the sport (event management/marketing, broadcasting, consulting). -Possible conflict of interest? Olympic Movement is growth area. Athlete branding important aspect of job.
Franchise Ownership
Initially sport team ownership was a hobby for the wealthy. -Teams operated as "Mom and Pop" businesses. Focus of owners today is on running team like a business rather than a hobby. Most ownership groups today are diversified because of the costs of purchasing and operating a team. Exception is the NFL: Family or individual ownership is still the norm because of enhanced degree of revenue sharing
Sales Inventory: Sponsorships
Why do you believe the targeted company would be a good fit for your organization? The sponsorship sales process requires a great deal of up-front research, creativity, sales acumen, and patience. Sponsorships often entail a much larger emotional and financial commitment on the part of the potential customer. Process of selling sponsorship packages must allow the company sufficient lead time.
Sales Inventory: Naming RIghts
Opportunity to sell entitlement of arena or stadium, practice facility, or the team itself New phenomenon resulting in a significant new revenue stream for sport organizations Includes clauses designed to ensure that sport organizations get back for free their ability to sell their facility's name if the purchasing company becomes insolvent
Sales Strategies and Methods
Organizations have recognized the need to expand and enrich their relationships with current and potential customers. Critical determinants of success of a sales department: 1) The ability to accurately identify and understand the needs of potential and current customers. 2) The ability to maximize the generation of sales leads.
Franchise Values and Revenue Generation
Owners diversify investments to protect against risk that a franchise will lose a great deal of money. Currently, franchise values for major league clubs are in the hundreds of millions of dollars, with the most lucrative reaching into the billions. Franchise free agency—'stadium games': -Team owners threaten to move teams if their demands for new stadiums, renovations to existing stadiums, or better lease agreements are not met. Example of revenue generation: Boston Red Sox, who are maximizing revenue potential in every inch of Fenway Park (plus Fenway Sports Group) Large vs. small-market dichotomy created by the disparity in local broadcast revenues in MLB -Forcing some teams (Oakland A's) to focus on efficiency and use a system that uses less common statistics, wise drafting, and drafting of players who are "signable" Labor stability = Cost stability (NFL is example) Challenge: Long-term CBA creates stability
Franchise Ownership Issues
Owners trying to recoup initial investment in club and make more money on their franchises A growing trend is for owners to challenge league control over shared revenue streams. Some owners clamoring for local control over marketing revenues using logos, trademarks, and sponsorships -Examples: Dallas Cowboys and NY Yankees Or working to maximize revenues -Examples: Boston Red Sox and Fenway Sports Group
Ownership Rules
Permission to own sports franchise granted by ownership committee of league League imposes restrictions on ownership, including limit on number of franchise rights granted (number of teams) and restrictions on franchise location Leagues may also impose eligibility restrictions for franchise ownership. -NFL bans corporate and public ownership. Franchise and territorial rights are granted with ownership. Issue of cross-ownership
Elements of Successful Customer Service Program
Personal calls, emails, and personal notes Direct-dial phone numbers and email addresses given to each season ticket holder for contacting his or her personal service representative In-seat visits by sales account reps in the arena Maintenance of a customer sales and service booth in arena Invitations to attend "Fan Forums" with the team's general manager and team president A handbook or manual sent to season ticket holders describing the goals and values of the team's on-ice product
What does an Athletic Administrator do?
Planning Organizing Leading Implementing Controlling
Fee Issues
Players' associations limit amount of agent fees. Agent fee "ceilings" set between 3% and 6% Fierce competition for clients has driven average fees down closer to 2%−3%. Limitation only exists for the fees the agents can charge for negotiating the athlete's contract, not for marketing deals. Marketing fees charged by agents generally range between 15% and 33%.
Sales Strategies and Methods: Aftermarketing
Process of retaining customers Providing continued satisfaction and reinforcement to individuals or organizations who are past or current customers Encourages organizations to view season ticket holder not as a one-time $3,000 customer but, based on a potential span of 10 years, a $30,000 client
Sales Strategies and Methods: Benefit Selling
Promotion and creation of new benefits to offset existing perceptions of the sport product or service. Understand which objections customers have to your product or service, and why. Once benefits have been identified, they must be publicized and must be judged by the consumer to have worth or value. -Flex books and open houses
Sales Inventory Additional Options
Promotions: Giveaway items, on/off field or floor experiences, scoreboard promotions, etc. Community: School assemblies, camps, clinics, etc. Miscellaneous: Fantasy camps, off-season cruises with players, venue tours, fanfests, and road trips Creative development of new inventory, thus generating new revenue streams by selling companies the opportunity to associate with their sanctioned events
History of Sport Event Management
Late 1800s: Focus turned to the professional aspects of managing sport events because of a desire to increase profits (Albert Spalding). Barnstorming tours: The touring of star athletes and teams to promote the popularity of a particular sport. Emergence of sport management/marketing agencies (i.e., IMG) initially established to represent the legal and marketing interests of athletes. Agencies are businesses that act on behalf of a sport property (i.e., a person, company, event, team, or place). Agencies have expanded to incorporate myriads of functions beyond representing athletes.
Evolution of Sport Agencies
Late 1990s saw creation of "uberagencies." -Convergence of entertainment and sport -Large firms bought up smaller firms to diversify. -SFX, Octagon -Some firms ultimately broke up due to internal strife. 2000s saw rise of CAA and Wasserman. -Same strategy of buying up smaller firms -WME and Silver Lake Partners acquiring IMG for 2.3 billion in 2013
What Makes a Good Salesperson
Laugh: A salesperson needs a sense of humor. Make sure sale makes sense for prospective customer. Don't take rejection personally. Know as much as you can about the sales prospect. Sales is about volume—make a lot of calls and see a lot of people. Knock on old doors. Consult, don't sell. Develop the art of listening. Believe in what you're selling and believe in yourself. Close the sale: Ask customers what they want.
League Revenues
League revenues derive from: -National TV and radio contracts -League wide licensing -League wide sponsorship programs Local revenues kept by local teams: -Local broadcasting-media contracts -Gate receipts -Preferred seating sales -Other forms of stadium revenues -Creates competitive balance
League Structure
Leagues are structured as an umbrella organization for franchises to cooperate in business while competing on playing field. League also handles rule making and rule enforcement. Trend for emerging leagues to be established as single entities to avoid antitrust liability and to create centralized fiscal control (e.g., MLS, WNBA). -MLS challenged in court -WNBA moved to standard league structure
History of Sales in Sport
Sales has developed into a dynamic discipline. Certain myopias initially slowed the growth of the sports marketing profession. -One-size-fits-all packages, lack of foresight in marketing Evolution of marketing occurred through increased competition for the entertainment dollar and through professionally trained sport marketers.
Sales in the Sport Setting
Sales: Revenue-producing element of marketing Four ingredients to selling: -Identifying the customer -Getting through to the customer -Increasing awareness/interest -Persuading customers to act on their interest Four factors that cause consumers to purchase: -Quality, Quantity, Time, Cost Selling point: The emotional presence and element of excitement that exists within sport
Selling Sponsorship Packages
Schedule a meeting with the sponsorship decision maker. At the first meeting, listen 80% of the time and sell only when you have to. You are there to observe and learn. Arrange a follow-up meeting for the presentation of your proposal before leaving this initial meeting. Create a marketing partnership proposal. Present the proposal as a "draft" that you will gladly modify to meet the company's needs. Negotiate the final deal and get a signed agreement.
Sales Inventory: Ticket Inventory
Season ticket equivalencies 50% Advance ticket sales 25% Group sales 20% Day-of-game/Walk-up sales 5% Club seats, luxury seats complete with catered food service, private seat licenses (PSLs), and VIP parking, among others
Race and Gender in Pro Sports
Shropshire (1996) stresses pointedly that integration of more diverse employees into management positions will not happen without a concerted effort by owners, commissioners, and those in positions of power. Representation of minorities in sport management should match representation on the field. All leagues have shown improvements in terms of hiring women and people of color. 2003: NBA, NHL, and MLB had improvements in the race categories. -NBA: First African American majority owner was Bob Johnson (Charlotte Bobcats) -MLB: First minority owner was Mexican American Arte Moreno (Anaheim Angels) Change needs to come from those in position of power and through new policies. Case Study: NFL's Rooney Rule
Sport Agency Firms: Small Firms vs. Large Conglomerates
Small firms find greater success representing athletes in one sport and focusing on one or two services for the athletes or coaches. In smaller firms, an agent works alone or with a small group of employees. -Advantage may be that athletes receive increased attention and are actually represented by the person he or she originally signed a contract with. -Disadvantage may be that a solo agent often cannot offer as many services as a large firm. In larger firms, the agent may be part of an international conglomerate representing many athletes in a broad range of sports. Advantages of large firms include: -Provide one-stop shopping for services -More history, reputation, and contacts -Have other star players -Increased bargaining position A disadvantage may be that there is often a large stable of clients, and an athlete may feel like a "small fish in a big pond."
Ticket Sales and Social Media
Sport organizations use social media to connect and engage with fans by sharing news, posting videos, and hosting contests. They also are using social media platforms such as Facebook, Twitter, YouTube, and Pinterest to drive ticket sales. Increasing reliance on social media in the sales process has also created many new entry-level sales positions.
Career Opportunities with Sport Agency Firms
Sports Event Manager -Manage events owned by sport agencies Sports Marketing Representative -Coordinates all of the marketing and sponsorship activities for sports properties Sports Account Executive -The agency's corporate clients servicing their needs and leading sales and marketing efforts Sports Agent -May perform just one function (e.g., contract negotiation) or may have many staff performing functions for clients
NCAA Division I
Supports philosophy of competitiveness, generating revenue through athletics, and national success FBS is for institutions that are somewhat larger football-playing schools, which must maintain certain attendance requirements. FCS is for institutions that are football playing, but do not need to meet attendance requirements. Approximately 100 Division 1 members that do not sponsor football
Sales Inventory: Online Inventory
Team and league Web sites provide attractive platforms for sponsors. Banner ads, blogs, instant messaging applications, pop-up ads. Often online inventory (e.g., banner ads, company links) is included as an important value add in a larger sponsorship deal.
Representing Coaches and Management
The number of coaches (and even general managers) with agents is growing. -Increased income potential -Increased job movement -Added pressures on coaches to succeed -"Modern-day CEO" Increased complexities of coaching may make having an agent to rely on for advice and counsel almost a necessity.
Sales Strategies and Methods: Up-Selling
"Escalator concept" -Sport organizations strive to move customers up the escalator from purchasing single-game tickets to miniticket plans to season ticket packages. Sponsorship sales -Increase company's involvement with your sport organization. Never be satisfied with simply renewing a customer at his or her current level of involvement.
Sales Inventory: Signage Inventory
Traditional revenue streams include dasherboards, scoreboards, outfield signs, and concourses. New revenue streams include the playing surface itself, the turnstiles, and the marquees outside the venue, among other locations.
